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Inflation Calculator — Historical & Projected Purchasing Power

Calculate how inflation erodes purchasing power over time. Use historical US inflation rates or a custom rate to see the real value of money.

Cost in 2025 dollars

$15,620

Original Amount

$10,000

Purchasing Power Lost

$5,620

Avg Rate

1.8%/yr

Years

25

Purchasing Power Over Time

US Average Inflation by Decade

Analysis & insights

At 1.8% annual inflation over 25 years, $10,000 today will need $15,620 in future dollars to buy the same goods. In reverse: $10,000 25 years from now will have the purchasing power of just $6,402 today — a 5620.5% loss in real value. This is why cash sitting idle loses value: inflation silently erodes purchasing power even when the dollar amount stays the same.

Low inflation environment

Long-term US average is ~3%. The Fed targets 2%. Periods of 5%+ inflation are corrosive to cash and fixed-income returns.

Industry benchmarks

  • Today's value$10,000
  • Equivalent future value$15,620
  • Future $ in today's purchasing power$6,402
  • Purchasing power loss5620.5%
  • Years25
  • Fed target inflation2%
  • Historical US average~3%

Key insights

Cash is NOT safe

Money in a 0.5% checking account during 3% inflation loses 2.5% of purchasing power per year. After 20 years, your "safe" money is worth ~60% of what it was.

Stocks beat inflation long-term

S&P 500 has averaged ~7% real return (after inflation). That's why long-horizon goals belong in equities, not cash.

TIPS = treasury inflation-protected

Treasury Inflation-Protected Securities adjust principal with CPI. Worth considering for fixed-income allocations if you're worried about inflation risk.

Recommended actions(3)

Keep only 3-6 months expenses in cash

High priority

Emergency fund only. Everything else needs to outpace inflation: HYSA (matches inflation), I-bonds (beats slightly), stocks/funds (beats meaningfully).

Invest extra savings in equities for long-horizon goals

High priority

Retirement, college funds, anything 10+ years out belongs primarily in low-cost stock index funds.

Plan retirement spending in REAL terms

Medium priority

A "$1M retirement" sounds great until you realize inflation will erode that to ~$550K of today's purchasing power over 20 years. Plan in 2026 dollars + assume inflation will compound.

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This tool is for educational purposes only and does not constitute financial, tax, or investment advice. Consult a qualified financial professional for advice specific to your situation.