Inflation Calculator
Calculate the "Silent Tax" on your wealth. See how today's dollar will shrink in the future.
Details
Avg. US inflation is ~3%
Future Cost
To buy what $100 buys today.
Purchasing Power Loss
Inflation is the rate at which the general level of prices for goods and services is rising. As inflation rises, every dollar you own buys a smaller percentage of a good or service.
Saving money under a mattress guarantees a loss. If inflation is 3% and your cash earns 0%, you lose 3% of your wealth every single year.
Historical Context
Over the last century, US inflation has averaged around 3% per year. However, there have been periods of extreme volatility, such as the 1970s (over 10%) and recently in the post-COVID era.
- 1970: $0.25
- 1990: $0.75
- 2024: $3.50+
- 1970: $23,000
- 1990: $123,000
- 2024: $400,000+
Beating "The Silent Tax"
Invest to Outpace Inflation
To build wealth, your investments generally need to return more than the inflation rate. Wondering what your real return will be? Use our Investment Calculator to project your future wealth.
Salary Negotiations
If inflation is 4% and you get a 2% raise, you effectively took a 2% pay cut. Use our salary tools to understand your true earnings.
Calculate True Hourly WageThe Math: Future Value & Purchasing Power
Inflation uses compound growth logic. We calculate how much money you will need in the future to match today's purchasing power.
The Cost of Waiting: Cash vs Inflation
What happens to a $10,000 emergency fund over time at 3% inflation.
| Time Period | Nominal Value (In Hand) | Real Value (Purchasing Power) | Value Lost |
|---|---|---|---|
| 5 Years | $10,000 | $8,626 | -$1,374 |
| 10 Years | $10,000 | $7,441 | -$2,559 |
| 20 Years | $10,000 | $5,537 | -$4,463 |
Assumes 3.0% average annual inflation. This shows why "Safe" cash is risky long-term.
Related Tools
What is the difference between Nominal and Real returns?
Your 'Nominal Return' is the number on your bank statement (e.g., 5%). Your 'Real Return' is that number minus inflation. If inflation is 3%, your Real Return is only 2%. This is the number that actually matters for Wealth Building.
Is holding cash risky?
Yes. While cash feels safe from market crashes, it is guaranteed to lose value over time due to inflation. We call this 'The Silent Tax.' Holding too much cash is a long-term risk to your purchasing power.
How is inflation calculated?
The government (BLS) tracks the price of a 'basket of goods' (including milk, gas, rent, etc.) over time. This index is called the CPI (Consumer Price Index).
What is Hyperinflation?
Hyperinflation is when prices skyrocket out of control (usually defined as >50% per month). This destroys a currency's value. It is rare in stable economies but has happened historically (e.g., Zimbabwe, Venezuela).
Does inflation help borrowers?
Generally, yes. If you have a fixed-rate 30-year mortgage, you are paying the bank back with future dollars that are worth less than the dollars you borrowed today. Inflation eats away the real value of your debt.
Economic Terms
CPI (Consumer Price Index)
The main measure of inflation. It tracks the price of a weighted basket of goods and services purchased by households.
Purchasing Power
The value of a currency expressed in terms of the amount of goods or services that one unit of money can buy.
Deflation
The opposite of inflation. Prices decline over time. While this sounds good, it is often a sign of a shrinking, unhealthy economy (Recession).
COLA (Cost of Living Adj.)
An increase in Social Security or wages designed to counteract the effects of inflation.
About This Calculator
This Inflation Calculator uses the standard Future Value formula to project costs. It assumes a constant inflation rate, which differs from reality where rates fluctuate year-to-year.