A dollar today and a dollar in 30 years are not the same thing — even if the number printed on them is identical. Inflation is the reason why, and it's one of the most consequential, least intuitive parts of any long-term money decision.
$100,000 invested today at a 10% average annual return grows to the same nominal number no matter what inflation does — about $1,744,940 after 30 years. But what that number can actually buy depends entirely on inflation.
The nominal line is the raw account balance. The "today's $" line discounts that same balance by 3% annual inflation — the gap between them is purely inflation's effect.
| Inflation rate | Prices rise by (30 yrs) | Real value (today's $) |
|---|---|---|
| 0% | 1.00× | $1,744,940 |
| 3% | 2.43× | $718,892 |
| 6% | 5.74× | $303,812 |
| 8% | 10.06× | $173,408 |
The nominal number never changes — it's always about $1,744,940. But at 8% average inflation, that same balance is only worth about $173,408 in today's terms — roughly a tenth of the nominal figure.
Inflation compounds exactly like investment growth does — which means its effect is small over a few years and enormous over a few decades. A 3% inflation rate barely matters if you're looking one year out. Over 30 years, it roughly cuts your purchasing power in less than half, even while the nominal account balance looks impressive.
The fix isn't complicated: always look at the "today's dollars" figure, not just the nominal one, when comparing a purchase decision across a long timeline. It's the only version of the number that tells you what your future money will actually be able to buy.
Every result in the calculator is shown this way by default — adjust the inflation slider yourself to see how sensitive your own numbers are.