Inflation Calculator
Understand how inflation erodes your purchasing power over time. Enter your current amount, time period, and inflation rate to see the real value of your money in the future.
Inflation is the rate at which the general price level of goods and services rises over time, eroding the purchasing power of money. It is measured by indices such as the Consumer Price Index (CPI). The U.S. Federal Reserve targets 2% annual inflation as a healthy rate that supports economic growth without significantly reducing purchasing power.
Even moderate inflation compounds over time to substantially reduce the real value of savings. At 3% annual inflation, $100,000 today will only have the purchasing power of about $74,000 in 10 years and $55,000 in 20 years. Savings held in low-yield accounts that earn less than the inflation rate are effectively losing real value every year.
Historically, U.S. inflation has averaged approximately 2.5–3% per year over the past century, with significant spikes during the 1970s oil crisis and the post-pandemic period of 2021–2023. For long-term financial planning, using a 2.5–3% inflation assumption is prudent. Investing in assets that historically outpace inflation — such as equities or real estate — is the primary strategy for preserving purchasing power.
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What is inflation?
Inflation is the rate at which the general level of prices for goods and services rises over time, reducing purchasing power. The U.S. Federal Reserve targets 2% annual inflation.
How does inflation affect savings?
If your savings earn less than the inflation rate, your money loses real purchasing power over time. To preserve wealth, investments must outpace inflation.
What is a normal inflation rate?
The U.S. historical average inflation rate is approximately 2.5–3% per year. The Fed targets 2% as a healthy rate that supports economic growth without eroding purchasing power too quickly.