How to use the Inflation Calculator
- Enter an amount in today's money.
- Set an annual inflation rate — 2% is the Federal Reserve target and 3% is closer to the long-run US average.
- Enter the number of years to project forward.
- Read both directions: the higher figure is future prices, the lower is future purchasing power.
- Use the halving line as a blunt reminder of what cash under a mattress does over a career.
How the calculation works
Inflation compounds exactly like interest, just in the wrong direction. A steady 3% for 24 years halves what money buys, and it does so quietly, because each individual year's change is barely perceptible. That gap between imperceptible annual change and dramatic cumulative change is why long-horizon planning done in nominal dollars is almost always wrong.
The two outputs answer different questions. Future cost tells you what a purchase will require later — useful for tuition, a retirement income target or a replacement roof. Present purchasing power tells you what a fixed nominal amount will be worth — the relevant number for a pension without a cost-of-living adjustment, or for cash sitting in a low-yield account.
A single average rate is a simplification with real limits. Official CPI measures a fixed national basket, while the inflation you personally experience depends on your spending: healthcare and education have run far above average for decades, and consumer electronics have run negative. Over long horizons the rate itself varies enormously — US inflation averaged 1.4% in the 1960s and 7.4% in the 1970s — so it is worth running any long projection at 2% and at 4% to see how much the conclusion depends on the assumption.
Future cost = P(1 + i)ⁿ; future purchasing power = P / (1 + i)ⁿ; years to halve = ln 2 / ln(1 + i)Source: U.S. Bureau of Labor Statistics Consumer Price Index methodology, BLS Handbook of Methods chapter 17; Federal Reserve 2% longer-run inflation objective.
Worked example
$10,000 today, 3% inflation, projected 20 years out.
- Future cost = 10,000 × 1.03²⁰ = 10,000 × 1.8061 = $18,061.
- Purchasing power = 10,000 ÷ 1.8061 = $5,537.
- Power lost = 1 − 0.5537 = 44.6%.
- Halving time = ln 2 ÷ ln 1.03 = 23.4 years.
What costs $10,000 today costs $18,061 in twenty years, and $10,000 of cash buys only $5,537 worth — a 44.6% loss for doing nothing.
Frequently asked questions
What inflation rate should I assume?+
2% matches the Federal Reserve's target and 3% is nearer the long-run US average. Run both when the horizon is long.
How do I protect savings from inflation?+
Hold assets whose returns exceed it — equities historically, or TIPS and I bonds which index directly to CPI. Cash at 0% loses in real terms every year.
Why does my personal inflation feel higher than CPI?+
CPI measures a national average basket. If your spending is weighted toward healthcare, education or rent, your personal rate has almost certainly run higher.
What is real versus nominal return?+
Nominal is the raw percentage; real subtracts inflation. A 5% nominal return with 3% inflation is roughly a 2% real gain in purchasing power.
Last reviewed September 1, 2026. We review this page whenever the underlying formula, tax year, published rate or standard changes.