Will you be working the rest of your life?

<p>I'm probably guilty of looking too far ahead, but with time on my hands, i've been giving this some thought recently. How do people make it in life? Or perhaps they don't? A recent report that came out showed that the average person in America spent 101% of their earned income last year. That's right, the average person is spending 1% more than they make with NO savings! Where does it all go? How do people make it through life like that?</p>

<p>So I thought i'd try figuring out the bare necessities that a person needs to live. According to the statistics, the median income for a single person in the country is around $30,000 a year. After taxes, i'd guess that's around $27,000 a year in adjusted gross income.</p>

<p>At the college I plan to attend, they allocate $7,000 a year for room and board, living in a double room in a tiny residential hall with a small meal plan. In reality, i'm estimating at least $7,000 a year for a normal apartment and all utilities plus another $4,000 for all food expenses. So, take $11,000 off of the adjusted gross income, and you're left with $16,000 a year income. </p>

<p>Add liability insurance for a car which currently costs me $1,000 a year, plus the standard health insurances and car insurance payments, and i'm guessing that's about $3,000 a year at least. Now the income left over is down to $13,000 a year.</p>

<p>My college also allocates another $3,000 for personal and transportation expenses. In a real job and after school is finished, i'm guessing this would be much higher, but i'll say $4,000 for all other personal expenses. Now you're down to $9,000 in 'free' spendable income a year for luxuaries or savings. I'm sure there are far more expenses than this, but this would be pretty close to the average person's "bare necessities" i'd think.</p>

<p>Now consider this. The median home price this year was around $215,000! Since I have ambitious plans to never go into debt, I considered the option of paying this all off at once. My parents think that'll never happen, and they're probably right. It's the cheapest way to go by not having to pay loan interest, but it's probably not the most prudent. But let's say I did want to pay off my new home all at once and didn't want to incur the painful compounded interest payments that would be tacked onto a house payment over the course of many years. With $9,000 available for the average person in the country to save each year, it would indeed take many years -- close to 24 years of working, to be exact, just to save enough money to buy an average house with cash! (and we're not talking about anything close to mansions)</p>

<p>Now add on a few additional costs.. three -used- car purchases at the very least over this time frame, an expensive college degree for yourself (or not), and so many other personal and unforseen expenses such as TVs, stoves, dish washers, ovens, and plenty of electronics that need regular replacements. I won't even get into the cost of having a kid and especially helping him pay for college, but the other costs above probably amount to a bare minimum of an additional $100,000 over 24 years, which in itself would take another 11 years to pay off.</p>

<p>By this point, I figure our average person in the above figures is at about age 60 and wouldn't have a penny saved to their name. They'd have a house, they'd have a car, and they've have enough to live daily life, but that's about it. What about retirement then? Retirement doesn't seem possible from these figures, even if the average person wished to and were capable of working until they were 100 years old. What am I missing?</p>

<ol>
<li><p>the median income for a single college graduate is about $50,000 a year.</p></li>
<li><p>the median home price will depend on where you plan to live.</p></li>
<li><p>taking out a loan (for a house or a car) can be beneficial, provided you can invest the money you already have at a higher rate of interest than the loan itself.</p></li>
<li><p>the chances of winning the california super lotto jackpot is one in 18 million.</p></li>
</ol>

<p>good luck.</p>