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“OLD PEOPLE’S DISEASE.” That’s how I describe my shock every time I go to the grocery store and see how much everything costs.
Partly, this is because I remember how cheap things used to be. My memory of lower prices goes back to the 1960s. My parents would give my brothers and me 50 cents per week in pocket money. I can still recall buying a pair of Reese’s peanut butter cups, then my favorite candy and still top of my list for stealing from a child’s Halloween haul, for a dime. That meant that, with my 50 cents, I could potentially afford five twin packs per week. Yesterday, a twin pack at my local drugstore was on offer for $1.49, a 15-fold increase. I didn’t bite.
But it recently dawned on me that my “old people’s disease” isn’t just the result of my long-ago memory of lower prices. There’s also compounding at work, which means my shock grows exponentially larger as the years roll by.
Think of it this way: If inflation climbs at 3% a year, a $1 item would cost $2.43 after 30 years, or $1.43 more. That’s bad enough. But tack on another 30 years, so we’re now looking at six decades, and that $1 item would cost $5.89, up $4.89.
That said, I try to temper my shock by recalling that the quality of what we can buy today is so much better. Exotic foods beckon from the grocery store shelves. Rubbery mozzarella has been replaced by freshly made, bread comes in countless artisan varieties, and tzatziki, guacamole and hummus have become commonplace. Cars now have safety features that we only dreamed of a few decades ago. Today’s $1,000 laptop offers extraordinarily more speed and memory than one that used to cost twice as much.
And as for wine, I’d argue that the choice and the value have never been greater. At dinner parties, I recall my parents serving just one variety—sparkling Mateus rose. I recently spotted it in the local liquor store and almost bought a bottle. But I wasn’t sure I’d respect myself in the morning.
Take heart! It sounds like you are at just the right age according to research presented by Michael KItces. It is not all a bad situation.
“Yet a growing volume of research studying the actual spending habits of retirees is revealing that this traditional approach may not be entirely appropriate after all. Because as it turns out, retirees don’t actually maintain a stable lifestyle in retirement; instead, spending levels tend to decline (in real terms), as the retiree goes from the “Go-Go” early years of retirement, to the “Slow-Go” years, and eventually the “No-Go” years.”
You likely won’t be spending on the same mix of things at the same levels that you have in the past and thus your overall spending will go down, even in real terms! Are you at the Go-Go, Slow-Go or No-Go stage?
https://www.kitces.com/blog/age-banding-by-basu-to-model-retirement-spending-needs-by-category/
How can Jonathan remember that the candy cost a dime as a little boy? Didn’t he grow up in Britain…
When I was 3 1/2, my parents moved from London to Washington, DC. But I went to boarding school in England starting at age 10, and also attended university and started my career there.
A really good, mainstream television has cost around $600 for a really long time. But compare a $600 CRT TV from the ’70s to a $600 flat panel TV of today? Big difference.