Inflation Calculator

How this result is built

Move an amount forward or backward in time at a constant inflation rate.

Inflation compounding is the same shape as interest compounding, pointed at prices. Three percent for twenty years does not add 60%. It multiplies. One hundred dollars of today’s purchasing power needs about $180 later if that rate holds.

What the opening example is for

The past direction asks what today’s amount would have been worth earlier under the same steady rate. Actual history is bumpier. The steady rate is for planning, not for rewriting a receipt.

The walkthrough below uses the numbers already sitting in Inflation Calculator. Press Calculate and the headline should match this page. Then put your own figures in. The math does not run until you press the button, and Clear hides the result.

What each field is doing

The “Amount in today’s dollars” line on Inflation Calculator starts at $100.00. Leave that figure only when it matches the statement, the quote, or the plan you are testing. Press Calculate after the edit so the chart and the schedule move with it.

Inflation Calculator treats “Annual inflation” as its own entry, and the form opens with 3%. A round example is useful for learning the page. It is a poor substitute for the number on your own paperwork, so replace it and run the form again.

The remaining fields

Before you replace it, “Years” reads 20 on Inflation Calculator. The other fields stay put while you change this one. That is the clean way to see what this line is doing inside the result.

Look at “Direction” first if you are checking Inflation Calculator: the filled value is Cost in the future. If the label is a rate, type the annual figure the contract uses. If it is money, type the amount that will actually move, not a rounded hope.

The opening result, line by line

Press Calculate on the opening form and Future cost is $180.61. That is the number the rest of this section is talking about.

Today is $100.00 when you run the opening figures on Inflation Calculator. That line is part of the same calculation as the headline. It is not a second balance you can spend on top of the result. Change one input and press Calculate if you want to see whether this line moves.

On this opening pass, inflation is 3.00%. That line is part of the same calculation as the headline. It is not a second balance you can spend on top of the result. Change one input and press Calculate if you want to see whether this line moves.

Inflation Calculator reports that years is 20. That line is part of the same calculation as the headline. It is not a second balance you can spend on top of the result. Change one input and press Calculate if you want to see whether this line moves.

How those lines were produced

Purchasing power of today’s amount is $55.37 when you run the opening figures on Inflation Calculator. That line is part of the same calculation as the headline. It is not a second balance you can spend on top of the result. Change one input and press Calculate if you want to see whether this line moves.

A steady inflation rate is a planning model. Actual prices move unevenly.

A second pass changes only “Amount in today’s dollars”, from $100.00 to $110.00. Future cost moves from $180.61 to $198.67. Nothing else on the form was edited, so the gap between those two results is the effect of that one field on Inflation Calculator. If the gap is tiny, this page is not very sensitive to that entry. If the gap is large, get that entry from a document before you plan around the result.

What this page will not claim

Inflation Calculator compounds the rate you type. Markets do not pay a flat rate, and a fund fee comes out of the return before you should type it. The page is the equation, not a forecast and not a recommendation to buy or sell.

Inflation Calculator stops at its own formula. When the next question is different, open Real Return Calculator (The return that is left after inflation.); Retirement Calculator (Savings at retirement, next to the nest egg spending implies.); College Cost Calculator (Future tuition, and the monthly savings that chase it.). Do not add those results to this one as if they were the same kind of dollar.

Check the result before you use it

Start on Inflation Calculator by reading the labels, not the headline. The opening labels are Amount in today’s dollars ($100.00), Annual inflation (3%), Years (20), Direction (Cost in the future). If a label is not the fact you have, the result cannot turn into that fact later. The illustration on the form lands on $180.61. When you press Calculate and see that same figure, the button and this explanation are using one formula.

Change one field at a time. Write down the headline, edit a single line, and press Calculate again. A large jump means that line carries the result. A line that does not move is a line the formula ignores, which is a reason to confirm you opened the right page. Inflation Calculator is built for one job: The same dollars, a different year. The description on the page says the same thing in a sentence: Move an amount forward or backward in time at a constant inflation rate.

When the paperwork disagrees

Then hold the headline next to a source outside the site. That source might be a loan estimate, an account statement, a pay stub, or the public limit named in the methodology. A few cents of difference on a long schedule is ordinary rounding. A different rate, a fee you never typed, or a tax the form does not ask for is not rounding. Correct the input. Do not average the page with the paperwork.

When the outside source still disagrees, Inflation Calculator has reached the edge of what it will claim. It will not phone a lender, pull a county record, or apply a credit you left blank. Send the calculator name, every input, and the result you expected through the contact page if you think the formula itself is wrong. Until that is settled, read $180.61 as the output of the fields above and nothing else.

FAQs