Assuming an annual inflation rate of 9% (compounded annually), the purchasing power (in dollars) of the retired couple's fixed income of $3,100 per month in 5 years is $1,934.50.
To calculate the future purchasing power of the couple's monthly income in 5 years, we can use the formula for future value with negative compound interest, showing the effect of the 9% annual inflation rate:
FV = PV * (1 - r)^n
Where: FV = Future Value
PV = Present Value
r = annual inflation rate
n = number of years
PV = $3,100 per month
r = 9% or 0.09 (9/100)
n = 5 years
FV = 3,100 * (1 - 0.09)^5
≈ 3,100 * (0.91)^5
≈ 1,934.50
Thus, the future purchasing power of the retired couple's monthly income in 5 years, considering 9% annual inflation, would be approximately $1,934.50.