Some random browsing brought me to the Wikipedia page on Financial Independence, and I'm having trouble making sense of something it says. Below is the whole extract, provided in full to make it easy to see what's being discussed, and highlighted in bold is the sentence I'm having trouble understanding.
"It does not matter how old or young someone is or how much money they have or make. If they can generate enough money to meet their needs from sources other than their primary occupation, then they have achieved financial independence. Age is potentially irrelevant with respect to financial independence. If they are 25 years old and their expenses are only $100 per month and they have assets that generate $101 or more per month, they have achieved financial independence, and they are now free to do things that they enjoy without having to worry as much. If, on the other hand, they are 50 years old and earn a million dollars a month but still have expenses above a million dollars a month, then they are not financially independent because they still have to generate the difference each month just to stay even.
However, this needs to take into consideration the effects of inflation. If a person needs $100/month for living expenses today, that figure will be $105/month next year and $110.25/month in the following year to support the same lifestyle assuming a 5% annual inflation rate. Therefore, if the person in the above example obtains their passive income from a perpetuity, there will be a time when they lose their financial independence because of inflation."
The Wikipedia entry on "perpetuity" confused me more.
So, in layman's terms, what exactly is a "perpetuity", and why will inflation cause you to lose your financial independence at some point if you secured your money in one?