The number itself doesn’t mean anything – the purchasing power of those dollars is what counts.
I know you realize how inflation eats away at the purchasing power of our dollars year after year, but when we put it into perspective it becomes really apparent how one million dollars may not be as big of deal in 40 years.
Rewind 30 Years… Average Costs Then, Now And In The Future
I have no idea what things will cost in 2041, but what I do know is how to research what things cost 30 years ago. There’s no guarantee that inflation will be the same in the next 30 years, but to put things into perspective, I’ll forecast each projected cost with a reasonable average of 3% inflation per year.
- Average Cost of a New Home in 1980: $86,400
- Average Cost of a New Home in 2011: $246,000
- Projected Cost of New Home in 2041: $597,000
That just sounds scary… over a half million dollars for a home on average! I would hope that home prices don’t bubble like they did these last few decades, but for consistency we’ll use the same rates.
- Average Cost of a New Car in 1980: $5,413
- Average Cost of a New Car in 2011: $28,400
- Projected Cost of New Car in 2041: $68,934
Almost $70,000 for an average car? That sounds crazy. If a new car increased in price by five times in thirty years, who’s to say it couldn’t double in the next thirty.
- Cost of a Stamp in 1980: $0.19
- Cost of a Stamp in 2011: $0.44
- Projected Stamp cost in 2041: $1.07
Who knows if stamps will even be around in 30 years!
- Average Cost of a Gallon of Milk in 1980: $2.16
- Average Cost of a Gallon of Milk in 2011: $3.78
- Projected Cost of a Gallon of Milk in 2041: $9.18
- Average Income in 1980: $11,321
- Average Income in 2011: $46,323
- Projected Income in 2041: $112,438
With a quick glance at all of these common expenses, it’s easy to see how one million dollars may go by quicker than we expect. I know that 30 years might seem far away, but ask someone who is age 50+ about the 80’s and 90’s and they’ll probably say it seemed like yesterday. Even if prices aren’t this high in 30 years, the idea of a million dollars will probably continue to get smaller and smaller as people see an increase in income (and expenses!).
I’m still hopeful to have saved a million dollars one day, but if I’m spending $10 for a gallon of milk, I might feel better if my account had $2 million.
Are you shocked by these figures? What other items are you curious about? Mention them in the comments and I’ll run a similar projection.