Planning calculator
Inflation and COLA Impact Calculator
Estimate how inflation and COLA assumptions may affect future costs, income, and purchasing power.
How this calculator works
The calculator compounds today's expense by the inflation rate you enter. It also compounds today's amount by the COLA or income growth rate you enter, then compares the two values.
future cost = current amount x (1 + inflation rate) ^ years
COLA-adjusted value = current amount x (1 + COLA rate) ^ years
purchasing power gap = future cost - COLA-adjusted value
Worked example
If a household spends $60,000 per year today, and inflation averages 3% for 20 years, the future cost is about $108,367. If income grows by only 2% per year, the COLA-adjusted income is about $89,158. The gap is roughly $19,209 per year.
What this does not model
This tool does not use official CPI data directly. It does not model taxes, investment returns, healthcare inflation, housing-specific inflation, regional price differences, Medicare premiums, Social Security taxation, or changes in spending habits. It is a scenario tool, not a forecast.
Related tools & guides
- Plain-English guide: Inflation, COLA, and purchasing power
- Retirement income: Retirement Income Withdrawal Calculator
- Social Security timing: Social Security Break-Even Calculator
Frequently asked questions
What is a COLA?
COLA means cost-of-living adjustment. It is meant to help income keep up with inflation.
How does inflation reduce purchasing power?
If prices rise faster than income or savings, the same dollar amount buys less.
Does this use official CPI data?
No. It uses your assumptions. For official historical CPI calculations, use BLS resources.
Is this a retirement plan?
No. It is an educational scenario tool.
Important note
This page is educational only and is not financial, retirement, tax, legal, accounting, or benefits advice. For official inflation data, see BLS CPI Inflation Calculator. For Social Security COLA information, see SSA COLA information.