Priorities, Priorities

According to The Wedding Report (a research firm in Tucson, AZ), US couples on average spent almost $22,000 - excluding the cost for a honeymoon or engagement ring - on their wedding in 2008. Though that was down from roughly $27,500 the year before and will likely decline further in 2009 due to the recession, that still means the average total cost including ring and honeymoon has to be close to or even over $30,000. Note that the average age of marriage for women is 26 and for men, 28.

This got me thinking it would be interesting to connect the dots between the average wedding cost and the average household savings for retirement at later points in life. According to the Congressional Research Service (www.globalaging.org/pension/us/2009/retire.pdf), the median savings for a family with the head of household between ages 45 and 54 was $67,000 in 2007. For the group between 35 and 44, the median was just $37,000. For the non-mathematically-oriented among us, the median is the midpoint of a data series, basically in this case the level at which half of the households have more and half have less than this amount (the mean often skews north of the median with these kinds of stats because high net worth folks can push the average much higher - e.g. just add Bill Gates into a grouping and take a look at mean versus median levels).

It's fascinating to me that the average household savings a decade or two after the wedding isn't that much more than the cost of the event that got the household started in the first place. I wonder how often families that find themselves in tenuous financial circumstances regret the amount of money spent on their wedding. Obviously many marriages are funded, at least in part, by parents. But that's still money flowing out of the family coffers never to be seen again. I'm not saying that spending money on marriages is a wasteful allocation of family funds, it's just that the amount of spend should more closely correlate to a family's available resources. From the above statistics, it's clear that it doesn't.

All of this is kind of like the Starbucks coffee retirement lesson - stop buying that latte and scone every day and you'll retire a millionaire. It's a basic rule that small dollars of savings compounded over long periods will yield tremendous financial outcomes for retirement. For the amount of money spent on the typical wedding, cutting back by even 10 to 20% or more can be the difference between having a comfortable cushion in retirement and spending your remaining days stressed about how little money you've got to last. This isn't a particularly romantic notion, I know, but it's reality. And I would venture to say many couples would make different decisions about their wedding with the benefit of this kind of financial hindsight.