(My Budget 360) All Americans pay Social Security taxes. So looking at Social Security for income data is fairly reliable. The new Social Security figures show that Americans continue to make a lot less than what the public tends to believe. For example, you may have seen mainstream shows with talking heads saying that someone making $200,000 a year is somehow middle class. First, if your family is making that much you are in the top five percent of all U.S. households. Not exactly the middle. The median figure is the best measure here. This is the point where half of workers make less or more (the true middle). The latest Social Security data shows that the median worker income earned by an American is much less than what most expect.
What does the typical American worker make?
Most Americans are living by the seat of their financial pants. Half of the country is living paycheck to paycheck hoping their money clears into their account fast enough to pay the mortgage or rent and electricity. You also see so many people going into incredible levels of debt just to maintain the illusion that they are somehow middle class.
Social Security data is very reliable because this is a tax that we all pay. Here are the latest figures:
The typical American worker is making $29,930 per year. Keep in mind that from this amount you have taxes being taken away and this also doesn’t account for other expenses like healthcare. Overall Americans are struggling to get by and many people just don’t do the research to find out what is the true income situation for most in the country. Many would rather rely on pundits and talking heads that have some underlying agenda to push.
This figure should be put into context. Many private colleges now charge $50,000 or more a year in tuition. So a four year college education is going to cost many six-figures while the typical wage of an American is $29,930. Even looking at household income, the median amount is $56,000:
So Americans continue this battle to stay on the middle class bandwagon but the cost to stay on continues to get more expensive. People keep running faster and faster on the treadmill simply to stay in the same place (the Red Queen’s race dilemma).
What is also problematic here is that with America getting older, many Americans are now relying on Social Security as their primary source of retirement income. That was never the intention of Social Security. It was meant to be one leg of a three legged stool for retirement built on pensions, independent investment accounts, and Social Security. As you know, pensions are nearly extinct and the 401k has been a disaster for most Americans when you look at data. So half of elderly Americans rely on Social Security as their primary source of income.
And the debt we are taking on per American worker is mind boggling:
Social Security and Medicare depend on a large young workforce that is actually earning money. By definition this trend cannot continue.