Are You Financially Average?

Budgets are Sexy asks if you are financially average and shares these ten financial averages in the US:

#1. The average American gross household income is $71,258
#2. The average American household with debt owes $132,529
#3. The average American gave $5,491 to charity in 2015
#4. The average American has a FICO credit score of 700
#5. The average American’s 401(k) balance is $96,288
#6. The average personal savings rate in the U.S. is 5.5%
#7. Only 18% of Americans actively contribute to an IRA
#8. The average American’s tax refund in 2016 was $2,860.
#9. The average American pays an effective federal income tax rate of 13.5%
#10. The average American’s Social Security retirement benefit is $1,363/mo

Here are my thoughts on these:

1. I'm surprised that the income number is so high. I thought it was more like $55k. Anyway, this gives me more hope for Americans overall. With an income of $71k a year, you can certainly build wealth over time.

That said, I passed $71k in income pretty early in my career, probably five years of so out of grad school -- and that was in early 1990's dollars. Yes, earning a good salary is a great way to grow net worth. If you don't believe me, just read what millionaires have to say. 

2. We paid off our mortgage over 20 years ago and haven't looked back since.

3. We gave away 26% of our gross income over the 20 years we were building wealth. Even today in retirement we give 20% or so away per year, though we do it through assets (not income) using a donor advised fund.

We are big believers in helping others as much as we can, so giving has always been a big part of our family, as has volunteering.

4. Last time I checked, our credit scores were near 800.

5. I maxed out my 401k for many, many years and surpassed $96k a long time ago.

6. We saved 36% of our gross income. This was pretty good back in the day but many of today's early retirees make that look like slacking.

7. I contributed as much as I could to all my retirement accounts.

8. Our tax refunds had wild swings since we had so much going one every year -- especially after we bought our rental properties. I'm looking forward to the day when my tax return isn't 150 pages. (Yet another reason I use a CPA to do my taxes.)

9. My federal tax rate was way over 13.5% for many years, but one benefit of retirement is that it should be lower now. :)

10. I haven't looked at my Social Security benefits since I have a couple decades before I'll claim them. I'm not even sure they'll be around at that time (which is why I don't have any financial plans based on needing them). That said, if they are around, I should get a decent amount since I paid the max amount to Social Security for many years.

How about you? How do you stack up on these measures?

Comments

[Rachel Slifka]

I was surprised by the gross household income as well. I'm also a little surprised the FICO score is that low. Thanks for rounding these up!

[texashaze]

I expected income lower, debt much higher, 401k balances much lower. So from my perspective we seem to be in better shape.

[Josh Stein]

#1. Ours is now well above this - of course helps that we both work
#2. We're a bit higher than this - to get to a better quality school system we had to sell when our house had no equity (bought at the bottom of the market and our market dug)
#3. Probably about here - should be higher, but isn't
#4. We're very close to 800
#5. Between the two of us, we're right about here
#6. We are a bit above this; getting debt paid off is primary goal but we're close to 10%
#7. I do not contribute to an IRA yet - we will once debts are gone
#8. Ours was higher than usual, but not $2,800 - now, if you include Ohio city refunds we both get due to our situations, then yeah we're at about $2,800
#9. Mine is well below 13.5%
#10. Ours are projected to be higher, but I'm not worrying about that specific figure right now at age 36.