Inflation Impact Calculator
Standard compound inflation formula ยท By Stuart Mathieson · Updated October 2026
Starting amount in today's dollars
Expected average inflation rate
Number of years to project
Yearly deposits to add
Results
Future Cost
Equivalent cost in future dollars
Purchasing Power Lost
Erosion in today's dollars
Real Value Today
What future amount buys today
Results are estimates for illustration only and are not financial advice. Consult a qualified financial professional before making financial decisions.
How the inflation calculator works
- i
- - the annual inflation rate as a decimal (3% = 0.03)
Worked example
$1,000 at 3% inflation for 10 years, where 1.0310 = 1.3439:
- Something that costs $1,000 today would cost $1,343.92.
- $1,000 kept as cash would buy what $744.09 buys today.
- So $255.91 of purchasing power is lost - about a quarter.
If you also add $1,000 at the end of each year for those 10 years, you put in $10,000, but it is worth $8,530.20 in today's money, because each year's contribution is discounted for the inflation between now and then.
How inflation erodes $100
What $100 today will buy after:
| After | 2% inflation | 3% inflation | 5% inflation |
|---|---|---|---|
| 5 years | $90.57 | $86.26 | $78.35 |
| 10 years | $82.03 | $74.41 | $61.39 |
| 20 years | $67.30 | $55.37 | $37.69 |
| 30 years | $55.21 | $41.20 | $23.14 |
The rule of 70
Divide 70 by the inflation rate to estimate how many years it takes for prices to double - and for cash to lose half its buying power. At 3%, that is about 23 years.
Things to keep in mind
- Which rate to use. In the US, inflation is measured by the Consumer Price Index (CPI), published monthly by the Bureau of Labor Statistics, and the Federal Reserve aims for 2% inflation over the longer run. Inflation varies from year to year, so try a few rates.
- Your own inflation. The CPI tracks an average basket of goods and services. Depending on what you spend money on - housing, healthcare or education, for example - your costs can rise faster or slower than average.
- Beating inflation. Savings only hold their value if they earn more than inflation after tax - see the Compound Interest Calculator.
Frequently asked questions
What inflation rate should I use?
There's no single right answer - many people use a long-run historical average as a starting point, but you can enter any rate to model different scenarios.
What does "real value" mean?
It's how much your current amount is really worth once you account for future inflation - expressed in today's purchasing power rather than future nominal dollars.
How is this different from the Compound Interest Calculator?
Both use the same growth formula, but this one frames it around rising prices eroding value, while Compound Interest frames it around savings growing - useful together to compare nominal growth against inflation.
How long does it take inflation to halve the value of money?
Roughly 70 divided by the inflation rate, in years. At 2% inflation that is about 35 years; at 3%, about 23 years; at 5%, about 14 years.
Sources
- Consumer Price Index - U.S. Bureau of Labor Statistics
- Why does the Federal Reserve aim for inflation of 2 percent over the longer run? - Board of Governors of the Federal Reserve System