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Zhi Finance » In 2042, what can one million dollars buy?

In 2042, what can one million dollars buy?

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If you start planning for retirement when you are young, you will soon find that you have to save more than one million dollars before retirement. Maybe it sounds like a lot of money. After all, you are going to be a millionaire. Don’t be too excited about your luxurious retirement life. Let’s see what you can buy with one million dollars in 2042.

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We assume that the average annual inflation rate is 3%.

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Car price: In 2012, a standard new car sold for nearly 30000 dollars. In 2042, its price will rise to nearly 72000 dollars. You may be starting to feel less money.

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House price: In many markets today, a standard American family home sells for nearly $200000. The house price in 2042 is expected to exceed 485000 dollars, nearly half of 1 million dollars. This means that in addition to saving a large amount of money in your retirement savings account, you have to pay off all your house loans; Otherwise, your retirement savings will not be much. In 2042, the rent will rise from 1500 dollars today to nearly 3600 dollars.

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Income: What you hope most is that retirement savings will bring you income. It is almost impossible to know exactly how much income a million dollars can bring without spending a penny; This money changes every year. Unless you invest cautiously, the money will depreciate in some years. Even so, you can still get income from $1 million in three ways.

  • 1. Conservative growth: In the face of rising income and inflation, if you want to live on investment for a lifetime, you can spend less than your annual income. Suppose that your average annual income accounts for 7% of $1 million, and you want to leave 3% of it for reinvestment to ensure that the annual income and inflation increase at the same time, then you will only spend the remaining 4%, which means that $1 million can only provide an annual income of $40000. The good news is that in this set of assumptions, money will increase before you die, and you can leave a large amount of money for future generations. However, by 2042, $40000 is equivalent to less than 17000 in annual income. (Maybe your social welfare is enough, but it’s hard to say).
  • 2. Take all of it as income: Select the second option, and you can use all of your annual income of $70000 as expenses. With your social security benefits, the total income may be considerable. But over time, inflation will reduce the value of $70000; This money fluctuates year after year, but will not increase.
  • 3. All expenses: Finally, you can use your income and part of the principal every year in a planned way. If you know how long you can live, this plan will be very good. (The problem is, no one knows how long they can live.) If you assume that you can live for another 20 years after retirement in 2042, $1 million means that you can get more than $94000 a year. The value of this income will gradually decrease in 20 years, which can obviously make you feel. Twenty years later, if you are still alive, you will be penniless.

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It is discouraging, even depressing, to think of spending so much money after retirement. It is almost certain that the social security benefits will be relatively low (because it is possible to introduce a mechanism to reduce benefits, the retirement time will be postponed, and as time goes by, the amount of benefits affected by inflation calculated according to today’s formula will actually be lower).

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Choose not to be discouraged by these realities, choose to save more money every month, enhance your economic strength, and let yourself live a dream life instead of a worried life after retirement. The choice is all yours.