See how inflation changes the value of money over time: what a future sum is worth in today's money, and how much more the same goods might cost years from now. Essential context for any long-term savings plan.
Inflation impact
£
%
yrs
Value of £10,000 in 20 years
£5,537
In today’s money
Buying power lost£4,463
Future cost of the same goods£18,061
This is why cash held for long periods can quietly lose value, and why longer-term goals are often invested rather than left in low-interest savings.
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Why inflation matters for savers
Inflation is the rate at which prices rise, which means each pound buys a little less over time. The Bank of England targets 2% CPI inflation, though it has been well above that in recent years. For savers and investors, the key insight is real return: if your savings earn 4% while inflation runs at 3%, your money is only growing about 1% in real buying power.
Worked example
10,000 with inflation at 3% for 20 years.
In today's money it will be worth about 5,540 - nearly half.
Put another way, goods costing 10,000 today would cost about 18,060 in 20 years.
This is why holding too much in low-interest cash over long periods can quietly lose value, and why long-term goals are often invested rather than saved in cash.
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Frequently asked questions
What inflation rate should I use?
The Bank of England's target is 2%. For caution over long periods, some people model 3%. Recent years have seen higher figures, so it is worth trying a range.
What is real return?
Real return is your return after inflation. It is what actually matters for buying power: a 5% return with 3% inflation is roughly a 2% real return.
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Important: BrickCrunch provides general information and estimates only — this is not financial, tax, mortgage or legal advice. Calculations are simplified and your circumstances may differ. UK tax and rate figures are checked against gov.uk (21 June 2026 (2026/27 tax year)) but rates change and errors are possible. Always confirm figures with gov.uk or a qualified professional before making decisions.
