Current Value =
Inflation Rate = 3
Adjusted Value =
Because prices increase over time, an amount of money can buy more today than it can tomorrow. This template considers the effects of inflation on an amount of money.
- Current Value: Current value in today's dollars.
- Inflation Rate%: Annual inflation rate expressed as a percentage. Historically, US inflation has been 3% per year.
- Years: Number of years. Positive means Adjusted Value is in the future; negative means Adjusted Value is in the past.
- Adjusted Value: Inflation adjusted value.
A client wants to retire in 20 years and would like to have $1 million in the bank. If inflation averages 3% over that time period, what is the buying power of that $1 million 20 years from now?
- Current Value: 1,000,000
- Inflation Rate%: 3.0
- Years: 20
Select "=" on Adjusted Value row. The buying power (the value of $1 million tomorrow expressed in today's terms) would be $553,675.75.
If the same client wanted the buying power of $1 million when he retires, how much would he have to actually save?
- Adjusted Value: 1,000,000.00
Select "=" on Current Value row. Your client would need to save $1,806,111.23.