Median U.S. Incomes and Net Worths

I just stumbled upon this Bankrate piece that lists median U.S. incomes and net worths including the following on incomes:

If you and yours are bringing in $40,000 a year, you're doing better than half the households in America. Or, as a Washington think tank recently pointed out: If you're a teacher married to a policeman, your combined household income puts you in the top 25 percent of all households in the nation.

Anything in six figures means you're in the top 20 percent.

I'm surprised by both of these. I would have thought that the median was higher and that six figures didn't get you so high into the rankings.

But income is really the minor part of the story (in my opinion.) We've all seen examples time and time again of people who make a boatload and spend it or -- or even more!  Net worth is where it's really at -- it's the true measure of what you're worth. Here's how Bankrate lists the median net worths:

• 90 to 100 percentile: $833,600
• 80 to 89.9 percentile: $263,100
• 60 to 79.9 percentile:  $141,500
• 40 to 59.9 percentile: $62,500
• 20 to 39.9 percentile: $37,200
• Less than 20 percentile: $7,900

And it also includes this:

Across all households, the national median net worth is $86,000. Half of your fellow citizens have more than that, half less.

For those of you wondering, yes, this includes home equity.

I guess I never get over the shock at seeing net worth numbers. They're always amazingly low! The median net worth is $86k? Holy cow, that's pathetic! (even for someone making $40k per year)

One final comment: I always have people telling me that $1 million is "not that much" whenever I write about saving to reach $1 million. While it's true that $1 million is not what it used to be (nothing is), it's also not chump change. Having $1 million is puts you in the top few percentages of people in the U.S., so it's more than most people have (including, probably, those people that make the "it's not that much" comments.)

Comments

[Orthros]

I believe Jorge lacks perspective. As an experienced hiring manager, I can affirm that the average salary for new hires (undergrad or graduate) does not even come close to $100K, and even Harvard undergrads don't average $100,000 in first-year salary.

While it's not impossible to hit six-figure incomes early on, it is rare to see this before age 30 outside of certain professions (consulting, I-banking). Previous Fortune 100 companies I've worked for had many, many individuals with MBAs and 10+ years of relevant experience who hadn't yet broken $100,000 in base salary.

I personally would cringe at the thought of paying a 22 year-old new hire in a Fortune 500 company more than $60,000, regardless of potential. Yes, there are exceptions that are worth more (some much more), but most hi-po new hires are going to make in the high $40s or low $50s to start this year. These are grads from strong state schools (Michigan, North Carolina) as well as non-Ivy private schools (Swarthmore, Duke); for those at more mainstream colleges, you can expect mid $30s to mid $40s.

MBAs can certainly make close to $100,000 base if they're front a top 25 school, but these are generally experienced professionals and career switchers in their late 20s and early 30s. Two Top 20 MBA programs I recruit from have average starting salaries of just under $90,000. Personally, I've hired MBAs in a range from $50,000 to $120,000, with experience being the dominant factor.

I'd like to hear what other managers, directors and VPs from Fortune 500 firms are paying their new hires.

[E.F.]

1. A good salary matters, yes; but only as long as one has a job. The average person is two to three paychecks away from poverty despite all the good advice out there to have an emergency fund of at least six months.
2. Net worth is key. It enables people to have financial security even when unemployed or retired and the financial freedom to take time off, help their children, etc.
3. The only way to build net worth to to spend less and save more. A trite observation, perhaps, but no less a valid one since many people have not learned that lesson yet.
4. Comparisons of income and net worth may not serve an important purpose, but it is intriguing for many people to know where they rank. It may even encourage some people to save more if they realize most people in their age and income group have a higher net worth.