Find out what today's money will be worth in the future after a given rate of inflation.
At 3% average annual inflation, you'd need 1,343.92 in 10 years to buy what 1,000 buys today.
Inflation is the rate at which the general price level of goods and services rises over time, which correspondingly reduces the purchasing power of a fixed amount of money. An item that costs $100 today will typically cost more in the future, meaning the same $100 buys less as time passes.
At a steady 3% annual inflation rate, $100 today has the same purchasing power as roughly $180 in 20 years — meaning your $100 today will feel like only about $55 twenty years from now in today's terms.
| Years | 2% inflation | 4% inflation | 6% inflation |
|---|---|---|---|
| 10 | $8,203 | $6,756 | $5,584 |
| 20 | $6,730 | $4,564 | $3,118 |
| 30 | $5,521 | $3,083 | $1,741 |
Purchasing power of $10,000 over time, at different inflation rates
Example 1 — Cost of a past purchase today: An item that cost $50 in 2010, adjusted forward at roughly 3% average annual inflation over 16 years, would cost approximately $80 today.
Example 2 — Salary needed to keep pace: A $60,000 salary in 2020 would need to be roughly $71,000–$74,000 by 2026 just to match the same purchasing power, given cumulative inflation over that period.
Example 3 — Real return on savings: A savings account paying 4% nominal interest during a period of 3% inflation delivers a real return of only about 1% — the true growth in purchasing power, not the 4% headline rate.
| Nominal return | Real return | |
|---|---|---|
| What it measures | Stated growth rate | Growth after removing inflation's effect |
| Formula | As stated | Nominal rate − inflation rate (approx.) |
| Why it matters | Shows on statements | Reflects true purchasing power gained |
What's the difference between nominal and real returns? Nominal return is the stated growth rate; real return subtracts inflation to show growth in actual purchasing power.
Is a small amount of inflation normal? Yes, most central banks target a low, steady inflation rate (often around 2%) as a sign of a healthy economy.
How is inflation typically measured? Most commonly through a Consumer Price Index (CPI), which tracks the average price change of a fixed basket of goods and services over time.
What's the difference between inflation and deflation? Inflation is a general rise in prices over time (money buys less); deflation is a general fall in prices (money buys more), which can also create economic problems like delayed spending.
Why do some things (like electronics) get cheaper while overall inflation is positive? Overall inflation is a weighted average across many goods and services; specific categories like electronics can fall in price due to technological improvement even while the broader index rises.
How does inflation affect fixed-rate debt like a mortgage? Fixed-rate debt payments stay the same in nominal dollars, so inflation effectively reduces their real burden over time, since future dollars are worth less than when the loan was taken out.
Should retirement savings target a rate above inflation? Generally yes — for savings to maintain or grow real purchasing power over decades, their average return needs to outpace the average inflation rate over that period.
At 3% annual inflation, $50,000 today would need to grow to roughly $90,300 in 20 years just to maintain the same purchasing power — meaning any investment or savings goal should account for this erosion, not just nominal growth.
Purchasing power: The value of money measured by the quantity of goods or services it can buy.
Nominal value: A dollar amount not adjusted for inflation.
Real value: A dollar amount adjusted for inflation to reflect true purchasing power.