Purchasing Power Calculator: Measure the Impact of Inflation on Your Money
Enter your amount, expected inflation, and years; the calculator instantly shows your future spending power. At 3 % inflation, $10,000 today buys goods worth about $7,437 after 10 years (BLS CPI Calculator, 2024).
Purchasing Power Calculator
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How to use the tool
Initial Amount (USD) – type how much money you hold today. Example A: 9,000 Example B: 22,750
Annual Inflation Rate (%) – enter the yearly rise in prices. Example A: 4 Example B: 2.2
Time (Years) – choose the projection horizon. Example A: 8 Example B: 15
Press Calculate to see what the money will buy at the end of the period.
Formula used
$$
P = A \times \left( \frac{100}{100 + r} \right)^{t}
$$
P – future purchasing power
A – initial amount
r – annual inflation rate (%)
t – years
Example calculations
Case 1: A = $9,000, r = 4 %, t = 8 → P ≈ $6,576
Case 2: A = $15,500, r = 2.2 %, t = 15 → P ≈ $11,140
Quick-Facts
The U.S. dollar’s buying power has fallen 85 % since 1970 (BLS CPI Calculator, 2024).
Average U.S. inflation 2013-2023: 2.6 % (BLS CPI Summary, 2024).
The Federal Reserve targets 2 % inflation to maintain price stability (Federal Reserve, 2020).
Consumer prices rose 3.4 % year-over-year in April 2024 (BLS News Release, 2024).
FAQ
What does the Purchasing Power Calculator do?
It converts today’s dollars into their inflation-adjusted value for a future year, helping you gauge real buying power (BLS CPI Guide, 2024).
Which formula does the calculator use?
It applies $$P=A\left( rac{100}{100+r}\right)^{t}$$, the standard compound inflation discount equation (OECD Handbook, 2023).
How accurate is assuming constant inflation?
Constant rates simplify forecasting; accuracy drops when actual inflation deviates, especially beyond ten years (IMF WEO, 2023).
What is a realistic inflation rate to enter?
Use the 10-year breakeven inflation rate—2.3 % on 6 May 2024 (U.S. Treasury, 2024).
How can you keep savings ahead of inflation?
Invest in assets with historical real returns above 0 %, such as broad equity indexes averaging 5 % real since 1926 (S&P Dow Jones Indices, 2024).
Why should salary negotiations include inflation?
An annual 3 % raise only matches 3 % inflation, keeping real pay flat (SHRM Compensation Study, 2023).
Does inflation affect all goods equally?
No. Medical services rose 5.2 % annually 2000-2023, while electronics fell 8 % (BLS CPI Detailed Report, 2024).
How often should you update inputs?
Refresh calculations yearly or after any 0.5 % CPI swing to keep plans current (Council of Economic Advisers, 2024).
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The calculations, results, and content provided by our tools are not guaranteed to be accurate, complete, or reliable. Users are responsible for verifying and interpreting the results. Our content and tools may contain errors, biases, or inconsistencies. We reserve the right to save inputs and outputs from our tools for the purposes of error debugging, bias identification, and performance improvement. External companies providing AI models used in our tools may also save and process data in accordance with their own policies. By using our tools, you consent to this data collection and processing. We reserve the right to limit the usage of our tools based on current usability factors. By using our tools, you acknowledge that you have read, understood, and agreed to this disclaimer. You accept the inherent risks and limitations associated with the use of our tools and services.
