Inflation & Buying Power Calculator
What will your money actually be worth? See how inflation quietly erodes today's dollars over the years, the future buying power of a lump sum, the income you'll need later to live the same way, and why a "safe" savings account can still lose ground.
Buying power over time
What today's money is worth as the years pass, your rate versus 2%, 3% and 5% for scale.
Year-by-year table
Buying power in today's dollars, the share lost, and the nominal amount needed to keep pace, each year.
| Year | Buying power (today's $) | Lost to date | Nominal to keep pace |
|---|
Then vs. now, a few familiar prices
Illustrative Canadian prices, 1990 vs. today, and what each might cost in 2051 at your inflation rate. Rough figures, for perspective only.
| Item | 1990 | Today (approx.) | Future |
|---|
How this is calculated
What inflation does to a dollar
Inflation is the annual rate at which prices rise, measured in Canada by the Consumer Price Index (CPI), a basket of goods and services tracked by Statistics Canada. If prices rise i per year, then after N years a basket costs (1 + i)^N times as much. Everything below flows from that single factor.
Future buying power
An amount you hold today (uninvested) buys less each year. Its buying power in today's dollars after N years is amount ÷ (1 + i)^N. At 2% for 25 years, (1.02)^25 ≈ 1.64, so $100,000 buys only about $100,000 ÷ 1.64 ≈ $61,000 worth of goods.
Income you'll need
To buy the same basket later, you need more nominal dollars: amount × (1 + i)^N. A $60,000 lifestyle today needs about $60,000 × (1.02)^30 ≈ $108,700 in 30 years just to stand still.
Total erosion & cumulative inflation
Erosion is the share of buying power lost: 1 − 1 ÷ (1 + i)^N. Cumulative inflation is the total price increase: (1 + i)^N − 1. They are two views of the same factor.
The rule of 70
A quick estimate of how long until money loses half its value: 70 ÷ rate. At 2% that's ~35 years; at 7% (1970s-style), ~10 years. The exact answer is ln(2) ÷ ln(1 + i), which the rule of 70 tracks closely.
Real vs. nominal returns
A "safe" 2.75% high-interest savings account doesn't grow your buying power by 2.75%. The real return is (1 + nominal) ÷ (1 + inflation) − 1. At 2.1% inflation, that 2.75% becomes just ~0.64% real, and if inflation ever runs hot, cash and fixed pensions can post a negative real return.
What's indexed (and what isn't)
Good news: CPP and OAS are indexed to the CPI (OAS quarterly, CPP annually), and the federal tax brackets and basic personal amount are indexed each year, so those keep pace automatically. Not indexed: most savings balances, GICs, and many private/defined-benefit pensions without a COLA clause. This tool models the latter.
Assumptions & what this doesn't model
Constant inflation each year, a single national rate (your personal basket, rent, groceries, tuition, may run faster or slower), and no taxes on the savings-rate comparison. The "then vs. now" prices are illustrative approximations for perspective, not official CPI series. Defaults: Bank of Canada 2.0% target, FP Canada 2.1% planning assumption, and Canada's ~2.1% 1990–2025 average, as of July 2026. To grow money ahead of inflation, see the compound interest calculator, and for retirement in today's dollars, the retirement calculator.
Common questions
How much buying power does inflation erode over time in Canada?
At the Bank of Canada's 2% target, $100,000 today buys only about $67,000 worth of goods in 20 years, and roughly $55,000 worth in 30 years. The formula is future buying power = amount ÷ (1 + inflation)^years. Higher rates erode faster: at 7%, money loses about half its value in just 10 years.
What is the rule of 70 for inflation?
The rule of 70 estimates how many years it takes for money to lose half its purchasing power: divide 70 by the inflation rate. At 2% inflation, buying power halves in about 35 years; at 3.5% in about 20 years; at 7% in about 10 years. It closely approximates the exact logarithmic answer.
What is a real return versus a nominal return?
The nominal return is the headline rate a bank or fund quotes. The real return subtracts inflation and measures actual growth in buying power: real return = (1 + nominal) ÷ (1 + inflation) − 1. A top Canadian high-interest savings account at 2.75% only earns about 0.6% real after 2.1% inflation, so cash barely keeps up.
Are Canadian government benefits and tax brackets indexed to inflation?
Yes. CPP and OAS payments are indexed (OAS quarterly, CPP annually), and the federal tax brackets and basic personal amount are indexed each year to the Consumer Price Index. Most provinces index their brackets too. This protects those amounts from inflation, but not your savings, GICs, or fixed pensions.
What inflation rate should I assume for planning?
The Bank of Canada targets 2.0% (the midpoint of its 1–3% control range), and FP Canada's 2026 planning guidelines assume 2.1%, which also matches Canada's roughly 2.1% average from 1990 to 2025. For stress-testing, it can be worth checking a 1970s-style 7% scenario, when inflation ran into the double digits.