Direct labor costs include items such as payroll taxes, travel expenses, a work wardrobe, and “networking costs” for items such as team happy hours and birthdays and weddings. office. Indirect labor costs include household services (cooking, cleaning, housekeeping and laundry hired for work).
Put all the pieces together over a typical lifetime, and it’s clear why people’s spending – with the exception of health care – tends to drop with age. These costs tend to increase with age, but as BLS data shows, falling costs elsewhere tend to more or less offset these higher medical costs.
What it means to you
The great benefit illustrated in this table is that it helps to put a reasonable retirement much more within reach. If you consider these huge mid-career costs of raising a family and paying a mortgage, it should give you hope that there really is an end in sight. Your total cost of living probably won’t go up forever, and the price of your annual retirement might not be as high as what you pay today (adjusted for inflation).
Moreover, looking at things from a Cost perspective rather than a current income perspective can help you better understand how much you’ll really need to save. Since typical retirement planning guidelines are based on replacing a certain percentage of your income, you might be relieved to recognize that you could get away with less and still have a decent lifestyle.