Saving & investing
Inflation Calculator
Built and maintained by Chandranshu Kumar · Figures from the IRS, SSA, BLS and Freddie Mac
The quiet tax on cash
Inflation is easy to ignore because it works slowly, but over a long horizon it is one of the biggest forces on your money. At a steady 3%, cash loses roughly half its buying power in about 24 years. That is why money you will not need for a long time usually belongs somewhere that at least keeps pace with rising prices, rather than sitting in a checking account. It is also why a raise that only matches inflation is not really a raise. Slide the rate up and you will see how much faster things move when inflation runs hot.
Assumes a steady rate. Real inflation varies year to year. Not financial advice.
How the change in value is worked out
Inflation is measured by comparing a price index, usually the Consumer Price Index, between two dates. The ratio between the two index readings is how much prices moved, and any dollar amount scales by that same ratio. This tool uses a steady rate to stand in for that ratio, compounding it once for each year in the span.
To find what the same goods will cost later, it grows the amount by the rate every year. At 3% over 20 years, the things $50,000 buys today rise to about $90,306.
Buying power runs the other way. It asks what today's money will be worth in future dollars, so it divides instead of multiplying. By that measure $50,000 held as cash will buy what about $27,684 buys today, once 20 years of 3% inflation has passed. See the full method.
Common questions
Why does inflation matter for savings?
Money that sits still loses value as prices rise. At 3%, cash roughly halves in buying power over about 24 years, so long-term savings usually need to earn more than inflation.
How is real inflation actually measured?
In the United States the Bureau of Labor Statistics tracks the Consumer Price Index, the average price of a fixed basket of goods and services a household buys. The yearly change in that index is the headline inflation rate. This tool assumes one steady rate, while the real figure moves year to year.
How long until money loses half its value?
At a steady 3%, buying power falls by about half in roughly 24 years. Higher rates get there much faster, which the sliders make clear when you push the rate up. To see whether savings can outpace that drag, try the retirement calculator.