Inflation Calculator
See how inflation affects the real value of your money with our free inflation calculator. Enter a dollar amount, an inflation rate, and a time period to calculate the future purchasing power of today's dollars, or the present-day equivalent of a historical amount.
Inflation is the gradual increase in the general price level of goods and services over time. As prices rise, each dollar buys less than it did before, effectively reducing your purchasing power. The U.S. has averaged approximately 3-3.5% annual inflation historically, though it can vary dramatically from year to year.
The inflation adjustment formula works in two directions. To find the future purchasing power of today's money: Adjusted Value = Amount / (1 + rate)^years. This tells you what your current dollars will be able to buy in the future. To find the present-day equivalent of a past amount: Adjusted Value = Amount x (1 + rate)^years. This tells you what a historical dollar amount would equal in today's dollars.
At 3% annual inflation, $1,000 today will only buy about $744 worth of goods in 10 years, and about $554 worth in 20 years. Over 30 years, your purchasing power drops to just $412 -- meaning you lose nearly 60% of your buying power if your money does not grow.
This is why investing is important: your investment returns must exceed inflation to maintain and grow real purchasing power. If your savings account earns 1% but inflation is 3%, you are effectively losing 2% per year in real terms. The stock market's historical average return of about 10% (7% after inflation) has been one of the primary ways to outpace inflation over the long term.