Inflation Calculator
See how inflation affects your money over time
Last updated: January 2025
About This Tool
Inflation silently erodes the purchasing power of your money over time. This calculator helps you understand how inflation affects your savings, investments, and future financial plans so you can make informed decisions to protect your wealth.
What is Inflation Calculator?
Inflation is the rate at which the general price level of goods and services rises over time, reducing purchasing power. An inflation calculator shows how much more things will cost in the future, or conversely, how much less your current money will buy in future years.
How It Works
The calculator uses compound growth to project how prices increase over time. Enter an amount, expected inflation rate, and time period to see the future cost of goods or the reduced purchasing power of your current money. It demonstrates why your savings need to grow faster than inflation.
Formula
Future Cost = Present Cost × (1 + Inflation Rate)^Years
To buy the same goods in 20 years
$180.61
will cost this much
$100 today will be worth
$55.37
in 20 years
Purchasing Power Over Time
Impact Summary
Purchasing Power Lost
44.6%
Price Increase
80.6%
Historical Inflation
💡 Beat Inflation
- • Invest in stocks (historically 7-10% return)
- • Consider I-bonds or TIPS
- • Real estate often outpaces inflation
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When to Use This Calculator
Pro Tips
- •Always subtract inflation from investment returns to see real gains
- •Long-term investments must average returns above inflation rate
- •Cash savings lose value over time - keep only emergency funds in cash
- •TIPS and I-Bonds offer inflation-protected returns
- •Real estate and stocks have historically outpaced inflation
Common Mistakes to Avoid
- •Ignoring inflation when planning for long-term goals
- •Keeping too much money in low-interest savings accounts
- •Celebrating nominal investment returns without considering inflation
- •Not requesting regular salary increases to match inflation
- •Using average inflation when specific expenses (healthcare, education) grow faster