Inflation Calculator
↻ Updated 2026See how inflation raises the future cost of things and erodes the purchasing power of today's money over time.
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Runs entirely in your browser — nothing you enter is sent to us.How this works
How to read your inflation result
The two headline numbers are the same fact seen from both ends. $10,000 of today's shopping costs $18,061 in twenty years; $10,000 left in a drawer buys $5,537 of today's goods by then. Neither is a prediction — they're what a constant 3% does, and 3% is a planning convention rather than a measured forecast.
How inflation compounds prices and erodes purchasing power
Inflation is compound interest applied to prices. The same exponential that grows a portfolio grows the cost of living, which is why a 3% inflation rate over twenty years isn't a 60% increase — it's 80.6%. Each year's rise applies to a price that already rose.
The calculator runs one factor in two directions. Multiply today's amount by the factor and you get what that basket will cost later. Divide today's amount by the same factor and you get what today's money will buy later. One number, two questions, and they answer to different denominators.
factor = (1 + inflation rate) ^ years future cost = amount × factor ← what today's basket will cost purchasing power = amount ÷ factor ← what today's cash will buy purchasing power lost = amount − purchasing power cumulative inflation = factor − 1
- amount
- A sum of money in today's dollars — read it as a price when you use future cost, and as cash when you use purchasing power
- inflation rate
- Assumed constant annual inflation — 3% default; US CPI-U has averaged roughly 3.8% since 1960 and about 2.5% over the last twenty years (BLS)
- years
- How far ahead you're looking — the exponent — this is what turns a modest rate into a large number
- factor
- The cumulative multiplier over the whole period — 1.806 at 3% over 20 years, meaning prices are 80.6% higher
- future cost
- What today's amount will cost later — $18,061 on the defaults
- purchasing power
- What today's amount will buy later, in today's goods — $5,537 — the same $10,000 note, worth 55.4% of what it is now
The asymmetry between the two figures is the most misread thing on this page. Prices rise 80.6% and purchasing power falls 44.6% — those aren't inconsistent, they're reciprocals. Going up, the base is today's price; coming down, the base is today's cash. A 100% price rise means paying twice as much, which is a 50% loss of purchasing power, not 100%. Which is why 'inflation was 80% over twenty years' and 'the dollar lost 45% of its value' can both be true of the same two decades.
Constant inflation is the model's convenient fiction. US inflation ran at 9.1% in June 2022 — the highest in 41 years — and turned negative during 2009. A 20-year average of 3% can contain both, and the compounding path through them is not the smooth curve the chart draws. For the flip side of this arithmetic, the compound interest calculator grows money with the identical formula.
Worked examples
Example: $10,000 at 3% inflation over 20 years
The calculator's defaults. Read it twice — once as the price of something, once as cash sitting in an account.
| Amount today | $10,000 |
| Inflation factor1.03 ^ 20 | 1.806 |
| Cost in 20 years$10,000 × 1.806 | $18,061 |
| Cumulative inflationnot 60% — compounding, not 3% × 20 | 80.6% |
| Purchasing power in 20 years$10,000 ÷ 1.806 | $5,537 |
| Purchasing power lost45% eroded | $4,463 |
| Years to halve in valueln(2) ÷ ln(1.03) | 23.4 |
Same $10,000, two answers, both correct. As a price it becomes $18,061 — a car, a year of tuition, a roof. As cash it becomes $5,537 of today's goods, having lost $4,463 without anyone taking anything. Note the simple-interest trap: 3% × 20 years intuitively suggests 60%, and the real answer is 80.6%. That 20-point gap is compounding, and it's the whole reason inflation feels sudden after being ignorable.
Example: the same 20 years at 2% and at 4%
One percentage point either side of the default. This is the range most long-run US planning assumptions live in — and the spread across it is wider than the rate suggests.
| Cost at 2%cumulative inflation 48.6% | $14,859 |
| Cost at 3%cumulative inflation 80.6% | $18,061 |
| Cost at 4%cumulative inflation 119.1% | $21,911 |
| Spread, 2% to 4%70% of the original amount | $7,052 |
| Purchasing power at 2% | $6,730 |
| Purchasing power at 4%$2,166 worse than at 2% | $4,564 |
Two percentage points nearly halve the answer's usefulness: $14,859 against $21,911 for the same basket. At 4%, prices more than double in twenty years; at 2%, they rise by less than half. The Fed targets 2% (measured on PCE, not the CPI this page implies), US CPI-U has averaged nearer 3.8% since 1960, and the last twenty years came in around 2.5%. Which number you type is not a detail — it's the answer.
Frequently asked questions
What is the average inflation rate in the US?
It depends entirely on the window, which is why the question has several honest answers. US consumer price inflation has averaged roughly 3.8% a year since 1960 and about 2.5% over the last twenty years (BLS CPI-U). The Federal Reserve targets 2%, though its target is stated on the PCE price index rather than the CPI — the two typically differ by a few tenths of a point, with PCE usually running lower.
The averages hide the variance that actually hurts. Inflation hit 9.1% in June 2022, the highest reading in 41 years, and went negative in 2009. It exceeded 13% in 1980. A 3% default is a planning convention drawn from the long-run middle of that range, not a forecast — and no twenty-year stretch of US history has been a flat line at any rate.
How much will $100,000 be worth in 20 years?
At 3% inflation, $55,368 in today's purchasing power — the defaults scaled up ten times, since the factor doesn't care about the amount. You'd still have $100,000 of currency; it would buy what $55,368 buys now.
That figure assumes the money earns nothing at all, which is the case for cash in a checking account and roughly the case for a savings account paying less than inflation. Money earning a return has to clear the inflation rate before it gains anything real: at 3% inflation, a 3% savings rate is a 0% real return, and a 7% investment return is a 3.88% real return. This is the argument against holding long-horizon money in cash stated as arithmetic — the loss is certain, not risky.
Should I use nominal or real returns when planning?
Either, as long as you don't mix them — and mixing them is the single most common planning error. Work in today's dollars using real returns, or in future dollars using nominal returns and inflated spending. What you can't do is project a portfolio at a nominal 8% and compare the result to today's prices, which counts your gains at future value and your costs at present value.
The conversion isn't subtraction, though it's close enough that most people subtract. Exactly, real = (1 + nominal) ÷ (1 + inflation) − 1: so 7% nominal with 3% inflation is 3.88%, not 4%. The error is small over five years and compounds into real money over thirty. The FIRE calculator works in real terms for exactly this reason.
Does inflation affect my savings account?
Every day, and invisibly — the balance never falls, which is what makes it hard to see. If your account pays 1% while inflation runs 3%, your real return is −1.94% a year: you have more dollars and less money.
The gap has moved violently in recent years. High-yield savings accounts paid under 1% through much of the 2010s and over 5% in 2023-24, while inflation went from below 2% to 9.1% and back. There have been stretches where cash out-earned inflation and stretches where it lost 6% a year in real terms. Interest earned is also taxed as ordinary income the year it's credited (IRS Topic 403), so the real after-tax return on cash is lower again than the nominal rate implies — a 3% account in a 22% bracket nets 2.34%, which loses to 3% inflation.
Why does the future cost rise more than the purchasing power falls?
Because they're measured against different bases, so the percentages can't match. Prices rise 80.6% over the defaults while purchasing power falls 44.6% — and both describe the identical 1.806 factor.
The clean way to see it: if prices double, you pay 200% of what you paid before (a 100% rise), but your dollar now buys half as much (a 50% fall). Multiplying by 1.806 and dividing by 1.806 are inverse operations, and inverses don't produce equal percentage changes. Anyone quoting a big number for inflation is usually quoting the rise; anyone quoting a big loss is usually quoting the erosion. Same data.
Where this inflation model stops matching your actual costs
One rate, applied to one amount, for every year. Real inflation is none of those things.
- Inflation is never constant — The model applies your rate identically every year. Actual US inflation was 9.1% in June 2022 and negative in 2009. A smooth 3% curve and a jagged path averaging 3% end in a similar place, but they feel nothing alike along the way — and if you're drawing an income, the timing matters.
- Your inflation isn't the CPI — The CPI-U tracks a fixed basket for an average urban household. Yours isn't average. Healthcare, college tuition and housing have run persistently above headline CPI for decades, while electronics have fallen. A retiree's real inflation rate and a 25-year-old renter's are different numbers, and neither is the one on the news.
- Nothing here earns a return — The purchasing power figure assumes the money sits in cash earning 0%. Anything invested, or even in a high-yield savings account, is fighting back. This page shows the erosion, not the net result.
- No tax, and no inflation-linked assets — US Series I savings bonds and TIPS adjust their principal or rate with CPI, which is the direct hedge this model has no field for. Their interest is also taxable federally, so even they don't fully preserve purchasing power after tax.
- It's a projection, not a measurement — This tool runs an assumed rate forward. It doesn't look up what a 2006 dollar is worth today — for that you'd want the BLS CPI series itself, which is measured rather than assumed.
- ·Standard inflation compounding formula
Rates, brackets and limits here are checked against primary sources. If a number still looks off, email support@realmoneyiq.com and we'll review and fix it.
RealMoneyIQ provides free educational calculators, not financial, tax, investment or legal advice. Results are estimates based on the assumptions you enter and publicly published rates; your actual outcome will differ. Always confirm decisions with a licensed professional who knows your full situation.