In article <SMudnexxIOrMoznYnZ2dnUVZ_vShnZ2d[at]comcast.com> ,
joetaxpayer <joetaxpayer[at]nospam.com> wrote:

- quote -

Actually, it was a Chips hamburger. They were a regional chain in
Wisconsin. I recall going for lunch in 1978, thinking that it cost
1/3 of an hour of wages to pay for lunch. That was 59 cents. That
was a 1/4 lb burger, fries, and a coke. Today, it takes me about
5.1 minutes to earn lunch (the 2 hamburger combo with fries and diet
coke at McD's). So, that is about 8 times as much on a dollar and
cent basis.

- quote -

I am sure that you can find numerous examples. For example, I lived
in a home in the 70's that was built for $30K, and was on a $5K lot.
That same house would go for $325K today.

-john-

--
================================================== ====================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
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Mark Freeland wrote:

- quote -

John's 19 cent burgers were "White Castle" 1 ounce meat burgers. I
believe a regular McD is 1/5 lb, about 3oz.
Nice gas chart at http://www.fueleconomy.gov/feg/gasprices/FAQ.shtml has
unleaded gas at 61 cents in 1976, $2.30 in 05, not quite 4X, hardly 10X.

As far as the housing number is concerned, I don't doubt there are
places that saw 10X in 30 years. I suggest the OP shouldn't plan to
retire to one of them.
JOE

"John A. Weeks III" <john[at]johnweeks.com> wrote in message
news:john-C8D4B6.09383907012007[at]sn-ip.vsrv-sjc.supernews.net...
- quote -

While the point is sound, I think we need a reality check here. In the 1973
gas lines, regular gas broke 50c/gallon, well above the 30-40c mentioned;
current prices are now about $2.30 (per CNBC today, though I think it's
higher than that).

In 1976, McD's was giving out Olympics game cards for free Big Macs, fries,
etc. I won so many of them that I still have a hard time looking at the
stuff. But I can tell you that quarter pounders were running about 89c, 99c
with cheese. Today, you can get a double cheeseburger for about the same
price (okay, so it is missing the "special sauce" :-)
http://www.mcdonalds.com/usa/eat/features/dollar.html

What seems to have really gone up is anything labor intensive - education,
healthcare, etc. But "manufactured" goods like fast food and televisions
don't seem to have gone up nearly as much.

Mark Freeland
BnetOnewsX[at]sbcglobal.net

John A. Weeks III wrote:

- quote -

I did not call you a liar. I said "that 30 year's worth of inflation is
10X is a bit extreme." I think it's fair to cite median numbers,
especially for statistics regarding inflation. To your point, warning
the OP of the impact of inflation over the long term is warranted. In
the old days, people retired at 62 and died at 67-70. That made for some
good Social Security calculations, and inheritances. Less than 10 years
worth of inflation wasn't the concern it needs to be today. But I think
preparing for 8%/yr inflation is excessive.
- quote -

I was only referencing the line from "My Generation", 'hope I die before
I get old'. Well, we're all older that that now.
JOE

In article <tM6dnXfbR7G53jzYnZ2dnUVZ_hynnZ2d[at]comcast.com> ,
joetaxpayer <joetaxpayer[at]nospam.com> wrote:

- quote -

Where your argument breaks down is that you cannot take the
statistics of a population, and then impose that on any one member
of that population. The reason is that no one is likely to be
exactly average.

For example, house prices overall in the US may have gone up an
average of whatever you said. However, people who live in
Manhattan, New York, and Manhattan, Kansas, will both see those
numbers as absurd. Prices in Manhattan NY went up far more than
average, while the prices in Kansas were stable or even went down
in places.

The numbers I quoted above are 3 examples taken from real life
where I live. You cannot call me a liar by quoting a statistical
average when these items are actual fact.

- quote -

Both Pete Townsend and Roger Daltrey are in their mid-60's and
show no signs of slowing down.

-john-

--
================================================== ====================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ====================

John A. Weeks III wrote:
- quote -

Your intention is quite honorable, that one needs to account for
inflation during retirement years is certainly true. Your suggestion
that 30 year's worth of inflation is 10X is a bit extreme. From
http://www.westegg.com/inflation/infl.cgi the 30 years from 1975 to 2005
showed prices rising from an indexed 100 to 374.56, so 3.75X as a
factor, or 4.5% geometric average (i.e. the 30th root of 3.75). The 10X
number suggests 30 years of 8% inflation, that's hardly likely to
happen. I think the number we're using here for forecasting purposes is
3%, close to 2.5X over the next 30 years, and a bit more manageable for
planning purposes.
Even housing didn't do the 10X you suggest, I have a nice graph lifted
from the Chicago Mercantile Exchange, showing housing rising from a
Median $50,000 in 1981 to $200,000 in 2005. Funny thing is this; even
though that's 6%/yr over the period, the size of the homes the data is
based on is not normalized, the data is for home sales not price per
square foot. Homes grew 1.5% over that time, and so Housing costs
matched inflation precisely. I posted this on my site along with the
data source, http://www.joetaxpayer.com/housemort.html

Like Elle, I love pouring over the numbers. Unlike The Who, I hope die
die after I'm very old.

JOE

"John A. Weeks III" <john[at]johnweeks.com> wrote
- quote -

God I love this historical financial data chatter. The
numbers seduce me like a high class trash novel.

Admit it: A number of you regulars feel the same way. ;-)

In article <ekn1q250vm3rnk6i75gfq4k8kqoe6teb54[at]4ax.com> ,
Boris <boris[at]boris.com> wrote:

- quote -

People are increasingly living into their 80s, and even 90s.
You are 55, so you could potentially live 30 or more years.
With that kind of investment horizon, I think you still want
a good chunk of your nest egg in the market. You cannot afford
to take the risk of inflation eating it up. Maybe work with
your broker to find a way to hedge it a bit, or put in a
stop loss to sell out if the market does take a big dip (though
that is often the worst time to sell).

If you want some comparison of what can happen in 30 years,
think back to what prices were in the 1970's and 1980's.
The 30 and 40 cent gas is now ten times the price, $30K
houses are now $300K, and the 19-cent hamburgers are over
a buck, and often over $5 at a sit-down place. Do you still
want to earn 3% to 4% when a burger could be $50, a starter
home $3-million, and property taxes $30,000 a year?

-john-

--
================================================== ====================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ====================

My pension alone should cover listed expenses plus all other
essentials, based on today's cost.

- quote -

Hi Boris, how well does this anticipated retirement income
match your expenses? It's hard to comment very intelligently
without this info.

I think the free asset allocation tools at the sites linked
at http://home.earthlink.net/~elle_navorski/id8.html help
one get some perspective on how to invest one's retirement
funds. It's unlikely any of them recommend all insured money
funds at this point.

Scenario:

Retiring this year at age 55
Pension of about 49K
No mortgage payment
About 500K in 403B
Wife's pension to be about 14K (in 2 years)
Retirement expenses will consist mainly of condo upkeep, 2 cars,
light travel, health insurance.

403B monies at present: 24% bond fund, 16% short term equities money
fund, 60% conservative equities (34% world, 66% domestic). Equity
funds have yielded about 10-15% in 2006.

What to do w/ 403B monies? Will likely keep it in 403B until age 59,
then move to IRA. Thinking of moving all to index funds, staying put
in present funds, or going real conservative and moving all to
guaranteed, insured money funds and never having to worry about
principal depleting significantly, though giving up better chance of
significant growth.

Thoughts appreciated...