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Americans
are quick to tell you they are short of money. This is the most common
reason people give for not saving for retirement, buying health insurance,
or making other prudent financial choices.
Consider the following. One in four Americans gambled at a commercial
casino in 2004 spending almost $30 billion. That number does not include
gambling on Native American reservations or gambling online.
Americans
spend over $34 billion a year on pets, including liposuction, organic
pet food bakeries, and plots in over 800 pet cemeteries. Americans also
tire of their pets and pay $1.4 billion a year to have them destroyed,
25% before the pets are two years old.
Americans
will spend around $23 billion on digital TVs this year and similar sums
on other electronics, including $3 billion on customized ring tones
and the like. These purchases are being made in a country where nearly
all households already have TVs.
Americans
annually spend over $65 billion on illegal drugs, $45 billion on alcohol
(college students alone spend $5.5 billion on alcohol) and $167 billion
on smoking-attributable costs.
They spend $70 billion on weddings, $13 billion on chocolate, and $10
billion on bottled water.
This
consumption pattern is changing what Americans think of as normal. When
adults now in their 60’s and 70’s were growing up, weddings took place
at church, and, almost no matter how much money the families had, the
reception was in the church hall and offered wedding cake, nuts, mints
and punch as refreshment. Now the average wedding costs over $26,000.
Young people today would feel deprived having the kind of wedding that
was the norm only a little over a generation ago simply because what
we are used to has changed so much.
The
problem is that Americans are now used to spending more than they make.
Over 70% of low income US households spend more than they make. Even
in the very highest income bracket—annual incomes over $118,800—more
than 15% of households spend more than they make.
These statistics are alarming because Americans no longer have the same
government or corporate safety nets to pay for their retirement and
health needs. And the national debt is also huge. Over the next generation
taxes will have to increase over 50% across the board just to maintain
existing entitlement programs.
Why is this happening? It is not because human nature has changed—it
hasn't. It is that we live in a time when it is easy, for the first
time, for most people to separate consumption from payment on a massive
scale. With credit easily available, people buy now, enjoy their purchases
immediately, and don't think about payment until much later. The end
result is that many Americans are ill-prepared for retirement.
The United States is a free country that allows its citizens to make
free choices. However, if Americans are to be prepared for retirement,
they must take responsibility for and be accountable for their choices.
Caves & Associates commends our clients for choosing to be responsible
and preparing for their future. |
