Friday, January 25, 2013

What Will $100 be Worth in 10 - 20 Years?

This post estimates the future value of a dollar for the next 1-50 years, for inflation rates ranging from 1% to 10%. The chart works not just for $100, but for any amount -- $1, $1,000, $10,000, $100,000....  And, it works for 5, 10, 20, 30 ... anything up to 50 years. (This is a companion to a previous post which compares today's dollar to earlier years.)

Inflation is one of the biggest risks that current and future retirees face. Given today's life expectancies, even relatively low rates of inflation can devastate the purchasing power of a pension or uninvested cash during your retirement years. How great could the impact be? See below.

Try my new interactive future inflation impact calculator.  It does the same calculations as the graph below, but for any number of years, and for any inflation rate. Then come back to this post; graphs are still better for seeing the big picture.

What Will $100 be Worth in 5, 10, 20, 30... 50 Years?


What will a dollar be worth 5, 10, 20, 30 years from now in future?
What Will $100 be Worth in N Years?


The Impact of Inflation on the Future Purchasing Power of a Dollar

Over the last 100 years, U.S. inflation has averaged about 3%/year. As you can see from the graph above (click to expand), even at these apparently benign rates (the blue line), within 20 years the purchasing power of a fixed pension will be almost cut in half. Twenty years is not a long retirement these days; most advisors recommend that you plan for thirty. Some retirements last even longer.