Now that I’ve updated all the tools to reflect 2013 SCF data, I decided to create a much larger database from the SCF using data all the way back to 1989. There’s more to come on that, as I am still working on the best way to let you guys play with the data, but just to show you what’s to come. Like the tools that are currently available, this data was calculated using the Federal Reserve’s Survey of Consumer Finances. I took the net worth statistics for each year and calculated what it would take to rank at certain percentiles of wealth.
Here is a table showing the net worth by percentile for every SCF since 1989. The Fed has already converted all the dollar values in the most recent versions of the data to 2013 dollars (using standard inflation rates), so we’re comparing apples to apples. As you can see across the board, from 2004 to 2007, net worth peaked across the distribution. The disturbing thing though, is that since then only the 90% and above has had a nearly full recovery in wealth. The 25% and below are hitting historic lows in wealth, and the median wealth of Americans is lower than 1989, despite the massive increase in GDP, productivity, and total wealth in the United States. It appears that the majority of those gains have been concentrated in the top 10% of Americans rather than being evenly distributed.
For further reference here are those same numbers plotted to show the relative changes in wealth between Americans at the 10th, 25th, 50th, 75, and 90th percentiles. The largest gains in the last couple decades have captured at the 10% and presumably above. I am hesitant to calculate and publish the numbers of the 5th and 95th percentiles because the data is a lot more prone to being skewed at the long tail ends of the distributions.
Several visitors have notified me the release of the Survey of Consumer Finances (SCF) 2013 data. In the 3 years between the previous survey in 2010, the economy has improved, unemployment is down, and the stock market has soared. All of these factors have suggested that American’s finances (adjusted for inflation) would have improved since then. I’m working on updating them to the new data set over the next month.
The first few publications from the Federal Reserve have shown that this is not the case, and in fact, median net worth and income is down since 2010. This is on top of the drop from 2007 to 2010. Mean income and net worth on the other hand have increased since 2010, which is an indicator of an increasingly unequal distribution of wealth.
A couple other highlights:
- Mean Net Worth Increased only in the lowest 25% and the top 10%.
- Mean & Medium income increased only for the top 20%.
- Overall US Household debt has decreased– this may have been affected by the drop in home ownership.
- The importance of college degrees continues to grow as college degree holders showed 1% inflation adjusted growth in median income over the past 3 years compared to drops in median income for less educated people (-6% to -11%).
See the whole article here: http://www.federalreserve.gov/pubs/bulletin/2014/pdf/scf14.pdf
Note the numbers might not line up exactly with the numbers on the calculators here due to inflation adjustments and some differences in the weightings used–the Federal Reserve doesn’t publish the exact weightings that they use for publications but they publish one set that is fairly close.
Bankrate recently made headlines about American retirement savings. According to Bankrate’s August 2014 Financial Security Index, 36% of all Americans have not started to save for retirement. This is much lower than the almost 50% of Americans surveyed in the Survey of Consumer Finances in 2010 who reported $0 in retirement savings.
This is the question and the survey results:
The question doesn’t ask about how much people have saved, just if they have started to save. So I decided to compare these results to the results from the 2010 Survey of Consumer Finances from the Federal Reserve, where there is a survey question that asks how much the household being surveyed has saved for retirement, which includes IRA’s, 401k, Pensions,Thrift Savings, etc.
According to the SCF, 49.59% of the Americans they surveyed in 2010 did not have retirement savings. So there appears to be a disconnect between people starting to safe for retirement and actually being able to accrue positive balances on their accounts. 4 years have past between the SCF survey and Bankrate’s 2014 survey, but recent news sources have shown declines in median networth during recent years. Almost 64% of Americans have started to save but only 40% have retirement account balances above $10000.
This situation highlights one of problems with saving retirement, stability. Half the battle is beginning to save, and the other half is being able to save enough to make a difference.
The newest tool to the Shnugi set of tools to manage your personal finances is the Financial Health Meter found at: http://www.shnugi.com/financial-health-calculator/ . This simple tool needs only a few parameters to give you a quick view of your overall financial standing compared to others in your same age bracket. The goal of the tool was to save you time by combining the most popular features of the current set of tools into a quick summary so that you can compare your current status across several broad metrics.
I found this out the hard way. If you double click the little dot in the top left hand corner of your touch pad, you’ll switch between enabling and disabling your touch pad. It’s a quick fix, but kind of confusing the first time you have to try to turn it back on.
I’ve attached a picture of the dot on my laptop so maybe you’ll notice yours.