The Average American Income Is Only $1,301 From World’s Top 1%
Does your income rank in the top 1% of the entire world? Before you roll off your couch in a fit of cynical laughter, you should know that the answer to that question might just surprise you.
A recent study found that the level of annual income required for someone to be within the top 1% of earners in the world is a mere $32,400. This translates to an hourly wage of just $15.58, assuming a standard 40 hour workweek and full-time employment.
Yes, that’s right – make $15.58/hour or more on a full-time basis and you’re part of the global 1%, based on income. As of 2014, 43% of Americans earned $32,400 per year or more and were already considered part of this elite club.
Meanwhile, the latest U.S. Census Bureau statistics indicate that the median income for those over the age of 15 is currently $31,099. That puts the average adult American a mere $1,301 per year removed from making the cut for being counted amongst the same group.
The Flip Side
Surprised? Well, not all is sunshine and rainbows here in the renowned land of opportunity. Despite the encouraging statistics above, the latest annual report published by the American Psychological Association found that 62% of all Americans identified as being stressed by money. If we widen the report parameters to the last 15 months, that number climbs as high as 72%.
These statistics should actually come as no great shock, given the fact that as many as 78% of employed Americans report living paycheck-to-paycheck and that the majority of Americans (57%, to be exact) have less than $1,000 in savings.
This dire situation is compounded by the fact that as many as 40 million households have no retirement savings, with the total estimated retirement account shortage pegged at $4.3 trillion for the nation as a whole.
39% of Americans report no savings whatsoever.
A Strange Discrepancy
It doesn’t require an overly astute observation to note that something simply isn’t adding up here. If 43% of Americans possess incomes which place them in the top 1% of the world, and if the average American adult is only $1,301 removed from joining this same club, why are we so collectively stressed about money and finances and why do we have so little set aside in savings??
By way of explanation, some may point to the fact that the above income numbers are not adjusted for cost of living. Let’s take a look at that data.
This online cost-of-living comparison tool rates the cost of living in the U.S. 22nd highest out of the 110 countries listed. This trails many other developed nations, including Australia, France, the U.K., and most of Western Europe, while it is approximately equal to Canada, Japan, and Germany.
I submit to you that this discrepancy between income and savings leads us to only one logical conclusion – that many personal finance crises in modern day America should not be attributed to a lack of income by default, as is often done.
It is my experience that the root issue is far more likely to exist on the other side of the ledger, caused by compulsory spending or, more likely, simply a lack of understanding how to manage money to support the lifestyle desired.
Life In The Top 1% Not Living Up To The Hype?
Does your income qualify as being in the top 1%, yet you find that hard to believe because your lifestyle doesn’t match up?
That’s okay – that’s why you’re here, to learn how to master your money so you can start living a life which puts you closer to your hopes, dreams, and goals. A life that lives up to the hype of being associated with an income that’s in the top 1% of the world.
Make no mistake, getting there won’t be a cakewalk. What I have to say will probably challenge your current financial mindset. In fact, I hope that it does.
But no worries – I won’t ask you to go through the couch cushions in the name of scrimping and saving your way to financial freedom. One of the primary goals of this blog is to illustrate how an optimized game plan for your money makes it easy to get ahead on even a modest income level while still living a comfortable lifestyle.
The Power Of A Financial Game Plan
While my wife and I were working towards obtaining our own financial freedom, our annual spending fell far beneath the $32,400 annual income required to be considered part of the world’s top 1% by income.
Yet we were blessed to still be able to give away a double-digit percentage of our income, eat dinner out at least once a week, take annual vacations across the country, and spot ourselves no-questions-asked blow-money totaling 15% of our monthly spending.
I mention this as an encouragement to those readers who find themselves with incomes classified as belonging to the world’s top 1% who yet feel constricted by money and hopeless regarding their ability to live the lifestyle they desire.
It is more than possible to live a financially free life with an average American income if you have the right financial game plan. Here at The Financial Freedom Project, I’m making it my mission to show you how by sharing the strategies employed by my wife and I on our own journey to financial freedom and independence.
So stick around, sign up via the form on the right to receive new articles via email, or drop me a line via the contact form. Let’s work together to dispel the all-too-common refrain that a median income is barely enough with which to get by, and that financial opportunity and success are virtually out of reach for all but the wealthy.
This statistics are down right scary, totally agree the issue is not on the earnings side of the equation by rather on the expense and lack of money management skills. Thanks for sharing.
Thanks for the comment, Ana! Income is definitely part of the personal finance equation, but in my experience it plays less of a role than does spending.
Lower your spending and you also lower your emergency fund requirements, your required savings to become financially independent, the list goes on.
It’s typically easier to control your spending than your income. And since we Americans seem to have a spending problem, that’s where I’m putting my focus first when it comes to blog content.
The concept of “living below one’s means” seems so out of whack in today’s world. People don’t seem to realize that spending less than you earn is the ticket to financial sanity.
Sad to say, however, that there are too many people in this country and in this world, who earn too little to be able to live below their means. Minimum wage-type jobs just don’t cut it in this high-expense world.
So the gap between the low earning folks and the one-percenters is really very large. Much too large.
I agree! Sadly, too many people don’t have a money management system or budget in place to even know what their “means” actually are. These folks flying by the seat of their pants have no way to even gauge whether they’re living within their means or not.
My 24-part Master Your Money series which I’m in the process of wrapping up at the moment is intended to help folks like these get a grip on their money so they can start doing more than simply financially surviving.
While I agree with you that there is a large gap between those with low household incomes and the American one percent, the amount of income it takes to be in the world’s top 1% isn’t all that much – about the equivalent of a dual income household working two minimum wage jobs.
I believe the $32,400/year income outlined in the article is actually more than enough to live an extremely comfortable lifestyle if you have your finances configured properly. And I’m making it my mission to outline the comprehensive strategies that will enable folks with even just a single, minimum wage job be able to live life on their terms, without being overly constrained by money.