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May 12, 2011


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Earlier this year I prepared a detailed retirement budget estimate. The total was $67,960; just $40 more that the budget suggested in the article. The individual spending categories are different but the total was almost spot on.

hmmm... I actually think the 67k number sounds a little high, but I guess its just the child care that puts it over. Once the 2 kids are in school, they should be doing pretty well i guess... and by pretty well I mean that they will be able to bank another 500/month in savings.

The 3 biggest items on their list (transportation, food and housing) are huge. I have a family of 4 with 2 cars and we don't spend that much on transportation - not even close. What are they using for the calculation? Food same thing. Housing, I am in Boston (I work in Boston - the reason why my transport costs are low), so this several hundred below what my mortgage payment is. But add them all up, and it is still well above what I pay. My guess is they just took the median cost for each and summed them up, never taking into account the trade-offs that occur. Maybe a good thought exercise, but not useful.

They spend $23 per day on food for 4? If they have a hamburger for every meal and only have a 1/4 pounder each, they spend $12 per day just on hamburger at $3 per lbs.

I use hamburger because its one of the cheapest proteins.

I guess you could eat the college diet of ramen and day old bread.

College savings are ZERO.

Cell phone is ZERO.

Dry cleaning is ZERO.

Donations are zero.

Transportation 1k per month? 2 cars, 300 in gas, 200 in insurance, 100 in maintenance, leaves 400 per month for payments or savings for a cash purchase... that’s only $14,400 every 3 years for two cars.

Retirement savings of $672 per year? Are we really going to claim that is security? Hopefully the TWO of them will have 100k to retire on.

Housing cost at $821 if it only went to mortgage payments, that is a $153k mortgage at 5%. But there are taxes, insurance, maintenance, etc.

No gym memberships, No money for a vacation, No cable tv or going to the movies, No eating out, no internet.

What about birthday parties, Christmas, etc?

At the current rate, their emergency fund will have 1 year of expenses in 15 years! That’s security folks!

How did they buy the blue jeans, shoes, microwave, ladder, hose, lawn mower, toaster, books, computer?

The kids wont be able to have braces and will have limited dental cleanings.

Yeah they are secure and happy. Total nonsense.

Housing: (SEEMS TOO LOW) If this includes all of PITI, then it's pretty modest; although I may have a skewed perspective because I live in a large metro area. Should be possible in many areas of the country though.

Utilities: (SEEMS ABOUT RIGHT) This is pretty close to what I pay for the basic utilities (electric, heating, water/garbage/sewer and phone).

Food: (SEEMS TOO HIGH) We only have two in the house, but we pay far less than that on groceries. Even with two youngsters I don't think we'd spend that much.

Transportation: (SEEMS TOO HIGH) This seems a bit high to me. We've got a couple modest cars that we bought new ~10y ago, and I don't think we spend this much even living in a high-cost gas area. I'm factoring in everything we've paid for the cars (purchase prices, maintenance, repairs, gas, insurance) and averaging it over the lifespan.

Child care: (DON’T KNOW) We don't have kids, but if we did it'd be $0. Of course, that's not really a fair comparison because we'd be financially OK if only one of us worked.

Personal and Household Items: (SEEMS TOO HIGH) I’d be shocked if we spent anywhere near this on basic items such as soaps of all kinds and other personal and home care products.

Health Care: (SEEMS ABOUT RIGHT) That’d be close to what we’d pay as a family for a really nice health policy through my employer and out of pocket expenses.

Emergency Savings: (DON’T KNOW) Obviously saving a lot more than that because we’re able.

Retirement Savings: (DON’T KNOW) Again obviously saving a lot more than that because we’re able.

Taxes: (SEEMS ABOUT RIGHT) I’m assuming that this doesn’t include property taxes. Sounds about right for federal, state, FICA retirement/medical and sales taxes.

Tax Credits: (DON’T KNOW) We’re not eligible for this. Wouldn’t even know how close this’d be for that income level.

Very interesting post for the comments alone!

Instead of looking out from your perspective, you might consider looking at how others might percieve your lifestyle.

Someone looking at my home and cars would guess lower, middle-income. But I chose my lifestyle to accomplish a very specific end: So that I could remain financially independent forever (assuming they find a cure for getting old!).

I could drive a BMW but that would not fit in with my primary financial goal. And, besides, I have simple tastes and do not like having stuff that requires a lot of care. That is the same reason I live in a single-story house that can be heated and cooled with a single HVAC unit. I sold the big house with a pool when I left my last job.

My point is that "enough" is either defined by you or for you; I prefer to define it for myself and I know EXACTLY how much enough costs me.

As a single mom of 2 kids, I think the amount for basic expenses (apart from retirement and savings) seem about right and its pretty close to my personal budget in fact! And we live pretty well--I don't bother with coupons or being frugal, we spend freely on good quality food, the kids have lots of clothing and toys and whatever they need.

In answer to one of the comments above--I think the "personal and household" category includes all those things you asked agout such as blue jeans, computers, birthday parties, microwave, lawn mower etc. $460 per month should cover that all that pretty well. I don't know what else you'd need all that money for.

And you don't need dental insurance to get your teeth cleaned you know--just $50 once per year per person will do fine. I know braces are more expensive but if you don't have dental insurance you should still be able to pay for braces for your kids--just buy used cars and cheaper cell phones or cancel your cable for a while. I mean, what's your priority?

The amount for daycare is about half what you'd expect to pay for 2 kids in daycare full time but I suppose it's the average and includes the "daycare" expenses of families with kids old enough to no longer need daycare and those with one parent staying home.

MC- I think a family of 4 can live off this budget. I think the lifestyle is fine. However, that is not whats suggested. The title of the piece "Defining Economic Security". I dont think they are financially secure. Do you? They are on the edge living pay check to pay check as far as I can tell. Not only are they living on the edge, they arent living that far beyond the basic needs in a modern society.

I also argued the $250k couple referenced by FMF are not rich. They live a great lifestyle and make a great, secure living- but not rich.

My priorities? I dont have cable and my reasons have nothing to do with cost or money. This income allows for zero choices or freedom.

I think this is fairly realistic for a 'basic' level of economic security. I think the transportation and food numbers are a little high though.

Direct link to the full study:
See page 13 for full tables including 1 worker, single parent, 2 workers with no kids.

The $67,920 number is for 2 workers with 1 preschool child and 1 school age child.

Housing cost quoted is for RENT. Why is everyone assuming they'd own a house? They use HUD fair market value rent average. Thats a realistic national average figure.

Homeownership would cost more and they have that as a separate optional expense.

College savings for kids would cost more and is another optional line item.

Transportation figure seems on the high side. They are assuming 2 cars. But $1000 / month for 2 cars is about the total cost of ownership if you buy a medium sedan new every 5 years. You can certainly do cheaper than that.

Personal & household is a odd catch all. They say it includes : "Clothing, housekeeping supplies, personal care products, a landline telephone, minimal life insurance and bank fees are captured under this heading."

They say the food number is : "BEST food costs are taken from the USDA Low-Cost Food Plan, which presents an age-specific, no-frills diet consisting entirely of foods prepared and eaten at home."
The USDA figures are here :
Seems a little inflated to me.

Jim- Fine they rent a place 851k that costs 100k to buy. Rent seems very low even for low rent areas of the country.

Taxes $1000...oops .0755 times 67,000 is over 5k in payroll taxes alone!!! Now add in state taxes.

That's about exactly how much I earn. I am a divorced mother of three but the figures are a bit off. Live in New Jersey. Rent is almost double that for a decent 3 bedroom apt. ($1,500). I don't have childcare expenses anymore since I have teenagers, but private school tuition is kickin' my butt for two children. Food is about $500/mo. Utilities $135. Emergency Savings $300. Stopped 401K contributions after the stimulus bailout. I don't necessarily feel financially secure, however, I'm not totally insecure either since I do have some savings but nothing to scream at but rebuilding. To sum it up, this salary just meets the minimum requirements w/o much extra.

"We are talking about economic security that allows people to live day to day without fear of a lot of the economic insecurity that we've been seeing in recent years."

I don't get it. The budget shows emergency savings of 3% and retirement savings of 1%. At this rate it would take 15 years to build a 6 month emergency fund and retirement would never come. This is security?

Show this example to a conservative like Paul Ryan and have them explain how this couple could possibly save enough for retirement without getting full Medicare and Social Security? They will obviously not be able to save much for college, how will the kids afford it if they want to go? Student loans, grants, etc. - all stuff the conservatives want to cut.

I know many, many people in this exact situation, this could be one of the most common situation in our country. These people are one major car repair or one major illness away from bankruptcy. This is not "secure" at all. Two people, working hard deserve better than this. Meanwhile the average Fortune 500 CEO makes $9.5m!!!! The conservatives are whining about taxing the rich? This couple works just as hard as the $250k couple, but they can't have cable TV, vacations, housekeepers, etc. What is fair about that?

Tyler, I said you can live quite comfortably with those expenses, I didn't say that you *should* do so if you don't have any savings or emergency fund or income above that $68K coming in (which I do). My point was that the family can probably cut those expenses down quite a bit without really depriving themselves, so they can save more and get more real security.

The other question is also interesting--how much income does a person need to feel "secure"? Obviously, this varies quite a bit depending on how old you are, the field in which you work, how good you are at your job/career, how good your health is, how many children you have & how healthy they are, if your parents/family are well-off or poor, how much debt you owe, etc. For me, it's a paid off house, no debt, and $400K in the bank. But as I get closer to retirement, I'll need more savings to feel secure that I have enough to retire.

The conclusion I came to is if it takes 2 people to earn 67K in income and you have to put your kids in day care....then just don't have kids. It's not worth the stress for you or the kids.

67K with one parent working and the other at home is much more affordable and a lot less stressful.

My observations coupled with simple arithmetic based on the budget supplied.

Expenses incurred by having both adults working are consuming half the total income. One adult should quit their full time job and become a stay-at-home parent to eliminate daycare expense, additional income tax and that second automobile while adding in greatly increased tax credits for being a low income family. This same family would have more money at the end of each month with only half the income.

A behavior that I notice frequently with a relative is this. They can frequently tell you how frugal they are and what a great deal they got on a fairly small purchase, however several days later you hear about a good sized but impulsive purchase of something that they just had to have, but really they could have managed quite well without.

To be really frugal you have to be very consistent. It doesn't matter whether it's a $10 purchase or a $100 purchase you still need to ask yourself "Do I really need it?", and if the answer is "Yes", then the next question you ask yourself is, "Is it good value for money?". You also have to have a thick enough skin that it doesn't bother you if someone calls you "Tight" or a "Cheapskate". Just laugh it off.

The old English proverb that reinforces this attitude is, "Take care of the pennies and the pounds will take care of themselves". I regard the term "Cheapskate" as a compliment. Another term I have heard used about me is "He's so cheap it's like getting blood out of a stone to get him to part with money".

As for the budget example, $56/month for retirement savings is a big joke. Also, what happens if one of the wage earners lose their job?

Delurking here ... first time commenter, but I've been reading for a while.

What bothers me about the "what? they can't live on $250K?" folks is the idea that even though it seems like a lot, if a couple is doing everything right, there is very little room for error.

For instance, if the couple above gave anything to charity, or had debt from student loans or credit cards, they'd be out of luck. I don't consider my charitable giving "optional".

To be truly secure, a person needs to have enough income to pay all their bills (the real stuff, not the gardner, personal trainer, and pet-sitter) AND ... save enough for emergencies, save enough for retirement, save enough for kids' college, save enough for kids' weddings (if they have girls), save enough for vacations, and save enough for holidays (Christmas, birthdays).

Yes, getting by is relatively easy. Our family could live at the poverty level, no problem. I added it up, once, and our "must pay" bills are very low ... much lower than the estimates for the family above. But giving and saving are important to us. And that takes a very healthy income.

In a scenario where someone makes $250K, and they're doing everything they SHOULD be doing (like saving and giving), a tax increase DOES hurt. A pay cut DOES hurt. A cost of living increase DOES hurt. You have to be VERY wealthy before you start having gobs of disposable income. Like it or not.

Mark B.
No disrespect, but leaving Social Security and Medicare in their current state would result in exactly the same scenario. There simply aren't enough rich people to tax in order to fund the 20 year projected liabilities of these programs. They were bad ideas to begin with, that ended up creating 2-3 generations of workers that became psychologically and financially dependent on the government for their golden years, all the while being based on a boondoggle that was destined to fail.

If the programs are gradually phased out, people will learn to be more self reliant. Maybe more people will rent instead of buy homes. Maybe people won't buy new cars every 5 years. Maybe kids will go to community college before the University. Maybe weddings will cost $5K instead of $20K. Maybe kids will be decent again, and take responsibility for their parents in retirement, instead of abdicating that responsibility to society.

The world will survive without SS and Medicare. Perhaps economic liberalism won't. Let's hope.

I agree that the transportation budget seems high, but that's a detail.

The overall figure ($67k) should not surprise. We're talking about basic comfortable living, i.e. Joe Average's lifestyle. It's economics 101 that wages will settle so that Joe Average can lead a basic lifestyle like this -- they won't be much higher (Joe would soon be replaced by a jobless guy who is happy with less) and not much lower (employers wouldn't find anybody willing to do the job).

The typical job in the US pays around $40k ($34k after taxes). That's $68k for a typical American family. Coincidence?

Then of course depending on your circumstances (joblessness, many children) you may have it tougher or easier, but this is the typical picture.

@ Nathan:

While it's great that you are able to 'do everything right', you seem to be far removed from what my life and the lives of 80+% of the U.S. population look like; therefore, the minority's rules are way out of balance.

The tide needs to turn.

I sympathize with your comment. America is not the kind of country where the unfortunate and underprivileged should be expected to lead lives like many of the characters so vividly portrayed in the books by the great author Charles Dickens who immortalized the sad lives of so many that lived during the latter part of 19th. century England. To paraphase our President, "That's not who we are".

America, under the leadership of FDR introduced many reforms to try to remedy much of the misery that so many suffered during the Great Depression and the country seemed to be well on its way when Bill Clinton finished his second term leaving a $300 Billion surplus, and with the hope that by continuing his policies the National Debt could be retired by 2008.

Now, ten years later and after huge unfunded programs such as 1) The tax cut for the wealthiest Americans, 2) The war in Iraq, 3) The war in Afghanistan, and 4) The Medicare part D prescription drug plan, the country started running one huge deficit after another. The came the Great Recession that isn't over yet and the budget deficits are in the $1+ Trillion range for many years in the future.

The country needs Social Security and Medicare but doesn't know how to go about putting it on a self sustaining financial basis - herein lies the big problem. It cannot be solved only by raising taxes and it cannot only be solved by making draconian cuts. What it will take is for both political parties to come together, stop posturing and squabbling and work out a plan that will work for the coming decades.

There is also the problem of demographics. Americans are living longer, want to retire earlier, and the big bulge of the baby boomers has to pass through the SS and Medicare pipeline. This is a major national problem, I hope are leaders are up to the challenge.

@Old Limey: why are you (and many economists) saying the deficit can't be solved by raising taxes? In my country of birth in Europe, taxes are 43% of GDP, compared to 24% in the US.

I believe that our tax code certainly has to undergo a significant revision. Right now for example the oil that belongs to the USA and all of its people is being pumped out by oil companies that are not paying the USA anywhere near what the oil is worth and have been making huge profits for years. There are also the perfectly legal loopholes that allowed General Electric to pay $0 in income taxes in 2010 by sheltering their profits in foreign countries. On-line retailers are also, in many cases, not collecting taxes to be passed along to the states. Then there is the whole can of worms we call "itemized deductions". The tax code is so heavy, unwieldy, and hard to comprehend that most people need a CPA to do their taxes for them. I still do my own but I'm in the minority.
There are also consumption taxes, like the European VAT taxes that need to be part of the revenue stream.

We also cannot ignore the other component which is making cuts in popular programs. We have military bases all over the world, some of which have been there for many decades. We are also still building weapon systems that were credible during the days of the Cold War with the USSR but can no longer be justified in light of the state of our economy and the threats that we face. I don't see why America has to take the role of the World's Policeman any more, we just can't afford it. Germany, the country we defeated in WWII, is running a trade balance whereas we are running a huge trade deficit because we shifted so much of our manufacturing overseas. Some of the best economists are warning that we are on the brink and that we can't wait much longer to get our house in order if we want others to have faith in our dollar and for it to remain the reserve currency of the world.

The whole issue of levying taxes and funding government programs needs to be thoroughly examined by the best minds available if we are to spend our tax money wisely. As it is, other countries such as China, Japan, and France are leaving us in the dust when it comes to Rapid Transit and Green Energy.

We all know that right now the Rich are getting Richer and the Poor are getting Poorer. I happened to emigrate at a great time in history, work in a thriving defense industry, get nice promotions, invest wisely, save hard, and benefit from the Bubble so I am doing very well indeed but if I wanted to come to the USA from England today I doubt very much if I would even be able to get a Visa, let alone great well paying jobs that lasted 36 years without a single day's unemployment. My pension and investment income today is five times what it was the day I retired in 1992, I was very fortunate indeed.

@Old Limey,
Just a couple of comments ... we no doubt have differing opinions on economic policy, and I don't expect to change your mind, but I'll state my peace anyway ...

1. The only cases in history where the masses, that is the everyday, ordinary citizen, has been able to escape the Dickensian poverty you speak of are the cases where there has been free trade and the free flow of capital in the private economy. No government has ever been able to pull it's poorer, less productive citizens out of poverty by confiscatory taxes on the richer, more product citizens.

Collectivism, even in social democracies, only survives on the back of the success of the former era of capitalism, and even then, only temporarily.

2. Historically, despite wild fluctuations in the top marginal income tax rates, the US Federal Government tax revenues have been between 15-20% of GDP. You can raise taxes on the rich all you want, but tax revenues remain relatively consistent.

3. You mentioned Clinton's time in office, where the top marginal rate was 39%, instead of 36%. Tax revenues were still within normal ranges, but GDP was up, and spending as a percentage of GDP was low, compared to the late 2000s. (It fell through the Clinton admin, bottoming out around1999) That's pretty much a recipe for surpluses (a strong economy and low government spending).

4. FDR used Social Security as a means of promising immediate benefits to seniors, by laying the bill at the foot of workers. The only problem is, the 4 to 1 worker to retiree ratio was bound to implode. It's also worth noting that the Social Security Act did nothing to help the economy, which would take another 10 years to recover AFTER Social Security was made law.

5. "Tax Cuts" aren't "programs" that can be "unfunded". See point #2. Tax rates don't affect tax receipts to any significant degree.

6. How is Medicare Part D any worse than Medicare itself? It's all just a way to buy votes from seniors.

7. I happen to agree with you about military spending. Operating foreign military bases and engaging in senseless conflicts in countries that never attacked us is costing us trillions. Democrats had the Presidency, and both houses of Congress, witha supermajority in the Senate, and didn't do a thing about it. Instead they spent all their political capital enacting yet another unaffordable entitlement, despite already record spending, deficits, and debt. I guess they're no better than the Republicans. Actually, worse.

I hope that the government can pull its poorer, less productive, and less educated citizens out of poverty as the current situation starts unfolding but I certainly wouldn't bet on it.

The prosperity that helped me become wealthy and made so many billionaires here in Silicon Valley was "The Computer" and then "The Internet", the greatest inventions in more than 100 years, even greater than the automobile and the aeroplane, and helped along by the technological breakthroughs that came out of the arms race during the "Cold War" which lasted from the end of WWII almost until I retired in 1992. I don't believe that other such great earth changing inventions are in the cards for quite a long time, certainly not during the lifetime of a 76 year old. There will definitely be more great medical advances that help people live longer but that actually exacerbates the financial problems of Medicare, Medicaid and Social Security. My three children are doing quite well on their own but my wife and I will be leaving them everything that we have saved, after inheritance taxes, to ensure that their old age is every bit as happy as ours.

For those saying that it would be easier if one parent quit because they could get rid of one car and save on taxes, keep in mind other items that it would drive up such as health insurance and utilities. Not to mention that once the preschooler goes to school, they will need to buy that second car if the stay at home parent is going back to work.

I'm not convinced that quitting a 35k job to net 19K in savings is going to help when you are this close to the edge. Remember, even if the second job only is a net positive of 6,000 for the entire year (after you discount the childcare adn taxes I mean), that is adding 500/month into their budget. You have to look at the budget as ask where they will cut that 500/month from that is NOT part of the savings associated with staying at home.

Nathan Rice - you actually are like many other upper class people that you save for your children's college and their weddings? How ridiculous. I raised hard working independent children. They paid for their own college and weddings, as did I. They are adults and can do it. We did help our daughter in college if she needed a quick amount of money to get by. Our son joined the military.

One of the reasons these costs go so high (college & weddings) is that Mom & Dad are paying for many of them, so son & daughter can splurge all they want. If they want a grand wedding that is their perogative, but let them pay for it. Of course, I am old. I went to 2 years of college for $1,600 for room and tuition. My daughter left after 4 years with @ $12k in student loans. If they want these things, they should be adult enough to pay for what they want.

And, as one very wise economist said - when you put a third party into the mix, costs must go up. The third parties in our world are insurance and student loans.

FDR and his staff thought up SS. But they did not figure on it paying for itself. One member of his staff said they always thought it would eventually have to come out of general revenue. And, of course, being human, too many people began to count on it for complete retirement and not as a supplement to income. We are all to blame for the mess we are in.

And a weird thing to debate sometime - an economist also said once we blame or praise each president for the things that happen in his presidency. But he stated that so many of the things that happen during their term do not affect the economy for at least 10-12 years. So we end up praising or blaming the wrong leader.

Oh, I forgot. We also did not go on lots of vacations. In all the years our kids were at home we went on exactly 2 family vacations. We also spent a full year before hand planning & saving.

We spent lots of vacation days going to see grandparents or school activities. Who needs to go to Disneyworld or on cruises to have fun?


"Rent seems very low even for low rent areas of the country."

I guess you live in an expensive state/area.

For low rent places $800 would be fairly expensive.

Median rent in the USA was $824 in 2008. If you look at the following Census report you can see wide variation in median from state to state. Many states have medians > $1000. Some states medians are under $600.

They are using the 40% percentile FMV from HUD so its actually a bit below median.

Yeah, I'm torn about the college thing. We'll probably try to cover half, and leave the rest to our kids to work through. My wife's college was paid for by her dad, and it really helped.

Of course, money comes with strings. If they want our money, we get to have a say in where they go ;-)

FWIW, I wouldn't call us "upper class". Not yet anyway. Up until this last year, our Gross family income never topped $32K. My wife finished graduate school and I got a better job, which means we make a LOT more now. But we haven't been in this income bracket long enough to be "upper class" just yet :-P

Georiga, regarding SS said : "of course, being human, too many people began to count on it for complete retirement and not as a supplement to income"

Actually before SS there often wasn't anything else. Its not as if people stopped saving on their own because SS came about.

During the depression over 50% of senior citizens could support themselves. Only 5% of the elderly received pensions in 1932.

Most people never saved for old age. SS is the solution to that problem not the cause of it.

I said : "During the depression over 50% of senior citizens could support themselves."

That should have been : 50% of senior citizens could NOT support themselves.

Jim- On rent prices: Just do a few craigslist searches for a nice 2 br+ place. I've admittedly lived in more expensive cities throughout my life but I live in a middle city now and $800 wont get your very far.

The data you link is from 2008 and my city is only a few dollars more than the quoted median. I can tell you today, you couldnt get a 1 br for the price your data suggests.

Check for yourself- take a city on that chart, search craigslist in that city, and see if you can really rent a place for that price. For the cities Ive checked, the chart under prices reality.

Georgia- "I went to 2 years of college". So you actually didnt get a college degree or pay for college.

I dont think I am any less of an adult because my parents paid for my college or my life experiences.

Student loans are mostly from the govt not mom and dad, so you should take that up with your representative not rich mom and dad.

I'd love to see a source for that 50% figure. And maybe a definition of "support themselves". If 50% had to move in with their kids, or rely on charities like churches and food pantries, then the "problem" didn't warrant the "solution".

That doesn't even address the fact that currently, 66% of seniors depend on Social Security [1] for more than half their income. To say that the existence of Social Security has NOT lead to generational dependency is crazy. If your 50% figure is correct, self-sufficiency in retirement has actually DECREASED in the time since Social Security was started. Entitlement programs and handouts INCREASE dependency, with very few individual exceptions.



Craigslist examples:

Examples of 2 bedroom apartments or houses :
Wichita for $475
Boise for $600
Sioux Falls for $615
Fresno for $575
Las Vegas for $724
Pontiac for $650
Des moines for $599

You get the idea.

Obviously there are higher priced cities out there.

The 2008 numbers are one set of the latest figures. Yes the numbers for 2009, 2010 and 2011 will differ some. But not significantly.

2009 American Housing Survey puts median rents at $808
Table 4-13 :
"The best estimates are that in 1934 over half of the elderly in America lacked sufficient income to be self-supporting."

"lacked sufficient income to be self-supporting" and "depend on Social Security for more than half their income." are different measures.

Lacking income to be self supporting is basically poverty.

Getting more than half your income SS could be a wide variety of situations. Some of those people could be making $40k a year between SS and other sources. They are not close to poverty.

So you can't take those 2 things and call them the same.

Tyler couple things.

You said : "searches for a nice 2 br+ place"

The word 'nice' there may be important detail there. Average isnt necessarily what everyone would call 'nice' and everyone's idea of 'nice' is different. The figure cited is based on a 40% figure so it is below average cost and below average cost is often 'ok' or 'cheap' rather than 'nice'. Can you find an 'ok' or 'cheap' place for around $800 or less?

I live in an above average cost area and I quickly found a 2 bed for under $750. It looks 'ok' to me and is not in the most convenient location. But its $750.

You said : "I live in a middle city now"

Your city may be above average cost.
If you search for your city here :
Then it will tell you what % above or below the cost of living is compared to national average.

Interesting discussion :-)

@Georgia: I don't think you're old if you say children can pay for their own education. I'm 29 and I agree. While my own parents payed for my education, and I'm grateful for that, I've come to realize that making your own education happen without outside help, is an opportunity to train your achievement muscles -- which will come in handy for the rest of your life.

@Old Limey: being grateful is definitely one of your strengths. That said, I don't think that prosperity is harder to reach today than it was in your day and age. The same principles still apply: go live in a prosperous country (lots of choices outside the US), work in a well-paying career (engineering?) in an expanding industry (energy, commodities, healthcare, private banking, ...), save a significant portion of your salary, and go trade some asset boom/bubble (gold?) if you feel so inclined.

Jim- I'll retract my weak anecdotal statement and side with you. You posted relevant data and I did not. The data you posted was state and I think in terms of cities, which is wrong to do- most people don't live in the metropolitan areas. so I will agee that rent is a bit too high. Thanks for calling me out on this.

I agree with the numbers for the 1 worker, though I make twice the 30k. In my own budget calculations I have spent approx. 26k while living pretty well, not extravagantly. I drive a 2009 Accord live in a modest 2800 square foot house with pretty much everything I need. Of course this is the midwest, when I was living in NYC, this would not be the same. Though most costs are the same between the NE and Midwest, I would say shelter is what makes costs high in the NE. When I lived in NYC, a one bedroom cost me about 2700 vs 900 for my mortgage payment here, of course in NYC the salaries are much higher to compensate. Groceries in NYC are about 10 to 15% higher but in the suburbs of NYC they are about the same as the midwest. For instance in NJ, to rent a house 1500 square foot house, would prob. cost 1600 vs. in the midwest about 800. Other than that though everything else is about the same.( Utilities, gas prices, cable, etc.) I would assume the south is even cheaper, and the West is prob. about the same or lower than the NE. Living in major cities like NYC, LA, San Fran, and Chicago costs are going to be about 25 to 50% higher, but in the suburbs of those cities, prob. 10 to 20% higher than that 67k figure for a family of four.

Wow! I guess this puts me in the poverty class.

I'm living on about $42,000, if you include the $12,360 drawdown from savings. Actual income is about $30,000. Interestingly, my lifestyle is not significantly different from what it was before I was laid off from a $65,000 job.

Of course, I don't have two kids to feed, thank god. If it's true that you need upwards of $67,000 to maintain a modest lifestyle in an area where housing is only $800/month (that's about what rent costs here -- more for a mortgage), I can't imagine how young people, especially single parents, manage to get by in an economy where the median household income is $40,000, as it is here int he Southwest.

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