Question 1

What does this calculator actually show me?

Accepted Answer

It shows two things: how much more money you'd need in the future to buy what a given amount buys today, and how much today's value of a future amount is worth in today's dollars.

Question 2

What inflation rate should I use?

Accepted Answer

A common long-term average for many economies is around 2-3% annually, but you can use a higher rate to model periods of high inflation or a custom figure based on your own country's data.

Question 3

Why does purchasing power loss not equal the inflation rate times years?

Accepted Answer

Inflation compounds each year, so the cumulative loss in purchasing power grows faster than simple multiplication — that's why even modest rates add up significantly over decades.

Question 4

How is this useful for retirement planning?

Accepted Answer

It helps you understand that a fixed dollar amount won't buy nearly as much in 20-30 years, which is critical for setting realistic savings and income targets for the future.

Question 5

What's the difference between future value and present value here?

Accepted Answer

Future value shows what your amount today is equivalent to later, while present value shows what a future amount is really worth in today's purchasing power — they answer opposite questions.

Inflation Calculator

How the Inflation Calculator Works