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Adjust For Inflation Tool
For more information about inflation see our online article: Inflation: What Is It And Why Does It Happen?.
The Adjust For Inflation tool will show you the dramatic effects inflation has on your savings or investments.
That retirement nest-egg may look great in today's dollars, but what will it look like after 10, 20 or 40 years of
only 4% annual inflation? Over the past 30 years annual inflation has averaged 5.3%. Recent inflation has been more
tame but it can erode the value of your assets quickly.
Use this tool to help plan your retirement savings, estimate future net worth, and make purchasing decisions
based on the future value of today's dollars.
The inflation adjustment may be made on a current amount (Future Value estimation) or a future amount (Current Value estimation).
If you have a sum of money, you can calculate its value in the future based on an average inflation
rate. Enter the amount you have, the average annual inflation rate, and the number of
years into the future to project the amount. The future value of the amount based on today's dollars
and the percent of reduction will be calculated. In this example, the amount of $5,000,000 will
be projected over 40 years. If inflation averages 5%, that amount will have the equivalent worth of only $642,560 in
today's dollars. That is a reduction of 87.15%.
To calculate today's value of a future sum, enter the amount, the average annual inflation rate, and the number of
years into the future when you will have accumulated the amount. The current value of the amount in today's dollars
and the percent of reduction will be calculated. In this example, the amount of $5,000,000 will
be accumulated after 40 years. If inflation averages 5%, that amount will have the equivalent worth of only $642,560 in
today's dollars. That is a reduction of 87.15%.
The five Scenario buttons allow you to create multiple scenarios using different values. Each scenario
may be printed for future reference and comparison.
When you select the Print Scenarios button the following window appears:
Check the box next to each completed scenario that you want to print then select the View or Print button.
Next: Budget My Income
Click on a button above to learn more about the tool.
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