Free Inflation Calculator
Protect your wealth. Calculate how inflation affects the purchasing power of your money over 5, 10, or 20 years. Understand the true future value of your savings.
Last Updated: 15 Jan 2026
Inflation Parameters
Average US inflation is approx 3%.
Buying Power
See how inflation affects your money over time
Understanding Inflation: The Silent Tax
Inflation is often called the "silent tax" because it erodes your savings without you seeing a transaction. If you keep your savings in cash under a mattress, it loses roughly 3% of its value every single year. Over 20 years, $10,000 in cash would only have the purchasing power of about $5,500 today.
This hidden erosion of purchasing power makes inflation one of the most important factors to consider in financial planning. Understanding inflation helps you make better decisions about saving, investing, and retirement planning.
The Rule of 72: Quick Inflation Estimates
You can estimate how long it takes for prices to double using the Rule of 72. Simply divide 72 by the inflation rate.
- At 2% inflation, prices double every 36 years (72 ÷ 2 = 36)
- At 3% inflation, prices double every 24 years (72 ÷ 3 = 24)
- At 6% inflation, prices double every 12 years (72 ÷ 6 = 12)
- At 8% inflation, prices double every 9 years (72 ÷ 8 = 9)
Historical Inflation Rates
- 2020-2023: Elevated rates (4-8%) due to economic recovery and supply chain issues
- 2010-2019: Low and stable (1-2%) with Federal Reserve targeting 2%
- 1980s: High inflation (5-14%) before Federal Reserve policies stabilized it
- Long-term Average: Approximately 3% annually in the US since 1913
Impact on Common Expenses
- Housing: Typically rises with or above inflation
- Healthcare: Often exceeds general inflation rates
- Education: College costs have risen faster than inflation
- Groceries: Food prices fluctuate but trend upward with inflation
Example: $10,000 Over 20 Years
This shows why investing is crucial. To maintain purchasing power, your investments need to return at least the inflation rate, preferably more.
Protecting Your Wealth from Inflation
Good Inflation Hedges
- • Stocks (historically outpace inflation)
- • Real estate (property values rise with inflation)
- • Commodities (gold, oil, etc.)
- • Inflation-protected bonds (TIPS)
Poor Inflation Hedges
- • Cash savings (loses value)
- • Low-yield bonds
- • Fixed annuities
- • Money under the mattress
Frequently Asked Questions
What is inflation?
Inflation is the rate at which the general level of prices for goods and services is rising, and conversely, purchasing power is falling. It's measured as an annual percentage increase in prices. When inflation occurs, each dollar buys fewer goods and services than before.
Why does my money lose value over time?
As prices rise over time due to inflation, the same amount of money buys fewer goods and services. For example, if inflation is 3% per year, $100 today will only have the purchasing power of $97 next year. This is why investing to beat inflation is crucial for preserving wealth.
What is a normal inflation rate?
Historical averages for the US and many developed economies hover around 2-3% per year. The Federal Reserve targets 2% inflation as healthy for economic growth. However, inflation can fluctuate wildly during economic events, wars, or supply chain disruptions.
How do I use the inflation calculator?
Enter the dollar amount you have today, specify how many years into the future you want to project, and set the expected annual inflation rate (default is 3%). The calculator shows how much money you would need in the future to equal today's purchasing power.
How can I protect my money from inflation?
To protect against inflation, invest in assets that historically outpace inflation such as stocks, real estate, or inflation-protected securities (TIPS). Keeping money in cash or low-yield savings accounts means losing purchasing power over time.
Is this inflation calculator accurate?
Our calculator provides estimates based on the inflation rate you enter. Actual inflation rates vary by year and economic conditions. For precise financial planning, consult with a financial advisor and consider historical inflation data from government sources.
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