Inflation Calculator
Calculate the effect of inflation on purchasing power over time. Find how much money today is worth in future dollars or past dollars using historical CPI data.
💰 Economics📐 Future Value = Present Value x (1 + inflation rate)^years
Amount ($)
Annual inflation rate (%)
Number of years
Starting year (optional reference)
Please enter valid values.
Formula & Reference
| Variable | Formula | Units |
|---|---|---|
| Inflation Calculator | Future Value = Present Value x (1 + inflation rate)^years | $ value |
Step-by-Step Examples
Example 1
Salary in 20 Years
$10,000 today at 3.5% inflation, 20 years.
- Future: $10,000 x 1.035^20 = $19,898
- Salary of $50K today needs to become $99,490 in 20 years just to maintain purchasing power
✓ $19,898 in 20 years
Example 2
$1 from 1990
$1 in 1990 in 2024 dollars (34 years at 3%).
- $1 x 1.03^34 = $2.73
- $1 in 1990 needed $2.73 in 2024 to buy the same thing
✓ $2.73 today
Example 3
Retirement Goal
$1M retirement in 30 years, 3% inflation.
- Need $1M x 1.03^30 = $2.43M in nominal dollars
- Real goal: $2.43M to have $1M of today's purchasing power
✓ Need $2.43M nominal
Real-World Applications
Financial Planning
Understand how inflation erodes long-term savings and planning.
Economists
Quick inflation adjustment calculations.
Real Estate
Adjust historical property values for inflation.
Salary Negotiation
Calculate real wage changes after adjusting for inflation.
Common Mistakes to Avoid
⚠️
Ignoring inflation in retirement planning
A $1M retirement goal in 30 years needs to be $2.4M in nominal (dollar amount) terms if inflation is 3%. Many people target nominal amounts without adjusting for inflation.
⚠️
Assuming past CPI equals future inflation
Historical US average CPI: about 3-3.5%. Recent years have seen 4-9%. Planning for 3-4% provides a reasonable margin, but actual future rates are unknown.
⚠️
Not adjusting wages for inflation
A 2% raise with 4% inflation is a 2% pay CUT in real terms. Real wage growth = nominal wage growth - inflation rate.
Frequently Asked Questions
What is the current US inflation rate? ▾
Check BLS.gov for current CPI data. The Federal Reserve targets 2% long-term inflation. Recent years (2021-2023) saw 4-9% annual inflation. Long-term average: 3-3.5% annually over past 30 years.
What items inflate fastest? ▾
Medical care, college tuition, housing, and childcare typically inflate faster than headline CPI. Technology, electronics, and some food items often inflate slower or fall in price.
How does inflation affect savings? ▾
At 3% inflation, money in a 0% interest account loses 3% of purchasing power per year. At this rate, purchasing power halves in 24 years. This is why investing for returns above inflation is critical.
What is real vs nominal return? ▾
Nominal return is the stated percentage. Real return = nominal return - inflation rate. A savings account earning 5% when inflation is 3% has a 2% real return. Stock market at 10% nominal with 3% inflation = 7% real return.
Why is inflation a problem for retirees? ▾
Retirees on fixed incomes (pension, annuity, Social Security with COLA adjustments) see purchasing power erode. $3,000/month in 2024 has only $2,220 of purchasing power in 2034 at 3% inflation. COLA adjustments partially compensate but don't always keep pace.