On September 9th my grandson, Declan, turned 1 year old. I have to say that being a grandparent sits well with me. But the financial planner in me kicked in that morning and numbers started flashing through my head as I was imagining Declan’s world in another 20 years when he turns 21.
If we just use the 20 year average rate of inflation of 4%, this is what Declan’s world will look like in 20 years.
Assuming that we are still running on fossil fuel, a gallon of gas will cost him $7.87. That would be about $140 to fill the tank.
The price of that average new car could very well be $65,700. (Think “previously owned,” my boy.)
This is one that we are real familiar with now as we have spent the past summer shopping colleges for our daughter Kayla. A year at an in state university could very well cost $61,300. (College costs have traditionally risen faster than the overall inflation rate, so I’m betting I’m low on this one.)
While I doubt the U.S. Postal Service will still exist in 20 years, if it does, a first class stamp will set the boy back $1.05.
Since he will be a starving college student at this time, he’ll have to pay a little over $7.45 for a gallon of milk, but he won’t be able to afford a box of cereal to pour it over because that will cost him nearly $9.86.
Barring another dose of stupidity on the part of our government and financial institutions, the average price of a home in the United States will be $407,548. At today’s interest rates, his principal and interest payment on that note will be $1961/mo.
The “dollar menu” at Taco Bell will have more than doubled to $2.19.
I hope he isn’t as smooth on top as “Pops” is, but it might save him some money because a men’s haircut could set him back $33.00.
WAIT A MINUTE! Odds are good that I will still be here in 20 years, so not only will Declan be paying $7.87 for a gallon of gas, so will I. I can tell you that I will shave my head before I will pay $33 for a haircut. But then I probably won’t be able to afford that either as a pack of Bic disposable razors will cost me $8.19.
Wow……..
Mike Berry is a Registered Representative offering securities through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Legacy Wealth Management, LLC and Cambridge are not affiliated. Cambridge does not offer tax advice.
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