When contemplating your future nest egg it seems a million dollars just isn’t enough anymore. Doug Short, the author of an article called, The Millionaire Delusion, notes that in 1999 the Consumer Price Index (CPI) averaged 166.6. In December 2006 the Consumer Price Index averaged 201.8. That means today, $1,000,000 has the purchasing power of only $825,570, or $174,430 less than seven years ago.
Short points out that individuals are duped into the millionaire delusion, the idea that a million dollars will be enough to retire on 20 – 30 years from now. He notes that these delusions are furthered by shows like Who Wants to Be a Millionaire? Over the last twenty years inflation has averaged roughly 3%, over the last half-century roughly 4%. Short provides some interesting tables comparing future inflation rates at 3, 3 .5 & 4%. Ultimately suggesting that you’ll need at least $2 to $2.6 million if you plan to retire 25 years from now.
Check out the article. For those of you bound to retire over 25 years from now… it’s a short but worthy read that reminds us of the need to continue saving.
I love reading the ‘Millionaire in the Making’ stories on CNNMoney.com. This week’s story is about Daren Fike, a 38-year old widower raising his four year-old daughter Melody. It’s a heart warming story that speaks to the importance of making the most of your time on earth. Daren says, “I would gladly give every cent I have to spend just five more minutes with my late wife Christie so you can be sure I’m not taking the time I have with Melody for granted.“
It’s unfortunate that it takes a major event, like death or illness, for people to appreciate their lives. We are often too busy and bothered to cherish the relationships with those around us. It’s wonderful that Daren now treasures his time on earth, especially his interactions with his daughter.
To read ‘A Millionaire in the Making’ click here.