Posted on 09/21/2015 3:58:42 AM PDT by expat_panama
Is your network higher or lower than people of a similar age? How does your pay compare with others? Do you have more debt than the average Joe or Jane? Do you have more or less money set aside for retirement than your neighbors?
Knowing how you stack up financially to your peers can offer up insight that allows you to make changes that can secure your financial future, so let's take a closer look at how you stack up against the average American.
Net worth varies widely
Last year, the Federal Reserve released its triennial Survey of Consumer Finances, and that report sheds valuable insight into Americans' net worth that is a bit disappointing.
Despite a multi-year recovery in housing and stock markets that has boosted the net worth of the wealthiest people, the majority of Americans over age 45 saw their median net worth fall, and as a result, the typical American's net worth dipped by a median 2% between 2010 and 2013.
Overall, Americans' median net worth totals $81,200, but that amount varies significantly depending on age.
Americans between 65 and 74 have a median net worth of $232,100, while those between 35 and 44 have a median net worth of $46,700.
Net worth also varies significantly depending on education. People who have a college degree sport a median net worth of $219,400, but the net worth for people without a high school diploma is only $17,200.
Parsing paychecks
Economic growth has led to falling unemployment, but income gains have been slow to materialize, and that's a big reason net worth hasn't improved for many Americans.
The Fed's survey shows that people reporting income that was typical, or usual, saw their median income improve 2% in the 2010 to 2013 period; however, median income fell 6% for those under 35 to $35,300 and 7% to $60,900 for those between age 45 and 54.
Distilling debt
Although net worth and income didn't make a lot of headway in recent years, Americans have done a good job at whittling away at their debt.
The amount that indebted Americans owe in debt obligations dropped a median 20% during the survey's three-year period, primarily because Americans are relying less on loans on their home, but also because the number of families relying on revolving credit card balances has fallen and the median amount owed on credit cards has dropped by 18%.
Overall, the typical American is saddled with a median $115,000 in home loans and a median $2,300 in credit card debt. If we consider average credit card debt instead of median debt, then Americans owe $5,700 on their credit cards.
Repairing retirement
A significant percentage of Americans are worried that their retirement savings are going to come up short, and the survey's results show that people in the bottom half of income earners are participating less in retirement accounts than in the past.
That's a shame, because people who are socking away money in retirement accounts saw their account values climb to a median $59,000 in 2013, up 25% from 2010.
Tying it together
If you're coming up a bit shy on these measures, don't fret. Instead, it could be the perfect time to take action. Even small commitments to long-term investments or credit card balances add up over time, and because of that, adding an extra 1% to your 401(k) or 403(b) contribution and making an extra payment every quarter on your credit card debt can have a big impact on your financial security.
Financial ping
Jeepers.
If you are 64 years old and have the median income and the median amount of money saved for retirement, and need 80% of your income in retirement, then...
you only have 4 years of money saved for retirement.
But the median 64 year old person will need 16 years of money.
Looks like a lot of people will be working into their 70s or will depend on others.
“...but the payoff is that in retirement our standard of living is actually better than when we worked as we have more money to spend.”
You did it the right way, my FRiend! Good on you.
I’m retiring this year, Beau, the next. We, too, will be living a simpler life with a higher standard of living and so much more FREEDOM that it’s making my head spin!
I’m one that’s always, ALWAYS waiting for the other shoe to drop, but I think we got THIS one figured out. ;)
Move to Texas.
Thanks for the invite!
Beau and I are more the ‘Woodsy/Mountaineer’ type. We’d head northwest where he could hunt elk or prong-horns and I would spend my days in the Five-Star Hotel Spa!
After a lifetime of hard work and responsibility, I think I’m going to get the hang of this ‘pampered life’ of a manicure, pedicure and massage once a year, LOL!
Actually, we’re going to farm, so I’ll be investing in Carhart and John Deere stock in the near future. We’re going to be wildly successful, so there’s your insider trading tip from me! :)
What you posted is a reality of what we are seeing in many people the same age of us, our mid 70’s.
Those of us who invested/saved basically all of our adult lives, never inherited any funds just love, limited our children to degrees/skills after highschool that enabled them to get good paying professions on completion of their post. They were told any advanced degrees were on their own. They finished their advanced degrees with zero debt on them and minimal on our part.
Basically, every liberal our age spent basically every cent they made and went into heavy debt for worthless instant unemployment degrees for their children and grandchildren.
Many took out second mortgages to pay for luxury cars, vacation homes, expensive vacations for them, their children and grandkids. When the real estate market broke down, in many cases they lost their homes when their home went under water. Even then, they stayed in this high rent area instead of moving 30 to 50 miles away to a lower rent area. Of course, they have refused to share a home with relatives or friends. They have spent their IRA’s/401K’s, and they are on the edge of total financial disaster.
Many reasons, but one of the most important is my incredibly good physical condition. I owe this to my knowledge and experience as a Physical Therapist, and my soon to be patented 10 minute daily “mobility bar” home exercise system.
I have discovered how to maintain and improve our physical fitness in just 10 minutes/day! Makes me want to jump for joy! I think I will...
Mine too. My Dad had the same ideas and we "lived below our means". Although I didn't know it at the time I was growing up, our family could have lived much more affluently. But we did OK.
As a result, I have always tried to live within or below my means. After a couple of false starts, I learned the hard way. I have found it leads to a less stressful lifestyle when you have something saved back for a rainy day.
Of course I'm so old I was taught and still believe a man's duty is to provide for his wife (female kind) and children. Something my Dad did so well under the worst of times.
All you guys have to start “Foundations” and have people give you millions.
The old farts have lived long enough to pay off their mortgages. That is the difference in net worth between them and 40 year olds living in McMansions with big febt.
I know a couple who moved from San Francisco to right outside of Cincinnati. They were both working and I think their income was about $300,000.
Using a cost of living calculator they could live at the same comfort level in Cincinnati for about $100,000.
http://www.bestplaces.net/cost-of-living/san-francisco-ca/cincinnati-oh/300000
The house they bought in Cinncinnati a third of what they sold their CA house for. The new house is much larger and is a show place.
The amazing thing is that they didn’t take a pay cut. Getting people to move to Cincinnati isn’t easy so they offer large salaries.
One of my life’s lessons when observing others is that most of us wind up in old age exactly what we were as a kid. Example would be a hippy of the 60’s is a hippy in his 60’s, a radical in the 60’s is a radical today.
Same goes with spending habits, the friend I mentioned in my first post with the negative net worth was a big spender in his youth, his spending always exceeded in income. He retired with a second mortgage on his home and after retirement financed a motor home. He can’t sleep because of his debt, but does nothing to curb spending. His house of cards will collapse very soon.
My point is I(advice to others reading this thread), you gotta start saving when young, it’s got to be a habit. Automatic with holdings going to a 401K is the best way to do it, you never see it, you can’t spend it.
If by means testing you mean giving IRA’s & 401K’s “hair cuts” to come up with money to give to those that never saved, then I think Hillary would try something like that if obama doesn’t. For fact, Sanders would do it if the RINO’s wanted to just get along and support his every move like they are now.
Churchill once said: Capitalism is the unequal distribution of wealth. Socialism is the equal distribution of misery. Communism is socialism with a gun at your head.
Taking saver’s money and giving it to others makes us all miserable.
The Second Amendment is what’s slowing down socialism and stopping communism.
That’s why the lefties upper most goal is to rid us of our guns. Once our guns are gone, there is nothing stopping Communism.
For a story like that, I would tell them “This is when you dip into your savings.” If they say they already used their savings (if any) and cashed out the retirement fund (if any), I would suggest they find a job.
***My Dad was a child of the Depression.***
So was my dad. He preached “Live below your means” and “work all the Overtime you can”, but did not practice it. Money earned burned a hole in his pocket till it was gone.
I learned from his mistakes. When I got a good job I did live below my means, tried to save, ect. I worked all the overtime I could. In 44 years of my working life I only turned down three overtime days because I was exhausted. In the last thirty one years I worked every bit of OT, plus filling in for others vacations, even working my own vacations at some point.
Lost a lot of it in 2008, but still had enough to retire on comfortably. Not rich, but comfortable and OUT OF DEBT.
And my dad thought I would never amount to anything.
Yeah. The longer you wait to file for it the more your monthly payments go up.
They will start with Social Security. If you saved all your life you don’t need as much. I wouldn’t be surprised if they start taxing investment income on IRAs if you make over a certain amount.
For most people, social security is fairly straightforward, but there are certain options an average person may be unaware of.
For example, you can claim spousal benefits from a previous marriage as long as you were married for at least 10 years and are single now. There are other caveats, but you can find those online.
The option my husband and I were unaware of relates to spousal benefits. Because we both worked, we both qualify for benefits. We have sufficient savings to wait until age 70 to take maximum benefits. However, my husband can apply for SS benefits at 66 and suspend benefits. Because he has applied for benefits, I can apply for spousal benefits based on his benefits. My own benefit will continue to grow until age 70 when I then apply. My husband’s benefit, since he suspended his benefit, will also continue to grow until he resumes it at age 70.
Or you can do like my sister and her husband. He developed cancer right after he retired at age 62. He was successfully treated, but he decided to apply for SS then. My sister continued to work. She turns 66 (full retirement age) this week, so now has applied for spousal benefits. At age 70, she will apply for her benefits based on her own earnings.
Laurence J. Kotlikoff is a nationally known expert on Social Security and has a book out entitled: “Get What’s Yours: The Secrets to Maxing Out Your Social Security.” A real easy to read, excellent book on Social Security is: “Social Security Made Simple: Social Security Retirement Benefits and Related Planning Topics Explained in 100 Pages or Less” by Mike Piper. Either see if your library has one of these books or buy one or the other online.
Is this an Ad?
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.