What this calculator does
Inflation works in two directions from the same arithmetic. A fixed sum of money buys less each year, and any given basket of goods costs more. This calculator reports both, along with the doubling time for prices at the rate you enter.
The effect is easy to underestimate over long horizons. At 3% a year, historically unremarkable, prices double in about 23 years. Money left uninvested for a working lifetime loses well over half its purchasing power.
The formula
Prices compound at the inflation rate, so a cost multiplies by (1+i)ⁿ over n years. Purchasing power moves the opposite way, dividing by the same factor. The doubling time comes from solving (1+i)ⁿ = 2 for n.
| Term | Meaning |
|---|---|
| i | The average annual inflation rate. |
| n | The number of years. |
| Real value | The amount expressed in today’s purchasing power. |
The inputs explained
| Field | What to enter |
|---|---|
| Amount today ($) | The amount today, in today’s money. |
| Average inflation rate (%) | Average annual inflation over the period. Central bank targets are commonly in the 2–3% range, but actual outcomes vary widely. |
| Years | The number of years to project forward. |
When to use it
Checking whether a salary has kept up
Enter your salary from some years ago and the inflation over that period. If your current pay is below the future-cost figure, your real income has fallen even though the nominal number rose.
Planning a long-term goal
A retirement target set in today’s dollars needs inflating to the date you will actually need it. A $60,000 annual income in 25 years is not the same as $60,000 today.
Judging a fixed pension or annuity
A level payment loses purchasing power every year. Run it forward to see what it is worth in real terms at the end of the period you expect to receive it.
Deciding whether cash is safe
Cash has no nominal risk but a guaranteed real loss whenever inflation exceeds the interest earned. The value lost line quantifies exactly how much.
Worked examples
Every figure in the tables below is produced by this page’s own calculator at build time, so the numbers and the tool always agree. Select any row to load that scenario.
What $100,000 will be worth after inflation
A fixed $100,000, held as cash, at 3% average inflation over increasing horizons.
| Years | Buying power then | Cost of today’s $100,000 | Value lost |
|---|---|---|---|
| 5 years | $86,260.88 | $115,927.41 | 13.7% |
| 10 years | $74,409.39 | $134,391.64 | 25.6% |
| 20 years | $55,367.58 | $180,611.12 | 44.6% |
| 30 years | $41,198.68 | $242,726.25 | 58.8% |
| 40 years | $30,655.68 | $326,203.78 | 69.3% |
| 50 years | $22,810.71 | $438,390.60 | 77.2% |
How the inflation rate changes a 20-year outlook
The same amount and horizon at different average inflation rates.
| Average inflation | Buying power then | Cost of today’s $100,000 | Price doubles every |
|---|---|---|---|
| 1% | $81,954.45 | $122,019.00 | 69.7 years |
| 2% | $67,297.13 | $148,594.74 | 35.0 years |
| 3% | $55,367.58 | $180,611.12 | 23.4 years |
| 5% | $37,688.95 | $265,329.77 | 14.2 years |
| 7% | $25,841.90 | $386,968.45 | 10.2 years |
| 10% | $14,864.36 | $672,749.99 | 7.3 years |
Questions
What inflation rate should I use?
Many central banks target somewhere around 2–3%, and long-run averages in developed economies have often sat in that range, but individual decades have been far higher or lower. Running two or three rates gives a more honest picture than a single assumption.
Does this use official inflation data?
No: you supply the rate. That is deliberate: it keeps the calculator accurate regardless of when it is used, and lets you model a rate specific to your own spending rather than a national basket.
Why does personal inflation differ from the published figure?
Official indices track an average basket. If your spending is weighted toward categories rising faster than average, housing, health care, education, your personal rate will be higher.
How do I get a real rate of return?
Subtract inflation from the nominal return as a good approximation. Precisely, the real rate is (1 + nominal)/(1 + inflation) − 1, which matters when both figures are large.
To project investments in nominal terms, use the compound interest calculator. To discount a future amount at a chosen rate, see present and future value.