Calculate the purchasing power of any dollar amount over time. Use historical US CPI data from 1913 to 2026 to see how inflation has eroded or grown the value of money. Free.
How Inflation Erodes Purchasing Power
At 3% annual inflation, prices double every 24 years. This means a $50,000 salary in 2002 had the same purchasing power as roughly $93,000 today. It also means $1,000 sitting in a savings account paying 0.5% in 2002 has grown to about $1,260 nominally — but its real purchasing power is only about $680 in 2026 dollars.
The Real Return Equation
Real return = nominal return − inflation rate (approximately). A savings account at 4.5% during 3% inflation earns a real return of +1.5%. A bond fund at 2% during 3% inflation earns −1% real — you’re losing purchasing power. This is why all investment analysis should be done in real terms: compare returns to inflation, not to zero.
Social Security COLA Adjustments
Social Security benefits receive Cost of Living Adjustments (COLAs) tied to CPI-W each year. The 2026 COLA was approximately 2.5%. This partially protects retirees from inflation but lags actual consumer experience — healthcare and housing costs (which consume more of retiree budgets) often inflate faster than CPI.
Since 1913, US CPI inflation has averaged about 3.2%/year. In practice, it's been volatile: the 1970s saw 7%–14% annual inflation, the 2000s averaged under 3%, and 2021–2023 saw 5%–9%. The Federal Reserve's target is 2% annual inflation. From 2020 to 2026, cumulative inflation has been roughly 25%–30%, meaning $1,000 from 2020 buys what $750–$780 bought then. This explains why wages that didn't grow 25%–30% in that period represent real pay cuts.
A dollar in 2000 is worth roughly $0.48 today in purchasing power terms — meaning $1,000 in 2000 has the purchasing power equivalent of about $480 in 2026. Alternatively, to maintain the same purchasing power as $1,000 in 2000, you'd need roughly $2,090 today. This is why saving money in a low-yield savings account (0.1%–0.5%) is a guaranteed loss in real terms — inflation at 3% compounds faster than the interest earned.
Inflation is the silent destroyer of retirement savings. At 3% inflation, purchasing power halves in 24 years. If you retire with $1,500,000 at 65 and inflation runs 3%, your $60,000/year withdrawal has the purchasing power of $30,000 by age 89. This is why financial planners recommend maintaining 60%–80% stocks in retirement rather than going fully into bonds — equity returns historically outpace inflation by 4%–7% annually. The 4% safe withdrawal rate is calculated in real (inflation-adjusted) terms, assuming you increase withdrawals each year with inflation.
Historically: (1) Stocks — broad equity has returned 7% real (after inflation) over long periods; (2) Real estate — property and rents tend to rise with inflation; (3) TIPS (Treasury Inflation-Protected Securities) — the principal adjusts with CPI, guaranteed inflation protection for the bond portion of a portfolio; (4) I Bonds — US savings bonds paying fixed rate + CPI adjustment, limited to $10,000/year; (5) Commodities — inflation often correlates with commodity price increases. Cash and traditional bonds lose real value during high inflation. An S&P 500 index fund is the simplest inflation hedge for most people.
After the post-pandemic surge (7%–9% in 2022), inflation has moderated significantly. By 2025, CPI inflation fell to approximately 2.5%–3.5% annually, approaching the Fed's 2% target. In 2026, inflation is running roughly 2.5%–3%, with some months at or below target. The Fed has adjusted rates in response, with the federal funds rate settling in the 3.5%–4.5% range by mid-2026. Current HYSA rates of 4.0%–4.5% APY slightly outpace inflation, meaning savers are earning modest positive real returns — a significant improvement from 2022.
