Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Decline in Average Family Wealth
Old 08-23-2016, 10:10 AM   #1
Recycles dryer sheets
 
Join Date: May 2015
Location: NorCal
Posts: 62
Decline in Average Family Wealth

Interesting recent article by the CBO on the trend in average family wealth for different segments. For the group between the median and the top 10 percent, average family wealth was 35 percent higher in 2013 than in 1989. For families in the 26th through 50th percentiles, average wealth was 6 percent less than that of their counterparts in 1989. For those at or below the 25th percentile in the years between 1989 and 2013 held more in debt than they had in assets, on average. In 1989, families in that group were about $1,000 in debt. By 2007, on average, that group was about $2,000 in debt, but by 2013, they were about $13,000 in debt, on average.

Basically the rich are getting richer and the rest aren't doing so well. Wonder if this helps explain some of the political turmoil we're going through?

https://www.cbo.gov/publication/51846
__________________

__________________
FIREd_2015 is offline   Reply With Quote Reply
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 08-23-2016, 10:34 AM   #2
Thinks s/he gets paid by the post
2017ish's Avatar
 
Join Date: Apr 2012
Posts: 1,436
I can't quickly find an analysis of this data that takes family composition into account... I know that in the household income stats, there is a good deal of noise generated by changing household size. Wouldn't be surprised if decrease in marriage rate before having children is having some impact in the average family wealth area....
__________________

__________________
OMY * 3 2ish
2017ish is online now   Reply With Quote Reply
Old 08-23-2016, 10:40 AM   #3
Full time employment: Posting here.
 
Join Date: Jun 2016
Location: Denver
Posts: 846
In the summary they have the following:
For this analysis, CBO calculated that measure of wealth as a family’s assets minus its debt. CBO measured wealth as marketable wealth, which consists of assets that are easily tradable and that have value even after the death of their owner. Those assets include home equity, other real estate (net of real estate loans), financial securities, bank deposits, defined contribution pension accounts, and business equity.
For most of these listed, they have appreciated in that time frame, some more than others, so if you had assets, they grew. If you didn't, well the results speak for themselves.
__________________
COcheesehead is offline   Reply With Quote Reply
Old 08-23-2016, 11:21 AM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,051
With all the folks on this forum trying to stay not-rich in order to get financial aid for college and ACA credits and later keep their medicare costs low, I am not surprised that average family wealth is going down.

Add to that that millennials don't want to get married, don't want to buy cars, and don't want to buy houses, there is no reason to get rich anymore.

So is it such a bad thing that average family wealth is going down? Probably not.
__________________
LOL! is offline   Reply With Quote Reply
Old 08-23-2016, 11:37 AM   #5
Thinks s/he gets paid by the post
2017ish's Avatar
 
Join Date: Apr 2012
Posts: 1,436
Very interesting, from page 13 of the CBO's report:

Quote:
The median wealth of families other than those
headed by someone who was 65 or older was
lower in 2013 than it had been for their
counterpart families in 1989. From 1989 until
2007, median wealth increased for families
headed by someone over age 50, rose somewhat
for families headed by someone between
35 and 49, and stayed much the same for
younger families. After 2007, median wealth
declined for all groups.
The graph (Ex. 10) shows it well: as a class, only families headed by 65+ year olds had increase in wealth from '89 to '13....
__________________
OMY * 3 2ish
2017ish is online now   Reply With Quote Reply
Old 08-23-2016, 02:04 PM   #6
Thinks s/he gets paid by the post
Big_Hitter's Avatar
 
Join Date: May 2013
Location: In the fairway
Posts: 3,677
Quote:
Originally Posted by FIREd_2015 View Post

Basically the rich are getting richer and the rest aren't doing so well. Wonder if this helps explain some of the political turmoil we're going through?
I'm not sure why everyone is so butthurt.

From my perspective, the economy is killing it and shareholders are being rewarded big time. Old school savers...maybe not so much with the low rates.
__________________
Swing hard, look up
Big_Hitter is online now   Reply With Quote Reply
Old 08-23-2016, 04:06 PM   #7
Recycles dryer sheets
Sojourner's Avatar
 
Join Date: Jan 2012
Posts: 423
I just looked at the report and was shocked at how big the wealth gap is between higher education groups. Families headed by someone with a graduate degree are over twice as wealthy (based on the median) than those with a bachelors degree. Looks like graduate degree families are a bit over $400K and bachelors degree families are a bit under $200K. Had no idea there was such a large gap between those two. I would guess this is primarily because of medical doctors, dentists, lawyers, pharmacists, etc. But then again, according to The Millionaire Next Door, doctors and lawyers tend to be "underachievers" of building wealth.
__________________
Sojourner is offline   Reply With Quote Reply
Old 08-23-2016, 05:33 PM   #8
Thinks s/he gets paid by the post
DrRoy's Avatar
 
Join Date: Dec 2015
Location: Michigan
Posts: 1,246
From data that I have seen, for those in the lower half of wealth distribution, most of their wealth is made up from their home equity. The drop in wealth noted in the article is tied to the real estate market decline during the great recession. The end point of the data is 2013. The situation should look better now as real estate prices have generally continued to recover. For those with some assets in the stock market, there should also be improvement since 2013 as US stock indexes are this year making new highs. This is not to say that the situation is rosy, just that a 2013 analysis is getting out of date.
__________________
"The mountains are calling, and I must go." John Muir
DrRoy is offline   Reply With Quote Reply
Old 08-23-2016, 08:39 PM   #9
Thinks s/he gets paid by the post
target2019's Avatar
 
Join Date: Dec 2008
Posts: 3,352
Quote:
Originally Posted by FIREd_2015 View Post
Basically the rich are getting richer and the rest aren't doing so well. Wonder if this helps explain some of the political turmoil we're going through?

https://www.cbo.gov/publication/51846
This does not surprise me. It's been discussed, on news, and throughout recent campaigns. Some are not doing well, as always. Some are doing better. Thankfully, we are doing better, and will help others more this year.

I think the political process can handle this. I'll vote my conscience and go on with my life.
__________________
target2019 is offline   Reply With Quote Reply
Old 08-23-2016, 08:51 PM   #10
Thinks s/he gets paid by the post
target2019's Avatar
 
Join Date: Dec 2008
Posts: 3,352
Quote:
Originally Posted by Sojourner View Post
I just looked at the report and was shocked at how big the wealth gap is between higher education groups. Families headed by someone with a graduate degree are over twice as wealthy (based on the median) than those with a bachelors degree. Looks like graduate degree families are a bit over $400K and bachelors degree families are a bit under $200K. Had no idea there was such a large gap between those two. I would guess this is primarily because of medical doctors, dentists, lawyers, pharmacists, etc. But then again, according to The Millionaire Next Door, doctors and lawyers tend to be "underachievers" of building wealth.
I think we're both looking at Exhibit 11. Two interesting concepts. 1) Those with college degree (but not advanced degree) had a significant downdraft of wealth after Great Recession. 2) The more education you can muster, the better off you tend to be.
__________________
target2019 is offline   Reply With Quote Reply
Old 08-24-2016, 07:00 AM   #11
Thinks s/he gets paid by the post
 
Join Date: Dec 2009
Location: Alberta/Ontario/ Arizona
Posts: 2,486
Quote:
Originally Posted by Sojourner View Post
I just looked at the report and was shocked at how big the wealth gap is between higher education groups. Families headed by someone with a graduate degree are over twice as wealthy (based on the median) than those with a bachelors degree. Looks like graduate degree families are a bit over $400K and bachelors degree families are a bit under $200K. Had no idea there was such a large gap between those two.
Yes, agree. Every study confirms the importance of education. Generally the more education the better. Especially if it is relevant to our economy. It's important to adjust this data for other factors though, like your parents education, wealth, etc. If you do this the results are generally the same, but not as "dramatic".

It is my firmly held belief that education is by far the most effective tool a person can use to improve over his parents socio-economic position. Certainly was in my case.
__________________
Danmar is offline   Reply With Quote Reply
Old 08-24-2016, 07:47 AM   #12
Thinks s/he gets paid by the post
 
Join Date: Feb 2013
Location: Toronto
Posts: 1,131
Education is obviously a very important correlate. It is unfortunate that the cost of getting a useful education are becoming prohibitive for some and leaving many others with a very significant debt burden right out of the gate. My recollection is that the US is near the bottom in social mobility for OECD countries. The increasing barriers to education aren't likely to make this better. For the average Joe, wages have been stagnant for many years, expenses not so much.
__________________
6miths is online now   Reply With Quote Reply
Old 08-24-2016, 07:52 AM   #13
Thinks s/he gets paid by the post
Big_Hitter's Avatar
 
Join Date: May 2013
Location: In the fairway
Posts: 3,677
Quote:
Originally Posted by 6miths View Post
The increasing barriers to education aren't likely to make this better.
what barriers? service academies are still "free"
__________________
Swing hard, look up
Big_Hitter is online now   Reply With Quote Reply
Old 08-24-2016, 09:58 AM   #14
Full time employment: Posting here.
Philliefan33's Avatar
 
Join Date: Oct 2014
Posts: 561
Quote:
Originally Posted by Big_Hitter View Post
what barriers? service academies are still "free"

Service academies are very selective. Very few students have the qualifications for admittance.
__________________
Philliefan33 is offline   Reply With Quote Reply
Old 08-24-2016, 10:13 AM   #15
Thinks s/he gets paid by the post
Big_Hitter's Avatar
 
Join Date: May 2013
Location: In the fairway
Posts: 3,677
then go ROTC - I didn't think it was that difficult to get in the AFA
__________________
Swing hard, look up
Big_Hitter is online now   Reply With Quote Reply
Old 08-24-2016, 10:18 AM   #16
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 22,381
Are service academies really relevant to the thread topic?
__________________
MichaelB is offline   Reply With Quote Reply
Old 08-24-2016, 10:26 AM   #17
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 40,241
Quote:
Originally Posted by Big_Hitter View Post
I didn't think it was that difficult to get in the AFA
Is that where you got your degree?
__________________
Numbers is hard.

Retired in 2005 at age 58, no pension

REWahoo is offline   Reply With Quote Reply
Old 08-24-2016, 10:32 AM   #18
Moderator
Sarah in SC's Avatar
 
Join Date: Sep 2005
Location: Charleston, SC
Posts: 13,417
Quote:
Originally Posted by REWahoo View Post
Is that where you got your degree?
If I had to guess, it would have been Dale Carnegie.
__________________
“One day your life will flash before your eyes. Make sure it's worth watching.”
Gerard Arthur Way

Sarah in SC is offline   Reply With Quote Reply
Old 08-24-2016, 10:32 AM   #19
Full time employment: Posting here.
 
Join Date: Jun 2016
Location: Denver
Posts: 846
I went to a state school. Paid for the first three years on my own. Big parts of the last year were covered by academic scholarships because of my good grades. I left school without any debt. At least in my case I think I leveraged a "good" education into a great lifetime of income. I have seen lots and lots of others do it as well. You don't need to get into debt to get educated and by all means get a degree in something marketable.
__________________
COcheesehead is offline   Reply With Quote Reply
Old 08-24-2016, 10:35 AM   #20
Thinks s/he gets paid by the post
Big_Hitter's Avatar
 
Join Date: May 2013
Location: In the fairway
Posts: 3,677
Quote:
Originally Posted by REWahoo View Post
Is that where you got your degree?
nope
__________________

__________________
Swing hard, look up
Big_Hitter is online now   Reply With Quote Reply
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
British Doctor does a high touch family intervention with struggling family haha Health and Early Retirement 20 12-07-2015 02:34 PM
Link to government report on average family budgets sengsational FIRE and Money 2 05-04-2015 12:54 AM
more than average savings- average spending shorttimer Young Dreamers 23 11-04-2006 04:32 PM
charitable family foundations--family first! astromeria Other topics 4 09-25-2006 09:49 PM
Decline of the U.S. Middle Class? Cut-Throat Life after FIRE 83 09-10-2004 07:32 AM

 

 
All times are GMT -6. The time now is 09:58 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.