Inflation
See what today's dollars will really be worth later — and why cash quietly loses value.
This is why money left in cash loses ground — to keep pace, it has to earn at least the inflation rate.
How to use this calculator
- Enter an amount and time horizonToday's dollars and how many years out.
- Set an inflation rateAbout 3% is a long-run average; the Federal Reserve targets 2%.
- Read the future cost and lost purchasing powerSee why idle cash needs to earn at least the inflation rate.
Inflation is the slow, silent tax on money: as prices rise, each dollar buys a little less. It rarely feels urgent year to year, but over a decade or two it reshapes everything — what your savings are worth, what your salary buys, and how much you actually need for retirement. This calculator makes the erosion visible.
How inflation eats purchasing power
If prices rise 3% a year, something that costs $1,000 today costs about $1,344 in ten years and roughly $1,806 in twenty. Flip it around and the same math shows your money shrinking: $1,000 held as idle cash for twenty years at 3% inflation has the buying power of about $554 in today's terms. You did not lose dollars — you lost what they can buy.
A rule of thumb
Just as the Rule of 72 estimates how fast money doubles, it also estimates how fast inflation halves your purchasing power: divide 72 by the inflation rate. At 3%, money loses half its value in about 24 years; at 6%, in just 12. That is why even "safe" cash carries a hidden cost.
Why this is the case for investing
Inflation is the core reason money has to work. To simply preserve purchasing power, your savings must earn at least the inflation rate; to build real wealth, they must beat it. It is also why economists and the Federal Reserve watch inflation closely — the Fed targets about 2% a year, and the Bureau of Labor Statistics measures it through the Consumer Price Index.
A worked example
Enter $50,000, 25 years, and 3% above. You will see that what costs $50,000 today is projected near $105,000 in 25 years — and that $50,000 left in cash will feel like roughly $24,000. Adjust the rate to see how even small differences compound.