See how inflation erodes purchasing power and what your money is really worth over time.
Inflation is the gradual increase in prices over time, which reduces the purchasing power of money. At 3% annual inflation — the long-term US average — prices double roughly every 24 years. This means $10,000 today will only buy what $5,000 buys in 24 years if savings earn no interest.
The Federal Reserve targets 2% annual inflation. The long-term average since 1913 is approximately 3.2%. Inflation peaked at over 9% in mid-2022 before gradually declining. Understanding inflation is critical for long-term financial planning, especially for retirement.
Assets that historically outpace inflation include: stocks (7–10% historical average), real estate, TIPS (Treasury Inflation-Protected Securities), I-Bonds, and commodities. Cash savings lose real value over time unless earning interest above the inflation rate.