Inflation Calculator
See how inflation erodes your money over time and what today's amount will be worth in future dollars.
Inflation Calculator — input your values
What does this financial calculator do?
The inflation calculator shows two things: what goods priced at your amount today will cost in the future, and how much your current money will be worth in today's terms after inflation takes its share. It compounds the rate year over year, the way prices actually rise.
Inflation means a dollar buys less over time. This calculator quantifies that erosion, so you can plan long-term savings and investments in real, purchasing-power terms rather than nominal dollars.
Formula and variables
The same factor (1 + i)ᵗ both grows prices and shrinks the value of money.
| Symbol | Meaning |
|---|---|
| A | Amount today |
| i | Annual inflation rate (decimal) |
| t | Years from now |
Worked example
A $1,000 purchase today, with 3% inflation over 10 years.
- Growth factor: (1.03)^10 = 1.3439.
- Future cost: $1,000 × 1.3439 = $1,343.92.
- Purchasing power: $1,000 ÷ 1.3439 = $744.09.
- About 25.6% of the buying power is eroded in 10 years.
Answer: The same goods cost $1,343.92, and your $1,000 buys only $744.09 worth of today's goods.
Tips and common mistakes
Tips
- For long-term planning, subtract expected inflation from your investment return to work in today's dollars.
- Historically, inflation has averaged around 3% per year in the US — use 2% to 4% for scenarios.
- Housing, healthcare and education often inflate faster than the overall average.
- Investing in assets that outpace inflation, like broad stock index funds, protects long-term purchasing power.
Common mistakes to avoid
- Planning retirement and long-term savings in nominal dollars without adjusting for inflation.
- Using the current month's inflation spike as a long-run assumption — averages smooth out over decades.
- Confusing the future cost of goods with purchasing power: they are reciprocals of each other.
Inflation Calculator — frequently asked questions
What is the difference between future cost and purchasing power?
Future cost is what a basket of goods priced at your amount today will cost later. Purchasing power is how much of today's goods your current money will still buy. Both use the same compounded inflation factor.
What is a normal inflation rate?
Central banks target around 2% per year. The long-run US average is roughly 3%, while some years spike well above or below that.
How does inflation affect savings?
If your savings earn less than inflation, their purchasing power falls even though the balance grows. Real return is the interest rate minus the inflation rate.
Why does inflation matter for retirement planning?
Retirement can last 30 years, so prices can easily double or triple during it. Planning in today's dollars with an inflation-adjusted return keeps estimates realistic.
Can inflation be negative?
Yes — deflation. It is rare in modern economies, but this calculator accepts 0% for a no-inflation scenario.
How do I protect my money from inflation?
Invest in assets whose returns have historically outpaced inflation, such as diversified stocks, real estate and inflation-protected bonds, rather than holding only cash.