We like to think lots of things make us unique: where we're from, how we were raised, our tastes, our education. But for better or worse, how much money you make and how you spend that money also play huge parts in dictating what your life looks like. Below, Vox presents 29 charts showing how Americans earn and spend money, from childhood through their golden years.
Let's start with the basics: who earns what in America. The biggest earners are in the 35- to 54-year-old age range. The median person in those age brackets earned around $38,000 as of 2012. Earnings taper off after that, as people shift into part-time work or retire.
People in those prime working years may be earning the most, but they've also seen the smallest gains over time. Looking at the last 25 years, those 35-54-year-old workers have seen their earnings hold flat or even decline slightly. Meanwhile, older workers have experienced big boosts in their earnings. Longer life expectancy and the need to work longer to save for retirement likely play big parts in why this pay bump for older workers took place, as older people work more hours and later into their lives than they used to.
Financial management for a lot of people means keeping track of a 401(k), a Roth IRA, CDs, stocks, and a whole mess of other investments. But for some Americans, even a bank account would be a step up. According to data from the FDIC, 8.2 percent of Americans were unbanked in 2011, meaning they had no accounts at any insured bank, and roughtly another one-third were without both checking and savings accounts, two of the most basic financial tools at Americans' disposal.
The biggest chunk of Americans' spending goes to housing, which takes up around one-third of every dollar Americans spend. Other basics like food and transportation take up big chunks of Americans' spending as well, but the things many people consider splurges — apparel, entertainment — are only small wedges of the pie, affecting the average American's budget at the margins. But this picture can change dramatically depending on where someone falls upon the income spectrum. For example, housing takes up a bigger chunk of the pie for lower-income Americans than it does for richer people.
The US has one of the lowest savings rates among countries in the OECD, a group of developed nations. Americans will save around 4.1 percent of their disposable income in 2014, the OECD projects. Many Scandinavian and Western European nations save far more, with Switzerland coming out on top at 13.1 percent. As for why Americans save so little, that's more complicated. For many Americans, it is simply that they aren't earning enough money to pay basic expenses and save at the same time. In addition, some argue that it's cultural or that it stems from a lack of financial know-how. Other explanations say it's relatively easy to borrow in the US (making saving less necessary for some people) and that the tax code doesn't encourage saving as much as it could.
Americans aren't saving as much as they used to. Back in the 1970s, people saved well over 10 percent of their money. That fell off steadily in the intervening years, perhaps because of wage stagnation, or maybe because Americans felt more economic certainty. Today, it's below 5 percent — and that's after saving got a boost during the Great Recession. That boost wasn't because people suddenly paid more attention to their savings or retirement accounts; it was because they were paying down debt. So the decline since the recession might be a sign Americans' debt loads have eased.
American students are middling when it comes to financial literacy. According to the OECD's first-ever financial literacy test scores, US 15-year-olds are right in the middle among their OECD peers in financial know-how. The problem, as Vox's Libby Nelson writes, is that no one really knows a great way of boosting students' financial literacy.
Lots of us want our kids to learn the value of a hard-earned dollar, but most kids get their money elsewhere. The vast majority of America's 15-year-olds get monetary gifts from friends or family, and nearly 70 percent earn money from work outside of the home, though teens are working less and less now than they used to. And equal shares get pocket money from their parents — whether or not they do chores.
Maybe one reason so many teens are getting handouts is that the teen summer job is increasingly a thing of the past. The share of teenagers employed in July (usually the peak employment month for teen workers) has fallen off in the last few decades. However, that's not necessarily a bad thing. While the recent recession created a tough job market for today's teens, many of them simply don't want jobs and have turned instead toward summer school or other activities aimed at getting into college.
A slightly below-average share of US 15-year-olds have bank accounts, according to the OECD figures presented in the left side of this chart. (Prepaid debit cards, shown on the right, are less common in across countries.) Giving students more real-world experience with banking might boost their financial literacy, which as shown above is relatively low.
People get expensive college degrees expecting that it will garner them higher earnings down the road. And that does happen — people with four-year degrees earn more than people with two-year degrees, who earn more than people with only high school diplomas. Those earnings levels have drifted apart in recent years, but it's not just because college earnings are climbing; it's because high school and two-year degree-holders' earnings have fallen.
College is expensive, for sure. But it's easy to get unnecessary sticker shock when you look at how much a year of tuition costs. It's important to look at a school's net price as well, to see what an average student pays to attend. At both private and public schools, net price is substantially smaller than the full cost of tuition and fees. In addition, net price has risen much more slowly at private than at public schools (though private schools are still much more expensive, on average). In this chart, private colleges are in purple and public colleges are in blue. While tuition and fees keep growing, net costs are falling, in the case of private schools, or holding steadier at public schools.
Student debt feels like a heavy weight on a college graduate's finance, but debt looks small when you plot it against other typical consumer spending in other categories. This chart shows the average student debt payment in fact is slightly more than what people spend on entertainment but smaller than what they spend on health care. Still, it's another $240 each month — yet another bill on the monthly stack of expenses.
Lots of people talk about a "student debt crisis" as the national student debt level surpasses $1 trillion. But many of those students aren't themselves in crisis territory. According to the Federal Reserve Bank of New York, the overwhelming majority of debtors owe less than $25,000, and more than one-third owe less than $10,000. Those are still sizable balances, but they aren't the stuff of student debt horror stories as portrayed in many media accounts.
Your first job out of high school or college isn't all that likely to pay you piles and piles of money. But this chart should convince you to put at least a little of whatever you do earn into a retirement account. As this chart shows, the earlier you sock it away, the earlier compound interest can grow it, making your nest egg substantially bigger by the time you retire (or even letting you retire a little early).
All of that student debt might eventually get those graduates better jobs with better pay, but in the short run it may be hurting their chances of buying a house. Recently, the share of 30 year old student-debt-holders with home debt fell below the share for those who do not have student debt. Of course, this could be part of a more complicated trend, as student debtors return to more normal, lower levels of homeownership, as Vox's Libby Nelson has written. That said, the number of people with student debt continues to climb.
Stories abound about the outrageous cost of getting married (save-the-dates! place cards! fondue fountains!), but the fastest-rising price is paid well before the ceremony. According to data compiled by Quartz, engagement ring costs have more than tripled in real terms since 1930. All the more reason to just get wedding ring tattoos. Altogether, the average wedding cost has spiked. In the 1930s, the average cost was around $6,500. Today, it's around $30,000 (though average-wedding-cost numbers from places like The Knot have been known to skew high). In other words, weddings used to cost around one-quarter of median household income. Today, it's 49 percent.
Here's what that decline in homeownership among younger Americans looks like in a broader context. Homeownership levels hit a pre-recession peak of 69.2 percent in late 2004. Today, they're far lower, particularly for younger age groups. This shows the percent change in the homeownership rate (which is itself expressed as a percent) for different age groups over that time. What this shows is that while the homeownership rate for younger adults is lower, it also fell further as a share of the total rate than for any other age group.
OK, we sneaked two charts in here. But this shows an important housing market dynamic that has played out in recent years. Housing prices collapsed during the Great Recession (naturally, as the popping housing bubble was what started the downturn). However, rent prices continued to climb. This trend, alongside several years of near-record-low mortgage rates, has made buying look more and more attractive to many Americans...that is, if they qualify for a mortgage.
Raising a kid through age 17 is nearly $50,000 more expensive than it was in 1960, but those costs aren't evenly distributed. In some areas, raising a kid has grown easier — feeding a child, for example. Food and clothing, for example, have grown cheaper since the 1960s. Meanwhile, the cost of healthcare as a share of all child-rearing costs has doubled, and the cost of childcare and education is now roughly nine times bigger.
One of the biggest financial burdens of having a kid is childcare. The cost of childcare has outstripped the broader consumer price index for all items in the last 20 years, rising at nearly double the rate. Some economists think this growth in childcare might contribute to the downtick in women's labor force participation rate — as childcare costs go up, some women may find it costs less to stay home and let their spouses work rather than pay for daycare and work at the same time. That means the cost of childcare could contribute to the gender wage gap. If it causes women to take years off of work, that interrupts their earnings and sets them even further behind men.
By far the biggest chunk of workers has saved very little for retirement. More than one-third of workers told the Employee Benefits Research Institute that they had saved $1,000 or less for retirement. That may be fine for a worker starting out, but anyone further along likely needs more than $1,000. Fidelity, for example, recommends that a worker at age 35 have saved 100% of her current salary.
The share of young adults living with their parents has been steadily on the rise. Though the Great Recession is often blamed for this trend — and likely played a part in it — this was on the rise even before the economic downturn. But at least some of these people living with their moms and dads are working on diplomas — 41 percent of millennial college and grad school students live with their parents, and only around 14 percent live in dorms or similar quarters.
American retirees' savings are not much different from those that younger workers report — a plurality have saved very little (less than $1,000). The rest have a polarized pattern, having either saved a little or a lot, as shown by the chart's U-shape. Only a small minority of retirees say they've saved $25,000 to $100,000. Either way, it appears that many of these Americans haven't saved enough; one 2012 study suggested someone retiring at age 65 have 11 times their final salary saved up for retirement, and that someone retiring at 67 have 9.4 times that salary saved. Even a 65-year-old earning a $50,000 salary would therefore need $550,000 to retire.
The pension is becoming a thing of the past. Defined-benefit plans that pay out a guaranteed amount each month were once the dominant type of retirement plan. But defined-contribution plans, like 401(k)s and 403(b)s, have taken over. Around 42 percent of all private-sector workers participate in defined-contribution plans today, whether alone or in tandem with a defined-benefit plan. But only 14 percent have defined-benefit plans. That's a reversal from just over 30 years ago, when 38 percent of workers had pensions and 17 percent had defined-contribution plans.
It's not just how we pay for retirement that has changed; life expectancies in the US have grown and grown, meaning retirees increasingly need to either save more or work longer.
Most elderly beneficiaries rely on Social Security for most of their income, and nearly 1 in 4 elderly Social Security beneficiaries rely solely on Social Security for their income — a share that's much higher for blacks and Hispanics. That's a very limited income — the average monthly benefit amount for retirees is around $1,250 per month, or $15,000 per year. The poverty threshold for a single adult over 65 is $11,200.
If you're not in the top 40 percent of earners, chances are that your kids will end up with less wealth than you have, according to Pew's Economic Mobility Project. The median person in the bottom fifth of the population is worth around $2,700, far below the $7,400 of his parents' generation.
OK, so this one refers to everyone the world over, not just Americans. But there's still something hopeful in here: yes, retirement saving is hard, and yes, many people face financial hardship as they get older. But broadly speaking, people are also happier in their golden years — one reason to look forward to them, when you're not having fun choosing 401(k) funds or saving as much as you can.
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