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.