posted December 17, 2003 12:42 PM            

That's right: $130, for two tickets and a modest dinner.

That $130 may seem shocking, especially since today that same date with your honey might cost less than $60.

But that's the difference 27 years can make once you factor in inflation. And it's something people forget at their peril when estimating retirement needs.

"People ignore inflation. They do straight-line projections," said certified financial planner Steven Kaye. That is, they may figure they'll need to draw down the same set amount of income every year -- say $70,000 -- instead of $70,000 that increases 3 percent a year.

That's why, if you're 40-plus today, that cool million you're hoping to have set aside for retirement may not go nearly as far as you think if you retire in 2030 or beyond.

Think about it. If your expenses continue to appreciate at their historic rates -- which may or may not be on par with inflation -- the dollar bite for expenses in nominal terms alone is likely to be bigger than you might expect.

If home prices continue to appreciate at or near their historic annual rate of 6.3 percent, according to the National Association of Realtors, a home that today costs $200,000 might cost more than $1 million come 2030. And that dream retirement home that you're envisioning, which today might go for $500,000, would top $2.6 million.

A solid, $21,000 mid-sized sedan like the Toyota Camry listed on KBB.com will be more like $34,000 -- and that's assuming only a 1.8 percent annual growth rate, according to the Bureau of Labor Statistics (BLS).

And a box of prescription pills that runs $170 today is more likely to cost close to $1,000 in 27 years, given a 6.7 percent annual growth rate, according to the BLS.

Even the price tag for the so-called little things won't seem so small.

Taking your grandchild to a baseball game -- which today might cost you $40 -- could set you back $146, given a 4.9 percent appreciation rate. And that's before the hot dogs.

If you're still into artery clogging, a dozen Krispy Kreme doughnuts could cost you nearly $13, double the $6.50 you'll pay today.

And if you normally rack up a $50 bill shopping for food, plan on paying something closer to $111, given a 3 percent annual appreciation rate for groceries, according to the BLS.

Consider lifestyle changes
In addition to inflation and general price increases, there is also a likelihood that consumer spending habits may change, and what you'll want and need may be very different from what current retirees desire.

Take health care. According to Rod Falcon, a research director at the Institute for the Future in Silicon Valley, retirees' perception of health care may be much broader than it is now. More than doctor and hospital visits, health care will encompass an emphasis on healthful living – getting exercise, eating organic foods, and using a wide variety products that promise health benefits.

"Don't underestimate the way you think about health and what counts as health," Falcon said. "The household health budget may expand."

Health care decisions are likely to be made in an environment marked by a decline in retiree benefits, increased health care costs, greater longevity, new health technologies and treatments, and very likely, uncertainty about the future of public programs such as Medicare and Social Security.

And you might want to smoke on this: The impetus to be healthy may not just reflect a love of life. There's likely to be even greater pressure to age well.

"Health status is going to be social status," Falcon predicts.

Make realistic estimates of your needs
So what does all this mean for your nest egg and your current savings contributions?

Even though it's quite an accomplishment to build up a $1 million nest egg, you might want to periodically double-check that that will really meet your needs. If it doesn't, you still have time to adjust your savings contributions to make up the difference.

To get a ballpark figure of what you'll need in retirement, typically you base your goal on the assumption that your nest egg together with other income sources such as Social Security will need to generate anywhere from 70 percent to 100 percent of your current income.

This is an exercise you might revisit every two to three years since your income can change significantly, and along with it your lifestyle and expenses, Kaye said.

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Say you want to replicate your annual income today of $70,000 when you retire in 2030 at age 67. And let's assume you'll live until age 90.

In nominal terms, by 2030, that $70,000 will really be $155,490, assuming a 3 percent annual inflation rate. And that number will continue to grow every year thereafter as you adjust for inflation.

To support those ever-increasing income needs, your nest egg should be about $1.7 million the day you retire. That assumes you'll receive Social Security but no pension. And it also assumes you'll run out of money by age 90.

If you want to push back retirement by five years, to 2035, you'll still need about $1.5 million. Need the equivalent of $100,000 a year by 2035? Plan to have close to $2.5 million on tap, more if you're going to cut out of the work force in 2030.

How much you'll need to save to meet your retirement goals depends on how big your nest egg is today; whether you expect to receive a pension; how conservative your investments; how much you estimate stocks and bonds will return in future years; and, lastly, whether you plan to run down your principal during retirement or leave a pot of money for your heirs

posted December 17, 2003 01:19 PM              

Dinner costs about $30 - $50 including tax and tip (I am quoting places with clean bathrooms, good waitstaff, tablecloth and cloth napkins).

Bar Drinks are another $20 - $30, including tips

posted December 17, 2003 01:46 PM            

Last night I went out to dinner at the Outback. We had two beers each, appetizers and steak. The bill came to just under $100.00

If we had gone to the movies, it would have been at least another $20.00

posted December 17, 2003 02:34 PM            

I can never in my wildest imagination see spending that kind of money on dinner, movie and drinks. Here a good meal is about $8 - $12 and it`s a full meal. A beer is about $2 and a mixed drink $2.25. Movies $4.25 and $5.50. For $100 I could eat til I burst, get drunker than a skunk and watch movies 3 days running.

Wow is all I can say

juniperb

posted December 17, 2003 04:08 PM              

no, not kidding at all below is a glimpse into aphrodite's dating life in San Francisco:

here is the menu for Steps of Rome Mr. Cappie and i go to regularly in the North Beach district. we order 1 bruschetta appetizer to share, 2 entrees, and two glasses of wine @$4 each. tax is 8.75%. tip is a couple dollars. comes out to a little over $30.
http://www.stepsofrome.com/3.html

mixed drinks start at $6 at most bars in the city. we stay away from bars that charge more than $10 a glass. here is one of the ones we go to:
http://www.hobsonschoice.com/special.html

hobson's choice is low-end for san francisco and located in the Haight Ashbury district.

here's are the prices for a popular movie theater starting at $9.50.
http://www.metreon.com/theatres/index.html

we hardly go to movies b/c of this :-/

clubs are even WORSE. there is an door fee between $13 - $20 and drinks start at $7 and up. we wanted to go to the Minna Gallery together b/c he used to be a DJ in austria. may be we'll go for new year's eve. who knows. here's the flyer:
http://www.111minnagallery.com/

posted December 17, 2003 04:49 PM            

The drink ingredients are the same, the brands the same so what gives?

The food, out of the question. I could buy a weeks worth of groceries on whats spent for dinner for 2.

This is the most outlandish:

Loews Theatres at Metreon
General Admission $9.50
General Admission Fri and Sat for shows starting after 10 pm $9.75
Child (2 to 11) $6.00
Senior (62 and over) $7.00
Bargain (Monday - Thursday before 4 pm and first screening of movie on Friday - Sunday and Holidays) $7.00

For a movie they should be tried for highway robbery. Some bargain for the seniors ey, How can they ever afford it. I had thought, in California, where the movie studios are it would be lower than anywhere else.

All I can figure is the average wage is extremely different & it`s reflected in prices.

I`ll see if our movie theater has a web for prices.

Now I know part of why you`re a fabulous cook and host

juniperb

posted December 17, 2003 05:37 PM              

i worry about seniors too b/c aren't a large number on fixed incomes? i think it's more of an epidemic now (extreme word choice, yes i know) than it will be in the future. "back then" people trusted social security to ensure a stable, fixed source of income. now it gets cut along with medicaid budgets. money is tight with a long waiting list for government subsidized housing

these days people are advised to invest in other sources for retirement income. a lot of rich people (net worth $4M+ in my opinion) get taught at earlier ages how to make & keep money. in "older age" they dabble as consultants, part of board of directors, trade stocks, and go into venture capital.

*sighs* it's kind of weird seeing two ends of a picture.

love,

posted December 17, 2003 07:59 PM            

The point of your post that inflation will run at an estimated 3%, (too low in my opinion) for the foreseeable future, makes it imperative that investment of retirement funds now and until retirement be made in investments that return at least 3% just to stay even with the spending power of today's dollar. That will only mean the retirement fund doesn't decline in value but won't do a thing towards making money work, i.e., grow in terms of real dollars.

Money in checking accounts, savings accounts and CD's will not even keep pace with inflation, let alone grow.

Better to find something you really enjoy and start your own business, putting excess profits either back into the business to make it grow to produce more income or invest in real estate which grows on average at about 6% per year and/or in the stock market which shows an annual growth of about 10% per year going back to the early part of the 20th century through all the ups and downs of the market cycles.

Putting money in the mattress, sock or bank is a sure loser as inflation erodes it's purchasing power every year. Whatever the investment is, it must be in something that has tangible value that rises along with inflation but faster or you wind up losing ground or treading water.

We already had a long talk about real estate so I won't go there again.

Sounds like we should all open bars The way I figure, that $15 bottle of gin or vodka pays out about 60 drinks @ $7.00 per, equals $420. Now that's the way to make your money grow. Oh, I forgot the 2 drops of vermouth and olives. Subtract 2 bucks from the total. Still an impressive return.

"Ozone's", hey I like that.

jwhop

posted December 17, 2003 11:01 PM            

Nothing is hopeless ozone, take the word of a Leo on that.

posted December 18, 2003 11:24 AM            

I stand corrected. Well (cheap brand) drinks are 2.25, brand drinks (bacardi ect) 2.75, ice cream/fancy drinks 3.25 to 3.50. The bar (In the city downstate) I worked in, marked up the booze %500. There is a hellofa profit there. Here the average mark up is %200 hence the lower price per drink.

juniperb

posted December 18, 2003 02:03 PM              

the University of California, Davis has a great Enviro. Sci program, and it's one of the top Ag. schools in the US.

good luck

posted December 18, 2003 04:31 PM            

That is too freaky. Being a fellow Sag guess what. I have always wanted the same type of metaphysical / art / bookstore with a coffee shop. A place where people can learn yoga, get their astro charts, meditate and I could sell my American Indian shields. I would like to be near Coeur D'Alene.

posted December 18, 2003 04:57 PM            

My thumb is big fat & green I have huge gardens/flower beds and herb beds. Thats my hobby

posted December 18, 2003 06:02 PM            

My Uncle raises Paints in Kansas. He has some of the top cutting horses and they are all paints. Typically they are known for bad temperments, but he breds them, then keeps them for at least 5 years. He spends time getting to know their personalities, getting them accustomed to people and letting them just blossom. (He is a Gemini with a Virgo moon) I think he has about 30 right now and they all know him and love him.

I put up a couple of pics of the newest addition. Here they are: http://groups.msn.com/LindaLandjoints/shoebox.msnw?Page=9

I hope you like them. I don't have the horses yet. I don't have the room, but I will someday.

There is a joke about Apaches and Painthorses.

posted December 18, 2003 07:58 PM            

LOL, a good joke to share!

juniperb

posted December 19, 2003 07:16 PM            

No Oxy,Bucks is more by Philidelphia,Scranton is in Lackawanna county. In the North-east corner of PA. THE POCONOS!