Inflation Calculator
See how inflation erodes the purchasing power of money over time. Enter any amount and an inflation rate to watch what it's really worth in future dollars.
Real value after inflation
$4,120
$10,000 today has the purchasing power of $4,120 in 30 years at 3% inflation.
Purchasing power lost
58.8%
Nominal $ needed to match today
$24,273
Cumulative inflation factor
2.43×
- Inflation compounds annually at a fixed rate. Real-world inflation varies year-to-year.
- "Real value" is the amount you'd need today to buy the same goods in the future:
real = nominal / (1 + r)ⁿ. - "Nominal needed to match today" is the headline figure required in the future to equal today's purchasing power:
nominal = real × (1 + r)ⁿ. - The calculation models a single lump-sum amount, not an ongoing cash flow.
What inflation really means
Inflation is the gradual rise in prices across the economy, which means each dollar buys less over time. $100 today will purchase fewer goods and services in five years, ten years, or twenty years. This erosion of purchasing power is invisible in the short term — prices change only a few percent per year — but over decades it's devastating. At 3% annual inflation, a dollar today will be worth about 54 cents in twenty years.
Understanding inflation is crucial because it means that "cash is a melting ice cube." Money sitting in a zero-interest account loses purchasing power every year. Even in a savings account, if inflation runs 3% and your account earns 1%, your real purchasing power is declining by about 2% annually.
Why it matters to your money
Inflation is the silent threat to wealth preservation. A salary that looks like it's growing might actually be a cut in real terms if inflation outpaces your raise. A retirement savings balance that looks large might not buy what you think it will decades from now. Every financial plan needs to account for inflation, which is why this calculator lets you plug in different rates and time horizons.
Read the full explainer on understanding inflation for more context on how inflation has varied historically and what it means for your savings strategy.
Rules of thumb
- The US Fed targets 2% inflation: This is considered healthy for economic growth. The historical US average is closer to 3%.
- Doubling time: At 3% inflation, prices roughly double every 24 years. At 5%, they double in about 14 years.
- Always think in real (inflation-adjusted) returns: If your portfolio earns 8% but inflation is 3%, your real return is only about 5%. Investment decisions should be based on real, not nominal, returns.
Frequently asked questions
- What is inflation and why does it matter?
- Inflation is the gradual increase in prices over time, which reduces the purchasing power of money. $100 today will buy less in 10 years — historically, US inflation has averaged about 3% per year, meaning prices roughly double every 24 years.
- What is a 'real' return versus a 'nominal' return?
- A nominal return is the headline number (e.g., 10% stock market gain). A real return subtracts inflation to show actual purchasing power growth (10% nominal − 3% inflation = ~7% real return). Real return is what actually matters for wealth building.
- How does inflation affect retirement savings?
- Inflation is one of the biggest risks in retirement. A portfolio that doesn't grow faster than inflation will steadily lose purchasing power. That's why most retirement strategies target real (inflation-adjusted) returns, not just nominal gains.