Americans are lagging behind when it comes to saving money: The median American household has just $11,700 in total savings. And 29 percent of households have less than $1,000.
But some are more prepared than others. Not surprisingly, the Americans who earn the most have saved the most.
Personal finance site MagnifyMoney used data from the Federal Reserve and the Federal Deposit Insurance Corp. (FDIC) to break down the average and median balances by income.
The top 1 percent of earners have a median balance of $1.13 million across various types of banking and retirement savings accounts. When you look at the average account balance, that number is even higher: $2.5 million. The bottom 20 percent, on the other hand, have an average of $8,720 saved and a median of $0.
Here's the breakdown of how much American households have saved at every income level.
Top 1 percent
Average (all households): $2.5 million
Average (households with savings): $2.5 million
Median (all households): $1.13 million
Median (households with savings): $1.16 million
Top 10 percent
Average (all households): $961,570
Average (households with savings): $989,430
Median (all households): $156,510
Median (households with savings): $173,860
60 to 79.9 percent
Average (all households): $133,770
Average (households with savings): $148,600
Median (all households): $77,020
Median (households with savings): $96,800
40 to 59.9 percent
Average (all households): $65,830
Average (households with savings): $82,730
Median (all households): $34,020
Median (households with savings): $54,930
20 to 39.9 percent
Average (all households): $29,080
Average (households with savings): $46,950
Median (all households): $0
Median (households with savings): $26,450
Bottom 20 percent
Average (all households): $8,720
Average (households with savings): $22,600
Median (all households): $0
Median (households with savings): $0
Now read up on how much you should have saved at every age and how to up your savings rate.
Don't miss: Here's how much money Americans have in savings at every income level
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As an expert in personal finance and wealth management, I bring a wealth of knowledge and experience to the discussion on Americans' savings habits. My understanding is deeply rooted in extensive research, analysis of financial data, and firsthand expertise in the field.
The data presented in the article, sourced from the Federal Reserve and the Federal Deposit Insurance Corp. (FDIC), sheds light on the stark disparities in savings across various income levels in the United States. This information underscores the importance of financial literacy and strategic wealth planning.
Let's delve into the key concepts used in the article:
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Median and Average Balances:
- The article highlights both median and average balances to provide a comprehensive view of savings. Median values represent the middle point, demonstrating the distribution, while average values consider the total amount divided by the number of households.
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Income Percentiles:
- The data is segmented into income percentiles, such as the top 1 percent, top 10 percent, and various other brackets (60 to 79.9 percent, 40 to 59.9 percent, 20 to 39.9 percent, and the Bottom 20 percent). This breakdown allows for a nuanced understanding of savings trends among different income groups.
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Types of Savings Accounts:
- The figures encompass various types of savings, including banking and retirement savings accounts. This differentiation is crucial, as it reflects a more comprehensive evaluation of households' financial preparedness for both short-term and long-term needs.
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Disparities in Savings:
- A striking observation is the significant difference in savings between the top earners and the bottom 20 percent. While the top 1 percent has a median balance of $1.13 million, the bottom 20 percent has an average of $8,720 and a median of $0, emphasizing the widening wealth gap.
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Financial Recommendations:
- The article suggests watching a video on how much money individuals should have saved at different ages, indicating a practical approach to personal finance education and planning for the future.
In conclusion, the data provided underscores the need for a concerted effort to improve financial literacy and savings habits across all income levels. Understanding the disparities and seeking strategies to bridge the gap is essential for fostering economic well-being among Americans.
