How inflation affects your money
Inflation is the gradual rise in prices over time, which means each dollar buys a little less each year. This calculator shows two sides of the same coin: how much money you'll need in the future to buy what a set amount buys today, and how much your money's buying power shrinks if it isn't invested.
The formula
With an annual inflation rate i over n years, future cost is Amount × (1 + i)ⁿ, and today's money will have the buying power of Amount ÷ (1 + i)ⁿ in future dollars. Historically U.S. inflation has averaged roughly 3% per year, though it varies.
This is why cash left idle loses value, and why long-term savings are often invested to earn a return that outpaces inflation.
Frequently asked questions
What inflation rate should I use?
Long-run U.S. inflation has averaged around 3% per year, so that's a common default. For specific periods you can enter the actual figure — for example, inflation was higher in 2022 and lower in some earlier years.
How can I protect against inflation?
Keeping long-term savings in investments that historically outpace inflation (such as diversified stock funds) helps preserve buying power. Inflation-protected bonds (TIPS) and high-yield savings for short-term cash are other common approaches. This is general information, not advice.