How it works
At a constant inflation rate i, prices compound like interest:
Future Cost = Amount × (1 + i)^years
And the flip side — what today's money will feel like then:
Purchasing Power = Amount / (1 + i)^years
- Future Cost = what a basket costing this amount today will cost later
- Purchasing Power = the real value of today's amount expressed in future dollars
Example
$1,000 at 3% annual inflation for 10 years:
- Future cost of the same goods: 1,000 × 1.03^10 = $1,343.92
- Purchasing power of today's $1,000: $744.09 — a third of its buying power, gone
What this calculator does not include
It applies one constant rate over the whole period. Real inflation varies year to year and differs by spending category (healthcare, housing, and education have often outrun headline CPI). It also ignores taxes and investment returns — for real-net returns, subtract inflation from your nominal return first.
FAQ
What inflation rate should I use?
A common long-run planning assumption for the US is 3% per year, close to the historical average of CPI-U. For recent conditions, check the latest official CPI figures from the Bureau of Labor Statistics and adjust to your own expectations.
What is the rule of 72?
Divide 72 by the annual rate to estimate how long it takes prices (or money) to double. At 3% inflation, prices roughly double every 24 years; at 6%, every 12 years.
Is purchasing power the same as future value?
No. Future cost shows what the same basket of goods will cost later. Purchasing power shows what today's dollars will feel like then — $1,000 today buys roughly what $1,344 will buy in 10 years at 3% inflation.