Everything in life is relative. Say If you are making an annual income of 100,000, relative to someone who is making 20,000 a year, your income is 5 times higher, yet if you compare your annual income to someone that is making 500,000 a year, your income is 5 times lower.
To put things into a more viable perspective, it would be worthwhile to compare your annual income to other Americans in the same age bracket as you. This will provide you with some sort of measurability and put your own number in a better perspective.
Before we get into the crust of the data, let us clarify a bit of definitions. The “mean” and the “average” are used interchangeably and mean the same thing. They refer to the sum of all values divided by the total number of values. In other words it is the sum divided by the count. The “median” on the other hand, is the “middle” value in the list of numbers. The median is the middle point of a number set, in which half the numbers are above the median and half are below.
Where we get this data? Fortunately, the U.S. Census Bureau collects valuable data under the Survey of Consumer Finances (SCF) and the Federal Reserve Bulletin Another great source for data is Bureau of Labour Statistics with their Labor Force Statistics from the Current Population Survey and the United States Census Bureau .
Here is some interesting data
Median earnings for Americans at every age bracket, according to data from the Bureau of Labor Statistics for the second quarter of 2017.
In graphic form: Median earnings for Americans at different age bracket
In graphic form: Median earnings for Americans at different age bracket
Not only do women still face the repercussions of the gender pay gap, but their peak earning age is 35-44 years old while men’s peak earning age is 55-64 years old. Also, men peak median annual earning is $61,048, while their female counterparts earn $47,996 in her peak earning years, a difference of $13,052
According to the United State Census Bureau, data from 2017, Here is the before tax HOUSEHOLD income.
As can be seem from the table, peak earning years for household income headed by a person in the 45-54 age group is 80,671 Although data is not consistent, it give one an interesting range to be able to compare their income to the average American in their age group and compare their pretax household income relative to others in the same age group in the US.
Just remember that these figures can be drastically skewed. Mean or an average can be skewed higher or lower depending on the sample taken and the same holds for median which is the midpoint between the total set of these numbers.
When it comes to Household income, here is Household income distribution from 2014 to 2017, according to the United State Census Bureau – Table A1
According to U.S. Census Bureau data from 2017, the median household income in the USA is $61,372. Important to remember that the numbers above do not represent the full spectrum as they can further be sliced into different segments such as race, education level, geographic region etc.
Furthermore, the numbers above do not indicate if they represent only wage income or if they include also other type of income such as investment income, dividends, capital gain etc., yet these set of numbers provide some sort of measure and comparability benchmark so you have a number to gauge you own situation.
If your household income is up there, it might make you feel awesome, so pat yourself on the back, while if your income is lower than the numbers above, than now you have an income measure-yard to target for the next few years.
Personally, I never subscribed to the school of “keep up with the joneses” simply because in my view, I believe that each person is unique with its own distinctive set of circumstances.
Some people with a reported high income can be in more dire financial circumstances then others that make a fraction of their income simply because they have different philosophies about life and they make different choices about consumption, spending, saving and lifestyle.
Is it healthy to measure our income against other people or is it misleading and disingenuous? Do you think the disparity and inconsistency in published information is beneficial or is it simply baffling and meaningless?