What inflation rate should I use?

The US Consumer Price Index (CPI) averaged approximately 3.4% annually from 2015 to 2024. The Federal Reserve targets 2% over the long term. Use the historical average for general planning, or adjust to a specific period. For education costs, healthcare, or housing, sector-specific inflation rates are often higher than overall CPI.

What is the difference between CPI and PCE?

CPI (Consumer Price Index) measures what urban consumers pay for a basket of goods. PCE (Personal Consumption Expenditures) is what the Federal Reserve uses for its 2% target. CPI typically runs 0.2 to 0.5 percentage points higher than PCE because of methodological differences in how substitution effects are handled. Use a range of inputs rather than a single figure to understand the sensitivity of your outcome to this variable.

Why does inflation matter for retirement?

A retiree who needs $40,000 per year today will need roughly $72,000 per year in 20 years at 3% inflation. Fixed-income sources like pensions without cost-of-living adjustments lose purchasing power every year. This tool shows you the year-by-year erosion so you can plan withdrawal increases.

Can I use this for salary comparisons?

Yes. Switch to Past Value mode, enter your salary from a past year, and set the time horizon to the number of years since then. The result shows what that old salary equals in today's dollars. If your current salary is lower than that figure, you have lost purchasing power despite nominal raises.

How accurate is a fixed inflation rate over long periods?

Inflation varies year to year. The 2015-2024 period included years below 2% and years above 8%. A fixed rate is a planning assumption, not a forecast. For precision, use this tool to model scenarios at 2%, 3.4%, and 5% to see the range of outcomes. Verify current figures with the IRS or relevant authority before making financial decisions, as rates change annually.

What is real return versus nominal return?

Nominal return is the number your brokerage shows (e.g., 10%). Real return subtracts inflation (e.g., 10% - 3% = 7% real). Real return is what matters for purchasing power. This calculator shows both the nominal savings value and the inflation-adjusted real value so you can see the difference. Use a range of inputs rather than a single figure to understand the sensitivity of your outcome to this variable.

Inflation Impact Calculator

This calculator shows what a dollar amount today will be worth in the future after inflation, or what a past amount would equal in today's dollars. Enter an amount, a time horizon, and an inflation rate to see year-by-year purchasing power erosion on a live chart.

100% client-side. Your inputs stay in this browser.

Model idle cash erosion or inflate a historic amount; optional return line overlays what compounding buys after inflation.

Country / region

Changing region updates defaults and currency for your location.

Amount ($10,000)Years (10)Annual inflation (3.4%)US CPI (BLS avg 2015–2024) — adjust for your planning window.Annual savings / investment return (0.0%) , optional comparison

In 10 years, $10,000 in cash will buy about $7,158 worth of goods at today's prices.

At 3.4% inflation, prices double roughly every 21.2 years (Rule of 72).

Nominal amount

$10,000

Cash face value (unchanged)

Real purchasing power

$7,158

Expressed in today's dollars

Purchasing power lost

$2,842

Lost %

28.4%

How this tool works

The tool operates in two modes: Future Value (what today's money will buy in N years) and Past Value (what an old amount equals today). Both use the standard purchasing power formula: Real purchasing power = Amount / (1 + inflation rate)^years for Future mode, and Today's equivalent = Amount x (1 + inflation rate)^years for Past mode. If you enter a savings or investment return rate, the tool computes a second line showing your real savings value after inflation, so you can see whether your money is growing faster than prices.

Worked example

Amount: $10,000. Inflation rate: 3.4%. Time horizon: 10 years. Savings return: 5%. Without saving, purchasing power drops from $10,000 to roughly $7,161 (a 28.4% loss). With a 5% savings return, the nominal value grows to $16,289 and the real inflation-adjusted value reaches $11,660, a $1,660 real gain above starting value. Your 5% return beats 3.4% inflation, but the margin is thinner than it appears.

Frequently asked questions

What inflation rate should I use?
The US Consumer Price Index (CPI) averaged approximately 3.4% annually from 2015 to 2024. The Federal Reserve targets 2% over the long term. Use the historical average for general planning, or adjust to a specific period. For education costs, healthcare, or housing, sector-specific inflation rates are often higher than overall CPI.
What is the difference between CPI and PCE?
CPI (Consumer Price Index) measures what urban consumers pay for a basket of goods. PCE (Personal Consumption Expenditures) is what the Federal Reserve uses for its 2% target. CPI typically runs 0.2 to 0.5 percentage points higher than PCE because of methodological differences in how substitution effects are handled. Use a range of inputs rather than a single figure to understand the sensitivity of your outcome to this variable.
Why does inflation matter for retirement?
A retiree who needs $40,000 per year today will need roughly $72,000 per year in 20 years at 3% inflation. Fixed-income sources like pensions without cost-of-living adjustments lose purchasing power every year. This tool shows you the year-by-year erosion so you can plan withdrawal increases.
Can I use this for salary comparisons?
Yes. Switch to Past Value mode, enter your salary from a past year, and set the time horizon to the number of years since then. The result shows what that old salary equals in today's dollars. If your current salary is lower than that figure, you have lost purchasing power despite nominal raises.
How accurate is a fixed inflation rate over long periods?
Inflation varies year to year. The 2015-2024 period included years below 2% and years above 8%. A fixed rate is a planning assumption, not a forecast. For precision, use this tool to model scenarios at 2%, 3.4%, and 5% to see the range of outcomes. Verify current figures with the IRS or relevant authority before making financial decisions, as rates change annually.
What is real return versus nominal return?
Nominal return is the number your brokerage shows (e.g., 10%). Real return subtracts inflation (e.g., 10% - 3% = 7% real). Real return is what matters for purchasing power. This calculator shows both the nominal savings value and the inflation-adjusted real value so you can see the difference. Use a range of inputs rather than a single figure to understand the sensitivity of your outcome to this variable.