Authored by Mike Shedlock via MishTalk,
I have been on a rampage about average vs median income. Here’s a report about average vs median savings.
Magnify Money asks How Much Does the Average American Have in Savings?
The question is irrelevant. The story is how unprepared the median person is prepared for retirement. On that score, the article does explain.
Stats
- The average American household has $175,510 worth of savings in bank accounts and retirement savings accounts as of June 2018.
- The median American household currently holds about $11,700 across these same types of accounts.
- The top 1% of households (as measured by income) have an average of $2,495,930 in these various saving accounts. The bottom 20% have an average of $8,720.
- Roughly 83% of savings are in located in retirement accounts like IRAs and workplace-sponsored retirement savings plans like 401(k)s.
- Millennials, who have just started their savings journey, have currently socked away an average of $24,820. Gen Xers have $125,560 in retirement savings. Baby boomers and those born before 1946 have an average of $274,910.
- 29% of households have less than $1,000 in savings.
Point number 2 is the most relevant point. 50% of household have less than $11,700 in savings.
Averages Lie
What’s wrong with averages? The Skew!
Average and Median Savings by Income Level
The top 1% of income earners have an average savings of $2.53 million and a median savings of $1.16 million.
That average affects people with no savings.
The median savings for 40% of households is zero. The “average” varies by income group but it is much higher.
The “middle” (40-60% of wage earners) median savings is $34,020 but the average is $65,830.
Age Level
This is where the stats get truly depressing.
The average “boomer” headed into or in retirement has $274,910 in savings.
What’s wrong with that?
Well, 50% of boomers have less than $24,280 saved up.
Averages lie.
Upper middle class people expect retirement to mean having two homes and taking semiannual trips to Europe. Lower class people don’t have any expectations at all about retirement, but will probably be fine by moving in with their kid and spending their time babysitting their illegitimate grandchildren. $1,100/month from Social Security can buy plenty of food – especially if you’re on Medicare and your meds are available as generics.
Sounds great! Where do I sign up for that retirement plan.
Roll eyes and sigh.
Good news, Maggie – we’re all signed up already.
I believe, like o-care, there is a shared responsibility payment, and we all signed up by proxy. I just hope dog food doesnt get so expensive that i cant afford to eat it.
So mister “free trader” Mush Sherlock? The benefit of free trade is cheaper prices where by, more money will be left for savings and capital investment. Where by,. the future productivity of your people will be greater.
How’s the real world of your Ricardian Comparative Advantage working out for you?
Yes, Mish is in the mold of the ideal of free trade. Much like Ron Paul. Only, cheaper prices may only lead to more consumption and not additional savings and capital investment. So, You have shipped out your factory jobs for retail jobs at Walmart.. It’s time we recognize some empirical data . The real worl verses the theoretical world.
Are you two the same guy?
Perfect comment, Anon. Strict adherence to dogma with no comprehension as to how it played out in the real world
Stop it, Mish. Not exactly rocket science. The poor don’t save money. They don’t have money to save. Life costs more than they bring in. It has always been that way, and it’ll always be that way. So what purpose does this article serve?
The poor should have bought Tesla stock, then they wouldn’t be poor.
The poor should have bought Tesla cars. Then they could just immolate themselves and not worry about retirement savings.
Quit being lazy and work until you die like the rest of us. Then you dont have to worry about retiring. Duh.
Good point, Jim.
Ignores 2 key elements. How much saving is appropriate? What is the form? Bank checking accounts and retirement savings is one leg of savings/assets, but far from the only one. If that is your primary leg, it is appropriate to have a lot in it, if it is an ancillary leg to your stool, it is appropriate to have very little or none in it.
If you are a government employee with a pension that is calculated as 50% of your last three years, and you juice the overtime and cash in your saved up for decades vacation time to double your end of career pay for those three years, you get 50% of doubled salary, (your original end of career salary) forever. (assuming no massive default/financial reset that would likely destroy savings as well). You don’t need savings. Any.
You are a boomer, or one of the few gen X’s with a pension. Likely same story…no savings + SS is fine for a ‘working class’ retirement. If you’re a farmer with no ‘savings’ in the stock market, but free and clear 5,000 acres, and 3k head of cattle…you may have no ‘savings’ in wall street. If you’ve built a chain of 8 dry cleaners, and own the strip mall that 3 of them sit on but have ‘no savings’ you’ll be fine. If you own several dozen oil wells, but no stocks and bonds…fine. A couple of apartment buildings. You’re Ron Swanson and you’ve been burying gold for 30 years. Heck, given how constrained this data is, if you have $8mm of stock, bonds and mutual funds in a non-tax deferred regular account…you have no savings in this math.
This data set is too constrained to be useful…but it is available, so it is used.
Rather- I still have my money. I knew when to exit the rigged casino and go into hard assets. I bought hard assets at what now looks like bargain basement prices. Even a harsh deflationary period would not really take the wind out of my sails.
Much too late for that but metals could still really be your friend. Land is too high in most places.
You can’t eat Gold. And the government will take it from you if you try to use it.
You have a recipe for preparing those tasty Federal Reserve Notes? In a currency collapse, Gold is always the last man standing. In a dystopia lead and brass are king. Whenever things return to a semblance of normal, Gold would be the coin of the realm.
Greetings,
I would agree with you minus the fact that Silver has always been the coin of the realm. It was how workers and soldiers were paid for most of recorded human history. The slow decline of the Roman Empire tracks nicely with the removal of Silver from their coin.
With the right mix of tin, gold can be a reloading supply.
Robert (QSLV)
“Whenever things return to a semblance of normal…” being an important qualifier. It might be a loooong period between the time that the currency collapse and switcheroo/allocation are implemented, and the time that any sort of an open and honest market using trust (required for any broad voluntary acceptance) develops.
I am sure that gold will be back, but dubious about whether anyone with a few hundred ounces will live long enough to see it.
BL, I think you’re reinforcing my point about the insufficiency of the data set. You may have lots of savings/investment for your retirement (in your case in ‘hard assets’ (PM/real estate?), but without it sitting in a 401k/IRA or bank account, this data is saying you have nothing. You’re one of the people with ‘no savings’ (or perhaps modest compared to your actual situation) because this measured retirement accounts and bank accounts. Not hard assets. So they’re throwing a pity party for you (No savings!) when you’re likely much better situated (hard assets) than mean or median.
I don’t know if land is too high or the USD is too weak (or strong). I can’t do fundamentals on fiat. It is interesting to look at things, whether average single family home, or S&P500, or barrel of oil, in ounces of gold (or each other). According to this (not vouching for it) single family homes are relatively cheap in gold terms relative to historical ranges.
It seems a little off or dated to me (current charts seem to be ~50 ounces, but at $180k…that isn’t any recent USD conversion).
Rather- First, I don’t care what “THEY ” have to say. Keeping your business under the radar drives them bonkers. When I had a M. Lynch financial advisor, he called me a millionaire while THEY would look at me now as a dindu with nuffin. What they can’t see won’t hurt them/me.
Homes may be cheap in some areas, I get the point.
Median, yesssss!
All those poor folks with no savings, but Iphones, new cars, Nike shoes, and 200 pounds excess blubber.
I have no fucks to give.
Damn, this shit pisses me off. The “median” boomer has an IQ somewhat south of 100. Many of those folks would not be able to plan for their next meal, much less for retirement. And hey, they gots SS, medicaid, etc., to rely on, right?!
No way in hell they give one second of thought to saving for the future. Gimme my Iphone, my new car, my big TV! Savings? Whatz that?
One of my idiot in laws have $500 a month in mobile phone expenses, plus cable, plus car payment, plus etc. And not a cent saved. And yet the productive, actual taxpayer is supposed to pay for their 20 or more years in retirement.
What a load of shit. The world would be a lot better if it allowed these idiots to starve to death. Then they would quickly grasp the concept of taking care of themselves.