£85.6m today is equivalent to £1m in 1907 says Clerical Medical

6 million today to enjoy the equivalent lifestyle of a person with £1 million in 1907, demonstrating how dramatically inflation has reduced the spending power of £1 million over the past 100 years. Alternatively, £11,700 in 1907 would have had the equivalent spending power to £1 million today, according to new research from Clerical Medical.

Looking over the past 50 years, an individual would need £17.2 million today to fund the same lifestyle as someone with £1 million in 1957. Somebody would now need £2 million to have the same spending power as having £1 million in 1987.

Even the relatively low inflation of the past 10 years has had a marked effect on the value of money so that someone would need £1.3 million to have the same spending power as £1 million in 1997.

Today's equivalent to £1m in the past terms

1907 - £85.6m
1927 - £44.7m
1947 - £27.9m
1957 - £17.2m
1967 - £12.9m
1977 - £4.4m
1987 - £2.0m
1997 - £1.3m

Inflation will markedly reduce the value of £1 million over the next 50 years even at low rates

Low rates of inflation will still significantly reduce 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 even if inflation rises in line with the government's target of 2% a year. In these circumstances, an individual will need £2.7 million in 2057 to fund the same lifestyle as £1 million today.

The corrosive effects of inflation mean that a lump sum of £1 million is worth more to a 50 year old compared with a 20 year old. When today's 50 year old reaches the age of 60 in 2017, £1 million will be worth £820,300 in today's terms. This is in sharp contrast to today's 20 year old whose £1 million will be worth £452,900 when they are 60 years old in 2047. (Calculations are based on annual inflation of 2% a year.)

£1m still remains a considerable sum

Although £1m no longer finances the lavish lifestyle it once did, 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).

Rob Devey, managing director, commented: "There is no doubt that £1 million is still a lot of money although inflation has substantially eroded its purchasing power over the past 100 years. The value of £1 million will be reduced significantly further over the next 50 years even if inflation is kept firmly under control.

Whilst £1 million is no longer enough to fund a lavish lifestyle, it can still go a long way with careful financial planning."