Real Return: What Fees, Tax and Inflation Take

Why a 7% headline return can feel much smaller, and how to measure growth in today's money after costs.

Brochures quote nominal returns. What you can actually buy later depends on three leaks: fees, tax and inflation.

A 20-year example

Paying in $130,000 over 20 years, the calculator's default shows about $282,000 before tax, about $19,000 lost to fees, and $22,800 to tax on gains. After inflation the balance buys only about $158,000 in today's money, a real gain of roughly $28,000 on money you put in.

Why fees matter so much

A fee of 1% a year sounds small. Because it compounds, it can eat a fifth of your ending balance over decades. Low-cost index funds often charge 0.1% or less.

Plan in real terms

When setting a retirement target, think in today's money. Use the real return calculator to include everything, the inflation calculator to see price changes, and the compound interest calculator for the basic growth.

This article is general education, not financial advice.