Purchasing Power Calculator
See how much of a fixed sum of money inflation quietly takes away — what today’s cash will actually buy years from now.
How it works
Inflation factor = (1 + inflation)^years · Future purchasing power = amount ÷ factor · Value lost = amount − future purchasing power
Money held as cash does not lose its face value, but it loses buying power as prices rise. This calculator discounts a fixed amount back into today’s purchasing terms, revealing the silent tax of inflation on idle cash. It is the core reason long-term savings are usually invested rather than left in a low-yield account.
Worked example
At 3% inflation, $10,000 left untouched for 20 years will buy only 10,000 ÷ 1.03^20 = about $5,537 worth of goods in today’s terms — a loss of roughly $4,463, or 44.6% of its purchasing power.
Frequently asked questions
Does my cash actually shrink?
The number in your account stays the same, but what it can buy falls as prices climb. So while $10,000 is still $10,000, its real value — the goods and services it commands — declines every year inflation is positive.
How can I protect purchasing power?
Holding assets that tend to grow at least as fast as inflation — diversified stocks, inflation-linked bonds, or high-yield accounts when rates are elevated — helps offset the erosion. The goal is a return above the inflation rate.
Is this the same as a discount rate?
It is a discounting calculation where the "rate" is inflation, converting future money into today’s purchasing power. Investment analysis often uses a larger discount rate that also accounts for risk and opportunity cost.
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Educational estimate, not financial advice.