Calculator
Inflation & purchasing power calculator
What an amount of money will actually buy after inflation, how much you would need to keep pace, and what a "safe" cash balance quietly loses each year.
Leave the interest field at zero and watch the purchasing power line fall. Cash under a mattress has never lost a cent nominally and loses steadily, reliably, every year in the only terms that matter. "Safe" means no nominal volatility; it does not mean no loss.
How this is calculated
- Purchasing power =
amount × (1 + yield)years / (1 + inflation)years. - "Needed to keep pace" =
amount × (1 + inflation)years. - The real return is the exact Fisher relation,
(1 + yield) / (1 + inflation) − 1, not the common approximation of subtracting one rate from the other. - Doubling time uses
ln(2) / ln(1 + inflation). - A single constant inflation rate is assumed. Actual inflation varies year to year, and the basket that CPI measures may not match what you personally buy.
Why your inflation may not be the published one
CPI tracks a basket meant to represent an average urban household. If your spending is weighted differently — heavy on rent, childcare, healthcare or education, all of which have run hotter than the headline for years — your personal inflation rate is higher than the number in the news. Planning with the headline figure can therefore be optimistic even when the headline figure is accurate.
The practical implication is not to distrust the statistic but to build margin. If a plan only works at 2% inflation, it is a fragile plan. Run it at 3.5% and see whether it survives.
Common questions
How much is $100,000 worth in 20 years?
At 2.5% inflation, about $61,000 in today's purchasing power if it earns nothing. At 3.5% it falls to roughly $50,000. The calculator above shows the figure for whatever rate and horizon you want to test.
What is the real rate of return?
The return after inflation — what your money gains in purchasing power rather than in dollars. The precise formula is (1 + nominal) / (1 + inflation) − 1. Subtracting inflation from the nominal rate is a close approximation at low rates and drifts at high ones.
Is holding cash actually losing money?
In purchasing power, yes, whenever the interest it earns is below inflation. The nominal balance never falls, which is why cash feels safe, but what it buys shrinks every year. That is a real cost, just an invisible one.
How long does it take for prices to double?
Divide roughly 70 by the inflation rate for a quick estimate: about 28 years at 2.5%, 23 years at 3%, and 14 years at 5%. The calculator computes it exactly.
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