See What Retirement Cost Through the Past 65 Years (It Was a Lot Lower in the 1950s!)
There’s been a lot of talk about inflation lately, with prices rising at their highest rate in four decades. Inflation impacts more than just how much your groceries or gas cost. It also influences how much money you need to save for retirement.
Think about it: If it costs more for transportation, rent and all those groceries, then you need to save more for your golden years, too. Alas, what your great-grandparents saved and thrived on for their own retirement decades ago won’t be enough now.
One current rule of thumb is that you should save 10 times your current salary to maintain your current lifestyle in retirement. These days, that figure is quite a bit higher than it was just a few years ago. Salaries haven’t kept pace with inflation, but they have risen.
GoBankingRates recently calculated what you’d need to retire comfortably every year for the past 65 years. You can check out the full list by going to the site and seeing how much you’d need in the year you were born. Here are some other fun observations we pulled from the list.
It Was Cheap to Retire in the 1950s
This is not a surprise, exactly, since average wages have risen sharply since then. But it’s jarring to note that in 1951, the average annual salary was under $3,000, and you would need only $27,991 to retire — which, interestingly, is below the average annual wage for Americans up till 1998. In other words, in 1998, the average American made enough in a year for the average 1951 American to retire on.
A Big Change in 1978
The first time the cost to retire hit six figures was in 1978, when it reached $105,560. That was more than double the cost just 12 years earlier.
How About the Last Big Inflation Years?
We know that inflation was high 40 years ago, based on the current “40-year highs” headlines. So what did retirement look like back then? The annual salary had one of its biggest jumps from 1980 to 1981, going up more than $1,200. Previously, most year-to-year rises had been modest. The minimum wage actually rose in 1980 and 1981, up $0.45 in two years.
Another Big Change in 1989
Just 11 years after the cost of retirement broke $100,000, it doubled to above $200,000 for the first time. That also marked the first time the average wage crossed $20,000 per year, and it would double within 18 years, topping $40,000 for the first time in 2007.
What Is the Retirement Cost Today?
We’ve come a long way from 1951 — and not just with our technological advances. In 2021, the most recent year available, the cost of retirement hit an all-time high of $582,600. That was up nearly $100,000 in just five years.
Since 1951, the cost to retire has increased nearly twentyfold, a rate that far outpaces the average rate of inflation. A dollar in 1951 is worth $11.40 today — so even by that math, the equivalent of the 1951 retirement cost would be just over $319,000. We’re well above that now.
Still, with the right strategies, you can put an effective retirement plan in place and be ready for the future. Need a little assistance? Contact Jay today to discuss your options.