Inflation Calculator
See how inflation erodes purchasing power over time. Uses historical CPI data for reference.
Details
Result
Future Equivalent
$90,306
Purchasing Power Loss
$40,306
Multiplier
1.81×
For estimation only. Not professional financial, tax, or legal advice. Consult a qualified advisor before making decisions. Full disclaimer.
Why inflation matters
US CPI has averaged ~3% annually over the long term, with recent spikes (2021-23) hitting 8-9%. At 3%/year, $100 today buys only about $55 worth of goods in 20 years. Every long-term financial plan must account for this erosion.
Plan for 3% in projections
Using 3% keeps you conservative against the long-term average. If actual inflation runs lower, you end up with a buffer — better than the reverse.
Common questions about Inflation
What is the average US inflation rate?+
Long-term US CPI inflation has averaged ~3% per year. 2022-23 saw spikes to 8-9%; 2026 is back closer to 2-3%. Plan for 3% in long-term projections to stay conservative.
How does inflation affect my retirement nest egg?+
Dramatically. $1M today has the purchasing power of only $412,000 in 30 years at 3% inflation. A fixed $40,000/year withdrawal (4% SWR) would buy only $16,500 of today's goods by year 30. Plan withdrawals to rise with CPI annually, and maintain 40%-60% equity allocation in retirement to outpace inflation. Conservative bond-heavy portfolios lose real purchasing power fast in high-inflation periods like 2022-23.
Which investments beat inflation long-term?+
Historically: US stocks (S&P 500 ~10% nominal / 7% real), small-cap stocks (~11% nominal), international stocks (~8% nominal), real estate (5%-7% real), TIPS (Treasury Inflation-Protected Securities, real yield 1.5%-2%), I-Bonds (inflation-linked rate + fixed component). Not inflation beaters: savings accounts, regular bonds in high-inflation periods, long-duration Treasuries. Rule: keep at least 50% equity for any 10+ year horizon.
What is real return vs nominal return?+
Nominal return is the stated return; real return subtracts inflation. Formula: real return = (1 + nominal) / (1 + inflation) − 1. A 7% bond in 3% inflation delivers ~3.9% real. S&P 500 at 10% nominal with 3% inflation delivers ~6.8% real. For long-term goal planning, always use REAL returns: retirement math works in today's dollars and avoids inflation double-counting.
Are I-Bonds a good inflation hedge?+
For part of your emergency fund or 1-year+ savings: yes. I-Bonds from TreasuryDirect pay a rate = fixed rate + semi-annual inflation rate. Tax-deferred until redemption (or 30 years), state tax-exempt. Limit: $10k per person per year. Must hold 1 year minimum; sell before 5 years loses 3 months' interest. I-Bond composite rate in May-Oct 2025 was ~3.11%. Not great when inflation is low; excellent during spikes like 2022 (9.62%).
How does inflation affect my tax brackets?+
IRS annually adjusts tax brackets, standard deduction, and retirement contribution limits for inflation (using chained CPI-U). This prevents "bracket creep" — where pay raises keeping pace with inflation push you into higher brackets in real terms. Example: 2026 single top-of-22%-bracket is ~$103,500 vs $47,150 in 2013. Even without these adjustments, inflation would have reduced your real purchasing power within bracket limits considerably.