Why Does My Income Look Like It’s Declining?

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Understanding Inflation, Present Value, and Retirement Projections in Milestones

Question: Why does my rental income or pension income look like it’s going down each year? Is inflation being subtracted incorrectly?

Answer:

Milestones Shows Income in Today’s Dollars

By default, Milestones shows your retirement projections in today’s dollars.

This is called Present Value.

It means future income is adjusted for inflation so you can see what that money would be worth in today’s purchasing power.

It does not mean inflation is being subtracted incorrectly it simply means future dollars are adjusted so everything is easier to compare.

For example:

$80,000 twenty years from now will not buy what $80,000 buys today. Inflation changes that.

Showing everything in today’s dollars makes long-term planning clearer.

Why Income Can Look Like It’s Declining

If an income source, like rental income, is not set to grow with inflation, it may appear to slowly decline in the report.

Here’s why:

• The income stays the same each year in actual dollars• Inflation reduces what those dollars can buy

• The report shows that reduced purchasing power

The software is simply showing that flat income loses value over time when prices rise.

What If the Income Grows With Inflation?

If your rental income is set to increase at the same rate as inflation, it will look level in the report.

That’s because:

• The income increases each year

• Inflation increases at the same rate

• Purchasing power stays the same

When purchasing power stays the same, the line looks flat in today’s dollars.

Present Value vs Future Value

Milestones allows you to view your report in two ways.

Present Value (Default)

Shows everything in today’s dollars. Helps you understand real purchasing power.

Future Value

Shows income in actual future dollar amounts. You will see numbers increasing year over year if they are indexed.

If you want to see income rising each year, simply switch the report to Future Value. Both views are correct. They just show different perspectives.

Why We Use Today’s Dollars by Default

Retirement planning is about sustainability.

The most important question is:

“How much will this income actually be worth?”

Showing income in today’s dollars helps you understand whether your retirement income keeps up with inflation.

It makes it easier to compare years without being distracted by larger future dollar amounts.

Final Takeaway

If your income looks like it is going down, there is no formula error.

It reflects:

• Whether the income is indexed

• Your inflation setting

• The report being shown in today’s dollars

If something in your report doesn’t look the way you expect, it’s usually a setting, not a calculation problem.

Review your inflation and indexing choices, and switch between Present Value and Future Value to see the difference.