One of the most misleading things we see on a daily basis are television shows which depict that all Americans are wealthy and capable of affording luxurious apartments, expensive cars, and enjoying a social life that involves frequent visits to fancy restaurants and bars. Don’t forget medical care, which is often shown as a very affordable commodity. These opulent lifestyles are, unfortunately, far from reality.
The true lifestyle of a typical American
Watching these shows that portray luxurious lifestyles that involve sailboats, constant parties, expensive antiques, and fancy clothes can leave most of us feeling inadequate. That’s because the common American’s lifestyle is nothing like what’s shown on TV. They can’t afford any of these things, and even if they could, they would much rather spend their hard-earned money on things that really matter like health care, housing, and investments.
According to data released by Census ACS for the year 2016, the average US household income is just over $68,000. This money, however, means differently for different people living in different cities in the US. For example, a single 25-year-old Tulsa resident with an annual salary of $68,000 will live a much different life compared to a married 40-year-old resident of San Diego with four kids and earning the same amount. Although both people might have similar expenses and debts, their lifestyles will be on the opposite sides of the spectrum because of several factors, which include the number of people they need to support, the location of their residence, and their age.
What does your lifestyle mean for your retirement?
You may not have seen your financial situation in this light before, but it is indeed an eye-opener. Your income not only supports your current life, but it also creates a path for your future. The 40-year-old married person may not have student loans unlike the 25-year-old, but they have other priorities like saving up for their retirement fund. This means that their income should be able to support their current and constant expenses like bills, the needs of their children such as dental care, college funds, pay off whatever debts, and have enough that can go into their retirement fund.
Unfortunately, even regular lifestyles have become harder to maintain, especially in expensive cities like San Diego or Los Angeles. While most people channel some amount of their income into an employer-sponsored retirement plan, it has become increasingly harder for them to save up enough to maintain a similar lifestyle after they retire.
With this information, it’s crucial to learn the difference between “want” and “need.” This knowledge will help you either thrive or survive.