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 Reverse Inflation Calculator Reverse Inflation Definition
The Reverse Inflation Calculator is used when you want to know today’s buying power for a future amount of money.
A. Values to enter:
• Future amount (\$)
• Expected annual inflation rate (%)
• Number of years

B. Value returned:

Purpose
The most common kind of inflation calculator lets you enter a current dollar value and an inflation rate, and it will tell you the dollar amount of that value in the future. For example, you could enter your current salary and an estimate of the average annual inflation rate for the next five years, and the calculator would tell you what your salary would need to be in five years in order to maintain the same buying power that you have today.
The Reverse Inflation Calculator does this in reverse: It enables you to enter the dollar amount for a future point in time and an estimate of the inflation rate for the time period between now and then, and it will tell you the current buying power in today’s dollars.
Example
Suppose you are expecting to receive a certain amount of money at a given future point in time, and you want to have an idea what that amount of money would be worth in today’s dollars. If you are expecting to receive \$20,000 five years from now, and you have estimated an average annual inflation rate of 4.5%, you will enter the figures as follows:
• Future amount (\$): 20000
• Inflation rate (%): 4.5
• Number of years: 5

When you click the “Calculate” button, the calculator will return the answer: