Broker Check

It All Costs so Much Today

| July 24, 2023

I ran to Dairy Inn for lunch last week.  I ordered at the outside window and, as I was waiting for my food, an older gentlemen pulled in to order an ice cream treat.  This is a man in the community I know and have great respect for.  He was born in the early '30's and has seen a lot of things in this world.  He managed a great business (which is now managed by his son), has raised a wonderful family and positively impacted our community.  There is so much to learn from him. 

After he ordered and we were both standing there waiting for our food, he said something that really made me think.  He said, 'It all costs so much today.'  I started to think about folks his age (which is also my grandparents age) and the price changes they've seen over the last century.  I also thought about my parents and the impact those increases in costs have on them.  Side note; my Dad turns 70 in August...Happy Birthday Dad!  Also the impact on Tammy and I, along with our kids.  So naturally, I thought this might be something my clients were also thinking about.  

My grandfather is close to 95, my Dad 70 and I am knocking on 45.  So that gave me some natural ages and years for archiving the generational price ages for illustration.  I also wanted to understand what those dollar amounts will be in the future so I can have some perspective if I am in my nineties and paying $20 for an ice cream cone.

Below is a table of prices in 1928, 1953, 1978, 1998, 2023, 2048 and 2073.  Through different sources I pulled the pricing of milk, new car, homes and salaries over the last 95 years.  The inflation rate in 2048 is the average price increase from 1928 to 2023 on each particular item.  I carried forward that average rate as an assumption over the next 50 years.  Hourly wage is simply taking average salary and assuming a 2080 hour working year.

There are many assumptions in this worksheet and it is for illustrative purposes only, but you can see the pricing difference over five generations.  You can certainly understand for someone who was paying $0.87 for a gallon of milk when they were 25, paying $3.50 now can feel like sticker shock every time you walk in to the grocery store.  Truly- the value of a dollar can mean significantly different things to different people.

I also thought about the value of assets we own and that have appreciated in price over that same time period.  Below is a spreadsheet showing the value of $1,000,000 in 2023 and what the same value was assuming 5% as a rate of return.  Obviously, this is only an assumption and does not illustrate any particular investment product, taxes or the like.  But as you can see with a 5% assumption of return on your money $1,000,000 was $9,700 in 1928 and will be $11,467,400 50 years from today.


As a retirement planner I have the pleasure of helping people meet some of their life goals and use a multitude of information to help them make educated decisions about their money.  I also attempt to help them overcome some of the anxiety money gives us as we move through stages of life.  Raising a family, transitioning to retirement, aging and losing a spouse can all be anxious moments in our lives.

There is not a one size fits all approach to making money decisions, because we all have different life circumstances which give us different perspectives of the world.  It's our job to walk a mile in our clients shoes so we can give them ideas and options that could help make their financial lives a bit better.

As we age, it is important to keep things in perspective.  It is also important to understand and accept that pricing will likely always go up and that shouldn't be a reason not to enjoy an ice cream cone on a warm summer day.  After all, we can plan for that.