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Inflation · what your money really buys
Two ways to see it: what old money is worth now, and what today’s cash will be worth later.
Time machine
is worth — today
Cash erosion
will buy about —
Your net worth, in real terms
Add your numbers in the Net worth tracker and they’ll show up here, inflation-adjusted.
If it grows % a year over
Inflation is the slow rise in the general level of prices, and it works against your money one year at a time. Economists measure it with the Consumer Price Index (CPI), the government’s tally of what a fixed basket of everyday goods and services — groceries, rent, gas, healthcare, insurance — costs from one period to the next. When that index rises, the purchasing power of a dollar falls: the bill in your pocket still says $1, but it buys a little less than it did before.
The reason inflation matters so much over a lifetime is that it compounds. A loss of a few percent each year stacks on top of the year before, the same way interest builds in a savings account — only in reverse. Over a long-run average of about 3% a year (a typical figure, though it swings well above and below that depending on the decade), prices roughly double every 24 years or so. Money left sitting in a zero-interest account does not stay still in real terms; it quietly shrinks while the number on the statement never changes.
This tool works in two directions, so you can look backward or forward.
Past to today (the time machine). Use the first card to translate old money into today’s dollars. Type an amount, pick the year it came from, and the calculator scales it by the change in CPI between then and now. This answers questions like “what would my grandfather’s salary be worth today?” or “has my pay actually kept up since 2015?” Read the result as the amount you’d need now to match that old purchasing power.
Today to the future (cash erosion). Use the second card to project what a sum of cash will buy down the road. Enter an amount, choose how many years ahead, and set an annual inflation rate — the field defaults to roughly the latest reading, but you can raise or lower it to test a more cautious or optimistic scenario. The output shows the same dollars expressed in today’s buying power, plus how much of that value inflation eats away.
Say you want to know what $1,000 from the year 2000 is worth today. Prices have risen by a large margin since then, so the time machine shows that it takes well over $1,800 now to buy what that $1,000 bought back then — your money had to grow by more than 80% just to break even on purchasing power.
Now look forward. Suppose you park $10,000 in a drawer for 20 years and assume a steady 3% inflation rate. The erosion card shows that the same $10,000 will buy only about $5,500 worth of goods in today’s terms — almost half its purchasing power gone, even though the cash itself never moved. That gap is the cost of letting money sit idle.
Assuming your inflation equals the headline rate. The CPI describes an average household. Your personal inflation depends on what you actually buy — if a big share of your budget goes to rent, tuition, or medical care, your real rate can run higher than the number in the news.
Ignoring inflation on long-term savings. A balance that feels safe in cash is steadily losing ground if it earns less than the inflation rate. The longer the time horizon, the larger the hidden loss.
Confusing real and nominal returns. An account paying 4% while inflation runs 3% is only earning about 1% in real terms. Always subtract inflation before deciding whether an investment is truly getting ahead.
This calculator is for general education, not financial advice. Inflation varies over time and by household, so treat any single rate as an estimate rather than a promise.
Annual inflation, measured by the Consumer Price Index (CPI), has cooled to roughly 3% — down from a 2022 peak above 9%. This calculator uses official CPI data, so it reflects the most recent readings rather than a fixed guess.
The US Bureau of Labor Statistics tracks the price of a fixed “basket” of everyday goods and services — food, housing, transport, medical care and more — and reports the change as the Consumer Price Index. Inflation is simply the percentage change in that index over time.
Purchasing power is how much your money can actually buy. When prices rise, each dollar buys a little less — so $100 today will not stretch as far in ten years, even though it is still $100.
A lot, slowly. A dollar from the year 2000 buys only about 55 cents’ worth of goods today. That erosion is invisible day to day, which is exactly why a calculator that shows it over years is useful.
Keep only your spending money and emergency fund in cash — ideally in a high-yield savings account or I-Bonds that pay close to the inflation rate — and invest the rest, since stocks and real estate have historically outpaced inflation over the long run. Our “where to park cash” tool compares the cash options side by side.
Around 3% is a reasonable long-run average for the US, but it is only a rough guide. Real inflation has run below 2% in some years and above 9% as recently as 2022, so it is worth testing a few rates in the calculator rather than trusting one number. Your personal rate can also differ from the headline figure depending on how you spend.
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