Future Inflation Calculator – How Much Your Money Will be Worth

October 25th, 2012 by

The future inflation calculator shows how much your money will be worth based on the inputed number of years and rate of inflation.

Prices of goods and services tend to increase over time.  This is what we call inflation. If you are saving for something in the future – retirement, buying a house, sending your children to college – the cost in the future will typically be more than the cost today. If you know how much money you need for something in today’s dollars,  this inflation calculator can help you estimate how much you will need for the same product or service at a future date.  You can find a chart of inflation here.

How do you use the Future Inflation Calculator?

You’ll need to input the following information:

Amount Today ($): Enter the cost today of whatever you are saving for. Don’t put any commas in the figure.  For example, for one hundred thousand, enter 100000 into the future inflation calculator.

Inflation Rate: Because nobody knows what the future rate of inflation will be, this has to be an estimate. Historically, inflation in the United States tends to be in the 2-4% range per year. Inflation rates tend to be lower (0-2%) if the economy is poor. On the other hand, a factor like a dramatic rise in oil prices can drive inflation up  (inflation in the United States in the 1970’s was 4-10%).

Number Of Years: Enter the number of years between now and the future date you will need the money into the future inflation calculator.

Amount In The Future With The Same Buying Power: When you’ve entered in the data above and clicked on “Calculate”, this is the result. It’s an estimate of how much your savings will need to be in the future, and shows you how much more you’ll need to save to accomplish the same project at that later date.

What are the limitations of the Future Inflation Calculator?

Inflation for different items does not always increase in the same way. There is a general average which is measured by an economic indicator called the CPI (Consumer Price Index), based on a range of goods and services. However, costs of items like medical insurance and college education have skyrocketed over the last decade compared to the average rate of inflation. On the other hand, cars and computers have shown much smaller price increases. In addition, the rate of inflation can also change over time. Several years of high inflation can occur, followed by a number of years of low inflation. Depending on the length of time for your project to come to fruition, the rate of inflation may change significantly, making the estimate from the future inflation calculator correspondingly high or low compared to reality.

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