For military service members and veterans
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Request a conversationThis inflation calculator from Savant Wealth Management shows what your yearly spending will cost in the future and how much today's dollars will buy by then. Enter an amount, a rate and a number of years.
The result is an illustration, not a forecast. Actual prices will move up and down from year to year, and the calculator uses one steady rate.
How the inflation calculator works
The calculator multiplies your amount by (1 + rate) once for each year. That gives what the same goods will cost. To find what your money buys, it divides the amount by the same factor.
Look at the example below. At 2.5% a year, $100,000 of spending today needs $134,489 after 12 years. The same $100,000 then buys only $74,356 worth of today's goods.
Notice that the loss isn't a straight line. The first 3 years cost you about $7,140 of buying power, while years 18 to 20 cost about $3,090. The percentage is steady, but it applies to a shrinking amount.
| Years ahead | Same goods will cost | What the money buys |
|---|---|---|
| 3 | $107,689 | $92,860 |
| 6 | $115,969 | $86,230 |
| 9 | $124,886 | $80,073 |
| 12 | $134,489 | $74,356 |
| 15 | $144,830 | $69,047 |
| 18 | $155,966 | $64,117 |
| 20 | $163,862 | $61,027 |
When is a result worrying for a veteran?
A result is worrying when the future cost is more than your income sources are likely to grow. Say you're 45, retiring from the service with a pension and starting a second career. You spend $80,000 each year. At 3% for 15 years, that becomes about $124,600 each year.
Here's a quick test. Subtract the part of your income that rises with prices, such as a pension with cost-of-living adjustments, from the future cost. What's left must come from your TSP, your second-career pay or other savings. If that remainder looks large next to your balance, the due date for acting is now, not at 60.
Not every gap is a problem. A second career that raises your pay each year can cover it well. All investing carries risk, and you can lose money, including what you put in, so don't assume returns will fill the gap.
- Pension with no yearly increase: the gap is yours to fill
- Pension with cost-of-living increases: test a lower rate
- TSP withdrawals: the amount you sell rises each year
What does the calculator leave out?
It leaves out nearly everything personal. It uses one rate for every purchase, though health care, housing and food rise at different speeds. It doesn't know your pension adjustments, your TSP balance, your tax cost or your second-career income.
Savant Wealth Management works one decision at a time, in order of due date. Before an advisor suggests a change, we put the numbers for it next to your own: what the pension covers, what the TSP must supply, and what a rise in costs does to each. Then you decide the first step, and only then the next.
The honest limit: no calculator, ours included, can say what inflation will be. The point is to see how much room your plan has if it runs higher than you hoped.
Questions people ask Savant Wealth Management
What inflation rate should I enter in the calculator?
Use the long-run average you'd expect to apply to your own spending, not a single year's headline number. Many people test 2%, 3% and 4% to see the range. The figure is an assumption for illustration, not a forecast, and your own costs, such as health care, may rise faster or slower.
Can I use it to test a military pension?
Yes, the calculator shows how much your income would need to grow just to buy the same goods. In the example, $100,000 of spending today becomes $134,489 in 12 years at 2.5%. A pension with no cost-of-living increase would need to cover that gap from other sources.
How accurate is an inflation calculator?
The calculator treats the rate as constant every year, which real inflation never is. It also uses one rate for everything you buy. Real prices for housing, health care and travel move differently, so treat the result as a rough yardstick rather than a prediction.
What does purchasing power mean in the result?
Purchasing power is what a fixed amount of money can buy later. If prices rise 2.5% each year, $100,000 buys only about $61,027 worth of today's goods after 20 years. The dollars are still there, but each one covers less.
Does the calculator include investment returns or taxes?
No, it works from the amount, rate and years you enter, and it doesn't know your investments. Returns and tax cost are separate questions. Savant Wealth Management advisors look at those together with inflation when they review a plan with you.
Check your rate input
Entering a rate that's too low is the usual slip. Using 1% when your costs have risen 3% makes a 20-year plan look about $20,000 lighter on every $100,000 of spending than it is. Run 2 or 3 rates, and use the highest one to stress-test the plan.
This content is general information and education. It is not individualized investment advice, tax advice or legal guidance. Investing involves risk, including the possible loss of principal. Before making financial decisions, talk to a professional who understands your full situation.