Inflation Impact Calculator
Cash under the mattress shrinks even when the number never changes. Enter an amount, an inflation rate, and years to watch purchasing power erode — and plan around it.
Your results
Charts & visualization
Purchasing power decline
Each year’s slice compounds — erosion accelerates in later years even at steady rates.
Every chart’s underlying numbers are available as text — use the “view as table” control under each chart.
How it works
Inflation divides rather than subtracts: purchasing power equals today’s amount divided by (1 + rate) compounded over the years. At 3%, prices double about every 24 years, so a static $100,000 buys roughly half as much by then.
Three practical uses:
- Retirement math — deflate projected balances into today’s lifestyle terms.
- Long contracts — salary negotiations and leases priced in nominal dollars lose value yearly.
- Cash allocation — quantify what idle cash truly costs, motivating appropriate yield.
Formula used
i— annual inflation rate as decimalPurchasing power— what the amount feels like in today’s termsRule of thumb— 72 ÷ inflation rate ≈ years for prices to double
Example calculation
At 3% average inflation, $100,000 today carries the spending power of only about $55,368 twenty years from now — losing nearly half its real value while the account number stays frozen. Meanwhile goods costing $100 will run about $181 (1.8×). Earning any positive yield partially offsets this: at 4%, the same money keeps pace and grows slightly in real terms.
Assumptions & limitations
- Constant average rate; actual inflation varies year to year.
- General consumer-price inflation — personal baskets differ (healthcare and education often outpace).
- Taxes on any offsetting interest are ignored.
- Deflation scenarios work too — enter negative rates.
Results are planning estimates based on your inputs and the stated assumptions — not financial advice or a loan offer. Verify important figures with your lender or advisor.
Frequently asked questions
How much will inflation reduce my savings?
At 3% annually, purchasing power halves roughly every 24 years. The calculator quantifies your exact horizon — most long-term savers find the number sobering enough to seek yield.
What inflation rate should I use?
The U.S. long-run CPI average sits near 3%; official targets aim for 2%. For conservative planning, use the higher end — underestimating inflation quietly sabotages projections.
How do I protect money from inflation?
Assets whose income grows: stocks (pricing power), TIPS (indexed to CPI), I-Bonds, real estate, and any yield reliably above the inflation rate. Idle cash is the main casualty.
Is deflation possible?
Rare but real — Japan spent decades battling mild deflation. This calculator handles negative rates, showing purchasing power rising instead.