The statement that never falls
At 2.5% a year, close to what most central banks aim for, money loses about 39% of its purchasing power over twenty years. Run that against a £500,000 retirement pot and it buys what roughly £305,000 buys today. No crash. No bad decision, no transaction of any kind; the figure on the statement stays the same or grows while the amount of life it buys quietly shrinks, and there is never a particular day on which anything happened.
Enter an amount, a rate and a horizon, and this calculator shows both directions of that fact: what your money will feel like, and what you would need instead to stand still.
Two translations of one number
The headline answer deflates your amount into today's money. That is the honest translation of a future figure into something you can judge, because you know what things cost now and have no intuition at all for what they will cost in 2046. Underneath, the same amount is inflated forward: to buy in twenty years what this money buys today, you would need considerably more of it. Both are correct, and each earns its keep in a different conversation. Use the deflated figure when judging whether a target is enough, and the inflated one when setting a target from a present-day cost: a wedding, a house deposit, a year of fees.
The table beneath shows 5, 10 and 20 years together because the shape of the effect is the point. Inflation compounds, so it is almost unnoticeable over five years and brutal over thirty, and most people badly underestimate the far end. Compounding also makes the damage multiplicative rather than additive, which is why 2% feels harmless and 4% feels severe: doubling the rate from 2% to 4% takes the twenty-year loss from a third of your purchasing power to more than half, and the extra money needed just to stand still more than doubles. That asymmetry is the single most useful thing this page can show you.
Deflating your own plan, exactly once
If you are signed in with a saved FIRE plan, the tool offers your target pot and your current savings as one-click inputs. Seeing your actual retirement number deflated is a different experience from seeing a round example, and it is worth doing once.
Once, though, because a real mistake lurks here: FireMathLab already projects in real terms. The expected return you enter in the FIRE calculator is a real, after-inflation return (that is what belongs there, always), and the spending figure is in today's money, which keeps every figure on this site in the only unit you can actually reason about. Your projected retirement date is therefore already inflation-adjusted. Deflate the target a second time and panic, and you are double-counting. Treat this page as a way to feel the size of the effect and to sanity-check assumptions, not as a correction to apply on top of a plan that has already made it. Tax, for the record, sits outside the model too; it is applied separately and varies enormously by jurisdiction and wrapper. What decades of rising prices do to a pension in particular is its own question, and the inflation guide takes it up.
Eleven per cent, then nearly zero
The default of 2.5% sits slightly above the 2% that the Bank of England, the Federal Reserve and the European Central Bank each target, and it is a reasonable long-run planning assumption for developed economies. But a target is a design goal, not a guarantee. UK inflation exceeded 11% in late 2022 and sat near zero in 2015 (the full monthly record lives in the ONS's inflation and price indices); the Bank of England's inflation calculator lets you trace what any historical stretch actually did to a pound. Over long periods the average has been closer to the target than to either extreme, which is why 2–3% is the sensible default.
The model applies that single constant rate, compounded annually, and no real economy has ever delivered one. Actual inflation arrives in bursts, and the order of the bursts matters if you are drawing down a portfolio at the same time: a bad inflationary stretch early in retirement does more damage than the same average spread evenly. Nor is any of this a forecast. Nobody knows the next twenty years of inflation, this page included; it is a tool for understanding how sensitive your plan is to an assumption, which is genuinely useful, not a prediction of any kind. So the honest way to use it is to run it twice. Try 2%, then try 4%, and look at how far apart the twenty-year answers sit. That spread is the real uncertainty in any long-range plan, and no calculator can remove it.
Headline inflation is also an average across a basket of goods, and your basket is not the basket. Housing, childcare, energy and healthcare have historically risen faster than the headline figure; electronics have fallen. A retiree's spending looks nothing like a family with young children's, and if most of yours sits in a category that has consistently outpaced the average, a headline rate systematically understates your problem.
Cash, the reliable loser
The practical conclusion is uncomfortable: cash is the asset guaranteed to lose purchasing power. A savings account paying 2% while inflation runs at 3% loses 1% a year in real terms with perfect reliability, no matter how safe the account feels. That does not make cash wrong. It is exactly right for money you will need soon; your emergency fund and the twelve-month costs covered by your sinking funds should be in cash, and the small real loss is the price of certainty.
Money with a long horizon flips the calculation. Over twenty or thirty years the risk of holding cash is not volatility; it is the near certainty of erosion, and the compound interest calculator shows the other side of that trade. One consolation before you extrapolate the gloom to everything you own: your income is not a fixed pot. Wages and many pensions rise over time too, and the UK state pension has a triple-lock uprating, so a figure that ignores income growth overstates the pain for anyone still earning.