What will your money be worth tomorrow?
Inflation silently erodes the value of your money. Our Inflation Calculator shows how your purchasing power decreases over time. Understand inflation's impact on your savings and make informed decisions about retirement planning and investments.
Purchasing Power = Starting Amount / (1 + Inflation Rate)ⁿ
Example: $10,000 at 3% inflation over 10 years
→ 10,000 / (1.03)¹⁰ = 10,000 / 1.3439 = $7,441 purchasing power
Value Loss: $10,000 - $7,441 = $2,559 (-25.6%)
United States (Average):
• 1970-1980: ~7.1% (stagflation era)
• 1990-2000: ~3.0% (stable growth)
• 2000-2020: ~2.1% (low inflation)
• 2022: ~8.0% (post-pandemic surge)
• 2023: ~4.1%
Fed Target: 2% annual inflation
Main causes: (1) Demand-pull inflation - too much money chasing too few goods, (2) Cost-push inflation - higher production costs (energy, wages) passed on, (3) Monetary inflation - central banks printing too much money. 2022/23 mainly saw cost-push inflation from energy prices and supply chain issues.
Investments that typically outpace inflation: Stocks/ETFs (long-term 7-10%), real estate, Treasury Inflation-Protected Securities (TIPS), gold, I-Bonds. Money in checking accounts or under the mattress loses value guaranteed.
Nominal return is the stated interest rate. Real return = nominal return minus inflation. With 5% interest and 3% inflation, your real return is only 2% – that's your actual wealth increase.
Divide 72 by the inflation rate to find how many years until purchasing power halves. At 3% inflation: 72 / 3 = 24 years. At 6% inflation: only 12 years until your money is worth half!
Pro Tip: For long-term financial planning, assume at least 2-3% inflation. For retirement, remember you'll need significantly more money in 30 years to maintain the same standard of living!
With an inflation rate of 2%, the purchasing power of your money is halved in about 35 years.