About half of American adults lived in middle-income households inaccording to a new Pew Research Center analysis of government data. Our calculator below, updated with data, lets you find out which group you are in — first compared with other adults in your metropolitan area and among American adults overall, and then compared with other adults in the United States similar to you in education, age, race or ethnicity, and marital status. Related: The American middle class is stable in size, but losing ground financially to upper-income families. The calculator takes your household income and adjusts it for the size of your household. The income is revised upward for households that are below average in size and downward for those of above average size. To complete the subscription process, please click the link in the email we just sent you. Your size-adjusted household income and the cost of living in your area are the factors we use to determine your income tier. Middle-income households — those with an income that is two-thirds to double the U. The cost-of-living adjustment for an area was calculated as follows: Jackson, Tennessee, is a relatively inexpensive area, with a price level that is
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But that rises and falls depending on close you are to peak earning age , which is typically around age 49 for men and 40 for women. How does your salary compare? Below, check out the median earnings for Americans at every age bracket, according to data from the Bureau of Labor Statistics for the second quarter of Not only do women still face the repercussions of the gender pay gap, but their peak earning age is significantly lower than that of the average man. Male college graduates earn more from the get-go. From ages 22 to 32, pay for female college graduates actually grows slightly faster than it does for men. However, a shift occurs at age 33, when women’s earnings growth starts to slow and men’s remains steady. However, as Robert Kiyosaki writes in his personal finance classic » Rich Dad Poor Dad ,» «most people fail to realize that, in life, it’s not how much money you make. It’s how much money you keep. Like this story?
The average American household income
We know that the average net worth of Americans is lower than you’d guess, but what about income? Is it the same? Another big difference is that the SSA collects individual wage information and the Census estimates household income, so it is not accurate to compare them with one another. Census data when looking at average net worth of Americans. We’re going to look at the Social Security Administration data first since it’s based on actual data and then the U. Census Bureau’s estimates since it’s based on surveys. First, a definition — the national average wage index is calculated using compensation that’s subject to Federal income taxes as reported on W-2 Forms. This includes wages, tips, etc. It doesn’t capture a household’s entire income throughout the year. This is strictly a measure of how much they earn from day jobs. For example, dividends and capital gains aren’t included because they’re not wages. There’s also a little complexity involved with deferred compensation plans but for the purposes of our discussion, this level of specificity isn’t necessary. For fun, the figures below concerning percentages are taken from the data SSA provides but are themselves not averages or medians. Income increases almost linearly until you reach the top deciles SSA data. Those are just wages. But there are two hitches, indicated with the red 1 and green 2. At first, I was trying to understand why this might exist. Could there be tax implications?
50. Birmingham, Alabama: at least $67,540
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Read it. Elizabeth Warren, D-Mass. Warren, a former law professor and expert on the economic challenges of the middle class, cited a number of statistics to support her point, including: «Well, sinceguess how much of the growth in income over the last 32 years — how much of the growth in income did the 90 percent get? In fact, it is worse than. The average family not in the top 10 percent makes less money today than they were making a generation ago. We wondered if that was true — that the bottom 90 percent of earners in America have a lower income than they had more than 30 years ago.
The statistic comes from data compiled by well-known economists Thomas Piketty and Emmanuel Saez, who study income inequality. Their World Top Incomes Database specializes in cataloging the highest level of incomes over time in more than 20 countries. The Saez-Piketty data comes from millions of tax returns filed over the past century.
The data supports her claim. However there is some context to consider. Mainly, not everyone approves of the Saez-Piketty approach to cataloging income. Their approach uses pre-tax income and includes realized capital gains. Because the richest Americans earn a lot of capital gains and pay a lot of taxes, this arguably magnifies their income. On the other hand, the approach lowballs the income of lower-level earners — the bottom 90 percent in this case.
The income calculation does not include government payments, such as Social Security, unemployment insurance, food stamps and the earned income tax credit. The Saez-Piketty data captures that the young worker has a very small income, but not the fact that he lives in a house with multiple incomes.
Of the general trend in income growth, he said, «Data sources that are more widely used show solid, though not fantastic, income growth for most of the income distribution through There are big losses in the Great Recession, and then an incomplete recovery since.
The Congressional Budget Office produced a report in November showing that the bottom 80 percent of earners measured by households rather than tax units saw income increases of about 16 percent between and The top percent, on the other hand, saw increases of about 56 percent over the period. And the top 1 percent alone saw their household income grow percent. That report also found that if it includes government benefits in its income calculation, all income brackets saw even more income growth.
Richard Burkhauser, an economist at Cornell University, pointed us to a paper he co-wrote on income inequality that compares Saez-Piketty-style data to other income measurements.
The results are consistent with the Saez-Piketty data until households are adjusted for size, and capital gains taxes and government payments are factored in. With those controls, incomes have grown across the board, and income inequality has also grown — but not at as dramatic a rate as the Saez-Piketty data implies. If the question is, alternatively, whether government programs are doing something to close the gap and help the middle class — other measures show that programs like food stamps and Medicaid are helping to a certain extent, at least for people who qualify.
And of course not everyone in the bottom 90 percent of earners does qualify. Warren said, «The average family not in the top 10 percent makes less money today than they were making a generation ago.
According to one measurement, the bottom 90 percent of American earners had a lower income in than they had 30 years ago. By other measurements — mainly ones that include government payments such as Social Security — incomes have grown across the board.
Additionally, given the context of her speech at a forum about wages, it makes sense that Warren would reference data that gives more weight to pre-tax income. Notice Your privacy is important to us. Stay Connected:. Also, tax law has changed over the past 50 years to increase the number of units, Furth said.
Comparing Your Income to US Averages by Age
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This article is reprinted by permission from NerdWallet. Home value, job title, car model, savings account balance. These things merely hint at how wealthy you or your neighbors are. The naked financial truth comes down to just one number: net worth. A household in the U. Shocked by that figure? The median net worth of the average U. Median is the middle point where half the households have more and half have. That means the median figure may be a better indicator of where you stand relative to your friends and neighbors. But the overall figures are just one indicator. The Fed conducts the survey every three years. Some key numbers to know are:. Most lenders set their own debt-to-income ratio requirement. Dayana Yochim is a writer at NerdWallet. Email: dyochim nerdwallet. Twitter: DayanaYochim. Economic Calendar Tax Withholding Calculator. Retirement Planner. Sign Up Log In. Home Retirement NerdWallet Get email alerts. By Dayana Yochim. Comment icon.
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