Why inflation is the quiet tax on cash
Inflation means prices rise over time, so the same dollar buys a little less each year. At a 3% average rate, money loses roughly half its purchasing power in about 24 years — without you spending a cent. That's why cash sitting idle slowly shrinks in real terms, and why "safe" money under the mattress isn't actually safe from erosion.
This tool runs both directions: how much today's money will be worth in the future (it shrinks), and what an amount from the past is worth in today's dollars (it grows). Both use a constant average rate you can adjust — handy for "what would my grandparents' salary be today?" or "will my savings keep up?"
Frequently asked
- What inflation rate should I use?
- U.S. inflation has averaged around 3% annually over the long term, though individual years range from near zero to well over 8%. Use 3% for a general estimate, or your own assumption.
- Is this exact?
- No — it applies one constant rate, while real inflation varies every year. For precise historical figures, use an official CPI lookup. This is a fast, intuitive ballpark.
- How do I beat inflation?
- Generally by earning a return above the inflation rate — which is why money left only in low-yield cash loses ground while invested money can stay ahead. Not advice; just the math.