Nominal vs real (inflation-adjusted) value
Your nominal balance is the number of dollars you will have in the future. Your real balance is what those dollars could buy in terms of today's prices. Because prices usually rise, the real value is lower than the nominal value, and the gap widens the longer you invest.
Looking at both numbers keeps expectations honest. A balance that looks large in future dollars may cover less than you think, and the real figure shows by how much. If you want to look at returns without any inflation adjustment, the standard compound interest calculator does that.
The formulas
- Real return = (1 + nominal return) ÷ (1 + inflation) − 1
- Real value = nominal future value ÷ (1 + inflation)years
- Monthly rate m = annual return ÷ 12, applied to the balance each month
- Future value = starting amount × (1 + m)months + monthly contribution × ((1 + m)months − 1) ÷ m, with each contribution added at the end of the month
- Shortcut (approximate): real return ≈ nominal return − inflation
Contributions compound monthly, like on the rest of this site. The real value formula divides the whole balance by the same inflation factor, so it adjusts both your starting amount and everything you add.
Example scenarios
Try these inputs in the calculator above, or compare them to your own plan.
| Scenario | Starting amount | Monthly contribution | Annual return | Inflation rate | Years | Future balance | Real value | Real return |
|---|---|---|---|---|---|---|---|---|
| Steady saver | $10,000 | $500 | 6% | 2.5% | 20 | $264,122 | $161,186 | 3.41% |
| Starting from zero | $0 | $300 | 7% | 3% | 30 | $365,991 | $150,784 | 3.88% |
| Higher inflation test | $10,000 | $500 | 6% | 4% | 20 | $264,122 | $120,542 | 1.92% |
| Lump sum, no contributions | $50,000 | $0 | 5% | 3% | 15 | $105,685 | $67,835 | 1.94% |
Compare the first and third rows: the investment and the timeline are identical, but the only change is the inflation rate. That is the quickest way to see how sensitive your plan is to inflation.
What inflation rate should I use?
For a base case, 2% to 3% a year is a reasonable planning range. The Federal Reserve's FOMC judges that inflation of 2 percent over the longer run, measured by the annual change in the PCE price index, is most consistent with its mandate. That is a policy goal, not a promise, so actual inflation can run above or below it.
US consumer price inflation is published monthly by the Bureau of Labor Statistics as CPI-U. Check the latest release there for the most recent figures. Note that the October 2026 release could not publish 12-month changes because BLS did not collect October 2025 data during a lapse in appropriations, so look at the official page for the current picture.
Then run a second scenario with a higher rate than you expect. If your plan still works at the higher number, you have a safety margin. Also keep in mind that your personal inflation can differ from the national average, for example if housing or healthcare make up a large share of your spending.
Withdrawals and inflation
Inflation matters even more once you start taking money out, because a fixed withdrawal buys less each year. The compound interest calculator with withdrawals lets you raise your yearly withdrawal for inflation and includes the 4% rule. Use it to see how long a balance lasts when your spending keeps pace with prices.
Saving at a bank instead? The high-yield savings calculator and CD calculator work from an APY, and the growth rate calculator turns any start and end value into a yearly rate.