1996 ad perfectly predicted today’s high cost-of-living. What it means for the next 30 years — and how to plan

(NEXSTAR) – “They say that in 30 years, a hamburger and fries could cost $16, a vacation could cost $12,500, and a regular car could cost $65,000.”

These predictions were published nearly 30 years ago in 1996 by the Teachers Insurance and Annuity Association of America (TIAA) and the College Retirement Equity Fund (CREF). Magazine advertising It recently went viral on Reddit for its terrifying accuracy.

In these expensive American cities, a $16 burger and fries combo is a pretty good deal. (This year, Five Guys drew criticism for a total of $24 in receipts.) Vacation prices vary widely (whether you’re camping or galavanting across Europe), but prices start at $12,500. The dollar price tag probably isn’t shocking for a solo trip abroad. Family of 4. If we are talking about a standard sedan, the price prediction for a “basic car” is a little higher, but not by far. Some large SUV or pickup truck models.

Despite their successful predictions, the experts at TIAA-CREF are not psychics, they are simply prepared.

“If you look at inflation and a lot of financial data over long periods of time, it’s usually pegged to a certain inflation rate; “I don’t mean that in words, but it’s predictable.”

Financial planners can look at price increases over the past 10, 20, or 30 years and use modeling to predict how much movie tickets, groceries, and gas will cost decades from now.

Melone explained that such projections are important because when thinking about retirement, you need to plan for future living expenses, not current living expenses. “For people who are transitioning towards retirement, the question is how do you actually ensure that you meet your immediate and ongoing needs? [take into account] Why do prices increase over time? ”

One of the best ways to do that, Melone says, is an income annuity that turns your savings into a stable, guaranteed income for life.

“I think a lot of people, when they get close to retirement, say, “I’ve got the money, so I’ll be fine.” What I’ve realized in this job is that money isn’t a plan. Money is just something you have. “There are,” Melone said. “What we do when we work with clients is create projections that predict their life expectancy.”

Then, in 30 years, we won’t have to do what a 1996 magazine ad cynically suggests. And you won’t go anywhere. ”

Instead, Hypothetically speakingyou can drive your $100,000 car to a restaurant, order a $34 hamburger and fries there, and plan your next $26,000 trip without a care in the world.