For informational purposes only. This tool provides estimates based on your inputs and may differ from actual outcomes. It does not constitute financial advice. Please consult a qualified professional before making financial decisions. Terms
See how inflation affects your purchasing power over time.
of your $100,000 in 20yr
Purchasing power gone
to match today's $100,000
Raise 2.5% - Inflation 3%
Fed target: ~2%, recent average: ~3%
Your $100,000 silently losing value over 20 years.
$100 today will only buy $55.37 worth of goods in 20 years at 3% inflation.
Everyday prices today vs. in 20 years at 3% inflation.
With 2.5% raises and 3% inflation, you're effectively getting a 0.5% pay cut every year.
Not all prices rise equally. Healthcare and education inflate far faster than overall CPI.
At 3% inflation, your money loses half its purchasing power in 24 years
Rule of 72: divide 72 by the inflation rate to estimate years to halve
Compare investment strategies against your 3% inflation rate. Green means it beats inflation, red means it doesn't.
Matches CPI, $10k annual limit, tax-deferred, 1-year lock
Treasury Inflation-Protected Securities, principal adjusts with CPI, ~2% real return
Historical ~10% nominal (~7% real), long-term best hedge, volatile short-term
Rental income + appreciation typically tracks inflation, leveraged returns
Currently 4-5% APY, FDIC insured, but may not beat inflation long-term
To preserve purchasing power, your investments must earn at least 3% annually. Any return below this is a real loss.
How $10,000 grows in real terms (after 3% inflation) over 20 years in different account types.
A traditional savings account at 0.5% APY loses $3,882 in purchasing power over 20 years. Moving to higher-yield options is essential.
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Insights
At 3% inflation, your money loses 45% of its purchasing power over 20 years.
Inflation is the silent wealth destroyer. At 3% annual inflation, your $100,000 will only buy $55,368 worth of goods in 20 years. That means you need to earn at least 3.0% on your savings just to break even. Anything less means you are getting poorer every single day.
Cash in a savings account earning 0.5% APY is a guaranteed loss against 3% inflation. Historically, the S&P 500 has returned ~10% annually, well above inflation. Diversified investing in index funds, I-Bonds, TIPS, and real estate are proven strategies to preserve and grow your purchasing power. The key is to start investing early and let compound returns outpace the erosion.
I-Bonds track CPI and are risk-free, with a $10,000 annual purchase limit per person. TIPS (Treasury Inflation-Protected Securities) protect your bond principal from inflation erosion. The S&P 500 historically returns ~7% real (after inflation), making equities a powerful long-term hedge. The best defense is diversification across asset classes. No single asset perfectly tracks every inflation regime.
Money sitting in a savings account earning 0.5% loses purchasing power every day when inflation runs at 3%. Even high-yield savings accounts at 4.5% barely keep pace after taxes. Over decades, the gap is devastating. $100,000 in cash loses over $45,000 in real value over 20 years at 3% inflation. Long-term wealth preservation requires equity exposure to outpace the silent erosion of purchasing power.
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See how inflation erodes your purchasing power over time. Calculate what your money will really be worth in the future and how much you need to save to keep up.
At 3% inflation, $100 today is worth only $74 in 10 years. The calculator shows how inflation erodes purchasing power over any time period.
US historical average is ~3.2% annually. Recent years have seen higher inflation (6-9%). The calculator lets you model different inflation scenarios.
Investments that historically beat inflation include stocks, real estate, I-bonds, and TIPS. Keeping large cash reserves loses purchasing power over time.
