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In ation Calculator
This calculator helps determine the buying power of a dollar over time in the United States

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$ 100 in 2021 will be worth $128 in 2031 MORE FROM SMARTASSET

Using an in ation rate of 2.50 % from 2021 to 2031.  See how your investments will grow
over time
This is an average in ation rate of 2.50% and cumulative in ation of 28.01%.
 Learn more about saving for retirement

Value of a Dollar Over Time  Compare online brokerage accounts

The following chart shows the change in value of $100 from 2021 to 2031. A projected in ation rate of 2.5% was used to calculate values from
2022 to 2031.  Get professional nancial advice to plan
your retirement
$130

$125

$120
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$115  About this answer

$110
 How do we calculate this answer

 Learn more about in ation

$105

 Infographic: Places With the Least

$100 In ation

$95
2022 2024 2026 2028 2030
Year

Historical Rate
Projected Rate

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In ation Calculator
In ation is the increase in the prices of goods and services across an
economy. When prices in ate, you need more money to buy the same
things. The opposite of in ation is de ation, when prices become lower
across a range of goods and services. In ation is an important concept for
investors to understand because it eats into your returns on your
investments.

The In ation Rate De ned

To measure the in ation rate, you can't just take a single good and Photo credit: © iStock/Newbird

measure how its price changes. You have to look at what's called a
"basket" of goods and services. In the U.S., in ation rates come from the Consumer Price Index (CPI). The CPI takes what the
government considers a representative basket of goods and services and records changes in their prices from month to month
and year to year.

Historical In ation Rates

While many countries have battled in ation and even hyperin ation in the past 120 years or so, the U.S. has largely avoided
that fate. Average annual in ation in the U.S. between 1913 and 2019 was 3.10%.

If you look at a table containing the in ation rate from 1915 to 2019, you'll notice de ation (expressed as a negative in ation
percentage) during the Great Depression. You'll also notice signi cant in ation in the '70s and early '80s. In general, though,
the Federal Reserve moderates in ation to keep it around the 2% mark. In other words, you don't need to worry that you'll be
carrying suitcases full of dollar bills to the grocery store any time soon.

One of the privileges of living in a developed country in this day and age is a certain amount of con dence that in ation rates
will stay within a reasonable range. The in ation rate from 2017 to 2018 was just 2.44%.

How In ation Impacts You

If your income stays the same while prices go up, you'll feel the e ects of in ation. Your money won't stretch as far and you'll
have to make some changes to your budget. In theory, salaries and wages should rise to keep up with in ation so that workers
can maintain their standard of living. Social Security bene ts, too, are subject to Cost of Living Adjustments (COLAs) that take
rising prices into account.

If your income rises by the same percentage as the in ation rate, your purchasing power is not diminished. It doesn't grow or
shrink. If your income rises by a percentage greater than the in ation rate, you'll be able to a ord more goods and services.
This is the scenario most of us want. It makes us feel better to see our purchasing power growing over time.

Of course, if your income shrinks or disappears, you might be in trouble. Other people who feel the negative e ects of in ation
are those on a xed income, or those who hold xed-income investments while in ation takes its toll on their purchasing
power.

For example, if you buy a xed-income security like a CD with a 2% yield and in ation rises to 4%, you're losing money. In an
environment where interest rates are low, it can be tough to beat in ation without buying stocks. Bonds, CDs and savings
accounts will keep your principal intact but won't necessarily grow enough to keep pace with in ation. That means you're less
likely to meet your retirement savings goals. Fortunately, an in ation calculator can help you gure out a target for your
retirement investments in future dollars.

Although stocks bring risk and volatility, they also have a track record of providing in ation-beating returns over time. Investing
in stocks not only helps you grow your retirement savings, but it also helps your retirement savings last throughout your entire
retirement. It's important to have enough retirement savings that you won't be up all night worrying about in ation.

Once you're retired and out of the workforce, if your retirement nest egg isn't growing, there's not much you can do to
preserve your purchasing power if in ation hits. That's why our retirement calculator takes in ation into account when guring
out how much you should save for your golden years.

Get Real

When you see the word "real" used in relation to nance, it means
"adjusted for in ation." So if you hear that "real wages" aren't rising, it
means that wages aren't rising above in ation. Same with the "real"
increase in home prices over time. There's often a big di erence between
what you see before and after adjusting for in ation.

An in ation calculator shows you the value of the same sum of money at
di erent times in the past and the future. It can tell you about historic
prices and future in ation. Estimates of future prices and values are
Photo credit: © iStock/kutaytanir
usually based on projections using the average in ation rate - essentially
an expected in ation calculator.

Wondering how to calculate the in ation rate in a given year? The CPI helps, but it only goes as far back as 1913. To nd the
historic in ation rate in, say, 1800, analysts take a current price index and then subtract a comparable price index based on
data from 1800. They then divide that number by the 1800 index and multiply by 100 to get a percent. The formula for
calculating in ation is: (Price Index Year 2-Price Index Year 1)/Price Index Year 1*100 = In ation rate in Year 1.

As we mentioned, future in ation calculators generally base their projections on recent averages. In the U.S., where in ation
volatility hasn't been a problem lately, it's pretty safe to assume that future in ation will hover around 2.50%. A future in ation
calculator lets you see how many future dollars will equal a certain number of today's dollars. Sometimes you can even adjust
the in ation rate to see what would happen to your purchasing power if there were extreme in ation or de ation.

Bottom Line
If your investments aren't providing returns equal to or greater than the in ation rate, you're probably in trouble. You'll nd
yourself making tough choices about what you can a ord as in ation eats into your purchasing power. In other words,
investors should count on in ation and plan accordingly.

Preparing for retirement by stashing your savings under your mattress won't cut it if you want to maintain or improve your
standard of living. You should consider all investments, among other things, based on their ability to provide in ation-beating
gains. The fact that Social Security bene ts automatically adjust for in ation is part of what makes them such a powerful
resource for retirees. Now that you know about in ation, you can start working on strategies for beating it.

Places with the Least In ation Show 2018

SmartAsset’s interactive map highlights the places across the country that have experienced the least in ation over the past decade.
Zoom between states and the national map to see the places that have been the most resistant to in ation over ten years. SHARE

MORE ABOUT THIS MAP

In ation Cost of Living Change Income Change

 View the data behind these rankings

 How do we calculate these rankings

 Interactive: In ation Calculator

MORE FROM SMARTASSET

 See how your investments will grow

over time

 Learn more about saving for retirement

 Compare online brokerage accounts

 Get professional nancial advice to plan

your retirement

Map data ©2021 Google, INEGI Terms of Use

LEAST MOST

Rank Urban Area Change in Purchasing Avg. Change in Cost of Avg. Change in
Power Living Personal Income

Methodology
We determined the cost of living for each location by looking at the price for a basket of goods. The goods included basics like milk,
shampoo and rent. We did this for both 2007 and 2017. We also calculated the average per capita personal income for each city for
both years.

To gure out how far money would go in each city, we calculated purchasing power. We divided the average per capita income by the
cost of living in each city for both 2007 and 2017. The change in purchasing power from 2007 to 2017 then shows us the metro areas
in the country that have seen the least in ation over the past decade.

Sources: Council for Community and Economic Research, Bureau of Economic Analysis

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