What inflation does to money
Inflation is the general rise in prices over time. When prices rise 3% a year, something that costs $100 today costs $103 next year, and the same $100 buys a little less. Over decades the effect compounds: at 3% a year, prices double in about 23 years.
Using this calculator
Choose What will it cost later to see future prices, or What's an old amount worth now to bring a past amount into today's dollars. Enter an average yearly inflation rate. For reference, US inflation has averaged about 3% a year over the long run, and the Federal Reserve targets 2%.
Example
At 3% inflation, what costs $100 today will cost about $134.39 in 10 years. Put the other way, $100 then will buy only about $74 of today's goods.
Frequently asked questions
How is inflation measured?
In the US, the most common measure is the Consumer Price Index (CPI), published monthly by the Bureau of Labor Statistics.
How do I protect savings from inflation?
Aim for returns above inflation after tax. Treasury I Bonds and TIPS are designed to track inflation; stocks have historically outpaced it over long periods.