r/povertyfinance • u/k1ranell • 1d ago

Saved my first $5k at 26 pls clap 🥹 Success/Cheers

I also have some $820 in acorns and <$1500 in a rollover IRA I have yet to move to a ROTH but putting it off for tax/wuss reasons. However, I have $772 in CC debt. But a win is a win, I can pay it off with time 😁

Gonna try to save $10k next year

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u/Firm-Contract-5940 1d ago

the source is my ass, but i’d think the “average” savings number is going to be higher than what the average american has because the vast disparity of wealth, and savings. most people i know (aged 18-35) have no more than a paycheck in savings, if that.

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u/resarfc 1d ago

The median savings balance for Americans was $8,000 (2022) according to the Federal Reserve's Survey of Consumer Finances. The average was $62,410 - but as you say the difference between the median and average savings is because of massive wealth inequality.

Basically $8,000 is the point at which half of Americans have more savings and half have less.

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u/CanAlwaysBeBetter 1d ago

That's the median account balance checking/saving/CDs

It does not include retirement savings which are $87k for the median family

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u/resarfc 21h ago edited 19h ago

As far as I understand it, the retirement accounts median value only reflects those families with the specific types of retirement accounts included in their definition (IRA and Keogh, 401(k), Thrift, and defined contribution). i.e. it is the median value of retirement holdings for households that actually have those retirement accounts - and it is more like $55,000 not $87k.

https://www.federalreserve.gov/econres/scf/dataviz/scf/chart/#series:Retirement_Accounts;demographic:all;population:1;units:median;range:1989,2003

It doesn't, for example, account for families who rely solely on Social Security, or those with no retirement savings at all. If you look at the Percent Holding you can see this is 50% of all households. i.e. half of Americans have no retirement accounts at all.

Moreover it's crucial to view retirement savings it in conjunction with debt levels, which actually does have median value of about $87k.

https://www.federalreserve.gov/econres/scf/dataviz/scf/chart/#series:Debt;demographic:all;population:1;units:median;range:1989,2003

To understand the real picture you have to look at both sides of the equation, total assets (including retirement savings) and total liabilities (all debt).

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u/RaceHard 1d ago

wasn't there a poll recently showing that most Americans don't even have more than 400 in savings and that an unexpected 2000 bill would put them in dire financial stress for a year or longer?

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u/The_Lonely_Posadist 1d ago

not all savings can be pulled out immediately

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u/CantHitachiSpot 15h ago

Then it's not savings. That's just assets. You shouldn't count your house, vehicle equity or retirement accounts as part of your savings.

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u/Necessary-Depth9158 1d ago

This is the correct answer on how much 'most people' would have in their account 'on average'.

It doesn't factor in the very rich and the very poor to get the "median" which is the technical term for what most people would call "average" and is more accurate.

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u/Firm-Contract-5940 1d ago

the average american isn’t the average of americans

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u/Reaper_Messiah 16h ago

Is that across demographics or within a specific age range?

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u/resarfc 15h ago edited 15h ago

Well it is generally families or households across the entire country - using a reference person who is generally/basically "the richest person or couple in a household" often called the primary economic unit.

The definition of “family” used throughout this report differs from that typically used in other government studies. In the SCF, a household unit is divided into a primary economic unit (PEU)—the family—and everyone else in the household. The PEU is intended to be the economically dominant single person or couple (whether married or living together as partners) and all other persons in the household who are financially interdependent with that economically dominant person or couple.

This report also designates a reference person within the PEU, not to convey a judgment about how an individual family is structured but as a means of organizing the data consistently. For example, the age and educational classifications ascribed to families throughout this report describe the age and education of the reference person. If a couple is economically dominant in the PEU, the reference person is the male in a mixed-sex couple or the older person in a same-sex couple. If a single person is economically dominant, that person is designated as the family reference person in this report. Note that the term “reference person” is a new descriptor as of the 2019 survey, replacing the outdated “household head” terminology used in previous surveys.

You can read the definitions here,

https://www.federalreserve.gov/publications/files/scf23.pdf

And see breakdowns by demographics here - for example median debt by age.

https://www.federalreserve.gov/econres/scf/dataviz/scf/chart/#series:Debt;demographic:agecl;population:all;units:median;range:1989,2003

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u/Nice-Adhesiveness986 1d ago

This puts OP in the 27th percentile but if they keep saving $10,000 a year from now on like they are planning to they will be above average in just 3 years!

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u/AP_in_Indy 1d ago

My friggen fuck Batman.

Seeing those jumps between every 25th percentile is insane.

$11k, to $200k, to $500k, to $2.5 MIL.

Sheesh every tier up really is that much richer. We live in a society. Feels weird that the lower tier really is THAT poor, and the tier above is me is THAT rich. I can't think of how this is possible except for a small % of people in very high-demand, tech jobs or who inherited the wealth.

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u/Nice-Adhesiveness986 1d ago

If you really want to get a sense of it unclick the use logarithmic scale box.

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u/dehydratedgirl 1d ago

net worth is not savings. totally different

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u/AP_in_Indy 1d ago

If someone only rents and doesn't actually own anything, their savings is their net worth.

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u/dehydratedgirl 1d ago

those are massive "ifs"

generally speaking, net worth ≠ savings

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u/AP_in_Indy 1d ago

I think those "massive" ifs are pretty common for millennials and below, especially if most don't have more than $5,000 in their savings at any given point in time.

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u/PlacidPlatypus 1d ago

Pretty big percentage at least have a car, that's a pretty significant asset.

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u/AP_in_Indy 1d ago

Agreed, but a pretty big percentage have a car payment, too.

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u/quiteCryptic 1d ago

Savings, assets, and retirement funds, minus any debt

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u/AP_in_Indy 1d ago

"doesn't actually own anything" - so no assets other than savings.

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u/MapOk1410 1d ago

You need some better friends.

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u/Firm-Contract-5940 1d ago

no dude, they need better financial literacy. which is difficult when you work the service industry and/or have children.

making friends based on the amount in their bank account isn’t the flex you think it is

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u/Necessary-Depth9158 1d ago

It may have been poorly phrased, but there's a kernel of truth in it.

paycheck to paycheck is fairly normal for 18-25ish. But by 27 or 28 you really need to have some sort of financial plan for building wealth and being able to pass some of it to you kids. Food service people either tend to be grinders and savers or check to check party people that will rent forever in my experience.