September 30, 1991

If the Kukiharas of Japan or the Hagels of Germany dropped in on
the Orrocks of Eden Prairie, Minn., they would no doubt feel a bit
envious. Like the Japanese and German families profiled on pages 94
and 108, Jim and Judy Orrock, both 36, are living their country's
version of the good life. In the prosperous Minneapolis suburb of
40,500, they reside in a single-family house, own two cars and can
afford to take annual vacations with their two children, Jennifer, 8,
and Joey, 4. But there the resemblance ends. The Orrocks and their
year-old golden Labrador, Lucy, have much more room than the Germans
or Japanese to spread out in their custom-built, three-bedroom,
3,500-square-foot contemporary house and woodsy half-acre yard.
According to conventional wisdom, the Orrocks enjoy a sweeter
standard of living than their German or Japanese counterparts only
because both Orrocks work tirelessly and spend every cent they earn.
But that's not the case. Jim, an engineer who puts in a tough but not
grueling 50-hour workweek at Honeywell, earns $67,000 a year, while
Judy toils just eight hours a month as a dental hygienist, more to
maintain her skills than for the $1,000 a year she brings home. Says
Judy: ''I feel pretty strongly that I don't want someone else raising
my kids. Plus I have time in my day to make a good meal that we can
sit down to at night.'' Their family income of $71,500 a year,
including $3,500 from investments, puts them in the top 13% of U.S.
As for the Orrocks' spending habits, their only outstanding debt
is their mortgage -- a $108,000, 30-year fixed-rate loan at 9 1/2%.
By contrast, the typical American household these days carries $8,570
of nonmortgage personal debt. The family has been able to avoid such
consumer loans because they religiously pay cash for almost
everything, even the new Honda Accord ($13,200) and the barely used
Ford Taurus station wagon ($11,000) they bought in 1989. Indeed, the
Orrocks save even more of their income -- 8% -- than the Kukiharas
(6%) do. That may seem like peanuts compared with the Hagels'
herculean 27% savings rate, but the Orrocks' $92,000 investment
portfolio is fatter than the Hagels' $78,300 stash.
How can that be? It's largely because in the comparatively
land-rich U.S., the Orrocks' housing costs are far lower than the
Hagels'. Having bought their house and land in 1985 for $140,000,
which is $80,400 less than the Hagels - paid for their place two
years later, the Orrocks estimate that their house is now worth
$180,000. Also, the Hagels have been saving relentlessly to pay off
their short-term mortgages, while the Orrocks have no pressing need
to burn their home loan. Unlike in Germany, the $866 a month they pay
in mortgage interest is tax deductible.
The Orrocks' diversified portfolio, assembled with the advice of
Minneapolis financial planner Laurence Altman, includes $35,000 in
Jim's 401(k) and Judy's IRA; $30,200 in checking accounts,
certificates of deposit and money-market funds; $17,000 in
growth-stock funds; $7,300 in corporate and municipal bond funds;
and $2,500 in a real estate limited partnership. Each month, Jim
plows $30 into U.S. Savings Bonds, $75 into stock funds and $335 --
or 6% of his gross income -- into his 401(k), which holds Honeywell
shares and mutual funds. Honeywell kicks in 50 cents for each dollar
Jim invests up to 4% of his salary. Jim also sinks $2,000 a year into
a universal life insurance policy with a face value of $315,500.
Thanks to Honeywell, Jim's retirement looks cozier than Peter
Hagel's or Tetsuo Kukihara's. Using a Honeywell worksheet designed to
help him estimate his retirement income at age 60, Jim figures that,
assuming he stays with the company until he retires, 36% of his final
year's earnings will be replaced by money drawn from his 401(k).
Another 29% will be supplied by his company pension plan and 12% by
Social Security, adding up to a comfortable 77% of his pre-retirement
The dollars the Orrocks devote to vacations and leisure activities
also go further than the Hagels' or Kukiharas' expenditures. Take
golf, for example, which Jim loves just as much as Tetsuo Kukihara
does. At $15 to $20 a round at the public courses Jim plays, he can
afford to tee off twice a week in the summertime, while Tetsuo, who
pays nearly 10 times as much per round at private clubs, plays only
once or twice a month. Each summer, the Orrocks spend five days at
MacGuire's Piney Ridge Lodge, a rustic lake resort in north-central
Minnesota. Cost for the entire family: $800. Jim also spends five
days and $100 fishing for bass and walleye with friends in
Minnesota's Boundary Waters each year. He and Judy leave the kids
with their grandparents and spend a winter weekend cross-country
skiing at Maple Log, a lodge in northwest Minnesota. Cost: $225.
Additionally, the Orrocks pay $175 a year for unlimited use of their
community center's pool and ice skating rink.
Granted, life in Eden Prairie doesn't compare favorably on all
counts. The Hagels, for instance, get more bang for their taxes than
the Orrocks do. At 24% of their income, the Orrocks' tax burden is a
bit heavier than the Hagels', yet the Germans are guaranteed health
insurance for life and will not have to pay college tuition for their
children. Jim feels confident he can save enough to send his kids to
the University of Minnesota (today's tuition: $2,829 a year), the
state school where he and Judy earned their baccalaureates and where
he also won a master's degree in mechanical engineering in 1979. But
he worries about being able to cover the bill if one or both of his
offspring are accepted at prestigious private institutions that cost
five times as much. ''They call these the Wonder Years,'' he says
with a shrug. ''You wonder how you'll pay for it all.''
The Orrocks spend 2% of their income on comprehensive health
insurance provided by Jim's employer. That is in line with what Peter
Hagel and Tetsuo Kukihara pay for their health coverage. But if Jim
loses his job, his out-of- pocket medical expenses would at least
triple. By law, he could keep his family's present coverage for as
long as 18 months for a monthly premium of $319 to $370. After that,
the Orrocks would have to scramble to find a solid yet affordable
On the whole, though, the Orrocks are extremely appreciative of
life in America, particularly since they know firsthand what it's
like to live in Japan. From 1987 to 1989, Jim worked at the Yamatake
Honeywell Advanced Technology Center in Tokyo and the family lived in
suburban Yokohama. Asked about the quality of life there, Judy
wrinkles her nose and says: ''Grocery shopping was much more tedious.
I had to go daily instead of weekly because the stores lacked parking
lots and I could buy only as much as I could carry.'' Jim had it even
worse, with a 60-minute commute in subway cars packed as tightly as
raw fish and rice in a piece of sushi. Once he missed his stop
because he couldn't wedge his way through the bodies. ''My expatriate
friends and I called it the Hell Train to Shibuya,'' he laughs. By
comparison, Jim's 30-minute drive to Honeywell in his Honda, with a
Vivaldi cello concerto in the tape deck, is downright heavenly.


Here's how much the Orrocks, Hagels and Kukiharas have to pay for
selected items in their hometowns. The Kukiharas spend up to 420%
more than their - American and German counterparts on many consumer
goods. That is in part because Japan restricts the number of large,
cost-efficient stores that could force many mom-and-pop shops, which
dominate Japanese retailing, to lower their prices.

Selected prices in dollars

(per gallon) $1.33 $3.07 $3.80
(Christian Dior) 5.00 7.54 3.65
Compact disk 18.01 15.02 16.43
Daily newspaper .35 1.10 .73
Big Mac 1.86 2.55 2.77
Movie ticket 6.00 6.96 11.68
Cup of coffee .50 .70 1.83
Ground beef
(per pound) 1.18 2.61 6.15
Six-pack of beer
(domestic) 4.02 2.55 9.64
(per dozen) .79 1.67 2.00
Red-leaf lettuce
(per head) .89 1.44 2.03


Jim and Judy save 8% of their income, which is about twice as much
as the average American family puts away.

Jim and Judy's salaries $68,000

(in dollars and as a percentage of income)
Taxes $16,543 24%
Housing 13,777 20
and vacations 6,411 9
Savings 5,350 8
Groceries 4,610 7
Clothing 3,300 5
Personal and
miscellaneous 3,273 5
Life and disability
insurance 3,009 4
Education 2,392 4
furnishings and
maintenance 2,367 4
Transportation 2,203 3
contributions 2,000 3
Health care 1,425 2
Pet care 1,340 2
TOTAL $68,000 100%

Eagle (-2)
Birdie (-1)
Bogey (+1)
Double Bogey (+2)