Inflation Calculator
Calculate how inflation affects your money over time. See how much you'll need in the future to maintain today's purchasing power, or understand what past amounts are worth in today's dollars.
Inflation Calculator
In 20 Years, You'll Need
to have the same purchasing power as $100,000 today
Inflation Rate Comparison
| Inflation Rate | Future Equivalent | Purchasing Power |
|---|---|---|
| Low (2%) | $148,595 | $67,297 |
| Average (3%) | $180,611 | $55,368 |
| Moderate (4%) | $219,112 | $45,639 |
| High (5%) | $265,330 | $37,689 |
| Very High (7%) | $386,968 | $25,842 |
How Expenses Grow Over 20 Years
| Expense | Today (Annual) | In 20 Years | Increase |
|---|---|---|---|
| Groceries ($200/week) | $10,400 | $18,784 | +$8,384 |
| Rent ($2,000/month) | $24,000 | $43,347 | +$19,347 |
| Healthcare ($500/month) | $6,000 | $10,837 | +$4,837 |
| Gas ($150/month) | $1,800 | $3,251 | +$1,451 |
Purchasing Power Over Time
Year-by-Year Breakdown
| Year | Future Equivalent Needed | Purchasing Power Remaining | Value Lost |
|---|---|---|---|
| Year 0 | $100,000 | $100,000 | 0.0% |
| Year 5 | $115,927 | $86,261 | 13.7% |
| Year 10 | $134,392 | $74,409 | 25.6% |
| Year 15 | $155,797 | $64,186 | 35.8% |
| Year 20 | $180,611 | $55,368 | 44.6% |
Understanding Inflation
What is Inflation?
Inflation is the rate at which prices increase over time, reducing the purchasing power of money. At 3% inflation, something costing $100 today will cost $103 next year.
Why It Matters for Retirement
If you need $50,000/year today, you'll need about $90,000/year in 20 years at 3% inflation. Your investments must grow faster than inflation to maintain purchasing power.
Beating Inflation
Historically, stocks return ~10%/year, bonds ~5%, and savings accounts ~2-4%. To beat 3% inflation, you need investments that grow faster. Cash loses value over time.
Frequently Asked Questions
What is inflation?
Inflation is the rate at which prices increase over time, reducing the purchasing power of money. At 3% annual inflation:
- $100 today → $103 next year
- $100 today → $134 in 10 years
- $100 today → $181 in 20 years
What is the average inflation rate?
The historical average US inflation rate is approximately 3% per year. However, inflation varies significantly:
- 2010s: Very low (1-2%)
- 2022: High (7-9%)
- Fed target: 2%
- Long-term average: ~3%
How does inflation affect retirement?
Inflation significantly impacts retirement planning. Example at 3% inflation:
- Need $50,000/year today → Need $67,000/year in 10 years
- Need $50,000/year today → Need $90,000/year in 20 years
- Need $50,000/year today → Need $121,000/year in 30 years
Your retirement savings must grow faster than inflation to maintain purchasing power.
How can I protect against inflation?
- Stocks: Historically return ~10%/year, beating inflation
- TIPS: Treasury bonds that adjust for inflation
- Real estate: Property values and rents tend to rise with inflation
- I Bonds: Savings bonds with inflation protection
- Avoid cash: Cash loses value to inflation over time