Inflation Calculator

Inflation does not destroy money. It slowly makes each dollar buy less. $1,000 today is worth $1,000 next year on paper, but if prices rise 3.5%, you need $1,035 to buy the same things. Over 10 years, that gap compounds into a meaningful difference. This inflation calculator shows both sides: the future equivalent value (what you would need to keep pace) and the purchasing power remaining after inflation erodes your savings. Use it to understand the real return on savings accounts, evaluate whether a salary raise keeps up with inflation, or project the future cost of a recurring expense like college tuition or healthcare.

• Evaluating whether your salary keeps up: Enter your current salary and the number of years since your last raise. The future equivalent value shows what your salary needs to be today to maintain the same real purchasing power. If you earn less than that figure, your real pay has declined.
• Planning for future costs: College tuition historically inflates at 4 to 6% per year. Healthcare inflates at 3 to 5%. Enter current costs and the number of years until you need the money to see your likely future expense and plan savings accordingly.
• Comparing a savings account yield to inflation: If your savings account earns 2% and inflation is 3.5%, you are losing purchasing power. Use this calculator to see the real-dollar cost of keeping money in a low-yield account over several years.
• Understanding fixed income in retirement: A fixed pension or annuity payment does not adjust for inflation. Enter your expected payment and the number of years in retirement to see how much buying power that fixed payment loses over 20 to 30 years.

• Using the current inflation rate for long projections: Inflation rates change significantly year to year. A 30-year projection using today's 3.5% rate may be off if rates shift. For long-term planning, consider running the calculation at multiple rates (2%, 3.5%, and 5%) to see a range.
• Confusing nominal and real returns: A savings account earning 5% does not grow your purchasing power by 5% if inflation is 4%. The real return is only about 1%. When evaluating investments, subtract the inflation rate from the nominal return to find the real return.
• Assuming all expenses inflate equally: Different categories inflate at different rates. Healthcare, education, and housing often exceed general CPI. Groceries and energy are more volatile. If you are planning for a specific future expense, research the inflation rate for that category.
• Ignoring inflation on retirement withdrawals: A $4,000/month retirement budget today needs $5,900/month in 15 years at 3% inflation just to buy the same things. Many retirement plans underestimate this because they plan for current expenses without inflating them forward.

1. 1Enter a present-day dollar amount: a price, a savings balance, a salary, or any monetary figure.
2. 2Enter the expected annual inflation rate. The US historical average is about 3.5%. Recent years have seen rates from 2% to over 8%.
3. 3Enter the number of years to project forward.
4. 4The calculator applies the compound inflation formula to find the future equivalent value.
5. 5It also shows the value lost: the gap between the future equivalent and the original amount.
6. 6Purchasing power remaining tells you what fraction of today's buying power is preserved.

• Use the 10-year Treasury yield as a benchmark: The 10-year Treasury Inflation-Protected Security (TIPS) yield reflects the real return above inflation. If TIPS yields are low, it means the market expects inflation to persist. Compare your savings rate to TIPS as a sanity check.
• Invest at a rate above inflation: Cash under-performs inflation over time. A broadly diversified index fund has historically returned 7 to 10% nominally, well above the 3 to 4% historical inflation average. Keeping savings in low-yield accounts is a slow, guaranteed loss of purchasing power.
• Negotiate salary increases using real terms: When asking for a raise, frame the conversation in real (inflation-adjusted) terms. A 3% raise in a year of 5% inflation is a 2% real pay cut. Knowing this makes your ask more concrete and defensible.
• Lock in large fixed-rate expenses when inflation is rising: A fixed-rate mortgage or long-term lease costs the same nominal dollars in year 10 as year 1, while wages and prices around you rise. During inflationary periods, fixed obligations become relatively cheaper over time.