Inflation Calculator
$0.00 future equivalent
| Year | Equivalent Amount | Purchasing Power of Original $1 |
|---|
How This Inflation Calculator Works
This calculator applies a constant compounding rate to your starting amount, the same way real-world inflation compounds year over year: Future Value = Initial Amount × (1 + rate)years. Because the U.S. Bureau of Labor Statistics does not publish inflation forecasts, there is no way to know future inflation with certainty — the results here are an estimate based on whatever average annual rate you enter. A common starting assumption is the Federal Reserve's long-run target of around 2-3% per year, though actual annual rates have varied widely (near 0% in some years, over 8% in 2022).
Why "Purchasing Power" Feels Backwards
It's easy to confuse the two directions this calculator can be read. If prices rise by the inflation rate you entered, then the dollar amount shown in the headline is what you'd need in the future to buy what your initial amount buys today. Conversely, the "equivalent purchasing power" row shows how much your original amount would feel like it's worth in the future, once inflation has eroded it — that number is always smaller than what you started with, since a dollar buys less as prices rise.
Using This Alongside Retirement and Investment Planning
Inflation is the silent factor that determines whether your savings actually grow in real terms. If you're projecting long-term savings, run the same time horizon through the retirement calculator or compound interest calculator and compare your expected investment return against the inflation rate here — a return that merely matches inflation means your money isn't gaining any real purchasing power at all.
Frequently Asked Questions
What inflation rate should I use?
If you're modeling long-run U.S. inflation, 2-3% per year reflects the Federal Reserve's long-run target and roughly matches the historical average since the 1990s. For more conservative or worst-case planning, some people use 3-4%, since actual yearly rates have swung much higher (over 8% in 2022) and lower (near 0% in 2015) than that average.
Why does my money's purchasing power go down even though the dollar amount goes up?
The future cost figure and the purchasing power figure describe two different things. Future cost tells you how many future dollars you'd need to buy what your money buys today. Purchasing power tells you how much less your original, fixed amount of money will be able to buy after inflation — that number always shrinks over time because prices are rising while your original dollar amount stays the same.