Inflation is the quiet force that turns yesterday’s comfortable retirement number into tomorrow’s modest one. This calculator shows both sides of the picture: what you will need to have the same buying power years from now, and what today’s money will actually buy by then.
The Inflation Formula
Prices compound exactly like interest, just against you. A 3% annual inflation rate over 20 years multiplies prices by about 1.81 — so what costs $10,000 today would cost around $18,060 then.
Worked Example
$10,000 at 3% inflation for 20 years: you would need about $18,060 to buy the same basket of goods. Looked at the other way, $10,000 in 20 years will only buy what about $5,540 buys today.
Why This Matters
Any long-term financial plan denominated in today’s dollars silently understates the required target. Use this calculator to translate retirement goals, college savings targets or long-term spending needs into future dollars — or use a real return (expected return minus expected inflation) in the Retirement Savings Calculator to think in today’s purchasing power throughout.
Frequently Asked Questions
What inflation rate should I use?
Long-run U.S. inflation has averaged around 2–3% per year, though individual periods have been much higher. Central banks in developed economies typically target roughly 2%.
What is purchasing power?
How many real goods and services a fixed amount of money can buy. As prices rise, the same nominal amount buys less.
How do I protect against inflation?
Historically, long-term diversified stock portfolios have outpaced inflation, while cash in low-yield accounts has lost real value over time.