We always focus on the negative.
Even when we’re experiencing major improvements in our lives… we complain about the minor downsides.
We worry about the market, our investments, and our finances, even though we have all the tools to create a plan that can ensure a comfortable future. An investor 10 or 20 years ago was at a remarkable disadvantage compared with you. Brokers’ fees were high. Index funds were rare. Information was expensive and scarce.
That’s why I’m excited about the next few decades…[ad#Google Adsense 336×280-IA]I think that retirees – and people, in general – are primed for an unprecedented increase in quality of life and financial security.
You have huge advantages… And you’ll only gain more as time goes on.
If you’re preparing for or near retirement, you’ve got a heck of a lot to look forward to…
Many aspects of your retirement will be much more affordable than you may expect.
Technology, efficiency, and competition are lowering prices for consumers, one industry at a time.
Let me illustrate with a simple example. A taxi ride across Baltimore used to cost about $25. If you call for a driver today using the ride-sharing app Uber, you now pay about $7 for the same ride in a cleaner, more pleasant car.
The reason is, Uber cuts out some middlemen who can add costs to the taxi ride. For instance, the taxi companies that rented the cars to the drivers. More important, when you hired a taxi, you were also paying for all the time that the driver drove around looking for a fare.
Meanwhile, the Uber driver uses his or her GPS-enabled app to find a new passenger who’s already close by. He can give people more rides and spend less time cruising around unpaid. This makes for much bigger savings for us and more per hour for drivers.
When companies employ productive assets more efficiently, consumers are better off. Efficiency improvements like this are everywhere.
Look at the brutal price wars between retail outlets like Target (TGT), Wal-Mart (WMT), and Amazon (AMZN). These companies have invested billions of dollars to develop nearly flawless supply chains and logistics. You can buy almost anything from these stores cheaper than ever before.
You can even get two-day shipping for free with services like Amazon Prime.
These savings don’t show up in gross domestic product (GDP) numbers or inflation statistics, but they make real improvements to your quality of life and cost of living.
Quality also makes a difference. Here’s what I mean…
In 1980, you could buy a Ford Escort for $5,198. In 2015 money, that’s a little less than $15,000. Compared with today’s cars, that Escort was a hunk of junk.
Today, for that price, you can get a Ford Fiesta, Hyundai Accent, or Honda Fit. These new cars are miles ahead based on quality, comfort, and reliability. They will easily last you 15 years.
Inflation raises the price of goods, but it also raises income and asset prices at roughly the same rate. Even so, we’ve had low inflation for 25 years and extremely low inflation for the last five. That makes it easier to live off savings.
Your time is also valuable. There was a time when you would spend an hour or so each week going to the bank to cash your paycheck or make withdrawals. Now, I’d be surprised if you spend an hour in a bank branch each year.
The past year has given us more reason to be optimistic. As the price of oil has plummeted from around $110 a barrel to $45, consumers are feeling richer. The typical “rule of thumb” is that a 50% decline in the price of oil is good for a 1% increase in GDP growth… That’s $167 billion of economic activity.
The U.S. Energy Information Administration estimates that the drop in oil prices will add $700 to the typical American’s budget. It’s just another way that the economy can thrive and life can get cheaper.
In 1930, the economist who helped design today’s financial system, John Maynard Keynes, wrote an essay, Economic Possibilities for Our Grandchildren.
Keynes had witnessed the Industrial Revolution and the amazing increase in productivity it sparked. He suspected technology would keep advancing. He predicted we’d be able to fulfill our agricultural needs with one-quarter the labor we did in 1930, and he was right on that measure.
He also suspected that productivity would get so great that we would work only 15 hours a week to fulfill our basic needs.
Now, humanity – ever competitive and striving for more wealth – hasn’t cut back on hours. But most of us who work 40 hours per week could fund a survivable lifestyle at one-third the income for one-third the work.
We work for the creature comforts. The basics are easier than ever to pay for.
The sole holdout in the cheaper life of retirees has been health care. Since health care innovations tend to create more tests and drugs, prices rise. And no matter how much technology progresses, doctors can only see one patient at a time. (Economists call this “Baumol’s cost disease,” and it also affects the cost of education.)
Health care costs have grown at a rate that far outpaces general inflation. Fortunately, though, the rate of inflation in health care has been slowing for the last 15 years.
Many consider this the next problem that technology will tackle. We’ll have to see.
We’re only in the starting stages of this boom, and we think it will accelerate as each technology leads to the next.
In sum, it couldn’t be a better time for those who’d like to – or need to – live cheaply.
Despite what many feel, we’re in a time that will offer great opportunities for retirees…
Sit back, make a little plan, and enjoy it.
Here’s to our health, wealth, and a great retirement,
Dr. David Eifrig[ad#stansberry-ps]
Source: Daily Wealth