Why So Many Americans Can’t Save for Retirement

A 2019 report from Ladder, a life insurance company, revealed that the average adult spends $1,497 a month on non-essentials. Wow, that’s about $18,000 a year spent on things we can do without! That is especially troubling since 78% of full-time workers in the U.S. live paycheck to paycheck.

Let’s take a look at some of this non-essential spending that prevents us from saving for our retirement.

Eating Out

A typical family spends over $3,000 a year (or $250 a month) on eating out, takeout and delivery of food. What we gain in convenience, we lose in cash … cash that is no longer available to be invested for our retirement.

Phone upgrades

Smartphone makers like Samsung, Apple and Google spend millions of dollars on advertising to get us to buy new phones every time they develop a new smartphone … a new smartphone that can cost $1,000 or more. While a new phone may offer a couple of slightly improved apps or features, rarely are they worth $600 – $1,000 for a new phone as long as our current is working well and meeting our needs.

Clothing and apparel

The average American spends over $1,800 a year on new clothes and apparel. I think we need to adopt the following “code of conduct” concerning clothes and apparel:

  • Buy less
  • Only buy the essentials
  • Wear and use them until they are stained, ripped or they no longer fit

Lottery tickets

The average consumer spends over $80 dollars a month on lottery tickets. Though we can’t win if we don’t play, we know full well that the chances of winning are minuscule. Let’s take this $1,032 a year and save or invest it for our retirement.

Extended warranties

Here’s the truth about extended warranties: They are expensive and we typically only get pennies back for every dollar we pay for them.

When purchasing a big ticket item, let’s do our due diligence research and buy high-quality items that have a track record of lasting a long time with few (if any) repairs.

Cable TV

The prices for cable TV have skyrocketed and there’s no end in sight. Far too many people are paying well over a $100 a month for cable TV … especially for plans that include HBO and sports packages.

There are too many low-cost OTT (over the top) media options available over the Internet. Check out CNET’s Best live TV streaming services for cord-cutters in 2020 for prices and comparisons.

Impulse purchases

While this is a broad term, it basically boils down to purchases we don’t actually need but buy “in the moment” when we see them displayed at the store or online.

Big ticket items like the newest smartphone, large(r) screen TV, motorcycle, laptop computer, etc. can sabotage our financial position for months or years … especially if they are purchased on credit.

Let’s vow to minimize the amount of money we are wasting on products or services that don’t bring us long-term usage and actual personal fulfillment. I’m confident that doing this will provide us the dollars needed to finance a retirement fund.

Published by W. M. Brown

I am a retired U.S. expat living in Ecuador. I was a business owner for 32 years before retiring in 2012.

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