Inflation gradually erodes purchasing power — the same amount of money buys less over time. This calculator projects what a given amount today would need to grow to in the future to maintain the same real buying power, given a constant annual inflation rate.
The formula
For $1,000 today at 3% annual inflation over 10 years: $1,000 × (1.03)^10 ≈ $1,343.92 — meaning you'd need about $1,343.92 in 10 years to have the same buying power as $1,000 today.
Worked examples
| Amount | Rate | Years | Future equivalent |
|---|---|---|---|
| $500 | 2% | 5 | $552.04 |
| $10,000 | 4% | 20 | $21,911.23 |
| $100 | 3% | 1 | $103.00 |
Why this matters
This calculation is the reasoning behind why "keeping cash under the mattress" loses real value over time — even though the number on the bill doesn't change, what it can buy shrinks. It's also why retirement and long-term savings planning typically targets a growth rate that outpaces inflation, not just matches it.
Common mistakes
- Assuming a constant inflation rate. Real-world inflation varies year to year; this calculator uses a simplified constant-rate model for illustration, not a prediction.
- Confusing this with investment growth. This tool shows how much prices rise, not how an investment grows — those are different (though related) calculations.
Frequently asked questions
How does inflation affect the value of money?
Inflation reduces purchasing power over time — the same amount of money buys fewer goods and services as prices rise, even though the nominal amount stays the same.
What inflation rate should I use?
There's no single right answer; many people use their country's long-term historical average inflation rate as a rough planning reference, though actual future rates are uncertain.
Is this the same as investment return?
No. This calculator shows how prices rise over time, not how an investment grows. Comparing an investment's growth rate to the inflation rate shows whether it's outpacing inflation in real terms.