Quick answer
This calculator shows what inflation does to money over time. At 3% annual inflation, $50,000 kept in cash for 20 years buys what $27,684 buys today — and you would need $90,306 in 20 years to match today's $50,000 of purchasing power.
How the Inflation Purchasing Power works, step by step
Enter an amount, an inflation rate and a number of years. The calculator discounts the amount by inflation each year, which is the same compounding formula as investment growth run in reverse. The chart plots the 2% and 5% paths alongside your rate, so you can see how sensitive the answer is to a single point of inflation.
Use it in both directions. The forward answer — what a future price or salary is worth in today's money — tells you whether a future amount is actually progress. The reverse answer — what today's amount becomes in future prices — tells you how much a goal like a house deposit or retirement income really needs to be. Spending of $60,000 a year today needs about $108,367 a year in 20 years at 3% inflation to buy the same life.
Pick the inflation rate deliberately. US inflation averaged roughly 3% over the very long run, ran above 8% in 2022, and the Federal Reserve targets 2%. The latest official annual reading was 3.7% for September 2026; the October 2026 release carried no year-over-year rate because October 2025 prices were never collected during the federal shutdown. Your personal inflation also depends on your spending mix: housing, healthcare and education have often risen faster than the headline rate.
Compare the rate with what your money earns. At 3.7% inflation, a savings account paying 4.5% APY keeps about 3.51% after tax at the 22% bracket — a real return of roughly −0.18%, meaning the balance barely holds its value. Cash in a 0.5% account loses close to 3% of value a year at the same inflation rate, which is why idle cash is the most expensive place to keep money over decades.
The rule of 72 works for inflation too: divide 72 by the inflation rate to get the years for purchasing power to halve. At 3% inflation, money halves in value in about 24 years; at 6%, about 12 years. Retirement calculators that show a large future balance are usually showing nominal dollars — divide by the inflation factor to see the figure in today's terms before deciding the plan is enough.
The formula
Purchasing power = Amount ÷ (1 + inflation rate)^years. Future nominal equivalent = Amount × (1 + inflation rate)^years.
Worked example — try it on the calculator above
Worked example: $50,000 over 20 years at 3% inflation
Purchasing power in today's terms: $50,000 ÷ 1.03^20 = $50,000 ÷ 1.806 = $27,684. Working the other way, matching today's $50,000 in 20 years takes $50,000 × 1.03^20 = $90,306. Cash under the mattress therefore loses about 45% of its value over the period; a savings account must earn at least 3% just to stand still in real terms. At the September 2026 inflation rate of 3.7%, the same $50,000 would be worth only about $24,177 in today's money after 20 years.
Frequently Asked Questions
What inflation rate should I use for planning?
2.5% to 3% is a reasonable long-term planning assumption for the US — above the Federal Reserve's 2% target, below the spikes of 2021–2023 and the 3.7% reading of September 2026. For a conservative plan, test 3.5% as well and check the plan still works.
How does inflation affect my savings account?
Compare the account's APY with inflation. At 4.5% APY and 3% inflation, your real return is roughly 1.5% before tax — and interest is taxed, so after tax at the 22% bracket the real return falls to about 0.5%. Cash in a 0.5% account loses close to 2.5% of value a year at 3% inflation.
What is the rule of 72 for inflation?
Divide 72 by the inflation rate to get the years for purchasing power to halve. At 3% inflation, money halves in value in about 24 years. At 6%, about 12 years. It is the same rule used for investment doubling, run in reverse.
Does inflation change how much I need to retire?
Directly. Spending of $60,000 a year today needs to be about $108,367 a year in 20 years at 3% inflation to buy the same life. Retirement calculators that show a large future balance are usually showing nominal dollars; divide by the inflation factor to see the figure in today's terms.
Estimates, not advice. This calculator provides educational estimates based on the inputs you enter and the assumptions shown on this page. It is not financial, tax or investment advice, and it cannot see your full situation. Verify important figures against official sources, and consider a qualified professional for decisions about your own money. See our Disclaimer and Methodology.