Cash Erosion From Inflation
Inflation Calculator — Cash Erosion Over Time
What this calculator does
This calculator shows the silent loss of holding cash while inflation rises. It helps you decide how much to keep in savings versus invest.
The math, with a worked example
Future value = cash × (1 − inflation rate)^years. Lost purchasing power = cash − future value. $20,000 in cash at 3% annual inflation loses about $5,000 in purchasing power over 10 years.
Why this matters
Cash 'safely' in a drawer loses a quarter of itself per decade at 3% inflation: $20,000 quietly becomes $15,000 of purchasing power. Inflation is the tax on doing nothing — invisible on any statement, real at every register.
Methodology and transparency
Future purchasing power = cash × (1 − inflation rate)^years. The compounding-down approximation is slightly pessimistic versus the exact 1 ÷ (1 + r)^t deflator, and the rate input matters: 3% approximates the long-run average, but your personal rate depends on what you buy — rent and medical inflation have run hotter than the headline. Everything runs in your browser; no data is sent or stored.
Last reviewed: 2026-08-08
Common questions
Is cash bad?
Not for emergencies. But holding too much cash long-term guarantees a loss of purchasing power.
How do I protect against inflation?
Invest in assets that historically outpace inflation, like stocks, real estate, or I bonds.
What inflation rate should I use?
Use the current CPI or your personal inflation rate. Historical averages are around 2–3% per year.