An interesting thing I saw as I was studying retirement stats today and running calculations: Thirty years ago $1 would buy as many goods as $2.34 would buy you today. No oomph factor in that for you? Let’s try again, 30 years ago $10,000 would buy as many goods as $20,340 would today. Does that catch your attention? It should, that’s a 134% increase, or in other words, one’s investment 30 years ago would have needed to increase 134% just to stay even with inflation. Why did I pick 30 years you might be wondering? Because the oldest Millennial investors are 35 years-old this year and have 30 years until they’re eligible for normal retirement. So put another way, $10,000 in 30 years will buy you as much as $4,100 will today. Do you see where this is going?
If we use history as our guide, and it repeats itself like it’s very well known for, we will see we need to get busy in our investments. Inflation will continue to rise at roughly 4% annually on average at least like it has for many decades now. In an ensuing entry I will go into a detailed explanation about how much you might truly need for retirement compared with what you’ve heard previously. To give you a sneak peak at it, consider that if you’ve been told $1,000,000 is enough to live on throughout retirement; did that information come from someone that considered that $1,000,000 thirty years from now will buy you what $410,000 can today? If you’re smart enough to read this blog, you can do the math on what $2-4 million 30 years from now looks like in today’s figures as well.
Lastly, if you’re younger than 35, and most of you are, these figures get even more hairy. When you break down these large amounts over a 30-year period (and yes, many of us will live to this age or close to it-I’ll discuss these stats too). Stay tuned and I’ll break down what is really going to be happening to your money. You will also get a glimpse of how much you need to save for retirement. This will be different for every person based on wants/needs, but I’ll try to cover them all.
Until next time,