Inflation Calculator

What is Inflation?

Inflation is the rate at which the general level of prices for goods and services is rising, and subsequently, the purchasing power of currency is falling. In simple terms, your money buys less today than it did yesterday due to inflation.

How Inflation Impacts You

• Reduced Purchasing Power: The most direct impact is that the same amount of money buys fewer goods and services over time.
• Impact on Savings: If the interest earned on your savings (like in a bank account) is lower than the inflation rate, the real value of your savings decreases.
• Increased Cost of Living: Affects everyday expenses, making essentials like food, housing, and transportation more expensive.
• Investment Returns: Investors aim for returns that are higher than the inflation rate to achieve real growth in their wealth.
• Retirement Planning: Inflation significantly increases the amount of money needed to maintain the same standard of living during retirement.

Calculating Future Value

This calculator estimates the future value needed to match the purchasing power of a current amount, using the formula:

Future Value = Present Value × (1 + Inflation Rate) ^ Number of Years

This helps visualize how much more money you would need in the future to buy the same things you can buy today with a given amount.

Disclaimer: This calculator provides an estimate based on a constant assumed inflation rate. Actual inflation rates fluctuate over time. This tool is for informational purposes and should not be the sole basis for financial decisions. Consult a financial advisor for personalized planning.