This is probably a really simple question. But say if I invest $100 for 30 years at 10% return, I get around $217,132.11 with compounding interest. Now if we assume 4% inflation for the next 30 years it should only be worth around $66,945.88, which means I need $704,245.74 to keep up with its real value. (Source: Inflation Calculator - Save Enough to Account for Inflation) If I increase my monthly contributions by 4% each year will I keep up with inflation's decrease of 4%?

If you go to the link there (Inflation Calculator - Save Enough to Account for Inflation) and pump in 217132.11 in Today's Amount, 4% in Inflation, and 30 in Number of years you get that amount in Required Amount.

Something is not right with your calculations. Investing $100 for $30 years and compounding daily at 10% will come to $2007 and not to $217K. Even if an additional $100 was added monthly so yout total yearly investment was $1200 the total amount after 30 years only gets to $24K But let's assume that it did get to $217K. To be able to counteract inflation you need to be adding 4% of the capital and not 4% of your contribution and you need to be doing this at the compounding rate.

Thanks, that answers it, 4% to the capital, that makes sense. I'm not sure why your calculations are different. I used a different calculator this time and actually got more! Savings Results Calculator Pump in $100 per month, for 30 years at 10% p/a compounding interest. You get $226,048.79

nice 1. Now if you went 1 step further and sallary sacrificed $115/month into your super you will pay $15% contributions tax so your monthly contribution will be reduced to $100 but your actual cost depending on your tax bracket could be up a lot lower than $100. If you were on the 40% income tax scale you could increase your super contribution to $170/month. You will pay the 15% contributions tax but you will still have $144.50 added to your super. So your savings are higher than if you did it outside super and it will still cost you $100/month. The only problem with the above plan is that you can't touch the money until you are at retirement age. Cheers

even better BV, if your a low income earner, you can put in your $100 doll payment, the government will give you another $150, so your contribution would be $250 per month... how about we run those figures through the system!