At 3% inflation, $1,000 buys only $554 worth of today's goods after 20 years. Keeping today's purchasing power would take $1,806.
How inflation erodes money
Inflation raises prices every year, so a fixed amount buys less each year. The loss compounds: each year's decline applies to an amount already reduced by the years before.
At 3% a year, $1,000 keeps $744 of its purchasing power after 10 years, $554 after 20 and $412 after 30.
The rate makes a big difference
Over 20 years, 2% inflation leaves $1,000 with $673 of purchasing power and 4% leaves $456. A point or two a year adds up over decades.
The table covers 2%, 3% and 4%. Use your own assumption: past rates are not a guarantee of future ones.
What to do with the number
Savings earning less than inflation lose value in real terms. Enter your amount, expected inflation and horizon in the inflation calculator to see both the future cost and the purchasing power.
| Inflation | 10 years | 20 years | 30 years |
|---|---|---|---|
| 2 % | $820 | $673 | $552 |
| 3 % | $744 | $554 | $412 |
| 4 % | $676 | $456 | $308 |
FAQ
What is purchasing power?+
It is how much a sum can buy compared with today. At 3% inflation, $1,000 has the purchasing power of $554 after 20 years.
How much would I need in 20 years to match $1,000 today?+
At 3% inflation, $1,806. That is the future cost of the same goods.