Wealth inequality and averages: Where do you land?
November 6, 2015
Wealth inequality should be addressed from more than just a rich vs poor mentality, this WSJ post says, and shares several charts that look at wealth and age, race, education and generational money.
Disclaimer: I’m not an economist, and I don’t play one in my spare time. (What spare time?) It’s beyond my current brain to intelligently discuss the underlying factors that influence the wealth gaps right now.
Instead, charts! And data points!
How do we stack up? I’m comparing against the next two highest age markers because I feel 80 years old. Ha-ha yes yes, funny funny but no really, I do. And it’s not entirely because every bone seems to creak differently each day. But also because 40 adds an approximate handicap for our bigger extenuating circumstances: my poor health and related uncertain producing future, our three dependents of varying health statuses, our (my) penchant for adopting senior dogs, our high COLA.
Average assets: we are 1-2x the average
Average debt: we are 3x the average.
Wealth gap: I’m a bit miffed that just because whites and Asians trend along the same line we’re just all lumped in under white. I’m not even remotely white. Way to pretend we don’t even exist, WSJ.
Aside from that – I’m the first in my immediate family to have a college degree, while PiC’s at least the second, or third generation, even with a college education. The ability, whether we were self-funded (me) or not (him), to even obtain that education has to be an influence on the ability to make and keep wealth.
Millionaire?: I don’t know where to place us here. I don’t have a higher ed degree and PiC does. This only matters because I insist we’ll hit the million mark by the time I’m 40, come hell or high water. Admittedly, I likely won’t be comfortable with qualifying for seven figures based on a net worth including or even primarily relying on the stock market (our retirement and investing portfolio). That feels risky? No, that’s not the word. It isn’t as if holding everything in cash isn’t a sure way to lose ground, given inflation. It’s just that if the market takes a significant hit, at a certain point you run out of time for it to recover. I talk money with retired friends regularly and it was a sobering realization that even a very healthy portfolio isn’t any kind of guarantee against recessions. I grant we’re still a long ways away from retirement and relying on the portfolio, but it’s a factor.
Inheritance: Nope. PiC has some something from his family but I don’t count it on our net worth because we don’t consider it ours and likely it’d be funneled straight down to LB in some way if we don’t manage to send it back to his mom. I have absolutely no reason to expect an inheritance.
We are above the mean US net worth for age 50, but both have PhDs. One white, one Asian.
Obviously, therefore, far above the median. Median net worth’s in Australia are much much higher though. We are above that too, but not by so much. Debt is around $US570k.
So far I only inherited some money that skipped a generation – about $US20k or so. But we’d expect to inherit quite a lot in the future. Currently more than our net worth.
I’d be interested to see what the global numbers are!
House prices are high in Australia and there is compulsory retirement saving – employer must contribute at least 9.5% of salary. So, median net worth is high – something like half a million dollars, from what I remember. I think only Switzerland is higher from what I remember.
I’m 23 and my partner is 27 and I’m still in university so those charts were pretty damn scary!
I do think that ultimately, financial independence is something where if you’re smart and well-read, you can break any ‘statistical trends’ about what your age, gender or occupation might mean. It’s about doing what’s right for your household, don’t you think?
You’ve still got a lot of time. I wouldn’t say that just being smart and well-read will take care of the effect of your environment entirely but it can make a difference.
Compared to our age group, we do well on net worth, obviously have much more debt (yay, mortgage in expensive area). I will sad if we don’t make $1M by the time I’m 40, and i do expect most of that wealth would be stock + home equity, so… :::shrug:::: Things could take unexpected turns, but we are very much on track for that.
I hope both sets of our parents spend any potential inheritance! I think that is more likely on my side than his, but pretty likely on either side. At best, I’d think tens of thousands – but more likely, nothing. I find it nuts to comprehend that some people inherit large sums of money. Obviously it is just not something that is often discussed publicly, but to me, it seems like this other fantasy world.
*Expensive mortgage fistbump*
I’d actually be very interested to hear more about the inheriting large sums of money situations, though not from the stereotypical trust fund kid who parties it up on the money. Responsible people only, please.
We’re way behind, but that’s no surprise. For now, we have a decent amount in the bank, but that money’s earmarked.
We’ll see how next year goes, but we need to up the retirement contributions no matter what. I have no idea how, mind you. But somehow.
We should have the ability to weight these medians by our counterbalances of health and whatever issues.
You will find a way to increase the retirement contributions, I know it.
I do expect to inherit more than $1 million. This allows us to take a bit more investment and career risk than otherwise. We have saved about $US 1 million ourselves so far. ON the other hand, I took plenty of career risk – like getting a PhD – before I knew I would probably inherit quite a lot. So, maybe it really hasn’t had much impact at all.
I’d be interested in seeing something similar for single person households, especially those of women since we earn less than men. (Statistically speaking, of course, since there are plenty of women who earn more than the “average” wage for men in this country.)
If I had stayed married I very likely could be “on track” with these averages. I also didn’t follow standard advice when I sold my house and got rid of an asset that gave me a tax advantage and moved to a place with higher living costs.
But so what? I’m happier here.
I have no chance of inheritance and am lucky that my expenses to support my mom are fairly low since I’m sharing them with sister and stepfather. If I can keep working in my current industry and getting regular salary increases and bonuses that keep me slightly ahead of inflation, I think I’ll be OK. That’s a lot of “ifs,” though, so I try to keep my self-sufficiency and frugal living skills sharp.
I would like to see that as well, for both genders. When single, I just compared myself to the married averages, but it wasn’t really that satisfying.
I think it’s awesome that you made the move and ended up happier. That’s something these charts can’t ever cover – you could be in the top percentiles and still be the most unhappy person of your cohort.
And given my particular concrete boots with regard to family obligations, I think you know that I’m right there with you on the frugal living and self sufficiency practices.
Are you just looking at the WSJ charts and eyeballing?
If so then.. *squint*…
Average assets: I am 5.255x the average.
Average debt: I am 100% not the average (how do we calculate at 0)
With my partner’s net worth though, the numbers would be higher for assets, but same debt ($0).
Basically, I just grab the next higher age point and compare to that, it’s not exact, it just gives me a decent marker to aim at.
Hard to know how to interpret those W St J figures when you’re not a “family.” As one person, I’m above the median in assets (though certainly don’t feel that way with no meaningful earnings at this age) and $39,000 below the median debt level.
It looks pretty good, until you realize that once you’re too old to land a job with a real income (or don’t want to work that hard), you’re ridiculously vulnerable to inflation and recession. Maybe it’s Bag Lady Syndrome, but I actually feel rather poor: lucky to have a paid-off roof over my head, but don’t think I can afford to replace the 16-year-old car or diddle away money on travel and the like. The economy’s uncertainty — which I think is a given — makes these figures kinda meaningless.
I think it’d be nice to have similar charts for more demographics. *ahem* Since I’m Asian and not white, for example. For solo householders, for another.
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It’s been awhile. I’m debt free, no income, and two kids. And we passed the million in cash now that house is sold. No idea what future holds but with the cheapskate nature of my in laws we’ll likely inherit millions. I’d rather they spend it and not be so miserable people.
Hey! Long time indeed! Did you sell the house and move or are you still in the same area?
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