According to the U.S. Bureau of Labor Statistics, you would need $562 in 2010 to buy the same goods and services that $100 would have purchased in 1970. Prices have increased in all but three of the years since the Great Depression. So, you are very likely to face inflation in your retirement years, whether you plan for it or not.
If you do not plan for it, you will find your budget getting tighter and tighter every year as the prices of food, gas, and most other purchases rise faster than your income. If the country ever goes through a period of rapid inflation like the 1970s, your budget will be hurt even more.
To reduce your inflation risk, we offer an option to have your monthly benefit from the transfer increase with a common measure of inflation (CPI-U) every year. Because this will lead to much larger payments in the future, your initial benefit will be much lower if you select this option. This will allow you to adjust your spending to an appropriate level now, while you are still younger and can make adjustments, rather than later when your finances are much less flexible.