Suppose your salary in 2013 is $55,000. If the annual inflation rate is 2%, what salary do you need to make in 2021 in order for it to keep up with inflation? Round your answer to the nearest cent, if necessary.

Answer 1

To keep up with inflation, we can use the formula:

New Salary = Old Salary * (1 + Inflation Rate)^Number of Years

Number of years = 2021 - 2013 = 8 years

New Salary = $55,000 * (1 + 0.02)^8
New Salary = $55,000 * (1.02)^8
New Salary = $55,000 * 1.17161436218
New Salary = $64,435.79392

Therefore, you would need to make $64,435.79 in 2021 to keep up with inflation.