📖 The story
Mr. Newman plans today with $2,500 of monthly need in retirement. He wonders what amount will be required in 30 years to have the same purchasing power – at 2.5 % inflation.
ℹ Constant inflation rate, annual view.
Topics › Inflation & Purchasing Power › What $2,500 is worth in 30 years
Easy
Inflation & Purchasing Power
What $2,500 is worth in 30 years
Change any number and press "Calculate" – or use "Type in" on the right to watch it entered.
What you learn
Never plan with today's amounts for the distant future: even moderate inflation demands many times the nominal money a few decades out for the same standard of living.
In short: Even moderate inflation demands considerably higher nominal amounts a few decades out for the same standard of living.
Formula
FV = amount · (1 + inflation)^n
With the example numbers
2.500,00 € · (1 + 0,0250)30 = 5.243,92 €
How to read the formula
FV = amount·(1+inflation)ⁿ – the same compound-interest formula, only with the inflation rate as the "rate". It shows what nominal amount will be needed in the future to maintain today's purchasing power. The erosion of money acts exponentially, just like compound interest – only against you.
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