Do you ever wonder how your finances compare to the average person’s? Are you curious about how much others have saved for retirement, how their income compares to yours, or how much they spend each month? In this article, we will delve into some eye-opening financial statistics of the average person, providing insight into your financial situation and gauging whether you’re ahead or behind the curve.
Income
According to the US Department of Labor Statistics, as of 2021, the median income for a full-time worker was $1,146 per week or approximately $51,645 per year for those aged 15-24. This figure is strictly for an individual, not household income, which includes the total income of all members living in a home, including spouses and dependents.
Median household income in the United States in 2021, by the age of the head of household (in U.S. dollars) via Statista.
| Characteristic | The median income in U.S. dollars |
|---|---|
| 25-34 years | $74,862 |
| 35-44 years | $90,312 |
| 45-54 years | $97,089 |
| 55-64 years | $75,842 |
Retirement Savings
According to the Federal Reserve, the median amount saved for retirement among all adults was $65,000. This figure is based on all age groups but only considers those with retirement accounts. Approximately one-fourth of Americans don’t even have a retirement account. If someone were to retire with this amount using a 4% safe withdrawal rate, it would only produce $2,600 per year in income. These low amounts are alarming, considering the average household will need more than $500,000 with 10% annual returns and other income streams to retire comfortably.
According to Vanguard, the chart below shows the average and median balances for specific age groups at the end of 2021. Vanguard gathered data from 5 million defined contribution plan participants across its recordkeeping business.
| Age | Average Account Balance | Median Account Balance |
|---|---|---|
| Under 25 | $6,264 | $1,786 |
| 25-34 | $37,211 | $14,068 |
| 35-44 | $97,020 | $36,117 |
| 45-54 | $179,200 | $61,530 |
| 55-64 | $256,244 | $89,716 |
| 65+ | $279,997 | $87,725 |
Source: Vanguard, “How America Saves 2022”
Social Security
The Social Security Administration says the average benefit amount is $1,550 per month. Many Americans rely on social security income as their only retirement income. For most who have nothing else saved for retirement, it must be supplemented with income from a part-time job. Remember that $1,550 per month is just the average payment amount, and those who never earned much money during the intermediate year will likely receive even less than that. The social security administration has $22.5 trillion in liabilities due for payment to retirees that have paid in over their working lives. Many will be very disappointed with what they receive after the recent impact of inflation on purchasing power.
Spending
According to the US Department of Labor Statistics, the average household spends about $5,577 monthly. Over one year, that’s about $67,000 in annual spending, covering high costs like housing, transportation, and food, which commonly comprise a large percentage of the average budget. Specifically, the average household spends $1,885 monthly on housing, equating to 34% of total spending. $691 per month is spent on food, and $913 per month is spent on transportation.
Credit Score
The average FICO credit score is 710, according to Experian. Most Americans have scores between 600 and 750, with 700+ considered good. Despite some people downplaying the need for a good credit score, most people will benefit significantly by having a respectable number if they ever plan on using any debt. A credit score impacts your mortgage rate when you buy a home or rental property, the terms you receive for a car loan, and other forms of potentially low-interest debt.
Credit Card Debt
The average household’s credit card balance is $9,260. That’s $2,745 below WalletHub’s projected breaking point for household finances. Carrying credit card debt is perhaps the worst type of debt you can take. One main problem with credit card debt is the high-interest rates. If you’re paying a 15%, 20%, or 29% interest rate on credit card debt, that far exceeds what you could typically earn by investing in the stock market. Credit cards encourage wasteful spending, meaning much of that debt is probably due to overspending and buying things that weren’t even needed. The emotional impact of the expenditure is felt less when swiping a credit card than when paying with cash.
Net Worth
According to the Federal Reserve, the median net worth for households in the United States is about $122,000. These net worth figures are easy to exceed by creating a higher income and personal finance discipline. Net worth is the value of assets accumulated versus money spent on consumption.
Here is the average net worth by age according to the Federal Reserve 2019 study.
Age Average Net Worth Median net worth
Under age 35 $76,300 $13,900
35 to 44 $436,200 $91,300
45 to 54 $833,200 $168,600
55 to 64 $1,175,900 $212,500
65 to 74 $1,217,700 $266,400
75 or older $997,600 $254,800
Savings
The amount of income the average person saves varies from year to year based on various factors, such as the economy. According to the US Bureau of Economic Analysis, the personal saving rate, saving as a percentage of disposable personal income, was 2.4 percent in November 2022, compared with 2.2 percent in October 2022, meaning people save about 2.4% of their income after taxes. This money might be held for a home purchase, renovation, new car, college, retirement, or a surprise expense. After funding all short and medium-term savings goals, this doesn’t leave much left over for retirement.
Retirement Age
Ramsey Solutions says the average retirement age is 61, even though most people can’t even collect their full Social Security benefits until age 67. Retiring in your early 60s means you’ve been in the workforce for about four decades. For those who begin investing early, this amount of time gives them ample opportunity to earn compound returns on investment capital, but will retiring at 61 leave enough time for doing the things you enjoy? Doing what you love for a living solves the problem of what age to retire.
“Instead of wondering when your next vacation is, maybe you should set up a life you don’t need to escape from.” ― Seth Godin
Conclusion
The financial statistics of the average person can be eye-opening and provide insight into your economic well-being and how you compare to others. You might realize you’re doing better than the average person in many ways, giving you the momentum to continue improving. By paying attention to your income, retirement savings, spending, credit score, credit card debt, net worth, protection, and retirement age, you can make better financial decisions to help you achieve your financial goals.