Enter starting dollar amount, expected annual inflation rate, and time horizon to calculate future equivalent living costs and loss of purchasing power.
How to use this calculator
Enter your starting dollar amount today (e.g. $1,000).
Enter the expected annual inflation rate percentage (historical US CPI average is ~3.0%).
Enter the number of years into the future.
Read your future equivalent cost, real loss of purchasing power, and cumulative percentage price increase.
Formula & method
Inflation Future Cost & Purchasing Power Equations
r = annual inflation rate decimal, n = number of years.
Example
$1,000 today @ 3% annual inflation over 10 years → Future Equivalent Cost: $1,343.92. Real purchasing power of $1,000 drops to $744.09 (34.4% cumulative price increase).
Key insights
Inflation represents the gradual decline of purchasing power: at a 3% inflation rate, price levels double every 24 years (Rule of 72).
Holding cash in zero-interest savings accounts guarantees a loss of real purchasing power over time.
To preserve purchasing power, investments must achieve a net return that exceeds the prevailing Consumer Price Index (CPI) inflation rate.
Wage increases must equal or exceed the inflation rate annually just to maintain an equivalent baseline standard of living.
How to interpret your result
Equivalent Cost in N Years
The exact dollar amount required in the future to purchase what $1,000 buys today.
Real Purchasing Power
The diminished real buying power of $1,000 uninvested cash after accounting for future inflation.
Cumulative Inflation Rate
The total compounding percentage increase in the price of consumer goods and services over the timeframe.
Frequently asked questions
What is inflation and how is it measured?
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. In the United States, it is primarily measured by the Consumer Price Index (CPI).
What is the historical average inflation rate in the US?
Over the past 100 years, the average annual inflation rate in the United States has been approximately 3.1% to 3.2% per year.
How do I protect my savings against inflation?
You can protect your money against inflation by investing in assets that historically outpace CPI inflation, such as equities, real estate, Treasury Inflation-Protected Securities (TIPS), or High-Yield Savings Accounts.