Inflation over long periods of time

[audreyh1]

Cumulative inflation (through May) has just now exceeded 100% since August of 1999 when I retired, almost 27 years ago. So on average things now cost twice as much.

Over long periods of time inflation really makes a difference. When you look at how much your portfolio has grown since retiring, you should also compare against inflation.

 

[Earl E Retyre]

We are probably in the minority but we find our costs of living to be reduced.

Clothes: we now mainly wear shorts, T-shirts and tank tops, buy them at places like Kohl’s for less than $10.

Food: we mainly eat at home because it’s healthier and we like our cooking. A typical dinner is we split one chicken breast and some vegetables which is really inexpensive.

Gasoline: we only drive one car and not very far. So a tank of gas last us a long time.

Healthcare: ACA/ free.

It seems like the primary expenses that are increasing for us are real estate taxes and the cost of vacations.

Even if we very occasionally need to buy electronics like a TV, we can often buy better technology for less cost. And we usually keep TVs, phones and laptops for quite a few years.

 

[engineernerd]

It's more fun the other way!

But it is also sobering to think that the period since 1999 has had low inflation rates. Inflation was double-digits in the 1970s.

I have not calculated our personal inflation rate but our ACA costs have increased well above the CPI every year for decades, and lately our other insurance premiums have also jumped a lot.

 

[Mr. Tightwad]

Seems like my spending has doubled since 2020.

 

[pacergal]

The cost of living today can be sobering. I close my eyes when I pay for my groceries, hate to look at the receipt!
Our SIL is almost making what DH and I made combined at his age, yet they still struggle with some finances. Housing, medical, groceries are all so expensive.

 

[Al18]

For those that think cost of living is reduced, I guess you don't buy many new cars.

A 2000 Ford Mustang GT (V8) cost $21,015
A 2026 Ford Mustang GT (V8) cost $48,795

 

[surprising]

Seems like my spending has doubled since 2020.

For restaurants it sure seems like a double. I remember thinking going out to eat was going to be half the cost once my 2 kids were off to college, but we are now paying the same or more for just the 2 of us.

 

[Flieger]

For those that think cost of living is reduced, I guess you don't buy many new cars.

A 2000 Ford Mustang GT (V8) cost $21,015
A 2026 Ford Mustang GT (V8) cost $48,795

Wait 1 to 2 years and get it30% less.

Flieger

 

[Earl E Retyre]

I did buy a new fancy SUV for over $50k recently but that was by choice (blow your dough). I could have just as easily bought a new Honda civic in the mid 20’s. When we buy cars they tend to last over 100k miles so we won’t be buying too many more cars.

 

[Al18]

No way in heck the price of a new Mustang GT is going down

 

[Flieger]

No way in heck the price of a new Mustang GT is going down

AI - KBB info

Flieger

 

[disneysteve]

For those that think cost of living is reduced, I guess you don't buy many new cars.

A 2000 Ford Mustang GT (V8) cost $21,015
A 2026 Ford Mustang GT (V8) cost $48,795

Cars are a tough item to use for comparison because the 2026 car has all sorts of features that the 2000 car did not have. I realize that you can't choose a stripped down model today because many of those features are required by law. It just makes it a troubled analogy.

 

[G-Money]

For those that think cost of living is reduced, I guess you don't buy many new cars.

A 2000 Ford Mustang GT (V8) cost $21,015
A 2026 Ford Mustang GT (V8) cost $48,795

An important distinction is pricing versus someone's individual cost of living. Pricing has increased and a Mustang has more than doubled in PRICE in 26 years.

It's still possible to reduce one's cost of living, i.e. by not buying a new car, wearing only casual clothing, not driving as much.

What Flieger is saying, although it's a stupid argument, is you can reduce your cost by foregoing a new car to avoid high prices. Well, that's not really the point if we're comparing the cost of a new car from the year 2000 versus now in 2026. I can avoid the cost by not buying any car at all. What does that prove?

Or I can not eat.
Or seek healthcare.
Or own a home.

etc, etc.

 

[disneysteve]

Cumulative inflation (through May) has just now exceeded 100% since August of 1999 when I retired, almost 27 years ago. So on average things now cost twice as much.

The median household income in 1999 was $42,000.
The estimated median household income in 2026 is $88,000.

So prices have doubled and median income has done the same.

 

[frayne]

Since 1950 inflation has averaged 3.5-4% a year. So basically your money value is halved every 18-20 years.

 

[audreyh1]

Since 1950 inflation has averaged 3.5-4% a year. So basically your money value is halved every 18-20 years.

That illustrates how we went through an extended period of lower than average inflation from mid 1999 through May 2026 because it took almost 27 years to be cut in half.

 

[Pointby2]

Whenever I see this, I remember asking my sister about her retirement plans. First, she invested, but thought the stock market was too risky so she proudly never invested in the market. Then, when she retired, she took all her retirement money and bought a Colorado State annuity. Her comment?

I'll be set, as long as there isn't any inflation.

She is really struggling even after moving to a LCOL location.

 

[disneysteve]

I'll be set, as long as there isn't any inflation.

It’s sad that a mature adult would have no understanding of inflation like that.

Even sadder is the sleazy salesperson who sold her that annuity.

 

[Earl E Retyre]

Cars are a tough item to use for comparison because the 2026 car has all sorts of features that the 2000 car did not have. I realize that you can't choose a stripped down model today because many of those features are required by law. It just makes it a troubled analogy.

Yes this is a good point AND cars today last longer than older cars lasted. A new car isn't like a gallon of milk where you pay more for the exact same item.

 

[Pointby2]

It’s sad that a mature adult would have no understanding of inflation like that.

Even sadder is the sleazy salesperson who sold her that annuity.

She described it as buying an annuity, but after more homework (thanks ChatGpt) she actually was participating in the Colorado PERA program. More like a pension. However, the result is pretty much the same.

There is no automatic adjustment, they adjusted it by 1% in 2025 and 2026 for inflation.

 

[Midpack]

Our current house is (property tax) valued at just over 1000% more than our first house (Jun 1982). It would definitely sell for closer to over 1200% more than our first house cost. How's that for lifetime inflation?

 

[momoney]

For those that think cost of living is reduced, I guess you don't buy many new cars.

A 2000 Ford Mustang GT (V8) cost $21,015
A 2026 Ford Mustang GT (V8) cost $48,795

1999 Mazda Miata $20,095
2026 Mazda Miata $30,430

 

[Al18]

It’s not a good idea to put all of your money into most annuities, because they typically don’t keep up with inflation. You really need some other investments that will keep up with or exceed the inflation rate.

 

[Al18]

2026 Mazda Miata costs $31,665 to $43,770 - so it has doubled in price. https://www.motortrend.com/cars/mazda/miata/2026

 

[rk911]

We are probably in the minority but we find our costs of living to be reduced.

Clothes: we now mainly wear shorts, T-shirts and tank tops, buy them at places like Kohl’s for less than $10.

Food: we mainly eat at home because it’s healthier and we like our cooking. A typical dinner is we split one chicken breast and some vegetables which is really inexpensive.

Gasoline: we only drive one car and not very far. So a tank of gas last us a long time.

Healthcare: ACA/ free.

It seems like the primary expenses that are increasing for us are real estate taxes and the cost of vacations.

Even if we very occasionally need to buy electronics like a TV, we can often buy better technology for less cost. And we usually keep TVs, phones and laptops for quite a few years.

Count us in that group as well. No debt other than day-to-day and CC balances are paid off every month. Utilities including gas, water, electric, sewer, garbage, cable TV/internet, cell phones and streaming services run ~$1200 p/m, med insurance runs another $1000 or so, auto/home/umbrella is maybe another $10k per year. Grocery bill isn't much as we don't eat very many big meals. Health issues keep us close to home so no travel. Our newest TV is 10-yrs old. We both have iPhone 13"s (wife just bought a refurbished 13 to replace her iPhone 7). Positive cash flow every month. We give away much more than we spend.