Inflation Calculator
What is an Inflation Calculator?
Inflation erodes the purchasing power of money over time: $100 today will not buy the same goods in 20 years. An inflation calculator shows how much a given amount of money would be worth in another year, based on an average annual inflation rate.
Enter an amount, a starting year and an ending year, plus the average annual inflation rate you want to assume. The calculator uses the compound growth formula (1 + rate) raised to the number of years, then shows the future equivalent value, the cumulative inflation, and how much buying power was lost. Use the historical average of about 3% for the US for long-run estimates.
Frequently Asked Questions
How is inflation calculated?
Future value = amount × (1 + annual rate)^years. For $1,000 at 3% inflation over 15 years: 1,000 × 1.03^15 ≈ $1,558. That means you need about $1,558 in 15 years to buy what $1,000 buys today.
What is the average inflation rate?
The long-run average annual inflation rate in the United States is about 3%, but it fluctuates widely: there were periods below 1% in recent years and double-digit inflation in the 1970s. Use a higher rate for conservative planning and a lower one for optimistic scenarios.
How do I protect my money from inflation?
To at least preserve purchasing power, your money needs to earn more than the inflation rate. Options include inflation-protected securities (like TIPS), high-yield savings when rates exceed inflation, and diversified investments that have historically outpaced inflation over the long term.