The Money Decoded

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Inflation Calculator

Educational content only — not financial advice

A McDonald's hamburger cost 15 cents in 1955. The same hamburger costs around $2.50 today — roughly 17 times more. The bun is the same. The patty is the same. What's changed is how many dollars buy it. Pick a mode below to project a current amount forward, or take a future amount and deflate it back to today's purchasing power. Enter the inflation rate you want to assume and the number of years to apply it across.

The Federal Reserve targets ~2% per year. Use 3% for a long-term planning estimate.

Future cost in 20 years

$90,305.56

Cost increase
$40,305.56
Purchasing power lost
44.6%

The formula behind the calculator

Inflation compounds the same way interest does:

Future_value = Present × (1 + r)^t
  • Present is the amount today.
  • r is the annual inflation rate as a decimal (3% becomes 0.03).
  • t is the time in years.

For the present-value mode (deflating a future amount back to today), the formula is the same equation rearranged:

Present_value = Future / (1 + r)^t

A worked example

Take $50,000 today, projected forward 20 years at 3% annual inflation:

  • Inflation factor: (1 + 0.03)^20 ≈ 1.806
  • Future cost: $50,000 × 1.806 ≈ $90,306
  • Cost increase: $40,306
  • Purchasing power lost: ~44.6% (1 − 1/1.806)

Same standard of living, twenty years later, costs almost twice as much in nominal dollars. That's the practical effect of even modest inflation compounding across a long horizon.

Pair this calculator with the explainer

For the broader conceptual background — how inflation is measured, why central banks target a small positive rate, and how it interacts with savings, debt, and investments differently — see our companion piece: What Is Inflation Explained Simply. For the practical effects on different parts of your finances, see how inflation affects your money.

Run your own retirement number through the future-cost mode at 3% and you'll see why a target that felt comfortable a decade ago now reads as modest. The number didn't grow more ambitious — the dollars required for the same standard of living did.

Frequently asked questions

What inflation rate should I use?

The Federal Reserve targets approximately 2% per year over the long run. For long-term planning, 3% is a slightly more conservative figure that historical periods have averaged in the U.S. For specific recent years, the Bureau of Labor Statistics publishes the actual CPI inflation rate each month at bls.gov/cpi.

What's the difference between the two calculation modes?

"What will today's $X cost in N years?" projects forward — useful for planning a future expense like retirement, college tuition, or a down payment. "What is N years of $X worth in today's dollars?" deflates a future amount back to its present-day purchasing power — useful for comparing a long-dated promised payment to current dollars.

Why does inflation matter for everyday saving?

Money kept in cash or low-yield savings accounts loses purchasing power at roughly the inflation rate. A savings account paying 0.5% during a 3% inflation year produces a real return of approximately negative 2.5% — the dollar balance grows but what those dollars can buy shrinks. That's why high-yield savings, productive assets, and inflation-protected bonds get discussed so often.

Does this calculator use a fixed inflation rate?

Yes — it assumes the rate you enter applies every year. Real inflation varies year to year. The calculator is most accurate over short periods or when you use a long-term average rate. For very long horizons, treat the result as an estimate, not a precise prediction.

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