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How does your net worth compare to the average?


tiddman
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I have been looking for numbers on the average net worth of people in various parts of the country and at various ages and have been surprised at what I've found.

 

For example the Federal Reserve Survey of Consumer Finances in 2012 reported this:

 

Median family net worth

Age 45 to 54: $117,900

Age 55 to 64: $179,400

Age 65 to 74: $206,700

 

These numbers seem low to me.  I wonder if this includes retirement accounts and home equity?  For someone who works say for 30 years (age 22 to 52) to have a net worth of $118k seems low, that is the equivalent of saving less than $4k per year with 0% return.  Comments?

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I have been looking for numbers on the average net worth of people in various parts of the country and at various ages and have been surprised at what I've found.

 

For example the Federal Reserve Survey of Consumer Finances in 2012 reported this:

 

Median family net worth

Age 45 to 54: $117,900

Age 55 to 64: $179,400

Age 65 to 74: $206,700

 

These numbers seem low to me.  I wonder if this includes retirement accounts and home equity?  For someone who works say for 30 years (age 22 to 52) to have a net worth of $118k seems low, that is the equivalent of saving less than $4k per year with 0% return.  Comments?

 

When you have a 4% savings rate and a median household income of $51,000 it's easy for that to happen. Also, the 4% savings rate has a fat right tail full of high income/high wealth individuals, so very little saving going on until you get into the 80%+ income bracket.

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I have been looking for numbers on the average net worth of people in various parts of the country and at various ages and have been surprised at what I've found.

 

For example the Federal Reserve Survey of Consumer Finances in 2012 reported this:

 

Median family net worth

Age 45 to 54: $117,900

Age 55 to 64: $179,400

Age 65 to 74: $206,700

 

These numbers seem low to me.  I wonder if this includes retirement accounts and home equity?  For someone who works say for 30 years (age 22 to 52) to have a net worth of $118k seems low, that is the equivalent of saving less than $4k per year with 0% return.  Comments?

 

At first thought I would agree with you but I have come to believe most Americans are spenders and not savers.  A distant friend owns some of those payday loan places and told me that his best clients are the guys who make $300-500k who need to come in and get a $50k loan for 30 days.  I was shocked that a guy who makes that amount of money would ever need a loan.  But given how people flip cars, expensive vacations and just waste money I am now a believer that the vast majority of people have a genetic predisposition against saving money. 

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By the way, these numbers include primary residence, which accounts for approximately 75% of the totals, which makes this even more surprising.  The average person of retirement age has about $50k of assets aside from their house?  So if you work for 50 years that means saving $1000 per year (assuming no return).  I guess taking inflation into account that doesn't seem quite as ridiculous but still.

 

The US population between the ages of 45 and 64 is approximately 62 million (based on 2010 census).

 

If these people have a net worth of $149k (average from the table I posted earlier) that is $9.24 trillion in overall net worth, 75% of which is in primary residences (very approximately), leaving 25% or $2.3 trillion in other worth.

 

Total US market capitalization is around $15 trillion at the time of these numbers.  So if 100% of non-primary-residence net worth was in the stock market, this would account for only about 15% of total market capitalization.  Realistically most people probably only have a fraction of their savings in the stock market.

 

So who owns the other 80-90% of the stock market?

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Canadian networth is overstated due to the increase is housing prices. Usually it tracks US networth pretty closely and average Canadian housing prices are in line with average US housing prices.

 

In the US - an average person lost 20 years of savings during the GFC. - Their networth fell back to what it was in 1994, if I recall correctly.

 

An american median house is less 3x median income whereas in Canada currently is it at 5.5x - I do not believe this has happened before.

 

avg US house is around $230k whereas in Canada we are at $390k. Used to be within $10k of US housing prices.

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Scary.

From the abstract: This paper examines households’ financial fragility by looking at their capacity to come up with $2,000 in 30 days. … Approximately one quarter of Americans report that they would certainly not be able to come up with such funds, and an additional 19% would do so by relying at least in part on pawning or selling possessions or taking payday loans.

 

Read more: Almost Half of All Americans Can't Generate $2,000 in 30 Days | TIME.com http://business.time.com/2011/06/01/nearly-half-of-americans-would-struggle-to-come-up-with-2k-in-30-days/#ixzz2vqoj19xg

 

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Scary.

From the abstract: This paper examines households’ financial fragility by looking at their capacity to come up with $2,000 in 30 days. … Approximately one quarter of Americans report that they would certainly not be able to come up with such funds, and an additional 19% would do so by relying at least in part on pawning or selling possessions or taking payday loans.

 

Read more: Almost Half of All Americans Can't Generate $2,000 in 30 Days | TIME.com http://business.time.com/2011/06/01/nearly-half-of-americans-would-struggle-to-come-up-with-2k-in-30-days/#ixzz2vqoj19xg

 

 

Hey bobp-

 

Look at the last paragraph of the article you posted:

 

The bottom line is this: If you don’t have a $2,000 emergency fund, your life is going to be miserable because every single financial contretemps is going to make you scared instead of just annoyed. A $2,000 emergency fund is $1 a day for less than three years. If you’ve been working at some kind of job for three years and haven’t been able to scrape together a dollar a day, go over your budget with a fine-tooth comb. It’s just not that much money. Find a way to do it. Your blood pressure will thank you.

 

I think this sums it all up.  A $2,000 emergency fund is $1 a day for less than three years?  Most Americans are just bad at math! :)

 

 

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Guest longinvestor

Numbing but unsurprising. I attended a real estate training 15 years ago, where this reality was stated slightly differently:

Median networth of home owners in US: $72,000

Median networth of renters: $2000.

A continental divide.

In an obtuse way, the real estate bubble involved overzealous lending practices to non-creditworthy borrowers.

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Scary.

From the abstract: This paper examines households’ financial fragility by looking at their capacity to come up with $2,000 in 30 days. … Approximately one quarter of Americans report that they would certainly not be able to come up with such funds, and an additional 19% would do so by relying at least in part on pawning or selling possessions or taking payday loans.

 

Read more: Almost Half of All Americans Can't Generate $2,000 in 30 Days | TIME.com http://business.time.com/2011/06/01/nearly-half-of-americans-would-struggle-to-come-up-with-2k-in-30-days/#ixzz2vqoj19xg

 

 

Hey bobp-

 

Look at the last paragraph of the article you posted:

 

The bottom line is this: If you don’t have a $2,000 emergency fund, your life is going to be miserable because every single financial contretemps is going to make you scared instead of just annoyed. A $2,000 emergency fund is $1 a day for less than three years. If you’ve been working at some kind of job for three years and haven’t been able to scrape together a dollar a day, go over your budget with a fine-tooth comb. It’s just not that much money. Find a way to do it. Your blood pressure will thank you.

 

I think this sums it all up.  A $2,000 emergency fund is $1 a day for less than three years?  Most Americans are just bad at math! :)

 

haha. Nice catch, my fellow Ohioan. ;)

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Scary.

From the abstract: This paper examines households’ financial fragility by looking at their capacity to come up with $2,000 in 30 days. … Approximately one quarter of Americans report that they would certainly not be able to come up with such funds, and an additional 19% would do so by relying at least in part on pawning or selling possessions or taking payday loans.

 

Read more: Almost Half of All Americans Can't Generate $2,000 in 30 Days | TIME.com http://business.time.com/2011/06/01/nearly-half-of-americans-would-struggle-to-come-up-with-2k-in-30-days/#ixzz2vqoj19xg

 

 

Hey bobp-

 

Look at the last paragraph of the article you posted:

 

The bottom line is this: If you don’t have a $2,000 emergency fund, your life is going to be miserable because every single financial contretemps is going to make you scared instead of just annoyed. A $2,000 emergency fund is $1 a day for less than three years. If you’ve been working at some kind of job for three years and haven’t been able to scrape together a dollar a day, go over your budget with a fine-tooth comb. It’s just not that much money. Find a way to do it. Your blood pressure will thank you.

 

I think this sums it all up.  A $2,000 emergency fund is $1 a day for less than three years?  Most Americans are just bad at math! :)

 

haha. Nice catch, my fellow Ohioan. ;)

 

He is probably assuming 60%+ compounding there. Buffet said he can compound at 50% with a 1 mill portfolio, so 60% with penny stocks shouldn't be that difficult  ;)

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Numbing but unsurprising. I attended a real estate training 15 years ago, where this reality was stated slightly differently:

Median networth of home owners in US: $72,000

Median networth of renters: $2000.

A continental divide.

In an obtuse way, the real estate bubble involved overzealous lending practices to non-creditworthy borrowers.

 

Generally I do not like government subsidies, but housing subsidies that encourage ownership may help people save.  Obviously, too  much will result in another financial crisis, but I don't mind small, reasonable subsidies.

 

Also, in the boom time, rising house prices rose boats of investors and consumers alike.  Now after the bubble, its investors cleaning up the foreclosure and distress mess and reaping the gains of the recovery.

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The concentration of wealth in our country is too high.  The explanation I hear some places that this is due to financial illiteracy or lack of discipline is not true in a lot of cases  The bigger problem is that too many people aren't getting a good education which is resulting in whole communities being stuck in a cycle of poverty.  Something needs to be done about this in my opinion.  It will benefit everyone.  We have already decided we won't let these people drop below a certain living standard so their financial problems will be ours too.

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I guess I'm not shocked as to how low the median net worth numb's are, with so much conspicuous consumption. My NW is way, way, above the median, and compounding at 15.4% p.a. since 1997. I find it funny when people tell me, i'm good with money. I just spend less the I earn and invest the rest and don't try to keep up with the Jones', who are always one month from insolvency, but drive nice cars. ;)

 

 

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The concentration of wealth in our country is too high.  The explanation I hear some places that this is due to financial illiteracy or lack of discipline is not true in a lot of cases  The bigger problem is that too many people aren't getting a good education which is resulting in whole communities being stuck in a cycle of poverty.  Something needs to be done about this in my opinion.  It will benefit everyone.  We have already decided we won't let these people drop below a certain living standard so their financial problems will be ours too.

 

I couldn't disagree more.  When I look at people I know with financial difficulties ( whether they be friends, acquaintances, family members, or extended family members), what I see is one stupid financial decision after the next over a period of years then decades without ever a thought to saving a penny.  When advice is given (even after they bring up the subject with their complaints) it is met with hostility and is certainly not welcome.  I hate to think that I'm becoming a curmudgeon, but the older I get the more I believe that most people are just stupid and irresponsible.  They make bad decisions and don't want to be called on them, don't want to admit to them, and don't want to be held accountable for them.  This explains in a nutshell why democracy can't work.

 

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I guess I'm not shocked as to how low the median net worth numb's are, with so much conspicuous consumption. My NW is way, way, above the median, and compounding at 15.4% p.a. since 1997. I find it funny when people tell me, i'm good with money. I just spend less the I earn and invest the rest and don't try to keep up with the Jones', who are always one month from insolvency, but drive nice cars. ;)

 

I'm of a similar mindset as you. The amount conspicuous consumption and essentially total lack of saving is really amazing in the US. There are people around me who earn far more than I do, but are in near dire straights financially. So we talk about what they can do, they see the problem (silly spending) and continue as they always have. One or two bad months they'll be in big trouble. It's only useful to say "stop spending" so many times. Eventually it becomes unwelcomed, so I just say ok good luck. No wonder the average NW is so low.

 

This is sort of a side note, but does anyone else here think about how much an item would cost in terms of how many hours they'd have to work to earn the money? Sometimes I do and then realize I don't want item X nearly that badly lol.  :P

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I agree Morgan on the situation of your friends, we have some of the same friends it seems.

 

But what you wrote interested me

 

This is sort of a side note, but does anyone else here think about how much an item would cost in terms of how many hours they'd have to work to earn the money? Sometimes I do and then realize I don't want item X nearly that badly lol.  :P

 

This used to make a lot of sense to me when I worked for an hourly wage but now I work in a capacity where I am billing out at a monthly rate and my hourly rate on the surface looks like it's 300-400 per hour which if I could bill 40 hours a week I would be doing great but I can only bill out a few hours a day so it makes it hard to make this comparison but still your point is good.

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The concentration of wealth in our country is too high.  The explanation I hear some places that this is due to financial illiteracy or lack of discipline is not true in a lot of cases  The bigger problem is that too many people aren't getting a good education which is resulting in whole communities being stuck in a cycle of poverty.  Something needs to be done about this in my opinion.  It will benefit everyone.  We have already decided we won't let these people drop below a certain living standard so their financial problems will be ours too.

 

I couldn't disagree more.  When I look at people I know with financial difficulties ( whether they be friends, acquaintances, family members, or extended family members), what I see is one stupid financial decision after the next over a period of years then decades without ever a thought to saving a penny.  When advice is given (even after they bring up the subject with their complaints) it is met with hostility and is certainly not welcome.  I hate to think that I'm becoming a curmudgeon, but the older I get the more I believe that most people are just stupid and irresponsible.  They make bad decisions and don't want to be called on them, don't want to admit to them, and don't want to be held accountable for them.  This explains in a nutshell why democracy can't work.

 

I see that with the middle class people, but not so much with poor people with limited education and prospects.  Anyway all I am saying is that the education system for poor people needs a lot of improvement because a lot of poor kids are coming out of high school miles behind the wealthier kids.  I understand letting adults fend for themselves but I think kids should get more help to level the playing field.

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I look at it a little different - but the same round about idea. I avoid wasteful/dumb financial decisions that I see low NW compounders make. For example, how many friends do you have that would spend 1 week researching a new washer and dryer or TV to save $100. I figure i'm much further ahead to focus on investing, where reading a handful of 10-K's over that week could make (or lose  >:() me thousands not hundreds of $$$. I bought my last car, a Nissan Altima, in literally 5 mins of visiting the car lot. Even if the dealer "soaked" me for an extra $500, cuz I didn't haggle, I'm still waayy ahead by finding 2 or 3 good investment ideas per year. Our low NW compounder friends, who aren't interested in investing, should spend time on making money in their chosen profession ( or learning to make good financial decisions) , in stead of researching the new TV for a week.

 

Just my two bits....

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The concentration of wealth in our country is too high.  The explanation I hear some places that this is due to financial illiteracy or lack of discipline is not true in a lot of cases  The bigger problem is that too many people aren't getting a good education which is resulting in whole communities being stuck in a cycle of poverty.  Something needs to be done about this in my opinion.  It will benefit everyone.  We have already decided we won't let these people drop below a certain living standard so their financial problems will be ours too.

 

I couldn't disagree more.  When I look at people I know with financial difficulties ( whether they be friends, acquaintances, family members, or extended family members), what I see is one stupid financial decision after the next over a period of years then decades without ever a thought to saving a penny.  When advice is given (even after they bring up the subject with their complaints) it is met with hostility and is certainly not welcome.  I hate to think that I'm becoming a curmudgeon, but the older I get the more I believe that most people are just stupid and irresponsible.  They make bad decisions and don't want to be called on them, don't want to admit to them, and don't want to be held accountable for them.  This explains in a nutshell why democracy can't work.

 

I see that with the middle class people, but not so much with poor people with limited education and prospects.  Anyway all I am saying is that the education system for poor people needs a lot of improvement because a lot of poor kids are coming out of high school miles behind the wealthier kids.  I understand letting adults fend for themselves but I think kids should get more help to level the playing field.

 

There are very few people in the US who can't add, subtract, and multiply by the time they are 10.  That is all the education you need to understand that spending less than you earn will allow you to save money and that the savings will grow.  And that spending more than you earn while taking on debt will not allow you to save money and the debt will grow.  This isn't brain surgery.  I hate when people say that we need more education for the poor.  They can already do simply math and it is likely that in 99.9999999999% of the cases it is their own bad decisions which is the reason for their poverty to begin with.

 

Also the middle class represents the majority of Americans, so even if your opinion of the poor was 100% correct it wouldn't move the needle anywhere near as much as getting the middle class to behave even slightly more intelligently with their money.  You can cure ignorance fairly easily, but as the saying goes there is no cure for stupid.  They live their whole lives like there is no tomorrow and are just shocked, shocked, when tomorrow finally comes.

 

 

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Why should we be surprised?  Just go down to your local mega store complex.  I am sure it is the same across NA.  The number of retail outlets has exploded in the last 30 years. 

 

I go to the same Sbux 3 times a week or so and buy the same thing - tall bold, and nothing else.  I sit and nurse it for nearly an hour while I read.  In line with me are people getting latte this and that and some treat and paying 7-10 and they appear to think this is normal.  They ring the purchase through on their Iphone -70 /month, get in their vehicle - 500/month, 150 for gas.  Then they go shopping for things they dont need or buy things for people who dont need them.  The amount of crap that comes through my door that I dont want blows my mind. 

 

Then there is restaurants.  The number of these has exploded as well in the last 30 years.  We go our for dinner about once a month. 

 

Probably the worst thing to ever happen was the advent of easy credit.  I am guessing most on this board are like me.  I have only ever had one credit card, and I only use it for big purchases. 

 

Joe/Jane average (or should I say Joe median) dont live like we do. 

 

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