Many Americans are now discovering that a comfortable retirement and adequate healthcare are beyond their means. As a consequence, we are working later in life, lowering our expectations, and going without not only luxuries, but essentials as well.
The decisions we make through our lives come with financial consequences. These choices include the careers we develop, the colleges we attend, the people we marry, the size of our family, and the lifestyles we adopt. While many of these choices may seem out of our control, it is possible to make adjustments along the way to minimize their worst financial consequences. The advantage available to everyone is time: The sooner we understand the long-term impact of our decisions and make the necessary changes, the more likely we are to reach our financial goals.
Major Lifetime Expenses
People incur common expense categories as they pass through different stages of life. However, the magnitude and timing of each vary from individual to individual. For example, one person may have $25,000 in student loan debt, while another has none. One person might get married at age 22 and have two children while another gets married at age 35 and has three children – another may not marry at all.
As a consequence, the following categories are necessarily broad, and a specific expense category may not apply to everyone. Nevertheless, a rough timeline projecting the cost of future expenses can enable you to save a portion of your income through each phase of life, helping you comfortably pay expenses when they occur, and ultimately leading to a substantial retirement fund.
1. Student Debt
According to a recent report by the Institute for College Access & Success, seven out of ten graduating college seniors in 2013 had student loans averaging $28,400. The median debt for those who earn post-graduate degrees is an additional $57,600, according to New America – one in ten graduate students owe $150,000 or more.
The cost of obtaining an undergraduate or graduate degree continues to escalate. While there are differences in everyone’s loan limits, interest rates, and repayment requirements, every borrower has to decide whether to focus on repayment as quickly as possible or make minimal payments and begin a savings program.
The taxpayers of America are unknowing victims of corporate extortion, effectively subsidizing big companies at the rate of billions of dollars each year for corporate relocations. The subsidies are often in the form of tax benefits, but may even be cash payments to companies threatening to move from their existing locationor to companies willing to move if the bribe is sufficient.
Consider moves from California and Texas alone. According to an April 2014 editorial in the Dallas Morning News, more than 250 companies have relocated from California to Texas in recent years. Corporate and Texas officials claim that the moves are motivated by Texas’ almost nonexistent regulatory environment, low wage costs, and lack of a state personal income tax. Not surprisingly, officials rarely mention what the news refers to as “a handsome dowry”, including outright cash payments, subsidization of relocation costs, and years of property tax abatements.
It is not just Texas and California where a battle for incentives occur, and the companies with their hands out include the largest, most profitable corporations in the world. Since the 1970s, there have been more than 240 mega-deals across the continental United States, each with subsidies of $75 million or more. According to the Walmart Subsidy Watch, Walmart – the largest company in America, with earnings in excess of $16.5 billion in 2014 – has benefited from more than $1.2 billion in “tax breaks, free land, infrastructure assistance, low-cost financing, and outright grants from state and local governments.”
In an era of state and local government budget shortfalls, requiring cut-backs in education and infrastructure spending, academic studies report that state and local governments offer more than $50 billion annually in incentives either trying to keep businesses or to lure them from other U.S. locations. According to University of Iowa Professors Alan Peters and Peter Fisher, after decades of policy experimentation and hundreds of scholarly studies, there is little evidence that incentives work.
Thomas Peterson of the Goldwater Institute is more blunt, saying, “They just don’t work…You have average citizens and taxpayers subsidizing wealthy corporations.” Some critics note that relocations are a zero-sum game since, according to CityLab, few new jobs are created, but are simply moved from one locale to another.