What Will a $100 Bill Buy You in 40 Years?

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Do you have any idea how much a $100 bill will buy you in 40 years? Did you know that it will buy you less than what it does today? I hope so, because without realizing this, you could have a very dismal retirement.

The Average Inflation Rate of the United States

According to Trading Economics, the average inflation rate over the past 100 years has been 3.38%. Most likely, this will be the trend for the future as well. So, what does this mean for your money today? How will it affect your future?

$100 Now

Before we get into what $100 can buy you in the future, let’s take a look at what it can buy us right now. According to the latest Target ad, here’s what that $100 bill can get you today:

  • 40 gallons of milk
  • 5 hoodies
  • 2 pairs of shoes (keep in mind, these aren’t Air Jordans)
  • 30 boxes of cereal

$100 in the Future

Let’s say you put $100 in a savings account that paid 0.00% interest (there actually are some of these out there – please avoid them) and then took it out 40 years from now to buy a few essentials.

In 40 years, that $100 will buy you…

  • 10 gallons of milk
  • 1.25 hoodies
  • 0.5 pairs of shoes
  • 7 boxes of cereal

Wow! That really sucks, huh? Think about it though, if you choose not to invest your current earnings, this is what will be happening in your retirement years. Your hard-earned money will only buy you one shoe in the future (last I checked, most of us need 2 of those….)!!

What About an Inheritance?

If you’re anything like me, you’d like to leave an inheritance for your next generation. Since I’m only 26 years old, I most likely won’t kick the bucket for another 60 years. What will my $100 buy my kids and grandkids?

  • 5 gallons of milk
  • 0.67 hoodies
  • 0.27 pairs of shoes
  • 4 boxes of cereal

Yep, that’s a pretty sad inheritance. It’s no wonder why old people think that a shiny new quarter is so valuable! Back when they were kids, this probably could have bought them 10 candy bars!

Make Sure That You’re Earning Interest on Your Money

I hope that this quick lesson has taught you something about what could happen to your money in the future. If you don’t earn at least 3.5% on your money each year, you’re actually going backwards!

Are you surprised how little $100 will buy you in 40 years? What are you doing to grow your current savings?

 

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Investing Money Retirement

Derek

AUTHOR Derek

My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.

20 Comments

  1. I am not a bit surprised since I know what inflation can do to purchasing power and I know what investments will maintain purchasing power. I am old enough to remember when gasoline was under $1 per gallon and $8000 bought an incredibly nice sports car.
    cashflowmantra recently posted..My Favorite Options Trade

    • Wouldn’t it be nice to stock-pile some cash and go back in time! You could buy anything you wanted! Maybe that should be a goal for 2012….build a time machine….. πŸ˜‰

  2. HAHA I remember that too CFM along with bread only being a quarter and a pack of cigarettes being a buck and at those prices my mom was complaining how much things were as she remembered bread being a dime. At the same time my Grandfather REALLY complained and talked always about how he made less than 20 a month when he first started working for Chrysler when you held the same job until retirement. ( He worked for Chrysler for 40 years!)

    Gotta love inflation!
    Carrie Hetu recently posted..A few more ways we save

    • Inflation is fun just so we can hear those stories!! πŸ™‚ You know, when a candy bar used to be a nickel… πŸ˜‰

        • That would have been pretty cool. I would like to carry a pocket-full of change and feel like I was rich!

  3. Derek,Inflation calculations like this give me chills. That’s why I’m hoarding gasoline and salt in my basement :).

    Seriously though, you are absolutely right. When calculating what you need for retirement you really need to consider what it will buy you at that time.
    Car Negotiation Coach recently posted..Credit Sesame Review

    • LOL at hoarding gasoline and salt in your basement!!! πŸ™‚ I actually heard of someone trying to do that….their house exploded… so all you readers, don’t be getting any ideas. It isn’t worth it.

  4. Great post. It really shows how inflation catches up to us and we have to use foresight with our savings and investments. We are very aware of this when it comes to our retirement savings. We want to make sure we have what we think we will have.
    Miss T @ Prairie Eco-Thrifter recently posted..Investing with the Santa Claus Rally

    • That inflation can really kick our butts if we don’t watch out. I would definitely put a plan in place to make at least 5% each year. If not, then you’re really standing still.

    • Yep! They do lose money in the end don’t they! And they don’t even know it! πŸ˜‰

  5. Wow…this is a really thoughtful post. I never really thought about it like that. Makes me want to invest and save even more than I already am. It puts things into perspective. Merry Christmas!
    Jon – Free Money Wisdom recently posted..9 Tips to Getting Control of Your Finances

    • It sure does doesn’t it? Merry Christmas to you too!

  6. Great thinking i love it, this is a really thoughtful post. I never really thought about it like that. Makes me want to invest and save even more than I already am. Good job keep it up.
    Laura Edward recently posted..How to make money in forex

    • Save, save, save, invest, invest, invest!! πŸ™‚

    • Lol. Yep. Can you buy 50 gallons now and freeze them??? That might be an idea.

  7. Very Good Question. Very Good Question. I believe that the root of all evil is inflation. Inflation creates more inequality between the haves and the have nots all the time. It creates envy those who have the money and those that don’t. It creates different class structures mostly not for the better. I can think of few if any possitive effects of inflation. But I can think of many negative insidious effects that it has on a society. I don’t know what a dollar will buy in twenty or thirty years all I know is that it will buy less how much less who knows.

    • Yep. Inflation bites the big one.


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