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3 Percent Inflation Over 10 Years

Prices rising 3 percent a year change what savings can buy. This page adjusts a 10-year result for that.

On the starting figures the final balance is $70,784. After inflation it is worth $52,670.

$
$
%
years
%
Final balance
$70,784
Total you put in
$45,000
Interest earned
$25,784
Final balance after inflation
$52,670
Year by year
YearTotal put inBalance
1$18,000$19,096
2$21,000$23,465
3$24,000$28,128
4$27,000$33,103
5$30,000$38,411
6$33,000$44,074
7$36,000$50,117
8$39,000$56,564
9$42,000$63,444
10$45,000$70,784
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How buying power is worked out

The calculation runs month by month. The yearly return of 6.5 percent becomes a monthly rate of 0.5417 percent. Each month the balance grows by that rate and then the deposit of $250 is added. Your $15,000 start and every deposit after it keep growing for the rest of the 10 years. To see buying power, take the final balance and divide it by 1.344. That number is one plus the inflation rate of 3 percent raised to the power of 10.

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Worked example

Over 10 years the account grows from $15,000 to $70,784 with $250 added each month. Inflation is set to 3 percent.

Prices grow by a factor of 1.34 at 3 percent over 10 years. The final balance therefore buys about as much as $52,670 does at the start.

Questions about this calculator

Which inflation rate should I use for a 10-year plan when testing 3 percent?

Use a long-run average you are comfortable with. Prices rarely rise at a steady pace so test a low and a high case. Here 3 percent leaves $52,670 of buying power while 5 percent leaves $43,455 and 1 percent leaves $64,079.

What real return is left at 6.5 percent growth and 3 percent inflation over 10 years?

Roughly 3.4 percent a year over 10 years. That is how fast your buying power grows.

What if inflation were 4 percent instead of 3 percent over 10 years?

The balance would buy about $47,819 instead of $52,670.

How much would you need at the end to keep up with 3 percent inflation over 10 years?

$70,784 has the buying power of $52,670. To match $70,784 of buying power you would need $95,127 in future money.

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This page is for education only and is not financial or tax advice.