Inflation Calculator
See how rising prices erode purchasing power and your real investment returns over time.
Future purchasing power
$5,537
Purchasing power after 20 years
Future cost
$18,061
Purchasing power lost
44.63%
Key insight
- Purchasing power lost
- 44.63%
- Future Price
- $18,061
- Value halves in
- 24 yrs
| Year | Buys (today's $) | Costs then |
|---|---|---|
| 1 | $9,709 | $10,300 |
| 2 | $9,426 | $10,609 |
| 3 | $9,151 | $10,927 |
| 4 | $8,885 | $11,255 |
| 5 | $8,626 | $11,593 |
| 6 | $8,375 | $11,941 |
| 7 | $8,131 | $12,299 |
| 8 | $7,894 | $12,668 |
| 9 | $7,664 | $13,048 |
| 10 | $7,441 | $13,439 |
| 11 | $7,224 | $13,842 |
| 12 | $7,014 | $14,258 |
| 13 | $6,810 | $14,685 |
| 14 | $6,611 | $15,126 |
| 15 | $6,419 | $15,580 |
| 16 | $6,232 | $16,047 |
| 17 | $6,050 | $16,528 |
| 18 | $5,874 | $17,024 |
| 19 | $5,703 | $17,535 |
| 20 | $5,537 | $18,061 |
How it's calculated
Formula
Future Purchasing Power = Amount Today ÷ (1 + Inflation Rate)^YearsHow it works
Inflation compounds like interest, but against you. Dividing by (1 + i) for each year strips out rising prices, leaving what a fixed sum can actually buy. Multiplying instead gives the future cost of today's goods.
Variables
- Amount
- Amount in today's dollars
- i
- Annual inflation rate (decimal form). Example: 3% = 0.03
- t
- Number of years
- Future Purchasing Power
- The inflation-adjusted value of today's money after the selected number of years.
Worked example
Step 1 Inflation Factor = (1 + Inflation Rate)^Years = 1.806 Step 2 Future Purchasing Power = Amount Today ÷ Inflation Factor = $5,537 Step 3 Future Cost = Amount Today × Inflation Factor = $18,061 Step 4 Purchasing Power Lost = (1 − Future Purchasing Power ÷ Amount Today) × 100 = 44.63% In 20 years, $10,000 would buy only about $5,537 worth of today's goods — a loss of roughly 45% in purchasing power.
Frequently asked questions
What inflation rate should I assume?
The long-run U.S. average has been roughly 2–3% per year, though it varies. Use a rate that reflects your own expectations for the period.
How does inflation affect investing?
It's why cash slowly loses value and why investors aim to beat inflation. The 'real' return — your return minus inflation — is what actually grows your wealth.
Is this the same as the official CPI?
No. This uses a single assumed rate. Official inflation (CPI) changes monthly and varies by spending category, so your personal inflation may differ.
How fast does money lose half its value?
Divide 72 by the inflation rate (the Rule of 72). At 3%, purchasing power halves in about 24 years; at 6%, in about 12.
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