So last week we went over 15 great financial goals to hit if you wanted to be ABOVE average in this wacko world of ours, but today I thought it would be fun to see just how close we are to being AVERAGE average compared to others ;)
Because why not, right? What else are we going to do today?
Stats are below in bold, followed by my own thoughts & answers… I’ll let you decide which areas you actually want to be average on, and which you don’t ;)
10 Financial Statistics of The Average American
(The data is mostly from 2015 and chock-full of other variables that we should probably pay attention to, but take them for what they’re worth and just play along with this blogger here ;) Big shout to The Motley Fool where I borrowed these stats from.)
#1. The average American gross household income is $71,258
Pretty decent… Our household income this year will be around $110,000 between my wife’s new job and my online projects, but obviously if there’s only one of you in your household it’s going to skew your results :) Verdict for us: above average
#2. The average American household with debt owes $132,529
Dayuuummm… Although it *does* include mortgages and student loans, cars, etc, so it’s not ALL credit card debt. We’ve opted to go back to renting so we don’t have any mortgages, but we do have a car note with $12,142.79 left which makes our verdict here below average.
#3. The average American gave $5,491 to charity in 2015
Pretty good!!! Probably because the higher earners skew it, but still – no shame in trying to keep up! And outside all the gobs of time I spend helping people with their $$$, we fail here with only giving about $1,000 in cash and donations last year… Though we did give out over $14,000 so far with our Community Fund I helped launch, and my $20/mo charity trick is now auto. pumping out $100/mo to 5 of my favorite organizations, so we are getting better! Verdict: below average (but not for long!)
#4. The average American has a FICO credit score of 700
Much better than I’d expect? I’m not exactly sure what my *FICO* score is, but I do know from last week’s checking that we’re at 829 with Experian and 835 w/ TransUnion and 833 w/ Equifax. So I would assume we’d be in the 800’s as well with FICO. And man are there a lot of different scores out there? You can learn more about most of them here, but again as long as you’re at least monitoring one of them consistently you’ll be just fine. J$ verdict: above average
#5. The average American’s 401(k) balance is $96,288
I no longer have a 401(k) since becoming self-employed, but I do have about $504,000 in my SEP IRA which is an equivalent (minus those glorious free matches!!!) so it’s safe to say we’re way above average here too. You could also probably include IRAs and any other types of retirement accounts here which of course paints a much bigger picture, especially if you don’t even have access to a 401(k) plan.
Here’s a cool graph Motley Fool included that breaks down the average totals by *age* – which is a much fairer comparison. It comes from Vanguard’s 2016 How America Saves report (PDF):
#6. The average personal savings rate in the U.S. is 5.5%
Ugh… Although apparently this is up from 1.9% in 2005, so yay? I’m never quite sure exactly how one goes about calculating their savings rate (do you use pre-tax money? After-tax? Does investing count? What about debt payments?) but here’s what I get depending on what I’m including – all based on pre-tax income:
- Actual “savings” rate: 0% (all our extra money goes to maxing out retirement accounts and debt)
- Investing rate: 26% (SEP IRA, ROTH IRA)
- Investing + debt pay off rate: 34% (SEP IRA, ROTH IRA, Car loan)
Verdict: above average
#7. Only 18% of Americans actively contribute to an IRA
Double ugh… I’m not sure what’s considered “active” here (I usually contribute only once a year to max it out vs monthly deposits) but either way not good, America. Not good! J$ verdict: above average
#8. The average American’s tax refund in 2016 was $2,860.
I know people either LOVE getting refunds or think it’s asinine that you “give the government a loan,” but as far as I’m concerned a nice surprise is always better than an ugly one. And I find that when people get a *chunk* of money vs smaller more frequent ones, they tend to apply it more towards bigger goals anyways since it seems to make a much larger difference. So to me it’s all in HOW YOU USE THE MONEY vs when you get it.
As for our typical returns, we usually break even since we pay taxes quarterly, however last year we got an unexpected return of $5,000 when we overpaid on part of some money that came in at the end of the year. Which of course went right back into investments! And again, a much better surprise getting $5,000 back than the opposite ;)
Verdict: above average (not sure how to color code this, haha…)
#9. The average American pays an effective federal income tax rate of 13.5%
Wow! Wouldn’t have ever guessed that! Not that I pay attention too much to this stuff (borrrrringgggg). And similar to the whole savings rate thing I wasn’t quite sure how to calculate this puppy either, however a quick Google search shot me a fast answer and was able to figure it out nicely.
An individual’s effective tax rate is calculated by dividing total tax expense from line 63 of his 1040 Form by his taxable income from line 43 of that form.
Easy enough, right? For 2016 that came out to 17% for us (much lower than usual probably due to us taking a loss when we sold our house earlier in the year, as well as my wife maybe going back to work?), but for 2015 it was quite higher at a whopping 43%! Can that be right?? This is exactly why I use an accountant as I don’t trust myself to calculate crap haha…
(UPDATE: Per a commenter there is no possible way I can reach 43% tax unless I’m making over $1,000,000/year which I am most certainly not… So pretty much, I don’t know what the hell I’m doing here haha… (And even more reason to have a CPA! :))
Verdict: above average (I’m gonna say this is both good and bad: bad cuz we’re obviously paying more than the average, but good in that it typically means we’re also *earning more,* as well as giving more back to support our state/country too)
#10. The average American’s Social Security retirement benefit is $1,363/mo
Reason #38 to make sure you’re saving and investing on your own!! Can’t rely on anyone to support you in retirement :( I cant find my login/password to the site at the moment, but here’s what our future payments were estimated at two years ago. I’d imagine it’s only gone up?
(I like how “early retirement” is 62 btw… surely they haven’t come across FIRE blogs! ;))
You can easily access all your own social security stuff these days here: socialsecurity.gov/myaccount (provided you remember your password!). It’s also helpful when trying to run your Lifetime Wealth Ratio too that I conjured up :) Divide your current net worth by your *total earnings* over your lifetime and see what % of it you still have left! Just make sure to have a box of tissues around as most times it’s pretty depressing, haha… Verdict: above average
#11. Bonus: The average American will spend $165.14 on Thanksgiving expenses this year (via LendEdu)
If only that read Christmas! :) We’ll probably only be spending around $30 or $40 for gas and some side dishes to the dinners we’ll be attending this year (thanks mom and dad!), but I know some are flying all over the place which I’d imagine gets pricey pretty fast. Good thing we love our friends and families! Verdict: below average
(my favorite all-time gift, given to me by Baby Penny!)
BTW, right before I went to publish this I got two more T-Day stats emailed to me, by Ebates:
- 22% of Americans plan to begin their Black Friday shopping online after Thanksgiving dinner
- 11% of Americans admit to shopping on their mobile phones during Thanksgiving dinner
So there you have it! The average financial stats of your fellow man and woman :)
Where do you land? More average than below average? More below than above?
It looks like I’m mostly above average in the right places and below average in the others, but areas of improvement can be found in both the charity and the effective tax rate areas… I’m still amazed by how all those early retirees pay 0% in taxes btw, even though they’re all millionaires!! Talk about being crafty!
See this post here by Go Curry Cracker to see what I mean: Never Pay Taxes Again (hint: you’ll need to live on far less than you’re probably doing right now to pull this off)
Thanks for playing along! No one else in real life likes talking about this stuff with me ;)
PS: Here’s the link again to the Motley Fool article if you want to learn more: 10 Incredible Financial Statistics That Sum Up the Average American
Jay loves talking about money, collecting coins, blasting hip-hop, and hanging out with his three beautiful boys. You can check out all of his online projects at jmoney.biz. Thanks for reading the blog!