How to use this calculator
- Current amount — the sum in today's rupees.
- Inflation rate — India's long-run average has been roughly 5–6%. For education and healthcare, 8–10% is more realistic.
- Years — how far ahead you're looking.
The formula and how the maths works
Future cost = Present cost × (1 + inflation)years
To see what today's money will be worth in future terms instead, divide rather than multiply:
Future value of today's money = Present amount ÷ (1 + inflation)years
These are two sides of the same coin. The first tells you what something will cost; the second tells you how much your savings will have shrunk in real terms.
What inflation does over time
What ₹1,00,000 will buy in future, in today's terms:
| Years | At 5% | At 6% | At 8% |
|---|---|---|---|
| 5 | ₹78,353 | ₹74,726 | ₹68,058 |
| 10 | ₹61,391 | ₹55,839 | ₹46,319 |
| 20 | ₹37,689 | ₹31,180 | ₹21,455 |
| 30 | ₹23,138 | ₹17,411 | ₹9,938 |
At 6% inflation, money left idle loses about 44% of its purchasing power in ten years and over 80% in thirty. This is why a savings account is not a safe place for long-term money — it is only nominally safe.
The other direction: what things will cost
| Today | In 10 yrs (6%) | In 20 yrs (6%) | In 30 yrs (6%) |
|---|---|---|---|
| ₹50,000 | ₹89,542 | ₹1,60,357 | ₹2,87,175 |
| ₹5,00,000 | ₹8,95,424 | ₹16,03,568 | ₹28,71,746 |
| ₹50,00,000 | ₹89,54,238 | ₹1,60,35,681 | ₹2,87,17,459 |
Real return: what actually matters
Real return ≈ Nominal return − Inflation
| Investment | Nominal | After 30% tax | Real (6% inflation) |
|---|---|---|---|
| Savings account | 3% | 2.1% | −3.9% |
| Fixed deposit | 7% | 4.9% | −1.1% |
| PPF (tax-free) | 7.1% | 7.1% | +1.1% |
| Equity fund (long term) | 12% | ≈10.8% | +4.8% |
A fixed deposit in the 30% slab loses purchasing power. It feels safe because the rupee number never falls — but the number of things it buys does. This is the central argument for holding some growth assets over long horizons, alongside the safety of PPF and deposits.
Using this for real planning
Retirement
If you need ₹50,000 a month today and retire in 25 years, at 6% inflation you'll need about ₹2,14,000 a month then. Plan against that number, not today's. Our retirement calculator handles the full projection.
Child's education
A degree costing ₹15 lakh today, needed in 15 years, at 9% education inflation, will cost roughly ₹54 lakh.
Emergency fund
Review the target every couple of years. A fund sized for 2020 expenses is meaningfully short today.
Common mistakes
- Planning long-term goals in today's rupees.
- Comparing investments on nominal return without subtracting inflation and tax.
- Applying headline CPI to education or healthcare, where costs rise faster.
- Assuming cash is risk-free. It carries certain, gradual loss of purchasing power.
- Using an unrealistically low rate to make a plan look achievable.
Frequently Asked Questions
What is a realistic inflation rate for India?
Around 5–6% for general planning, based on long-run CPI. Use 8–10% for education and healthcare, which have historically risen faster.
How does inflation affect my savings?
It reduces what each rupee buys. At 6% inflation, money kept in a low-return account loses roughly 44% of its purchasing power over ten years.
What is real return?
Nominal return minus inflation. A 7% fixed deposit with 6% inflation gives about 1% of real growth — and less once tax is deducted.
Can inflation be negative?
Yes, that's deflation — falling prices. It's rare in India and brings its own economic problems.
Which investments beat inflation?
Historically, equity and equity mutual funds over long periods, and real estate in some markets. Fixed deposits and savings accounts typically do not, especially after tax.
Is PPF a good inflation hedge?
PPF returns are tax-free, so its real return is usually slightly positive — better than a taxed FD, but modest. It works best as the stable portion of a wider portfolio.
How do I plan retirement with inflation?
Work out today's monthly requirement, inflate it to your retirement year, then size the corpus needed to sustain that inflated amount for your expected retirement span.
Related calculators and guides
Disclaimer. This calculator provides estimates for general guidance only and is not financial, tax or legal advice. Rates, rules and limits change, and your own situation may differ. Please verify current figures with the relevant authority or a qualified professional before acting on them.