See what your money will really be worth.
Inflation quietly shrinks every dollar you hold. Enter an amount, a number of years and an inflation rate to see both sides: the future cost of the same buying power, and how little today's cash will actually buy down the road.
Your money
The US long-run average inflation rate is about 3%. Try 2% (the Fed target), 3.2% (the 1913 to 2024 average), or 9% to see a high-inflation year.
The two sides of inflation
Purchasing power eroding over time
Cost rising vs cash shrinking
Inflation scorecard
Year-by-year breakdown
The rising cost keeps the same buying power as your amount today. The shrinking value is what today's cash will actually buy in that year.
| Year | Rising cost (same power) | Value of today's cash | Purchasing power | Cumulative inflation |
|---|
Inflation, explained
How Inflation Affects Your Money Over Time
Inflation erodes the purchasing power of your money, meaning that the same dollar buys less in the future than it does today. At an average inflation rate of 3%, the purchasing power of $100 drops to about $74 after 10 years. This is why keeping all your savings in a non-interest-bearing account effectively guarantees you will lose money in real terms.
Understanding the Consumer Price Index (CPI)
The Consumer Price Index (CPI) is the most widely used measure of inflation in the United States, tracked monthly by the Bureau of Labor Statistics. It measures the average change in prices paid by urban consumers for a basket of about 80,000 goods and services. The CPI covers categories like food, housing, transportation, medical care, and education, and it serves as the basis for cost-of-living adjustments to Social Security benefits and federal tax brackets.
Historical US Inflation Trends
Since 1913, the US has experienced an average annual inflation rate of approximately 3.2%. Notable spikes occurred during the 1970s oil crisis when inflation exceeded 13%, and again in 2022 when it reached 9.1%. The Federal Reserve uses monetary policy tools, primarily interest rate adjustments, to keep inflation near its 2% target, though achieving that goal consistently has proven challenging throughout history.
Strategies to Protect Against Inflation
Investors can hedge against inflation by holding assets that historically outpace rising prices, including stocks, real estate, and Treasury Inflation-Protected Securities (TIPS). I Bonds, issued by the US Treasury, offer a variable rate tied directly to CPI changes. Diversifying across asset classes and maintaining investments with returns that exceed the inflation rate is essential for preserving long-term purchasing power.
Common questions
What is a normal inflation rate?
The Federal Reserve targets a 2% annual inflation rate as ideal for a healthy economy. The US historical average from 1913 to 2024 is about 3.2%. Rates above 5% are generally considered high and can erode purchasing power quickly.
How does inflation affect my savings?
If your savings earn less interest than the inflation rate, your money loses real purchasing power over time. For example, $10,000 in a 1% savings account loses about 2% of its real value each year when inflation is 3%.
What investments keep up with inflation?
Historically, stocks, real estate, and Treasury Inflation-Protected Securities (TIPS) have outpaced inflation over long periods. I Bonds also offer inflation protection with a rate that adjusts every six months based on CPI data.
Why does the cost of living seem to rise faster than reported inflation?
The CPI measures a fixed basket of goods and may not match your personal spending. Housing, healthcare, and college tuition have often risen faster than overall inflation, making the cost of living feel higher for many Americans.
Estimates for planning only. Real inflation varies year to year and by spending category. Housing, healthcare and tuition often rise faster than the headline CPI. Use these figures as a guide, not a forecast.