Figures are illustrative only, ignore charges and tax, and are not a forecast or personal recommendation.
This is a simple, adjustable visualiser for one of the most intuitive ways to understand inflation: taking a single round-number amount — £100,000 by default, but you can change it — and showing what its purchasing power will be after a chosen number of years at a chosen inflation rate.
Why start with a round number?
Percentages and compounding formulas can be hard to hold in your head, but a concrete number like "£100,000 becomes worth roughly £X in today's terms after 20 years" tends to land more clearly. This calculator lets you adjust both the inflation rate and the number of years so you can see how sensitive the outcome is to each assumption — small changes in the inflation rate, held over long periods, produce surprisingly large differences in the final figure, much like the compounding effect on investment growth works in reverse.
Worked example
At a 3% assumed average annual inflation rate, £100,000 today would have the purchasing power of only around £55,000 in 20 years' time — meaning it would buy roughly half as much. At a lower 2% assumption, the same £100,000 retains purchasing power of around £67,000 after 20 years; at a higher 5% assumption (closer to some recent years' experience), purchasing power falls to around £38,000. Try each of these rates in the calculator above to see the visual scale of the difference a couple of percentage points of inflation makes over two decades.
What this means in practice
This isn't an argument against holding cash altogether — cash has an important role for short-term needs and emergency funds, where stability of nominal value matters more than long-run purchasing power. But for money that won't be needed for many years, this calculator illustrates why leaving a large sum in low- or no-interest cash for the long term is rarely a neutral decision: doing nothing still has a cost, just a quiet, gradual one rather than a sudden loss. Our Savings vs Investment Calculator lets you weigh this erosion against a specific alternative — investing the same sum at an assumed rate of return instead.
How this compares to our other inflation tools
This calculator is a simplified version of our general-purpose Inflation Calculator, defaulted to a round £100,000 example for easy visualisation. If you'd rather apply the same calculation to your actual savings balance and see the loss expressed as a percentage as well as an amount, our Inflation Erosion Calculator is built specifically for that.
Frequently asked questions
Why 20 years specifically?
Twenty years is a common horizon for thinking about retirement savings or a child's future — but the calculator lets you set any number of years to match your own planning horizon.
Is 3% a reasonable inflation assumption?
It's a commonly used long-run planning assumption, somewhat above the Bank of England's 2% target, intended as a cautious middle ground — though actual inflation has varied considerably above and below this level in different periods.
Does this calculator account for any interest the money might earn?
No — it deliberately isolates the effect of inflation alone, assuming the money earns no return, so the erosion effect can be seen clearly on its own.
What should I do with money I don't want to lose purchasing power on?
Consider whether it needs to be accessible in the short term (in which case cash, ideally in the best available rate, remains appropriate) or whether it could be invested for the long term instead, which carries its own risks but has historically outpaced inflation over multi-decade periods.
Common mistakes when visualising inflation this way
A frequent mistake is concluding that because £100,000 "loses half its value" over 20 years at a given inflation rate, holding cash is always a poor choice — but this framing ignores that the same money, if needed within the period, may still have been the right choice for stability even while losing purchasing power, and that comparing against a specific alternative (like investing) requires accounting for that alternative's own risk, not just its potentially higher average return.
A second mistake is applying this visualisation to a fixed sum without considering that most people's cash holdings aren't actually static for 20 years — money is usually added to and withdrawn from savings regularly. This calculator is most useful as a conceptual illustration of the erosion effect on a single static sum, rather than a precise model of a real, actively used savings account.
Why does a small change in the inflation rate make such a big difference over 20 years?
Because inflation compounds in exactly the same mathematical way investment growth does — a 1 percentage point difference, applied every year for 20 years, produces a meaningfully different outcome by the end, even though the year-by-year difference looks small at first.
What's a realistic inflation rate to plan around for the next 20 years?
Nobody can know this with certainty — the Bank of England targets 2%, long-run historical UK averages have often run somewhat higher, and recent years have shown inflation can spike well above typical targets for extended periods, so testing a plan against a range (2%, 3%, and perhaps 4-5%) is more robust than relying on a single figure.
Would this look different for a smaller or larger starting amount?
No — the percentage of purchasing power lost is identical regardless of the starting amount, since it's driven purely by the inflation rate and number of years; only the absolute amount lost scales with the size of the starting figure, which is why the calculator lets you change the amount to match your own numbers.
How does this compare with historical UK inflation over real 20-year periods?
Actual 20-year UK inflation outcomes have varied considerably depending on the exact start and end points chosen, reflecting very different economic conditions across different two-decade windows in UK history — which is exactly why testing this calculator at more than one assumed rate gives a more realistic picture than relying on a single figure.