Inflation is a silent tax. Enter an amount and see what it will really be worth in the future, and how much purchasing power silently disappears each year.
Inflation is the gradual increase in prices over time, which means each dollar you hold today buys less in the future. At 3% average inflation, prices double roughly every 24 years. This means $100,000 today would have the purchasing power of only about $55,000 in 20 years if left in cash.
The key to fighting inflation is earning a return that exceeds the inflation rate. If your investments earn 7% and inflation is 3%, your real return is approximately 4% per year. Over 20 years, this difference compounds dramatically: $100,000 invested at 7% grows to about $387,000 nominally, but its real purchasing power is about $214,000 in today's dollars.
The Federal Reserve targets 2% annual inflation, but actual inflation varies significantly. In 2022, US inflation peaked at 9.1%, while the historical average since 1950 is around 3%. Even small differences in inflation rates compound into massive differences in purchasing power over decades.
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