Inflation is applied differently depending on the type of input. Understanding this helps you enter amounts correctly and interpret results accurately.

Two inflation rates - On the Assumptions page you set two inflation rates:

• General inflation rate (default 2.54%) - used for most expenses and costs over time.
• Medical inflation rate (default 3.36%) - available as a separate rate for healthcare expenses, which historically rise faster than general inflation.

Recurring expenses - Each recurring expense grows annually by the rate you assign it. You can choose to use the plan's general inflation rate, the medical inflation rate, or a custom rate. For example, you might assign general inflation to housing and groceries, medical inflation to health insurance and out-of-pocket costs, and a custom rate to anything that grows at a different pace.

One-time expenses and windfalls - When entering a one-time expense or windfall, you choose whether the amount is in today's dollars or future dollars.

• Today's dollars - the amount you enter represents what something costs now. The plan inflates it forward to the year it occurs. For example, a $20,000 expense in today's dollars occurring 10 years from now at 3% inflation would be treated as roughly $26,878 in the plan.
• Future dollars - the amount you enter is already in the dollars of that future year. No inflation is applied. Use this when you already know the nominal amount, such as a known inheritance or a contractually fixed payment.

Income - Income sources are not automatically inflated. Each income source has its own annual growth rate that you set yourself. For employment income this might represent expected raises. For passive income it can model cost-of-living adjustments. Set it to zero for income that will not change.

Social Security - Social Security has its own separate COLA (cost-of-living adjustment) rate, set on the Social Security page. This is independent of the plan's general inflation rate. When next year's national COLA has already been announced, the planner applies that known figure to the first projected year (shown next to the COLA field on the Social Security page), then your COLA rate for every year after.

Account balances - Portfolio balances grow by investment returns, not inflation. The return rates you set on the Assumptions page drive portfolio growth.