The Average Household Is A Millionaire With A $1.06 Million Net Worth, According To The Fed — So Why Do People Still Feel Broke?
https://www.benzinga.com/personal-finance/25/04/44891276/the-average-household-is-a-millionaire-with-a-1-06-million-net-worth-according-to-the-fed-so-why-do-people-still-feel-broke
by BiggieTwiggy1two3
34 comments
I am about $1.06 million short right now.
Because at any moment you could find yourself having that wealth removed through no fault of your own. Health issues, an uninsured driver, a layoff, a global depression caused by tariffs or war or climate etc. A weather event that destroys your property and an insurance company that decides to bankrupt and restructure. The threats are everywhere and existential. I have everything i need except security.
WTF???
Because the mathematical average doesn’t represent the median and a huge percentage is tied up in illiquid real estate.
from the article:
>In reality, this number is skewed by the ultra-wealthy. While the average household may clear seven figures, the median net worth — the point where half of households have more and half have less — was just $192,900
Its an average.
The average of Elon and 223,000 totally broke homeless people is $1 million average
You have to live somewhere so strip about $250K of it as non-spendable. $750K of retirement may seem like a lot but after taxes, healthcare, insurance, entertainment-vacations, and hobbies it can go quite quickly.
They buried the important part in the article. “In reality, this number is skewed by the ultra-wealthy. While the average household may clear seven figures, the median net worth — the point where half of households have more and half have less — was just $192,900. That’s a pretty big gap, and it says a lot more about how people are actually living.”
Tldr. A Few people are really really rich… Most people are just getting by.
There is a difference between average vs median income
Below average American has entered the chat.
Averages mean nothing with out Mean Absolute Devition or average spread between data points.
it’s probably because the distribution is heavily skewed towards the top earners. But I could be wrong.
Because wealth and income are different.
I can’t spend illiquid wealth. Nobody will take a piece of my flooring as payment even though my house might be valued at $3000/sqft.
I generally spend all my income on housing, transportation, and food.
So while I might be rich, I don’t have any income left over for anything else…. which makes one broke.
Which is why it is hard to tax wealth.
Wouldn’t this count retirement too? That’s not money I count as part of my day to day.
Putting aside the uberwealthy, most households with around $1m in net worth probably have the majority of it in their primary home. What are they going to do, retire to van life after selling it? Even if that wealth could be accessed, it’s as a loan with banks making plenty on the interest.
Even those with higher net worth are often house-rich but cash-poor.
Not true
Who came up with that bullshit?
“A substantial number of Americans struggle to cover even a $500 emergency expense. A recent survey indicated that 63% of employees are unable to cover a $500 emergency expense. Other studies have shown that 37% of Americans can’t afford an emergency expense over $400, and almost a quarter (21%) have no emergency savings at all. This suggests that many individuals are living paycheck to paycheck and lack the financial cushion to handle unexpected expenses.”
Average is different than median. The median net worth is $192,000. That’s what the majority of people would have when you account for the gazillionaires.
https://www.nerdwallet.com/article/finance/average-net-worth-by-age
There are only 23M millionaires population is about 335M.
Only 6.8% are millionaires.
No the average household aren’t millionaires.
“The survey, conducted every three years, captures the total value of assets — from homes and retirement accounts to vehicles and brokerage balances”
Homes – based on market values that they/we can not control.
Retirement accounts – based on market values that they/we can not control.
Vehicles – based on market values that they/we can not control.
Brokerage balances – based on market values that they/we can not control.
All of which have become drastically inflated in the last ~5 years and are over LONG overdue for a real correction and facing some of the most ridiculous and obvious headwinds since the 1930s.
Because the mean/average is not the median.
Isn’t median a much more relevant number when it comes to financials and household earnings??
When the average is a statistical lie.
Because if you sell your one and only house you’re not rich, you’re fucked. You may have equity in the house but it’s not actually accessible. Also, they’re using the median. 😂
Let’s say I have a million dollars, but that’s not cash, it’s the home and retirement account. Is it enough to retire early on considering the cost of health insurance? Now add in a spouse and a couple of kids, and pretend you want to save enough for their college education. Is it enough now?
Because that’s mostly their house and retirement savings and as such isn’t actually money they can access for anything
This is an old right wing talking point that’s been kicking around since the 80s. It’s a thought terminating cliche.
This is the exact type of number misinterpretation that was used during the Biden presidency to attempt to gaslight people that the economy was actually good.
“Average wages outpaced inflation”
Yeah average. Most of us are 20% poorer.
“Total purchase went up from last year this black Friday”
Yeah, not for most of us it didn’t.
“Unemployment is at an all time low”
Yes double and triple shifts for part timers and a bunch of folks who got laid off during COVID settling for low wage jobs.
This is a practical example on why the inequality has consequences.
As the GINI coefficient climbs towards 1.0, the “average” net worth becomes less accurate and reflective of reality and more useful as propaganda to hide the crimes of the oligarchy.
It’s depressing that this even has to be asked here. General knowledge like mean vs median, liquidity, and unrealized gains feels like a more-than-fair baseline for a sub called r/economy.
I like the mean/median discussion. And I’d like to add you can’t eat bricks. If you bought a house 10 years ago, you are likely to have a bunch of equity that doesn’t help you in the day to day. Sure it’s better than not having it, but if you want to move and stay in the same area it doesn’t help you.
It’s better to use a median for something like this..
Average is not median.
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