How does inflation affect my retirement savings?

If you need $50,000/year today, you'll need about $90,000/year in 20 years (at 3% inflation) to maintain the same lifestyle. This is why retirement planning must account for inflation—your savings need to grow faster than inflation.

What's the difference between nominal and real returns?

Nominal returns are the raw investment gains. Real returns subtract inflation. If your investment earns 7% but inflation is 3%, your real return is only about 4%. Real returns show your actual increase in purchasing power.

Can deflation occur (negative inflation)?

Yes, though rare in modern economies. Deflation means prices are falling and money gains purchasing power. While it sounds good, widespread deflation often signals economic problems and can lead to reduced spending and economic contraction.

How accurate is this calculator?

The math is precise, but actual inflation varies year to year and differs by location and spending habits. This calculator provides estimates based on the constant rate you enter. Real-world inflation fluctuates.

Finance

Inflation Calculator

See how inflation erodes purchasing power and calculate future or past values of money adjusted for inflation

Calculation Mode

Amount

Annual Inflation Rate

Number of Years

years

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Understand the Impact of Inflation on Your Money

Inflation silently erodes your purchasing power over time. Our inflation calculator shows exactly how much your money is worth today compared to the past, or how much you'll need in the future to maintain the same buying power. Essential for retirement planning, salary negotiations, and understanding historical prices.

What Is Inflation?

Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power over time. If inflation is 3%, something that costs $100 today will cost $103 next year. Over decades, this compound effect significantly impacts the real value of money, savings, and investments.

Future Value Formula

FV = PV × (1 + r)^n

How to Calculate Inflation Impact

Common Use Cases

Retirement Planning

Calculate how much you'll actually need in retirement dollars to maintain your current lifestyle.

Salary Negotiations

Compare job offers across different time periods or understand if your raise keeps up with inflation.

Historical Comparisons

See what prices from the past would be in today's dollars, or what today's prices mean in historical terms.

Investment Analysis

Calculate real returns on investments by factoring in inflation's impact on purchasing power.

Frequently Asked Questions

The US historical average is about 3% annually. Recent years (2021-2023) saw higher inflation (4-8%). For conservative long-term planning, 3% is reasonable. For current projections, check the latest CPI data from the Bureau of Labor Statistics.