Inflation Calculator
See how inflation erodes purchasing power over time.
Your Details
Breakdown
Visual split of the key components
- Remaining Purchasing Power6418.619473967174
- Lost to Inflation3581.3805260328263
Sensitivity
How the result changes across a range
How It Works
- Enter the values on the left.
- Press Calculate to see your results and charts.
- Use Reset to start over from the defaults.
Formula Used
Purchasing Power = Amount ÷ (1 + Inflation Rate)^Years.
Good to Know
- • Historical U.S. inflation has averaged roughly 2-3% annually over long periods, though it varies year to year.
- • Cash sitting idle loses purchasing power even without being spent.
Important Notes
- • Uses a constant assumed rate; real inflation varies year to year.
- • Different goods and services can inflate at different rates than the general average.
Why Cash Savings Alone Rarely Keep Up
Money sitting in a low-interest account effectively loses value over time if its return is lower than inflation — the numbers on the balance stay the same or grow slowly, but what that money can actually buy shrinks. This is part of why long-term savings goals are often paired with investments aiming to outpace inflation, not just preserve the nominal dollar amount.
Why Inflation Rates Aren't Uniform
The commonly quoted inflation rate is an average across a broad basket of goods and services. Individual categories — healthcare, education, housing — have often inflated faster than the overall average in recent decades, while others like electronics have sometimes gotten cheaper. Your personal "inflation rate" depends on your specific spending mix, which can differ meaningfully from the headline number.
What You Need to Know First
- Purchasing power — what a given amount of money can actually buy, adjusted for rising prices.
- CPI (Consumer Price Index) — the most commonly referenced measure of overall inflation in the U.S.
Real Numbers, Real Example: $10,000 After 15 Years of Inflation
At an assumed 3% average annual inflation rate:
Value lost to inflation ≈ $3,581
Even without spending a dollar, $10,000 sitting idle for 15 years at 3% inflation loses over a third of its real purchasing power — a strong argument for keeping long-term savings in inflation-beating vehicles rather than cash alone.
Inflation Rate Comparison Table
$10,000 purchasing power after 15 years:
| Inflation Rate | Real Value |
|---|---|
| 2% | $7,430 |
| 3% | $6,419 |
| 5% | $4,810 |
Where People Slip Up About Inflation
- Assuming cash holds its value — idle cash steadily loses purchasing power.
- Using the headline rate for everything — personal inflation varies by spending category.