About this calculator
Inflation is a slow tax on idle money. At 3% a year, prices double about every 24 years — the $10,000 that feels substantial today buys what roughly $5,500 buys now, two decades from today. This calculator shows both directions of that math: what something costing a given amount today is likely to cost in the future, and what a future sum (a salary, a pension, a savings target) is worth in today's purchasing power.
The second number is the one that matters for planning. A retirement target of "$1 million" sounds comfortable until you convert it: at 3% inflation over 30 years it has the buying power of about $412,000 today.
How to use it
- Enter an amount in today's dollars.
- Set an inflation assumption — the US long-run average is around 3%, the Federal Reserve targets 2%, and the 2021–2023 spike peaked above 9%.
- Choose the horizon, and read both results: the future price tag and the today's-dollars value.
The formula
Prices are assumed to rise by the same percentage each year, compounding — exactly like interest in reverse. Purchasing power is the same formula divided instead of multiplied: Amount ÷ (1 + rate)^years.
Worked example
At 3% inflation over 20 years, something that costs $10,000 today will cost $18,061.11. Turned around, $10,000 received 20 years from now will buy only what $5,536.76 buys today — cumulative inflation over the period is 80.6%. Your money needs to grow by at least that much just to stand still.
Frequently asked questions
What inflation rate should I assume?
US CPI inflation has averaged roughly 3% a year over the very long run, about 2.5% over recent decades, and the Federal Reserve targets 2%. Using 3% for long-horizon planning is a reasonable, slightly cautious default. Short periods can be far from any average — inflation peaked at 9.1% in mid-2022.
How does inflation affect savings in a bank account?
If your account pays less than inflation, your balance grows while your purchasing power shrinks. At 0.1% interest and 3% inflation, $10,000 is "worth" about $7,400 in today's dollars after ten years despite the balance rising. Cash for emergencies is necessary; large long-term cash piles are a slow, guaranteed loss.
What is the real rate of return?
Your return minus inflation, approximately. An investment returning 7% with 3% inflation has a real return of about 4% — that is the rate at which your actual buying power grows. Retirement and savings projections are most honest when done in real terms.
Has inflation always been positive?
Not always — the US saw deflation in the early 1930s and brief dips in 2009 and 2015 — but sustained deflation is rare in modern economies, and central banks actively target low positive inflation. Planning around gentle, persistent inflation is the realistic default.