Question 1

What inflation rate should I use?

Accepted Answer

The US historical average is about 3% per year over the long run (1913–present). The Federal Reserve's target is 2%. Recent years (2021–2023) saw rates of 4–8%. For long-term retirement planning, 3% is a common conservative choice. For short-term projections, check the latest CPI data from the U.S. Bureau of Labor Statistics.

Question 2

What is the difference between nominal and real value?

Accepted Answer

Nominal value is the face value in current dollars — the number printed on the price tag. Real value adjusts for inflation to reflect actual purchasing power. A salary that rose from $50,000 to $55,000 over 10 years with 3% annual inflation has a higher nominal value but lower real value, since $55,000 buys less than $50,000 did a decade ago.

Question 3

How does the Rule of 70 work?

Accepted Answer

The Rule of 70 is a quick mental math shortcut: divide 70 by the annual inflation rate to estimate how many years it takes for prices to double. At 3% inflation, prices double in about 70 ÷ 3 ≈ 23 years. At 7% inflation, prices double in about 10 years. Our calculator uses the precise logarithmic formula rather than this approximation.

Question 4

Does this calculator use real CPI data?

Accepted Answer

No — this calculator uses a fixed annual rate that you choose, not live CPI data. This makes it more flexible for scenarios (e.g. planning with a specific assumed rate) but less precise for calculating the exact historical change between two real years. For exact historical CPI comparisons, use the BLS CPI Inflation Calculator at bls.gov.