The formulas
Future cost = A × (1 + i)ⁿ Purchasing power = A ÷ (1 + i)ⁿ
Where A is the amount today, i is the yearly inflation rate as a decimal and n is the number of years. At 3% for 10 years, prices rise by a factor of 1.03¹⁰ ≈ 1.344, so something costing $100 today would cost about $134, and $100 would buy only what about $74 buys today.
How to work it out by hand
Suppose a year of living costs is $50,000 today and you expect 3.5% inflation for the next 15 years.
- Turn the rate into a growth factor: 1 + 0.035 = 1.035.
- Raise it to the number of years: 1.035¹⁵ ≈ 1.6753.
- Future cost: 50,000 × 1.6753 ≈ $83,767. Prices rise about 67.5% in total.
- Purchasing power: 50,000 ÷ 1.6753 ≈ $29,845. Your $50,000 would buy about 40.3% less than it does now.
What $100 becomes at different inflation rates
| Years | 2% a year | 3% a year | 5% a year |
|---|---|---|---|
| 5 | $110.41 / $90.57 | $115.93 / $86.26 | $127.63 / $78.35 |
| 10 | $121.90 / $82.03 | $134.39 / $74.41 | $162.89 / $61.39 |
| 20 | $148.59 / $67.30 | $180.61 / $55.37 | $265.33 / $37.69 |
| 30 | $181.14 / $55.21 | $242.73 / $41.20 | $432.19 / $23.14 |
A couple of percentage points makes a big difference over long periods. At 5% for 30 years, prices more than quadruple.
A quick check: the rule of 72
Divide 72 by the inflation rate to estimate how many years it takes for prices to double. At 3% that gives 24 years; the exact answer is about 23.4. At 2% the rule gives 36 years against an exact 35.0, and at 5% it gives 14.4 against 14.2. It is handy for a sanity check without a calculator.
Using the result
- Salary: to keep the same buying power as $60,000 today after 10 years of 3% inflation, you would need about $80,635.
- Savings goals: if a goal is years away, inflate today's cost first, then plan to save for the larger figure.
- Interest rates: if your savings earn less than inflation, the balance grows in dollars but buys less each year.
A projection, not historical data
This calculator uses the constant rate you enter. It does not look up historical consumer price index (CPI) figures, so it cannot tell you what a past amount is worth today. Real inflation changes from year to year, so treat the result as an estimate.