Why every number here is in today’s dollars
A projection that tells you "you will have $2.4 million at 65" has told you almost nothing, because it has not told you what a dollar will buy in that year. The fix is a convention, and once you adopt it every number becomes something you can actually judge.
Two ways to describe the same wealth
Nominal dollars are the numbers that will literally appear on a statement in some future year. Real dollars — "today’s dollars" — restate that same wealth in terms of what it would buy now.
They describe identical purchasing power. They just use different rulers, and one of the rulers is shrinking.
The same estate, two numbers
Priya — 54, Ontario, single. $118,000 salary, $410,000 in her RRSP and $88,000 in her TFSA, planning to retire at 63.
Priya's plan runs 36 years. Her projected estate is $422,378 in today's dollars. Stated in the nominal dollars of that final year, at the plan's 2.1% inflation assumption, the same estate is $892,541.
The second number is more than twice the first, and it is not better news. It is the same news, measured in smaller units. But it *feels* like better news, which is exactly the problem with reporting projections that way.
The same applies to her spending. $58,000 a year in today's dollars is a figure she can sanity-check against her current life. The nominal equivalent thirty years out is a number she has no intuition about whatsoever — and no way to tell whether it is generous or thin.
The real return, and the mistake it prevents
To keep every figure in today’s dollars, a projection converts the nominal return you expect into a real return — the growth that is left after inflation has taken its share. The relationship is not subtraction, though subtraction is close enough to be seductive:
Everything then follows in the same units. Balances grow at the real rate. Spending stays flat in real terms unless you deliberately change it. CPP and OAS, which are indexed to inflation by law, stay flat in real terms too — which is a genuinely useful property to be able to see rather than having to mentally deflate.
Where nominal is the right answer
Real dollars are the right default for judging a plan. Nominal dollars are the right answer for a specific class of question: what a payment will actually be. If you are trying to reconcile a projection against a statement, or work out the literal cheque a RRIF minimum will produce in a given year, you want nominal.
Which is why the year-by-year ledger has a toggle between the two — and why comparing a logged actual balance against a projection requires converting one to the other first. They are both correct; they answer different questions.
The ledger toggles between today’s dollars and future dollars on the same projection, so you can see how much of a growing number is growth and how much is inflation.
Next: reading the net worth chart — the shape, the peak, and the drop nobody expects at the end.
GlidePathEngine is an educational planning tool — not financial, investment, tax, or legal advice.