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Comment by muhfuhkuh | Hacker News Reader

Can we conclude that this is the wistful daydream equivalent of the "Maserati Problem"[1]? I can definitely say that if 30 years we're looking at half a million dollars as a "cost of living adjustment", that world will for the people who don't make that kind of money be Thunderdome. I mean wages have barely kept up with inflation. In the last 40 years (between 1967 and 2007), median wages have only gone up US$10000 (from 40k to 50k). How the hell are all of our parents going to fare when you need 500,000 to maintain an upper-middle class lifestyle?

I see the numbers adding up (and it is a nicey-nice spreadsheet), it just doesn't make any kind of a sense. I guess that's why I'm only middle-class. I don't see this heinous future coming for all of us.

[1] http://news.ycombinator.com/item?id=1444003

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How the hell are all of our parents going to fare when you need 500,000 to maintain an upper-middle class lifestyle?

If the past 40 years are a guide to the future, then the lifestyle we currently define as "upper-middle class" will be redefined as "poverty" and will be available to virtually everyone, including people who can't even be bothered to find a job.

People will continue to complain about the declining middle class, how the median family can barely afford to live in a 4000 sq ft house with a robotic kitchen/laundry/bathroom and about how unaffordable their stem cell therapy and cloned organs are [1]. They'll watch TV news reports lamenting the bad economy on their 108,000p 10' 3d full immersion TV's, while the uber rich (income inequality will go up as well) do much the same thing, but in a 100,000sq ft house and a 50' TV. Also, the quality of stem cell therapy and robotic surgery available to the rich will be slightly greater.

[1] They will of course lump all medical goods and services together under the catch-all term "health care".

[edit: clarified that I'm thinking about 40 years here.]

I think you're making a mistake trying to apply something like Moore's law to a middle class lifestyle. Niche technological advancements don't necessarily translate to higher standards of living. If you're thinking the middle class life will simply scale the way hard drives and TV resolutions do you're in for a big surprise.

I understand that many of the things we think we "need" or want become very relative over time. But if we include basics like needing food, shelter and then add in middle class health care, mobility, security, leisure and luxury, you are talking about an expensive ticket. Yes we have made impressive advancements and maybe someday we'll have things like 100% robotic aggregation/farming and no longer need to think a lot about how we'll get our food. But I don't think the middle class life will simply becoming the default option anytime soon.

What about overpopulation? Increase demand from developing nations for this "middle class"? What about our numerous energy issues? I'm also not sure what your frame of reference is for the past. I must be stuck in the rebound towards an up trend because I know for a fact that a houses were much more affordable for my parents who lived on one carpenters paycheck, even while I make a higher salary after inflation and have the assistance of my spouses income.

I'm not attempting to apply Moore's law, merely the past 40 years of growth to the next 40 (just as the original poster tried to do).

In any case, the point I'm making is that "middle class life" needs a time period to be attached. "Middle class health care 1970" would be pretty cheap today - any medicine available back then is out of patent, and dying of untreatable cancer is pretty cheap. "Shelter 2010" is 60% bigger than "shelter 1970". "Luxury" in 1970 would be a 32" color TV, as opposed to a plasma screen with playstation today. Basically, "Middle class 1970" == "poverty 2010".

It might be the case that middle class 2010 is as good as it gets - I'm not trying to make predictions. I'm just pointing out that if, as the OP suggested, the next 40 years are as bad as the last 40 years, then we will be doing pretty good.

""Middle class health care 1970" would be pretty cheap today - any medicine available back then is out of patent, and dying of untreatable cancer is pretty cheap."

I question whether availability of drugs is the best indicator of overall health.

We are also a lot more sedentary, the quality of our food is probably not as a good, and we are a lot heavier. Given that, how many drugs do we need to just break even, health wise, with where we were in 1970?

"as opposed to a plasma screen with playstation today"

It would be an interesting psychology study to figure out if a kid with an Atari in the 1970s was objectively less happy and fulfilled than a kid with a plasma screen and playstation today. I suspect it is the relative excitement of being one of the first to get a game before your friends is a bigger factor. I guess it's a little late to start that study at this point, however.

My overall point is that I think comparing quality of life across eras is more complex than just comparing square footage, drug prices, and pixel counts. Unless I misunderstand your point.

I'm not using drug availability as an indicator of health, I'm using it as an indicator of health care. My point is that comparing the cost of health care in the past to health care today is not a fair comparison, since health care today includes vastly more services and products.

As for health, if people enjoy chips more than not being fat, I'm not going to tell them their choices are wrong (at least until 2014, when their choices are inflicted on me). Broccoli is available, they are free to eat it.

As for relative status, only one kid can be the first with a new toy in any era. In principle one could compare opinions and attitudes, but my guess is that they will be roughly constant over long periods. You can find find "kids these days, get off my lawn" and "my parents had it better" articles in newspapers of any era, for example. All I'm really assuming is that having a playstation or viagra is better than not having it.

"Broccoli is available"

In some inner city areas, even this is debatable.

If the past is a guide to the future, then the lifestyle we currently define as "upper-middle class" will be redefined as "poverty" and will be available to virtually everyone, including people who can't even be bothered to find a job.

For many reasons I doubt that the last few hundred years are going to tell us much about the next hundred. So many critical trends are following exponential curves that can't continue on indefinitely.

Exponential curves indeed can't continue indefinitely.

At the same, most of the reasoning about the future by even intelligent people still tends to involve linear extrapolation rather than exponential extrapolation - that's what makes sense to us. Thus it's more likely for a standard prediction is go wrong in the direction of the exponential trends continuing rather than in the direction of the trends stopping.

Moreover, one or another exponential trends might stop but the overall mine that Moore's Law comes out of, miniaturization, is not going to be exhausted at least until human construction reaches the nano scale.

That's exactly why I think trying to predict what the world is going to be like in 40 years is just about impossible. The only thing you can say with much confidence is that it's likely to be very different from the way it is today.

"That's exactly why I think trying to predict what the world is going to be like in 40 years is just about impossible."

Douglas Englebart had a pretty good approximation of what much of our information technology would be like today over 40 years ago.

http://sloan.stanford.edu/mousesite/1968Demo.html

Of course, this was because he put together all of the necessary underlying technology. I remember reading an interview with him in the 90s, asking him if he was surprised how fast technology was moving. He replied, no, he was shocked how long it took for the things he had working in the lab decades ago to reach the main stream.

It will also stay very similar. The outline of life in the 1970s vs 2010 is still fairly similar. Drive around in cars, live in a house, take the subway, read the newspaper, watch tv, go to the movie theatre, buy food at a grocery store, call people on a landline, plug stuff into the wall, use your fridge and hair drier, drive around in your RV, fly an airplane at supersonic speeds, rent an apartment, have a family reunion, go to the doctor, get surgery, take drugs, read a book, go to the public library, go to school, flush a toliet, use an AC, open the windows. The dragon ball Z live action movie, although pretty horrible has a pretty accurate deception how high school will look like in 20 to 40 years. Pretty much the same with more flat screens and computers.

It will also stay very similar. The outline of life in the 1970s vs 2010 is still fairly similar.

That's the entire point of this (sub)thread. Making predictions of the next 40 years based on the last 40 is likely to lead you astray. A whole bunch of things are coming to a head. Coming revolutions in biotech alone are likely to seriously shake things up, IMO.

"fly an airplane at supersonic speeds"

We consumers actually don't do that anymore: http://en.wikipedia.org/wiki/Concorde

I was only looking at the past 40 years, much like the original poster. My edit clarifies this point.

Even in that window of time if the underlying pattern is this: http://en.wikipedia.org/wiki/File:Bacterial_growth_en.svg

40 years doesn't tell you much about the next 10.

Growth rates in recent times have depended largely on finite resources, many of which are now becoming scarce. It may be that we innovate around all of this, but it's far from certain.

But the bacteria growth in Petri dishes is limited by resource, and bacteria has no way to change the situation.

Maybe we are really limited by available resources. We know for sure that we have limited supply of the solar energy. At the other hand, we are just using what is available on the surface of the Earth. Maybe we are going to figure out how to utilize more resources outside the surface of the Earth, or efficient way to use and recycle resources.

Hmm,

Biking through Oakland the other night, I saw a guy pushing a shopping cart with one hand and talking on his cellphone with the other.

A good deal of your lifestyles of the no-longer-needed description might true except ... the 4000 sq ft house.

For the now-permanently-unemployed, it would be a 40 sq ft "home" or perhaps a car or suped-up shopping cart. But still with lots of gadgets.

Space (at the least) isn't going to be made cheaper by mass production even if everything else will.

Any city that's learned to grow vertically would disagree with you. If you thought real-estate was expensive in New York now....

NYC is expensive because its more expensive to build skyscrapers than houses. Its not cheaper because of mass production, there's just enough incentive to spend more money than it takes to build houses because of the local population density.

That's not even imaginative enough. We'll be living in space and the rich will own whole solar systems with strong AI civilizations dedicated to working for them and worshipping them. The poor will barely be able to afford immortality and a space ship for going to work. Your great-granddaughter will complain, "Dad, why can't our Spaceballs One even move a diddly little gas giant while those people have whole solar systems to play with?" "Oww... blame our great-grandfather, he spent all his startup money on a measly 4000 sq ft house 200 years ago. Douchebag thinks he'd only live for 90 years."

this is a libertarian fantasy and nothing more. Wages for most people have been stagnant or declining while energy prices are steadily rising. This is a huge problem

> Wages for most people have been stagnant or declining

Wage growth has been slower than you'd expect because healthcare is getting much more expensive, so the increase is hidden in a worker's benefits, rather than being revealed in higher wages. Overall compensation is increasing: http://www.marginalrevolution.com/marginalrevolution/2007/10...

Unfortunately, most workers don't realize that their healthcare costs have a zero-sum relationship to their wages. This graph shows that point very well: http://voices.washingtonpost.com/ezra-klein/2009/10/will_low...)

yes and no. If we look at the economic growth of the past decade a disproportionate amount has gone to the super rich. If it were only healthcare to blame, or even primarily healthcare, then the delta for different income brackets would match historical trends. It hasn't, and healthcare is getting more expensive, and energy is getting more expensive.

It's a trifecta that is going to hurt.

Please tell me which point I'm wrong on. Do most people not live in larger houses, enjoy greater automation of housework, enjoy larger and better entertainment technologies, and benefit from medical procedures which did not exist in 1967?

I'm disputing the prediction that the future, if we remain on our current course, will be more of the same. Here's what you said, "If the past 40 years are a guide to the future". I'm disputing the idea that income inequality doesn't mean anything because the "poor" will have a higher standard of living that the middle class does today. Again, incomes are on the decline for most americans, and energy prices are rising. There is no way that we will get more of the same if that remains true.

Also, most people I know live in smaller houses than their parents, but that's purely anecdotal and based on the obvious fact that there are more people living on the same amount of earth. I happen to live in a major city.

A quick google search finds many links suggesting house sizes have gone way up. This one says 1500ft^2 in 1973, 2500ft^2 in 2006.

http://www.realtor.org/RMODaily.nsf/pages/News2007032701?Ope...

In spite of the purported declining income and increasing energy prices, people in 2007 have more and better material goods and services than in 1967, far more than the mere $10k increase in real incomes would predict. You could be right, the next 40 years may be different from the last 40 - I'll leave predicting the future to you and Ray Kurzweil.

There was a ridiculous downgrade in credit quality to facilitate that build out of McMansions over the last 10 years . A better analysis of how much real income and how much purchasing power per sq foot of home would have to take in credit quality/debt into account over time to be anywhere near informative. Secondly, increasing energy prices are not purported, they are real: http://www.eia.doe.gov/EMEU/steo/realprices/index.cfm

Real income analysis would require more time than I'm willing to commit right now.

That's an excellent visualization. Thanks for the link.

"I'll leave predicting the future to you and Ray Kurzweil."

Except that you did try to predict the future earlier. Energy prices haven't risen much yet. You have an odd pattern of dodging my main point, and picking at tangential details.

Btw, I put a caveat on the house thing, I live in a major city and I'm sure it's different in most parts of the country. I'll bet this changes when driving long distances to work becomes much more expensive.

I didn't try to predict the future - I explicitly qualified that everything I wrote applied only under certain circumstances: "If the past 40 years are a guide to the future..." You even quoted my qualification.

As for dodging your main point, let me address it more carefully now. You seem to believe that incomes (by which I assume you mean income adjusted for CPI) is decreasing. And yet, over a period in which CPI adjusted incomes remained flat, quality of life dramatically increased. So why do you believe that decreasing CPI-adjusted incomes are worth worrying about?

" why do you believe that decreasing CPI-adjusted incomes are worth worrying about?"

I've said it at least three times already. Because it is highly probable that energy prices are going to increase significantly.

Btw, how do you measure quality of life. I always find it funny when people throw around that term relating to economics.

You are concerned oil prices might increase by a factor of 8? Like in the 70's?

http://www.marketoracle.co.uk/Article1375.html

In any case, I'm not sure what this has to do with CPI-adjusted incomes.

By quality of life, I'm only estimating the direction of change rather than the magnitude. I'm assuming that having more stuff is better - I'm happier with flush toilets/a washing machine/Bioshock than without.

"most people I know live in smaller houses than their parents"

But do they live in smaller houses than their parents lived when they were your friends' age?

yes, but I live in L.A. and I'm sure it's different in most parts of the country. I make way more money than my parents or grandparents, even when adjusted for inflation, but I live in a much smaller place than they did.

I'm curious - do you live in a way smaller space than your parents did when you grew up, or when they were your age?

When I compare my current living space with the house I grew up in, it's significantly smaller. However, my parents were over 40 years old by the time I have my first memories. They'd been saving for close to 20 years to afford that place, while I've been saving for maybe 5 years.

When my mom was my age, she lived in a 4th floor walk-up with one of her friends from college. And yes, it was smaller than my current apartment. If you compare my mom's childhood with my childhood, she lived in a small apartment almost her whole life, until about 3 years before I was born, while I grew up in a house in the suburbs.

I wonder if this is behind a lot of the 20-something angst. We compare our current living standards to our living standards as children, and realize (correctly) that it's not as good. However, that childhood living standard is based on parents that were already at the peak of their careers, and had scrimped for years to get there. Of course we're not going to live as well.

I'm not a 20-something.

We're still safe to assume your parents are around 20 years older than you.

right, but the comment I was replying to was focused on the idea that I'm an angstful 20-something who is just starting a professional career. I'm not, and i have a much smaller place than my parents did at my age. 1200 sq/ft vs 3000ish sq/ft. I think my theory holds for areas that have already developed most of the available land. As population density increases we'll have smaller places than the generation before us in areas that have very little new land to develop.

I actually don't care that my place is smaller, and a bigger place wouldn't increase my quality of life much.

Touche. In order to get an accurate comparison, you'd have to compare to someone your age living in a city as large and dense as LA at the time they were your age. That probably means NYC, London, or Tokyo for your parents or grandparents since there weren't many megacities 30 or 60 years ago.

Your trying to make the population density a constant, my point is that it isn't a constant, but will likely increase going forward.

Why is any of that relevant? If we're discussing poverty rates, then we need to come up with a reasonably objective metric for poverty, not just throw together some cherry-picked indicators. Economists have put a lot of thought into a few metrics, like inflation-adjusted median wage, which you simply ignore in favor of your own 'tv-size index'.

For example, those larger houses may be on cheaper land (further from cities), or people may be spending more of their income on housing (at the cost of, say, food quality, or education). There are a million ways for an individual statistic to be misleading. This is the whole reason that we use aggregated statistics like real median wage.

There is a big difference between that and going from poverty to upper middle class. By your logic those stuck in poverty in 1967 will now have graduated to upper middle class by 2010. Even if that is how you define middle class I don't see very great strides. I rent because the housing market is a mess (http://seekingalpha.com/article/115464-new-home-prices-vs-me...), I wash dishes by hand and don't care for an iRobot vacuum with a state of the art cat fascinating feature, health care is very costly or down right unattainable, but yes I do enjoy my Xbox 360. It hasn't convinced me of your point though.

No, by my logic those living in poverty in 2010 will be living a life that the 1970's would describe as middle class.

Fun fact: the bottom 11% in 1970 didn't have flush toilets.

http://www.digitalhistory.uh.edu/database/article_display.cf...

In 2001, the bottom 7-8% don't have dishwashers, which were generally considered a luxury item in the 1970's. Go read this article, describing the material conditions of the poor (circa 2001):

http://www.heritage.org/research/reports/2004/01/understandi...

Tell me, what items did the middle class of 1970 have that the poor of 2001 lack?

"what items did the middle class of 1970 have that the poor of 2001 lack?"

They're not items, but I'd say hope, stability, confidence, status, etc.

They're not items, but I'd say hope, stability, confidence, status, etc.

Really? In the US? In the 70's? This was at the end of the Vietnam War, during the oil crisis, remember?

As a random example consumer confidence at the lowest point during the financial crisis was still higher than it was in 1973 (during the Oil Crisis): http://useconomy.about.com/b/2008/04/01/consumer-pessimism-s...

I'm guessing the middle class had more than the poor had.

Not outside of the United States, Western Europe, and some parts of Asia and South America. What makes you think the same thing (over 50% reduction in GDP and almost ten million excess deaths) that happened following the bankruptcy of the USSR can not happen once the US is unable service its debt any longer?

it seems to me that predicting the distant (20+ years) future based on the past never really works out.

That's because you're assuming the wrong frame of reference on your singularity. http://www.kmeme.com/2010/07/singularity-is-always-steep.htm...

If you were to drop back to 1970 and estimate the next 20 years by the 2010 scale, things are almost identical. If you measure 2000-2010 on the 1970 scale, things are a hard takeoff.

Can we conclude that this is the wistful daydream equivalent of the "Maserati Problem"

I'll go out on a limb and say that even normal retirement planning (50 years into the future) is a Maserati Problem.

Everybody that makes very long-term projections about money -- whether it's the gloomy "interest on $4m won't last 40 years" variety to the rosy "save $300 a month and the compound interest will make you a millionaire in 50 years" -- commits the same error: They neglect the fact that wars, revolutions, devaluations, confiscations, and other economic disasters have wiped out all savings at frequent points throughout history.

There should be some trillionaires walking around whose ancestors started saving in the Renaissance when modern banking began -- but there aren't.

So if you're talking time scales of 50 years, there is significant probability that your carefully calculated spending or savings plan is self deceit.

There should be some trillionaires walking around whose ancestors started saving in the Renaissance when modern banking began -- but there aren't.

The reason for that isn't financial but usually due to wealth dissipating though marriage. Some wealthy families relied on arranged marriages to keep the wealth in the family, but this kind of arrangement had it's own problems (first cousins marrying each other for multiple generations has clear genetic issues).

Nevertheless, some examples still exist: http://en.wikipedia.org/wiki/Rothschild_family (often claimed to have controlled the largest private fortune in history) http://en.wikipedia.org/wiki/House_of_Medici (although the Medici's lost most of their fortune in the 18th century)

Many rich European families were ennobled at some point, which makes their history more confusing. For example, the Duke of Westminster (6th richest man in the UK) is rich mostly because of his London land holdings. There are numerous other examples like that.

"There should be some trillionaires walking around whose ancestors started saving in the Renaissance when modern banking began -- but there aren't."

Carlisle Cullen. ;-)

Anyway - this is a really good point, but I'll point out something else. Most of the wealthy would-be trillionaires whose fortunes got wiped out passed down another inheritance: their genes. Those same disasters that wipe out the savings of the rich tend to kill the poor, who simply can't afford transportation away from disaster areas, bribes for border guards and security forces, political connections to ensure safety for their children, or information savvy to know when a crisis is coming.

Most of today's middle class is descended from the kings and nobility of the high middle ages. The peasantry just mostly died out, leaving no descendants.

Most of today's middle class is descended from the kings and nobility of the high middle ages. The peasantry just mostly died out, leaving no descendants.

That's simply untrue. For example, the majority of people of European decent in the US, Canada & Australia are from the "peasantry" classes (ok, by the time mass emigration was happing the "peasantry" class had mostly migrated to the factory cities in Europe, but they were still the poor people).

In Australia's case the early white population was mostly prisoners who were almost entirely poor, unprivileged and most certainly not nobility.

Most of today's middle class is descended from the kings and nobility of the high middle ages. The peasantry just mostly died out, leaving no descendants.

Source?

My Google-fu is failing me at the moment. It was from an absolutely fascinating article that suggested that the middle-class arose because of downward social mobility in post-Plague Europe. With the serfs mostly killed off by Black Death, the 3rds and 4th sons of the nobility typically couldn't support a feudal household, and so they had to take jobs as merchants or artisans in the emerging market economies. Along the way, they brought with them some of the values of the nobility (most notably, not having kids until they could support the lifestyle they were accustomed to as children), which allowed Europe to escape the Malthusian trap of the Dark Ages.

IIRC, the genealogical records (of most present-day Europeans and Americans being descended from the nobility) was presented as fact, but the causal link with the rise of the middle class was more tenuous.

I'll look again after I've gotten some actual work for $realjob done.

Sounds like _A Farewell to Alms_ by Clark. Though as far as I can remember the data showed the "merchant class" crowding out the lower classes, not the nobility. Nobles only had about an average amount of surviving children while rich merchants had an above average one. Makes more sense that way: medieval nobility doesn't sound like a great base for middle-class values...

I'm not totally convinced about the theory, but the book was a surprisingly good read.

I'd like to see a source for this. It seems counter-intuitive. A lot of the peasantry were sent to the United States as indentured servants. Most of the white poor land working classes from 17th century on. And it would be consistent with birth rates everywhere else in the agricultural world, that these people had more offspring than the wealthy. So. It just doesn't seem that this would be correct.

That being said. What we call 'The Middle Class' in the United States is kind of deceiving. Class can't simply be a function of how much cash income you bring in a year. Class has more to do with where that income comes from.

Those of us trading our time in exchange for money are working class, even if ( in the rarer case ) it is a greater dollar amount from a person whose primary source of income is the buying low, and selling high of commodities... such as, human labor, or pork bellies... and accumulating and reinvesting the difference.

Most of today's middle class is descended from the kings and nobility of the high middle ages.

Not true for Britain. The peasantry did mostly die out but the nobility did very badly as well. The middle classes were the forefathers. Sources etc. in "Farewell to Alms" by Gregory Clark

  >> There should be some trillionaires walking around whose ancestors started saving in the Renaissance when modern banking began

This ignores that people born to wealth do not have the same sense of frugality of the people who build the wealth.

""From shirtsleeves to shirtsleeves in three generations.": moneycentral.msn.com/content/retirementandwills/planyourestate/p147046.asp

"In the last 40 years (between 1967 and 2007), median wages have only gone up US$10000 (from 40k to 50k)."

That figure that you're citing is IN CONSTANT 2003 DOLLARS.

The nominal median household income in 1967, without adjusting for inflation, was $7,260.87. [1] So a "middle class" income has increased from $7,260 to $50,000 in 40 years.

Hopefully this clarification will make the author's nicey-nice spreadsheet make sense now.

[1] http://www.census.gov/hhes/www/income/data/historical/househ...

The US inflation rate over the last 40 years is readily available from the US Department of Labor based on the Consumer Price Index.

http://www.bls.gov/data/inflation_calculator.htm

$35,594 in 1970 got you the same as $200,000 today.

So why does it strain credulity to believe that $200,000 today will be equivalent to $500,000 in the year 2050? Inflation was much higher over the previous 40 years.

The CPI index is highly "massaged" (looking for a lower than actual value). A better inflation measure would probably be compare commodity prices then and now (copper, silver, gold, oil, etc).

Of course that is compensated partly with productivity increases.

More to the point, of course, is how much you will have to work to have that number of nominal dollars.

Right. People are going crazy over the $500k number 40 years out but, in real dollars, that could easily convert to a middle-class wage today.

Actually, one of my (many) issues with political discourse today is that thanks to inflations, "the rich" has been defined down brutally over the past 30 to 40 years. Anyone currently making $250/year, yeah, if they're hurting it's their own damn fault for overreaching, but that is very rapidly becoming merely upper middle class. Meanwhile, neither our legal/tax nor our social definitions of "rich" are being updated at anywhere near the proper speed.

I recall somewhere seeing that if you take the term "millionaire" at the time that it was coined, it would today take 130 million to have that same level of wealth. I can't seem to scare up a reference, but it's at least broadly correct even if I'm off by 10 or 20%. If you don't retire a millionaire in 2030/2040 money, you're going to be in real trouble. You're probably in trouble if you retire merely as a millionaire.

And yet many of the things that average people enjoy today could not be obtained with any amount of money when my grandfather was alive. Where I live, today, an annual income of U.S.$250,000 is very comfortable indeed (and rather rare).

Right, this is a common economic discussion. People under the poverty line today can afford a roof, TV, and a home phone; 70 years ago they would stand in bread lines. Quality of life has definitely improved.

Whoa, that 40->50k over 40 years stat seemed ridiculous to me so I looked it up and you're right. This strikes me as bizarre because in the UK, both prices and wages have blown through the roof over the same period. I wonder what the deal is here (though the USD-GBP rate was significantly different decades ago).

Those numbers are adjusted for inflation.

Tony's calculations are wrong because he assumed constant inflation.

There will be periods of deflation, and many think that one is starting now. It also won't be the last.

It's not a terrible thing to do though, because it also reflects uncertainty in your income, albeit in a way that people aren't used to seeing. There is a non-zero chance that 10 million dollars today will end up being 3 million dollars next year, and I don't mean "next year" metaphorically, and I'm not even talking about the nastiness of the current economy, either; that's always true, regardless of the state of the economy, just the odds change.

No, he doesn't assume that. He assumes an average rate of inflation with the mean average being above zero, because it's always been that way. http://www.usinflationcalculator.com/inflation/historical-in...

When you're talking about decades of retirement, the compound annual growth rate of inflation is all that really matters.

There isn't clear consensus on inflation/deflation in the near term. While last year saw deflation, a lot of economists think that printing money like we are will cause unusual deflation.

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