When today's 50 year old reaches the age of 60 in 2018, £1 million will be worth £820,348 in today's terms, based on inflation of 2% a year. This compares to today's 20 year old whose £1 million will be worth £452,890 when they are 60 years old in 2048.
According to estimates there are 376,000 millionaires in the UK
The value of £1 million will be cut by nearly two-thirds over the next 50 years if retail prices rise in line with the government's inflation target of 2% a year
Martin Ellis, chief economist at Halifax Financial Services, commented: "£1 million is still a lot of money, even though inflation has substantially eroded its purchasing power over the past half a century. Although £1 million cannot fund the lavish lifestyle it once could, it can still go a long way with careful financial planning."
£17.5 million today would be required to enjoy the equivalent lifestyle of a person with £1 million half a century ago.
A 17.5 fold increase in retail prices during the past half century means that someone would need £17.5 million today to enjoy the equivalent lifestyle of a person with £1 million in 1958, according to new research from the Halifax Financial Services.
Alternatively, £57,143 in 1958 would have had the equivalent spending power to £1 million today.
Today's equivalent to £1m in the past
1958 - £17.500m
1968 - £12.991m
1978 - £4.297m
1988 - £2.009m
1998 - £1.318m
2008 - £1.000m
Inflation will significantly erode the value of £1 million over the next 50 years even at 2% per year.
Looking forward, even low rates of inflation would still greatly diminish the spending power of £1 million over the coming years. The value of £1 million will be cut by nearly two-thirds over the next 50 years if retail prices rise in line with the government's inflation target of 2% a year. In this event, someone would need £2.7 million in 2058 to fund the same lifestyle as an individual with £1 million today.
£1m is worth more to someone aged 50 today compared to a 20 year old. The impact of inflation on spending power means that a lump sum of £1 million is worth more to a 50 year old than a 20 year old. When today's 50 year old reaches the age of 60 in 2018, £1 million will be worth £820,348 in today's terms. This is in sharp contrast to today's 20 year old whose £1 million will be worth £452,890 when they are 60 years old in 2048. (Calculations are based on annual inflation of 2% a year.) Successful investment, however, can change this conclusion with a younger person having the opportunity to accumulate interest at a rate above inflation for longer.
£1m still remains a considerable sum. Whilst £1m no longer finances the lavish lifestyle that it did half a century ago, it remains a substantial amount of money. For example, placing £1 million in a high interest savings account paying 5% would yield gross interest of £50,000 per year, or £38,889 after tax (assuming no other income).
