$125,000 x 4% = $5,000
$1,000,000 x 4% = $40,000
A different perspective, but based on this simple calc, it looks like $125k back then got you a lot further than one million today.
I think one major difference is that real estate was a lot cheaper back then. At least, around these parts it was. My grandparents sold a house in 1958 for $5800. Now granted, it was just a small Sears & Roebuck kit home style, maybe 900 square feet or so, and it needed a lot of work. But, just two years ago, another house of almost the same layout, and also a Sears & Roebuck, went on the market and sold for $152,000. And it was a total gut job, barely inhabitable.
Real estate might be hard to gauge though, because the newer houses they build today are much nicer than the ones back then. And the old houses from back then, if they're still around today, are often either in a state of horrible neglect, or they've been extensively remodeled.
But, by 1962 at least, in Bowie, the next town over, you could get a base 4br/2ba cape cod, around 1500 square feet with a central air, a 1 car garage, and roughly a quarter acre lot for about $12,000. Nowadays, those same houses are usually asking around $250-300k, sometimes more if they're really nice.
So in 1962, buying one of those houses would have only taken about 10% of your $125K nest egg. Today, it would take 25-30%, if not more, of your $1M nest egg.
Property taxes have gone up too, and faster than the rate of inflation I think. I found an old tax bill for my house awhile back, from 1961, and I think it was $200. Well, my last bill was about $3100, or a little over 15X.
And, things like gasoline have outpaced inflation, too. Cars, oddly enough, are one of the few things that HAVEN'T outpaced inflation, if you can believe that. $2200 wasn't going to get you much of a brand-new car in 1959. You might be able to get a full-sized Ford, Chevy, or Plymouth, but it would be a stripper model. My granddad bought a '57 Ford Fairlane 500, a '61 Galaxie 500, and then a '63 Monterrey, and each of those was around $3500 out the door with tax, tags etc. There was so much that was optional in those days...automatic, heater, backup lights, power steering/brakes, whitewall tires, two-tone paint (pretty passe by '61-63 though), AM radio, extra chrome trim, bigger engines, etc, that it didn't take much to jack up the price of a car. I think the base price of a '57 Fairlane 500 4-door hardtop was around $2400, so it didn't take much to jack it to $3500. Want air conditioning? It was around $400-500 back then...one reason that hardtops and convertibles were so popular. It was actually cheaper to buy a convertible without a/c, than a closed coupe with it!
Anyway, one of those $3500 cars would be about $28000 today. But today's $28K car would have air conditioning, power windows, locks, ABS, a nice stereo system, probably remote entry, air bags, and all sorts of safety and convenience equipment that hadn't even been dreamt of back in the late 50's/early 60's.
