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Americans' Median Net Worth by Age -- How Do You Compare?
If the figure above is representative of US general population, we are in trouble unless the they have a healthy social security and generous pension. Over the past 20 years define pension plans have largely been replaced by define contribution plan, i.e. 401(k) and 403(b).
I work for a company that offer both a pension plan and 401(k), but the pension plan grows slowly (invest conservatively and I have no control) and the company's contribution is too many (1% of my salary). The bulk of the company's contribution goes into my 401(k) and that I am grateful.
SS doesn't figure prominently into my retirement planning much since who knows how much I'll get (or what's in the SS fund!) when I reach that age ... as such, whatever I might get when I do retire will be an 'extra' and be appreciated at the time.
But looking @ this chart it's pretty staggering. Shocking, even.
It makes me feel that those who are on target to hit 1million or more dollars for retirement are going to be severely penalized with taxes and less in SS benefits. The politicians will have cover to do this since the majority of their constituents are represented in the numbers above. Scary.
Edit: As Mark points out below these are "medians" not averages. Yep - There's a substantial portion of the population that lives hand to mouth for a variety of reasons - some self-inflicted and some not. I'm amazed by the plethora of TV ads lately urging older folks to buy "funeral/last rights" insurance. One claims that the "average cost" of burial is around $7,000. I don't know if that cost is correct. But these ads tell me there's a substantial population out there that expect to die with less than $7,000 in assets. Really sad.
And ... If your mutual fund owns banks that charge excessive credit card rates or institutions providing pay-day loans, you are benefitting to an extent from this situation. After paying-off debt and accumulating real savings, one quickly realizes that when he/she needs a loan to cover unexpected expenses, the "loan" can be taken from savings, thereby avoiding these high costs.
If the figure above is representative of US general population, we are in trouble unless the they have a healthy social security and generous pension.
Defined pensions are a thing of the past. Only about 5% of workers have them and 50% of those work for gov't.
The only way I see people surviving with such small net worth is,social security, food stamps etc and living hand to mouth. 46 million use food stamps.
This should give those of us with substantial net worth, SS and pensions pause to appreciate what we have.
SS doesn't figure prominently into my retirement planning much since who knows how much I'll get (or what's in the SS fund!) when I reach that age ... as such, whatever I might get when I do retire will be an 'extra' and be appreciated at the time.
At some point I think SS will basically be taxed away if you make over a certain amount of money.
Average "has three mathematical meanings: it could be mean, mode, or median. This suggests that confusion, intentionally or not, is likely to happen when the word is used."
The article is misleading because it omits "human capital"- the present value of all future income earned from labor". For most young people, human capital far exceeds their actual capital. Even for many seniors, human capital is not zero- some seniors are still working in their seventies and even eighties.
Yes, the hed pushes readers in the wrong direction, but working mathematicians actually permit median and average to be the same thing?? Wow, how extremely lame and discouraging.
The article is misleading because it omits "human capital"- the present value of all future income earned from labor". For most young people, human capital far exceeds their actual capital. Even for many seniors, human capital is not zero- some seniors are still working in their seventies and even eighties.
Human capital is not a part of one's net worth... Regardless, if accurate, these numbers are embarrassing...
Naw. How it's used and what it means are two separate issues. Geez, you were at Berkeley. Ask any of my committee professors there.
Let me get this straight. I'm supposed to ask Cal academicians how the hoi polloi use a term of art, because your professors are experts on the English language. So they'd know more about common usage than the mathematicians at the colloquia that I sat in on. Got it.
I prefer Merriam-Webster, that gives two definitions of average:
- a number that is calculated by adding quantities together and then dividing the total by the number of quantities (i.e. your mean)
- a level that is typical of a group, class, or series : a middle point between extremes (conflating mode, i.e. most common, and median, i.e. middle)
Read the column I cited. Its point is that usage is extremely sloppy. You can't expect precise meaning of figures given as "average", for they can be used in various ways, and even when the arithmetic is clear, the statistics aren't.
Defined pensions are a thing of the past. Only about 5% of workers have them and 50% of those work for gov't.
Speaking of fuzzy statistics, this number sounds way off. Pensions are declining, but not nearly that fast. As of 2011, 18% of private sector workers had traditional pensions, and 78% of government workers had pensions. (I've no doubt the figures have dropped in the past five years, but not by 3/4). http://www.bls.gov/opub/mlr/2012/12/art1full.pdf
The only way I see people surviving with such small net worth is,social security, food stamps etc and living hand to mouth. 46 million use food stamps.
This should give those of us with substantial net worth, SS and pensions pause to appreciate what we have.
That's a more accurate statistic. It's even worse that it looks when you consider that several millions of those people need food stamps while working. I agree with the sentiment - though IMHO it is better to try to give a hand up (however one feels that is best done) than to simply be thankful for one's own situation.
As a working editor but not invariably a hardcore prescriptivist, I know that MW slips a bit every single year (I believe it's they who now permit strangled to death, gah, and also give miniscule as a variant of minuscule, or maybe that's just the Word dictionary, gah x 2). But it's really pisspoor dictionarying to define average with the word median no matter how you feel about descriptive usage. Noah Webster wanted to include aks for ask cuz so many of his countrymen said it that way, but was talked out of it.
Somewhere I've still got M-W's 2nd unabridged, on onion skin (from my parents). The last edition before they started including slang. If I can find it (not likely), I'll see what it says.
If one insists that average means (no pun intended) arithmetic mean: What was the average annual return of a fund that produced 50% and -50% returns over the past two years? 0% or -13%? Sure it's still a mean, but it's not the "usual" mean.
As for me, I'm still bothered by flammable. I get inflamed whenever I hear it
I realize that some serious stuff was exchanged on this topic, but I still feel a little humor might move the needle here.
I was only modestly interested in the exchanges so I skimmed them. That was a mistake and caused me at least momentary confusion ( not an unusual state for me ).
When I saw the abbreviation MW for Merriam-Webster in some of the later exchanges, I totally misinterpreted the intended meaning. As a retired engineer, I read MW as MegaWatts. Wrong, but true. I'm mostly a very simple, linear person.
For those who choose to abbreviate, and I in no way discourage the practice, please, please write out the complete term followed by the abbreviation when initially submitted. That'll cut the confusion factor significantly for us uninformed folks.
This recommendation is only partially made in jest. I appreciate all contributions.
@msf, Webster's II, along with I believe III (not positive, in basement next to a dozen AHDs, which I should also consult), is hygienic about the terms, by my reading just now. Medial ('medial sum') is also offered under average, but the lengthy entry is otherwise precise, and mean and median are altogether scrupulously observed and defined. Bryan Garner, the best of modern usage arbiters, likewise is exact.
As for flammable, we all have our idiosyncrasies,
but median and average are not among them for anyone interested in exactitude.
Defined pensions are a thing of the past. Only about 5% of workers have them and 50% of those work for gov't.
Speaking of fuzzy statistics, this number sounds way off. Pensions are declining, but not nearly that fast. As of 2011, 18% of private sector workers had traditional pensions, and 78% of government workers had pensions. (I've no doubt the figures have dropped in the past five years, but not by 3/4).
I agree with the sentiment - though IMHO it is better to try to give a hand up (however one feels that is best done) than to simply be thankful for one's own situation.
Can't a person do both. Maybe be thankful first than give a hand up?
Somewhere I've still got M-W's 2nd unabridged, on onion skin (from my parents). The last edition before they started including slang. If I can find it (not likely), I'll see what it says.
If one insists that average means (no pun intended) arithmetic mean: What was the average annual return of a fund that produced 50% and -50% returns over the past two years? 0% or -13%? Sure it's still a mean, but it's not the "usual" mean.
As for me, I'm still bothered by flammable. I get inflamed whenever I hear it
I hate when people us the term "average annual return" in place of "annualized return." The two are nowhere near synonymous.
Performance Table. Underneath the line graph is a table showing the fund’s annualized (or average annual) returns for 1-, 5-, and 10-year (or for the life of the fund, if shorter) periods.
@msf, at least 'average annual' attempts precision or something close to it, compared with 'average'. How would you define annualized?
@shipwreckedandalone, It does not work like that; it's money we owe chiefly to ourselves. Not to defend the scale of public debt blindly, but it's not at the top of the fret list. Study up. Not like a household situation (mortgage etc.) or a credit card.
Note that I cite Invesopedia here not as an authoritative source, but as a readable one, in case my writing/typing/formulae below are unclear.
For example, if you have a cumulative return of 21% for two years, you scale it to one year by taking the square root (1/2 power): sqrt (1 + 21%) - 1 = (1.1) - 1 = 10%
In general, given a cumulative return over a period of Y years, annualized return = (1 + cumulative return) ^ (1/Y) - 1
You'll notice a striking resemblance to geometric average: 1 + cumulative return = (1 + first year return) x (1 + second year return) x ...
Unfortunately, figures under a year are often "annualized" without compounding, e.g. a six month return of 5% is "annualized" to 10%, not to (1.05 * 1.05) - 1 = 10.25%.
Comments
I work for a company that offer both a pension plan and 401(k), but the pension plan grows slowly (invest conservatively and I have no control) and the company's contribution is too many (1% of my salary). The bulk of the company's contribution goes into my 401(k) and that I am grateful.
But looking @ this chart it's pretty staggering. Shocking, even.
---
Edit: As Mark points out below these are "medians" not averages. Yep - There's a substantial portion of the population that lives hand to mouth for a variety of reasons - some self-inflicted and some not. I'm amazed by the plethora of TV ads lately urging older folks to buy "funeral/last rights" insurance. One claims that the "average cost" of burial is around $7,000. I don't know if that cost is correct. But these ads tell me there's a substantial population out there that expect to die with less than $7,000 in assets. Really sad.
And ... If your mutual fund owns banks that charge excessive credit card rates or institutions providing pay-day loans, you are benefitting to an extent from this situation. After paying-off debt and accumulating real savings, one quickly realizes that when he/she needs a loan to cover unexpected expenses, the "loan" can be taken from savings, thereby avoiding these high costs.
Geez - a screwed-up post, since the chart reads "Median net worth"
I promise to pay closer attention. Thanks for the correction.
(Just for you, Hank, I edited the thread title to include the correct technical term! David)
The only way I see people surviving with such small net worth is,social security, food stamps etc and living hand to mouth. 46 million use food stamps.
This should give those of us with substantial net worth, SS and pensions pause to appreciate what we have.
I prefer Merriam-Webster, that gives two definitions of average:
- a number that is calculated by adding quantities together and then dividing the total by the number of quantities (i.e. your mean)
- a level that is typical of a group, class, or series : a middle point between extremes (conflating mode, i.e. most common, and median, i.e. middle)
Read the column I cited. Its point is that usage is extremely sloppy. You can't expect precise meaning of figures given as "average", for they can be used in various ways, and even when the arithmetic is clear, the statistics aren't.
http://www.bls.gov/opub/mlr/2012/12/art1full.pdf That's a more accurate statistic. It's even worse that it looks when you consider that several millions of those people need food stamps while working. I agree with the sentiment - though IMHO it is better to try to give a hand up (however one feels that is best done) than to simply be thankful for one's own situation.
But it's really pisspoor dictionarying to define average with the word median no matter how you feel about descriptive usage.
Noah Webster wanted to include aks for ask cuz so many of his countrymen said it that way, but was talked out of it.
If one insists that average means (no pun intended) arithmetic mean: What was the average annual return of a fund that produced 50% and -50% returns over the past two years? 0% or -13%? Sure it's still a mean, but it's not the "usual" mean.
As for me, I'm still bothered by flammable. I get inflamed whenever I hear it
I realize that some serious stuff was exchanged on this topic, but I still feel a little humor might move the needle here.
I was only modestly interested in the exchanges so I skimmed them. That was a mistake and caused me at least momentary confusion ( not an unusual state for me ).
When I saw the abbreviation MW for Merriam-Webster in some of the later exchanges, I totally misinterpreted the intended meaning. As a retired engineer, I read MW as MegaWatts. Wrong, but true. I'm mostly a very simple, linear person.
For those who choose to abbreviate, and I in no way discourage the practice, please, please write out the complete term followed by the abbreviation when initially submitted. That'll cut the confusion factor significantly for us uninformed folks.
This recommendation is only partially made in jest. I appreciate all contributions.
Best Wishes to All, and I Really Mean That.
@msf,
Webster's II, along with I believe III (not positive, in basement next to a dozen AHDs, which I should also consult), is hygienic about the terms, by my reading just now. Medial ('medial sum') is also offered under average, but the lengthy entry is otherwise precise, and mean and median are altogether scrupulously observed and defined.
Bryan Garner, the best of modern usage arbiters, likewise is exact.
As for flammable, we all have our idiosyncrasies,
but median and average are not among them for anyone interested in exactitude.
@shipwreckedandalone,
It does not work like that; it's money we owe chiefly to ourselves. Not to defend the scale of public debt blindly, but it's not at the top of the fret list. Study up. Not like a household situation (mortgage etc.) or a credit card.
Investopedia's got this right:
http://www.investopedia.com/terms/a/annualized-total-return.asp
Note that I cite Invesopedia here not as an authoritative source, but as a readable one, in case my writing/typing/formulae below are unclear.
For example, if you have a cumulative return of 21% for two years, you scale it to one year by taking the square root (1/2 power): sqrt (1 + 21%) - 1 = (1.1) - 1 = 10%
In general, given a cumulative return over a period of Y years,
annualized return = (1 + cumulative return) ^ (1/Y) - 1
You'll notice a striking resemblance to geometric average:
1 + cumulative return = (1 + first year return) x (1 + second year return) x ...
Unfortunately, figures under a year are often "annualized" without compounding, e.g. a six month return of 5% is "annualized" to 10%, not to (1.05 * 1.05) - 1 = 10.25%.