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.
Changing region updates defaults and currency for your location.
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.
When to use it
Use this calculator when you need to compare dollar amounts across different time periods, whether you are planning retirement withdrawals, evaluating salary offers from different years, modeling long-term savings goals, or assessing whether an investment return actually builds purchasing power. The tool is especially valuable for retirement planning, where a fixed withdrawal amount today will need to grow year over year to maintain the same standard of living.
How to interpret results
The chart shows two lines if you entered a savings return rate, or one line if you left it blank. The first line (purchasing power or equivalent value) shows what your dollars are worth after inflation erodes their buying power. The second line (real savings value) shows your investment balance after accounting for both growth and inflation. If the real savings line stays above the purchasing power line, your return is beating inflation. If it dips below, inflation is winning. The gap between the two lines represents your real wealth gain or loss.
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. If inflation had been 5.5% instead of 3.4%, your real value would have declined despite a 5% nominal return.
Key definitions
Inflation is the rate at which the general level of prices for goods and services rises, reducing the purchasing power of a currency over time.
Inflation matters because a dollar today buys more than a dollar in the future, so long-term financial plans must account for purchasing power erosion.
Real return is your investment gain after subtracting inflation; nominal return is the raw percentage your account shows before adjusting for purchasing power loss.
The Rule of 72 estimates how many years it takes for purchasing power to halve at a given inflation rate by dividing 72 by the rate (e.g., 72 / 3 = 24 years at 3% inflation).
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. You can model retirement withdrawal strategies with the OnSumo retirement withdrawal calculator.
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.
What is the Rule of 72 and how does it relate to inflation?
The Rule of 72 estimates how long it takes for a value to double (or purchasing power to halve). Divide 72 by the rate: at 3% inflation, purchasing power halves in 24 years (72 / 3). At 6% inflation, it halves in 12 years. This mental shortcut helps you quickly assess long-term erosion without a calculator.
Should I use historical or projected inflation rates?
Historical rates show what actually happened; projected rates are forecasts that may not materialize. For planning, use historical averages as a baseline and test higher rates to see how sensitive your plan is to inflation. The Federal Reserve publishes both historical CPI data and forward-looking projections, but no forecast is guaranteed.
How does inflation affect my emergency fund?
Cash in a savings account loses purchasing power every year unless the interest rate matches or exceeds inflation. If your emergency fund earns 0.5% and inflation is 3%, you lose 2.5% in real value annually. Use this tool to see how much purchasing power your fund will retain over time, and consider whether your savings rate needs adjustment. The OnSumo emergency fund calculator can help you determine the right target balance.
What is the difference between inflation and deflation?
Inflation means prices rise over time, reducing purchasing power. Deflation means prices fall, increasing purchasing power. The US has experienced sustained inflation for most of the past century. Deflation is rare and typically signals economic distress. This tool models inflation (positive rates); for deflation, enter a negative rate.