What will your money be worth in the future?
Inflation quietly shrinks what a dollar buys. A sum that feels comfortable today can lose a third or more of its purchasing power over a couple of decades. Enter an amount, a time horizon, and an inflation rate to see how much buying power it keeps — and how much future income you'd need to maintain the same lifestyle. Everything runs in your browser — nothing is uploaded.
A simplified projection, not financial advice. It assumes a constant annual inflation rate compounding over your chosen horizon. Real inflation varies year to year and differs by spending category — housing, healthcare, and education have often outpaced the headline rate. Use it to understand the direction and rough scale of inflation's effect, not as a precise forecast.
How inflation erodes purchasing power
Inflation is the gradual rise in prices over time, which means each dollar buys a little less than it did before. The effect compounds: at 3% inflation, prices roughly double every 24 years, so the same money buys about half as much. Put differently, $50,000 of spending power today needs to grow to over $100,000 in future dollars just to stay even.
Two ways to read the result
- Future purchasing power — what today's amount will feel like in the future. We discount it by inflation:
amount ÷ (1 + rate)^years. This is the shrinking number. - Required future income — how many future dollars you'd need to buy the same basket of goods:
amount × (1 + rate)^years. This is the growing number retirees especially need to plan for.
Why this matters for retirement
A retirement that lasts 30 years faces decades of compounding inflation. Income that covers your lifestyle at 65 may fall far short at 85 if it doesn't grow. That's why sound retirement plans build in rising income — through cost-of-living adjustments, a diversified portfolio expected to outpace inflation, and inflation protection like Social Security's annual COLA or TIPS. Planning in "today's dollars" with a real (after-inflation) return is another way to keep the math honest.
How to protect against inflation
- Invest for growth. Over long horizons, stocks have historically outpaced inflation, unlike cash sitting idle.
- Don't over-hold cash. Money beyond your emergency fund loses real value every year it isn't invested.
- Use inflation-protected assets. TIPS and I-bonds adjust with inflation; Social Security includes an annual cost-of-living adjustment.
- Plan for rising expenses. Budget for healthcare and housing costs that often grow faster than the average.
Frequently asked questions
What inflation rate should I use?
A long-run average of about 2% to 3% is a reasonable default — the U.S. Federal Reserve targets 2% and the historical average has hovered near 3%. Using 3% or 4% builds in a margin of safety for planning. The table above shows all three side by side so you can compare.
What does "purchasing power" actually mean?
Purchasing power is how much stuff your money can buy. Inflation reduces it: if prices rise 3% a year, a dollar buys 3% less each year. So $100 today might have the purchasing power of only about $55 after 20 years at 3% inflation — the number on the bills is the same, but it stretches less far.
How is the "required future income" calculated?
It's today's amount grown by inflation over your time horizon: amount × (1 + rate) raised to the number of years. It tells you how many future dollars you'd need to maintain the same standard of living you have with today's amount now.
Does investing beat inflation?
Historically, a diversified stock portfolio has grown faster than inflation over long periods, preserving and building real wealth. Cash and low-yield accounts usually lose ground to inflation over time. That's the core reason to invest for long-term goals rather than leave large sums in cash.
Plan in real, inflation-adjusted dollars
Free, private, and running entirely in your browser. Planomy projects your savings and income in today's dollars so inflation never hides in the math — and tracks plan vs. actual — no account required.