If you’d like a fuller version of what’s below, please do buy my latest book
Early Retirement Strategies for the Average Income Earner, or A Critique of the Curiously Ordinary Life of the Everyday Worker-Consumer
Also available on Amazon, but for $3.10 because I’d get a much lower cut if I charged less!
Over the summer I worked out that a 35 year old earning the median salary could potentially retire at 52, if they just stop buying crap they don’t need now. In contrast, the expenditure levels of the average worker-consumer effectively tie them into working until the current standard retirement age of 68.
This post is simultaneously a critique of the ordinary worker-consumer and of the Extreme-Early-Retirement model, which I don’t think can be applied in its fullest sense to an average person in the U.K. (Although if someone wants to modify my stats using different investment models to see if the retirement date could be brought forward, I’d be interested!).
In this blog post I compare two hypothetical 35 year old individuals (4) who both earn the median UK salary. One individual has average consumption and expenditure while the other has in mind the goal of retiring as early as possible and so is much more frugal, without completely having cut themselves off from society.
As testimony to my lack of Open Office Calculator and Inkscape skills, this is represented below:
To make reading the above more meaningful, you should refer to this spread sheet throughout – Comparing 33 years of expenditure
For the sake of making an easy comparison, I’ve used expenditure figures based on one person living alone for the remainder of their life, and imagined that they have just bought their first property at the age of 35. The reason for selecting a 35 year old is because this is the age by which most people are settled into a stable career, and this is also the age by which most people are at least starting to think about retirement, if not yet looking forward to it in the near future. It also happens to be the age at which today’s typical graduate student can reasonably have expected to have paid off their student debts and have some kind of savings towards their first property. Although the figures in each expenditure category will vary considerably depending on variables such as age, or household make up, the levels of expenditure are generally not going to be that far away from how the majority of people spend their money for much of their lives, and thus most people should at least recognise something of their own and their friends’ expenditure habits in these figures.
However, to satisfy those who just can’t get over the problems of using averages when variables which will differ widely, I’ve included a link (4) to the spread sheet where I’ve done my calculations so you can add in your own expenditure and income levels in order to personalise these calculations for yourself, or you can even modify at a deeper level to add in things such as inflationary effects, investment returns and changes in circumstance over time.
The purpose of this exercise is to put in the starkest terms possible how many years and months (expressed in decimal terms) of one average human life one individual would have to spend working to buy certain things for the remainder of one’s normal working adult human life. In those stark terms – The expenditure levels of the average-consumer effectively lock them into working until the current standard retirement age of 67-8, while the frugal-consumer, assuming they maintain their frugal levels of consumption, will be able to retire when they are 51, or 14 years earlier, or in half as much time as the average consumer on the average wage.
Executive summary – A comparison of the 33 expenditure patterns of an average-consumer compared to a hypothetical frugal-consumer.
As far as I see it, there are three main factors which work together to keep the average 35 year old worker-consumer locked into the need to work for 33 years until they are 67-8. In terms of overall expenditure, the single most significant item is the 25 year mortgage with massive interest payments (costs 9 years). However, this lock in occurs primarily because the high cost of car ownership (costs 5 years), and what I can only characterise as fragmented expenditure on a range of unnecessary consumer frivolities (costs 4 years), which together means that a person earning the average median salary has no choice other than to drag the mortgage out over a 25 year period, and accept the attendant massive interest costs.
In contrast, what I call the frugal-consumer chooses to get rid of the car and buys a bike (saving 4 years), radically reduces consumption of frivolities (saving 2.3 years), and in addition makes some relatively marginal savings on necessities (saving 1.5 years) such as food and utilities. Taken together, these changes in lifestyle allow for an 11 year mortgage repayment term and much lower interest payments as a result (saving 2 years). All of this, factored with the lower cost of living, mean that this individual could potentially accrue enough savings over 16 to years to pay for 33 years worth of frugal consumption, allowing for an early retirement age of 52.
In future blog posts, I’ll compare expenditures across four categories – housing, transport (focusing on the car), consumer frivolities and things which may be reasonably regarded as necessities.
If you can’t wait, you can always buy my book – ‘Early Retirement Strategies for the Average Income Earner‘.
Boring but important – A few (selected) notes on data sources and expenditure categories and statistics
Categories of Expenditure In my analysis below I have four main expenditure categories, mainly drawn from The Office for National Statistics’ Family Expenditure Survey (5) -Mortgage repayments -Transport costs -Necessities – food, utilities, council tax, clothes, pensions contribution, communication, maintenance of dwelling, health -Consumer frivolities – recreation and culture, restaurants and hotels, ‘miscellaneous’, household goods and services, alcohol and tobacco and education.
To get my figures for individual expenditure based on one individual living along I’ve mainly used the data from the ONS’ family spending survey and divided by the average household size (2.4 people) where it makes sense to do this (dividing makes sense for clothes, but not for council tax). Because the figures are mostly weekly, I’ve multiplied by 52 to get the annual figures and then 33 to get the 33 year overall expenditure to the normal retirement age. I’ve calculated how many years working it would take the average consumer to pay for one category of expenditure earning the median net salary by dividing the total cost of 33 years worth of expenditure by this figure (£21, 240). Where housing costs are concerned, I’ve used the figures for the cost of repaying the average mortgage which is £121 000 according to this is money (6). Here, for the average-consumer repayment is over a 25 year term, while for the frugal-consumer, the repayment period is over an 11 year term.
According to the UK Annual Survey of hours and earnings (7) median, full-time gross weekly earnings stands at £517.00 per week, which amounts to (*52) a median gross annual salary of £26884, which equates to a take home annual salary of £21, 240, or a monthly salary of £1770 after income tax and national insurance are taken out (£408/ week for those who like to work in weeks).
Potential problems with my modelling
Firstly, I don’t take into account inflation, I’ve just worked out everything at today’s prices, and neither do I take into account any returns you might make investing rather than paying down the mortgage, which is the main early-retirement strategy in my scenario. However, these two things being equal in both my average and frugal-consumer examples, you are still a lot better of spending as little as possible on anything other than the mortgage or savings. Another potential limitation of the model is that it is mainly based on someone having a stable job, and being single, although it is possible to ‘stick to the programme’ while moving around jobs and holding down a relationship, maybe even kids, just a lot more difficult.
References (lots more in the book!)
(1)See the spread sheet above
(2)Office for National Statistics – Family Spending 2013
(4)ONS – Annual Survey of Hours and Earnings 2013 – http://www.ons.gov.uk/ons/rel/ashe/annual-survey-of-hours-and-earnings/2013-provisional-results/stb-ashe-statistical-bulletin-2013.html
I was particularly interested in the middle section of this infographic which compares the life chances of children of dual-parent households with those of children from single parent households – while controlling for household income. It suggests that there is a rather strong correlation between single-parent households and an increased likelihood of their children falling into low income jobs in the future…
For the top income bracket, for example, children whose parents are in the top third of income earners are almost twice as likely as children from dual-parent households in the same parental income bracket to end up in lower-tier income jobs themselves.
As with many infographs, this doesn’t seek to explain these statistics….
One thing to think about is the difference between day to day life in those two types of upper income household – Many of those upper income tier households would be able to afford to have one parent stay at home at least part-time, but for the single parent earning nearly 80k a year, which must mean a long-hours professional career in most cases and I can imagine the the child won’t be getting that much quality parenting in such cases.
Secondly, this might not be measuring the effects of single parents but the effects on a child of relationship breakdown (obviously the two tend to go hand in hand).
Finally, I’m uncomfortably aware of the patriarchal norms lurking behind these data – if having one stay at home parent is what’s behind the relative success of dual parent households, let’s face it, we all know it’s going to be the woman staying at home in 90% of cases, and in those single person households it will be the woman being the single parent in those cases and no doubt these stats will be uncritically wheeled out by the new right to support traditional ideas on the family
China and Russia have both been moved to the bottom tier of the U.S. human trafficking rank, joining the likes of North Korea, Sudan, and Zimbabwe, according to a recent U.S. State department report.
In China, the one-child policy and a cultural preference for male children perpetuates the trafficking of brides and prostitutes. Chinese sex trafficking victims have been reported on all of the inhabited continents. Traffickers recruit girls and young women, often from rural areas of China, using a combination of fraudulent job offers, imposition of large travel fees, and threats of physical or financial harm, to obtain and maintain their service in prostitution.
Forced labour is also widely practised in China, in which both internal and external migrants are conscripted to work in coal mines or factories without pay, as well as its continued use of re-education hard labor camps for political dissidents.
In Russia, there are estimates that 50,000 children are involved in involuntary prostitution and about one million people are thought to be exposed to exploitive labor conditions, including extremely poor living conditions, the withholding for documents, and nonpayment for services.
Human Rights Watch has pointed out that some of Russia’s labour abuses have occurred during the preparations for the 2014 Winter Olympics in Sochi, with some workers enduring “12-hour shifts with one day off per month, having their passports confiscated, being denied employment contracts, and facing unsanitary and overcrowded employer-provided accommodations, with up to 200 migrant workers living in a one single-family home.”
While the nature and scale of such absuses isn’t on a scale with what’s going in Syria, these two nations are not ‘rogue states’, they make up half of the BRIC nations. Given their status as rapidly growing and globoalising economic superpowers, combined with the size of their populations, the potential for further human rights abuses in these two nations profound.
It would be nice to think that this lower designation results in the U.S. imposing sanctions on these contries countries, such as voting against any IMF or World Bank loans. However, given the historical record of the U.S. tolerating and even supporting governments who champion capital over human rights, I don’t think sanctions are likely anytime soon.
Nice article here outlining some arguments for the continued relevance of dependency theory – ending on a particular pertinent prophecy by Joseph Stiglitz – that our world is set to become one of more rich countries full of poor people – but is this true?
Looking at the world’s 10 fastest growing economies there seems to be mixed evidence-
If we consider the GINI inequality rankings for each of these countries, which are as follows – there is mixed evidence
Brazil scores 54 – is no. 13 in the inequality league table, and by far the largest population country up that high – so Stiglitz theory seems correct here…
China scores 47 and so has relatively high inequality, possibly reflecting the differences between the huge wealth in the East and rural poverty in the West. Then again, does this matter for development because China has a very similar level of inequality to the USA ( not that that’s a good thing of course!)
Russia scoring 40 is in mid table obscurity – so no comment for now
India scoring 33 – has low inequality, making it more equal than Britain, then again it is the poorest in terms of current GNP per capita so these levels of inequality might just reflect the fact that there are masses of poor people. Given the rapid increase in billionaires recently i don’t hold out much hope for india staying low in the inequality stakes!
This summary is designed for A level students studying the SCLY3 module in Global Development and outlines four persepectives on globalisation.
Optimist Globalism – Globalisation is mostly positive
1. More international trade, especially since the 1950s = Increasing wealth, health, education for most countries. Evidence below
This Hans Rosling Video illustrates the relationship between increasing wealth (brought about by trade) and health
The case of China’s economic growth – Use this ‘trading ecnomics’ web site to check out how China’s GDP growth over the last ten years (from 2001) appears to be directly correlated with its growth in exports (use the links to the right to change between graphs – you might need to change the years selection around too).
China is not the only country benefitting from increasing trade (imports and exports) – China is just one of four nations known as the BRIC Nations (Brazil, Russia, India and China) – 4 up and coming economies that are predicted to be wealthier than Britain by 2050. More recently, the CIVET nations are also benefitting from increasing trade. As an illustration of how these countries are increasingly integrated you might want to find out more about Brazil’s ‘Highway to China’ – which is talked about in this video- ‘The Chinese are Coming.’
2. Optimists argue that Tansnational Corporations are a force for good. Companies such as Apple, Sony, etc bring investment and jobs to developing countries.
This video clip (approx first 15 mins) from Blood Sweat and Luxuries illustrates high tech manufacturing in the Philippines. The Optimist arguement here is that workers in such factories benefit from the wages – http://estream.reigate.ac.uk/View.aspx?ID=6092~4r~SEdwPGeV
3. Patterns of consumption are becoming globalised – More people around the world are consumers rather than living subsistence lifestyles. Also people increasingly consume similar foods and brands (and shop for them in similar ways). Increasing global tourism is another feature of this. Evidence below…
The first ten minutes from this Inside Out show illusrates the increasing number of Chinese people coming to Britain to shop http://estream.reigate.ac.uk/view.aspx?id=10237~5a~RR8KCyzLt4
These photos of ‘what the world eats’ – Suggest similar consumption patterns.
4. Sporting events such as the world cup and the Olympics have become more popular.
5. The spread of Democracy and respect for human rights since the end of WW2 – E.G. The end of colonial rule in Africa, the collapse of communism and the Arab Spring. This is also evidenced in the establishment of the United Nations and the growth of global social movements such as green peace.
6. The growth of social media (Facebook and Twitter) have lead more freedom around the world.
7. Globalistion increasingly means global cities urban centres which have highly educated, politically engaged middle classes.
Global Pessimism – Globalisation is mostly negative
1. Increased trade has had unequal benefits. Mainly Europe and America, lately Asia have benefitted, but most of Sub Saharan Africa is largely left behind.
- The graph otlining economic growth since 1800 in different continents on page 1 of the intro to GD document illustrates this point very well..
- For a good example of the pessimist view of globalisation read KT’s summary of ‘liquid times’ by Zygmunt Bauman – You only need read the sections entitled ‘surplus people’ and ‘the experience of inequality’. I suggest you read selectively and look for three examples that illustrate Bauman’s point: ‘when the rich pursue their goals, the poor pay the price’.
2. TNCs pollute, extract resources from and exploit cheap labour in the developing world. E.G.s include Shell in Nigeria, Coke in India and of course the Bhopal incident in India.
- A case study of sweat shops – Apple in China - from the Daily Mail.
a list of examples of Corporations accussed of doing environmental damages (just from KT’s Blog – focussing on the case of Union Carbide in India and Shell in Nigeria – you have probably looked at these as part of the Crime and Deviance Module)
Mark Thomas’ documentary on Coca Cola illustrates how naughty this corporation is – http://www.youtube.com/watch?v=LH0r84W3LgU
Also see the following video sources (you can search for both on estream)
The Age of Stupid (section on Shell in Nigeria)
Crude – The Real Cost of Oil (outlines Chevron’s pollution of the Amazon
3. Culture may be increasing global, but this mainly means Americanisation according to Pessimists. This takes the form of Cocacolonisation, and Dysnification – where American forms of popular culture and the shallow materialism this promotes erode local traditions. Another aspect of this is Mcdonaldisation
This illustrates the threat of Americanisation and Cocacolonisation very well – how some French people view Coca Cola as undermining their national identity. http://www.youtube.com/watch?v=DxjMqrZ6psw
This site does a very good job of explaning what Mcdonaldisation is – http://www.mcdonaldization.com/
4. Sport may be increasingly globalised, but just as with trade there are winners and losers, especially where the Olympics are concerned…
5. Rather than the spread of democracy, it is more accurate to talk of the spread of U.S Military power, as outline by John Pilger in the War on Democracy, and the fact that the U.S. spends almost $700 billion on its military every year.
The second half of this video – The War on Democracy outlines America’s military invovlement in more than 50 countries since World War 2 – Evidence suggests that the USA uses military force to get rid of democratically elected leaders that are not pro-U.S. – http://estream.reigate.ac.uk/View.aspx?ID=4068~4s~tdt8zCqn
6. The spread of global media really means the spread of massive media firms such as Rupert Murdoch’s News Corp, with programmes such as Fox News presenting a pro-American view of the world. Also think of popular culture – X factor, and Hollywood and global advertising. The pessimist view on such aspects of the global media is that they lead to increasing cultural homogenisation.
7. Zygmunt Bauman argues that global cities are best described as ‘fortress cities’ – especially in the developing world cities are places of huge inequalities where the rich hide themselves away in exclusive gated communities and the poor are left to the slums.
- Read KT’s summary of ‘liquid times’ by Zygmunt Bauman- Somewhere in the article he talks about the concepts of ‘Fortress cities’
The Transformationalist View of Globalisation
1. ‘Trade’ has many complex formations. So it is difficult to say that it is either good or bad. Besides Free Trade, Fair Trade is expanding, and there is also illegal trade – in drugs for example.
- The Fairtrade Foundation has many examples of how trade can benefit people the world over in all sorts of different ways (NB you may think this works better as an example of global optimism) – http://www.fairtrade.org.uk/
- The Global Trade in drugs is quite a good example of Transformationalism – It certainly can’t be regarded as something that benefits people, and it certainly isn’t something that benefits the West at the expense of the developing world. The global trade in drugs is not controlled by Corprations or Western governments – it’s controlled by international criminal organisations, and arguable this is a case of poor farmers in the developing world benefitting (relatively) at the expense of people in the West – http://www.unodc.org/unodc/en/drug-trafficking/index.html
2. TNCs operate in dozens of countris. Clearly there are going to be winners and losers in different cases. Also governments the world over regulate international companies in different ways – Pollution laws, tax law, minimum wages, health and safety.
3. Increasing consumerism isn’t just good or bad – cultural globalisation is characterised by hybridity – new brands come into contact with local cultures and they are modified by those cultures, creating new products – Bollywood, Chiken Tikha Massala. A related concept here is glocalism…
- There are plenty of examples of cultural hybridity in music – http://www.youtube.com/watch?v=I3JDH-hUJj0 (the guy from Brazil in the second half of this!) – All in all a very ‘global experience’ and a great example of ‘ground up globalisation’ – Hip Hop being transformed into something new and different as it mixes with different local traditions…
4. New sporting formations the world over are good examples of cultural hybridity
5. Globalisaion is characterised by new political formations, not just the spread of democracy or the spread of American dominance. E.G China is a Communist country that doesn’t allow voting but supports Capitalism, while many African ‘democracies’ are so corrupt they can’t really be called democracies. Also, many countries have proved more than capable of resisting American force – mostly in the Middle East.
- The Paradox of China – Apparently the Communist government is now commanding Chinese businesses to agressively pursue profit. http://www.csmonitor.com/Commentary/editors-blog/2011/1104/The-China-paradox-communist-capitalism
- This Glocalist Manifesto is an interesting e.g. of glocalism applied to politics – http://www.glocalisti.org/blog/the-glocalist-manifesto/
6. The spread of global media has lead to diverse uses – e.g. crowdsourcing, microfinance, and mobile phone use in Africa.
- http://www.kickstarter.com/ is a good example of a crowdsourcing site. It encourages people around the world to fund projects. Global flows of money funding local businesses = glocalism
- Microfinance – You can now fund local businesses in developing countries via sites like this – http://www.opportunity.org/what-is-microfinance/
- Mobile phone use in Africa – http://www.guardian.co.uk/world/2012/oct/30/africa-digital-revolution-mobile-phones
7. Anthony GIddens argues that ‘detraditionalisation’ is part of Globalisation – People increasingly challenge traditions as they come into contact with new ideas.
- Read KT’s blog post on ‘detraditionalisation’ and summarise Gidden’s view of what effect globalisation has on culture – Is this closer to the optimist or transformationalist view of globalisation?
Traditionalism – Globalisation is exaggerated
1. Trade is not truly global, it is regional. For example, about 60% of EU trade is within the EU. And Sub Saharan Africa is largely left out of global trade flows
2. Transnational Corporations do not operate in all countries, only secure ones.
3. Billions of people still live mostly subsistence lifestyles and simply cannot afford to take part in globalised western style consumption.
5. Some countries remain cut off from ‘global democractic and military force’ – e.g. North Korea and Iran. Also some traditional cultures still practise abuses that go against the UNDHR – see 7 below.
6. Governments still have the power to censor social media – e.g. the great firewall of China
7. Local traditions still remain in many cultures – For example it is estimated that 90% of women in Somalia have been circumcised. See the following video links for examples of traditional cultures. You should watch these and consider the extent to which these cultures are really cut off from Globalisation..
- Three episodes of Tribe with Bruce Parry – The final one on the Sanema is especially interesting – http://estream.reigate.ac.uk/View.aspx?ID=7673~4x~8CS58LtS
- This episode of Tribe sees Bruce travel to the remote island of Anuta – http://estream.reigate.ac.uk/View.aspx?ID=2116~4k~jDaFVfFT
This post is simply a list of good videos for teaching and revising research methods
Doing Sociological Research - If you can get over the desperate attempt to be ‘down with the kids’, then the section on survey research in education offers a very useful explanation of sampling and operationalising concepts such as social class.
Milgram’s obedience experiments (youtube) – Link takes you to a contemporary version of Milgram’s experiment, which reveals depressingly similar results to the original.
The Stanford Prison Experiment (youtube)
A good example of a field experiment measuring how the public respond differently to differnt ethnicities engaged in stealing a bike.
This is a second field experiment measuring how the public respond differently to differnt ethnicities engaged in vandalising a car from the everyday sociology blog (videos removed but a good explanation on the blog)
Unstructured and Semi-Structured Interviews
Many episodes of Louis Theroux are good for unstructured interviews – I especially recommend the following –
America’s Medicated Kids (Youtube) – Louis even talks about ‘being a T.V. interviewer in the introduction. Also it should be fairly obvious why ‘unstructured interviews’ are suitable for researching these children.
Louis Theroux Behind Bars (Youtube) In which Louis interviews a man sentenced to over 500 years in jail
This is an interview with Louis Theroux (Youtube) talking about why he likes ‘unstructured interviews’ – about 1.13 in
OK – It’s not a video, it’s a podcast - but from about 5 minutes in there are some interesting results from research based on interviews with 18-25 year olds on the question of ‘why they drink to excess’. Their insights tell you much more than stats ever can about youth binge drinking today.
Tribe with Bruce Parry is a good, basic introduction to the advantages and Limitations of using Overt PO to research traditional societies in remote rural settings. I especially recommend the episode on the Suri in Ethopia.
For Covert Participant Observation, the standard ‘classic video’ from the late 1990s is Donal Macintyre’s research with the Chelsea Headhunters (link is to college’s estream and requires password)
Another ‘covert classic’ is the Secret Policeman – College estream link (needs password)
The Office for National Statistics has a huge array of videos on youtube. Some of the most interesting include – (1) Immigration Stats (2) Household Wealth (3) Cohabitation in the UK (4) The Latest on the Labour Market, including unemployment stats
Secondary Qualitative Data
The Freedom Writers - (link to college estream, requires pass word) A film based on a true life story of a teacher who gets her disinterested English literature students to tell their own stories using diaries
TED Talk – what we learned from 5 million books - using google ngrams to quantify the content of books
The Marshmallow Experiment (Youtube) – Measures deferred gratification in children and then tracks the children through childhood to see the effects of deferred gratification on future test scores in education.
It’s a bit long winded, and it is a cartoon – but this is a good xtranormal video (link to youtube) that goes over the pros and cons of quantitative versus qualitative research – using the topic of researching children with ADD as an example.
Whatever work you set your students this snow day, this is probably how most of them will interpret it –
Lay in (as if you haven’t already done that)
Don’t break leg
or anyone elses
Have snowball fight with random people – must be random
just make sure you pick people that look like they fancy a snowball fight (no ‘moany old bears)
not a ‘rude’ snowman -that’s way too crude
Go home, eat cake
Engage in audio visual entertainment of your choice
Make sure you watch the news reports about all those poor people that had to go to work today.