The doubling time is the number to remember
Percentages are hard to feel. Doubling times are not.
At 3% inflation, prices double in about 23 years. At 6%, about 12 years. At 9%, about 8. Indian inflation has generally run in the 5–6% range, which means prices roughly double every twelve to fourteen years.
Applied to a career, that is stark: something costing ₹100 when you start working may cost ₹400 by the time you retire. Your salary presumably rises too — but your savings only keep pace if they are invested at more than the inflation rate.
Why cash is not safe
Money in a current account earning nothing loses purchasing power every year, guaranteed. At 6% inflation, cash held for twenty years buys about 31% of what it did.
This reframes the usual risk conversation. Equity is volatile but has historically outpaced inflation over long periods. Cash is stable in nominal terms and reliably loses in real terms. For money you need next month, cash is correct. For money you need in twenty years, holding cash is the riskier choice, not the safer one.
The same logic applies to deposits taxed at slab rate. A 7% fixed deposit taxed at 30% returns about 4.9% — below 5–6% inflation. The rupee figure grows while the purchasing power shrinks, which is why a nominally profitable deposit can be a real-terms loss.
What this means for planning
Any long-horizon target must be inflated to the date you need it. A retirement figure calculated in today's money and never adjusted is not conservative — it is wrong, usually by a factor of two or three.
The retirement calculator applies this adjustment explicitly, which is why its targets look larger than figures quoted elsewhere.
Two things the average rate hides
Your inflation is not the published rate. Official figures are a basket average. If your spending skews toward education, healthcare or urban rent — all of which have risen faster than general inflation in India — your personal rate is higher than the headline.
Healthcare deserves its own line. Medical inflation in India is frequently cited in the 10–14% range, well above general inflation. Applying a general rate to a retirement plan understates the medical component substantially, which is why health cover is best treated as separate from the corpus rather than absorbed by it.
Frequently asked questions
How do I calculate the future cost of something with inflation?
Multiply today's cost by (1 + inflation rate) raised to the number of years. At 6% over 20 years, the multiplier is about 3.2 - so something costing Rs 100 today would cost around Rs 320.
How long does it take for prices to double?
Divide roughly 70 by the inflation rate. At 3% prices double in about 23 years, at 6% about 12 years, and at 9% about 8 years. Indian inflation has generally run at 5-6%.
Is keeping money in cash risky?
For long-horizon money, yes. At 6% inflation, cash held for twenty years buys about 31% of what it did. Cash is correct for money you need next month and is the riskier choice for money you need in twenty years.
What inflation rate should I use for planning in India?
Around 6% for general expenses is a common planning assumption. Budget healthcare separately at a higher rate, since medical inflation is frequently cited in the 10-14% range.