What Is The Average Family Income In The USA And How Do You Compare

Troy Sharpe: We’ve been going through a ton of data from the Federal Reserve, and in this video, I’m going to talk to you about what is the average and median family income in this country. The last video we did had to do with the average and median net worth, so at the end of this video, you’ll be able to click on that video. It did great. We had 45,000, 50,000 views in just the first week. A lot of people are interested in this information. We’re going to go through income, average income in this video so you can see how you compare, and then at the end, you can click on the net worth to see how you compare based on your age for average net worth in this country.

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Hi, I’m Troy Sharpe, CEO of Oak Harvest Financial Group, CERTIFIED FINANCIAL PLANNER™ Professional (CFP®), certified tax specialist, and host of The Retirement Income Show. If you could just take one second to hit that thumbs up button. What that does is that shows engagement, and YouTube is more likely to show this video to other people so they can see where they compare when it comes to pre-tax family income or net worth.

Part of the financial planning process is understanding where should we put our dollars, our income that we make? When we’re looking at if your average annual income is $50,000, or $100,000, or $150,000, how much of that do you put into the 401(k)? How much do you need to save into an emergency fund? How much should you put into the tax-free Roth IRA or the Roth part of your 401(k)? These are all financial planning decisions that will have a great impact on your financial security and your family’s security for many, many years to come.

When we look at this video, and we understand what the average and median pre-tax family income, I want you to be thinking, how much should I be putting in my 401(k)? How much should I keep in the bank? How much should I invest in stocks? Where should I put money into this Roth 401(k)? These are questions just like dominoes, they’re all interrelated, but they’re things we need to be thinking about to make good decisions. If you don’t understand what I’m saying, if you have no clue how much you should be putting into your 401(k) or should you be putting it into the Roth, there’s always a link below in the description where you can reach out to us and schedule a time to talk with one of our financial advisors.

Before we get into what the actual data says, we have to understand the difference between average or mean and median. Looking here at this chart, when we talk about the median number, this is the middle, so the median number means that if we have a 10-digit data series, right in the middle, this is the median number. I have a bunch of zeros here and then 150 at the end. Well, the median number is zero. If we had 10 people, and 9 of them had zero annual income and 1 person made $50, well, the median is zero, but to get the average, we have to add up the data points in the series, divide by the total number of data points to get the average.

Sometimes the average can be a bit skewed because if you have people on this end of the spectrum that make a whole lot of money or have a whole lot of net worth in the other video, that average can sometimes be skewed. Most people when we go through these numbers, when you’re comparing where you stand and how you stack up, I would probably focus on the median because that’s right in the middle. If there were 10 million people on this side in your similar age range and 10 million people on this side, the median is the middle.

The average is going to be skewed by the ballplayers who are making $10 million a year, $15 million a year, $20 million a year, movie stars, people who make an extraordinary amount of money, so it’s important to understand the difference here. Less than 35 years old, we’re going to break this down into 10-year demographics going all the way up to 74. Those that are less than 35 years old, have an average family income of $65,160, the median family income or the middle is about $48,870. When you’re in your early 30s, you’re getting into your career, you’re starting to, hopefully, whether you’re starting a company or you’re working for a corporation, hopefully, you’re building your skills and really preparing yourself to make better money in your 40s, 50s, 60s, and so forth, but these are the numbers, less than 35, $65,000 is the average, $48,000 is the median.

Now, as we get a little bit further along into our career, those aged 35 to 44, the average family income is $110,000 and the median family income in this demographic is $73,000. Now, when we talk about family income, we’re talking husband and wife or at least a married couple. If you’re single, maybe your income is half of this. If you are married, you should probably be somewhere in this range, if you want to be around the average family income or the median.

Those 45 to 54, we see a clear escalation and total income. At this point, you should be far along into your career. You’ve built the skills, you have the education, you formed the relationships, you’ve established your network, and you should be making pretty good money at this point, especially if you want to be saving for retirement and positioning your family for financial security, so the average is $145,210 and the median here is $78,400.

55, 64, so now we start to get into some people who are retiring early. They’re retiring at 58. They’re retiring at 60, 62, 63, so these numbers are going to be a bit skewed because income typically goes down for most people when they retire. The average $130,410 and the median, of course, here $63,120. Those aged 65 to 74, we see the trend continue, $107,000 is the average, $49,890 is the median.

Once again if you liked this video, hitting that thumbs up button that lets YouTube know that there’s some engagement here and they’re likely to share this video with other people. You can always share this video with a friend or family member, and if you’d like to stay connected to us so we can deliver more content to you, hit that subscribe button and that little bell icon so you’ll be notified when we deliver more content, keeping you more connected to your money.

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