Household Expenses Up More than 9%. Here are the details on the 2021 Survey
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If you are feeling poorer, you are likely spending way more than you think. Household income isn’t dropping. Prices on everyday items are going up.
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Table of Contents
Feeling a bit stressed about Expenses?
Average annual expense per media household went up from $61,332 in 2020 to $66,928 in 2021. This was an increase of 9.1 percent.
Add another 8 percent for 2022 and there’s your proof of purchase. We are living through challenging downturn after challenging downturns.
Record high inflation meets faster spending and way more debt. Even though the Federal Reserves increased interest rates, consumer appetite hasn’t abated. Most are relying on credit card debt to keep up with lifestyle.
This is a consumer market. And the consumers are always spending.
Where does the data comes from?
Just so you know, every year, the Bureau of Labor Statistics runs a survey on the median US Household income and expenses. This data is typically releases in September for the prior year. Subsequently, the US Census Bureau filters the results by Age, Gender, Race, State, and etc.
Although household income typically rises, economic disruptions, such as the housing crash of 2008 and the global pandemic dramatically alter lifestyle expenditures and household dynamics.
The labor shortage and supply chain issues from 2020 are finally catching up to us. As well as, droughts and wheat shortages stemming from Russia-Ukraine war.
Median household income for 2021 rose by 3.7 percent, compared with 2020
So how are we paying for everything? Credit and Saving Withdrawals. This is like juggling gasoline, diesel and a flaming ball.
While at first the average household savings hit as high as 33% back in April 2020, the prolonged issue lead to the faster growth in inflation in four decades.
Credit card average balances fell again in 2021, though not as sharply as in 2020. The average credit card balance as of Q3 2021 was $5,221.
That’s 2.1% lower than the 2020 average balance of $5,315. Average credit utilization ratio over 2020-2021 is up to 25%.
In summary, debt is up as high as 20% with average spending in 2022 peaking an additional $7,500 (when the dust settles). Total household debt surpassed $16 trillion in Q2 2022. Mortgage, auto loan, and credit card balances increased (FRS Bank of NY report, August 2, 2022). Once the dust settles, we will find that in Q4 savings will drop.
As of late, with a recession brewing, the majority of US households are just one financial emergency away from taking on costly credit card debt, withdrawing from their retirement savings draining their emergency fund.
By the way, $1,000 is not going to help you when a real emergency hits.
Here are some key US household statistics for 2021
Many household are feeling the crunch as median income grew to $70,784 in 2021. Other key findings include:
- GenX-ers, ages 45 to 54 are earning the most, with $85,444. Millennial Households are trailing behind with $82,751.
- The state of Maryland bolsters home with a median income of $97,332. This is almost 40% the national median.
- While being the most educated, women earned 17% less than the median wage of men. This amount to a difference of $10,189. But both are down more than 4 percent over 2020.
- Black American households pulled in a median income of $48,297, nearly 32% less than the median income of total household in the US.
- Married couples earned $96,439 in median household income. So you might be better off getting hitched.
Median US Household Income
“Median” is defined as the middle number, indicating that half of all households earned more while half earned less. There is a difference between the median and the average. Whereas the average can skew heavily if there are too many high or low earners, the median works best.
For 2021, the median income was $70,784.
No statistical difference from the 2020 estimate of $71,186. This was higher than it was in the three years prior to 2019. Diving deeper we can look at the median income by age, education, race and state.
Thankfully, this amount of income is greatly improve your chances of becoming a millionaire in less than 20 years.
Estimated Median income by age
| Age | 2021 | 2020 | % Change |
|---|---|---|---|
| 15-24 | $49,648 | $47,758 | +3.96% |
| 25-34 | $67,745 | $67,734 | +0.02% |
| 35-44 | $82,751 | $81,465 | +1.58% |
| 45-54 | $85,444 | $83,324 | 2.54% |
| 55-64 | $66,638 | $69,433 | -4.03% |
| 65+ | *$47,454 | $49,533 | -4.20% |
Median household income peaks for workers in their 40s and 50s with the highest growth potential in the 20s and early 30s. This is why it’s highly recommended to boost your educational attainment in your 20s.
Also, it’s beneficial to bounce around for up to 40% income boost. Staying in a job that doesn’t promote you by more than 10% in 3 years, becomes a financial death sentence.
Households with workers ages 45 to 54 brought a median $85,444. It’s important to note that it was 2.54 percent increase from 2020.
Those 65+ fell 4.2% — to $47,454. This is no bueno for the long haul. With productivity decreasing, this will prompt massive social changes.
Social Security and Supplemental Security Income (SSI) benefits for approximately 70 million Americans will increase 8.7 percent in 2023. Read more about the Social Security Cost-of-Living adjustment for 2023. Additionally, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $160,200.
In the end, we are brewing a perfect storm of the Have and Have Nots in the US.
Estimated Median income by gender
The real median earnings of all workers (including part-time and full-time workers) increased 4.6% (from $43,461 to $45,470) between 2020 and 2021. Median earnings of those who worked full-time, year-round decreased 4.1%, from $58,897 in 2020 to $56,473 in 2021.
On the other hand, women continued to earn less than men in 2021.
| Gender | 2021 | 2020 | 2019 |
|---|---|---|---|
| Women | $51,226 | $50,982 | $47,889 |
| Men | $61,180 | $61,417 | $58,173 |
Women who worked full-time, year-round positions earned about $10,000 less than men. While full-time working women gained ground toward earning an equal wage over time, a significant gap remains.
The pandemic added new stressors or sped up these outcomes which include care giving, whether raising children or taking care of aging parents, lower-paying jobs or industries, and further discrimination.
Most Americans want at least $74,000 per year but I’m not sure where they will get this miracle.
Estimated median income by race
Race has always played a large role in US society.
Nearly all households, regardless of race saw incomes drop in 2020, however Black and Brown communities took the brunt of the issues. Data shows that income rebounded in 2021 however not all household felt the wealth boom.
The US is definitely creating a ruling class. The WINS go to long term investors.
Asian households earned a median income of $101,418 while white households continue to fall behind with $74,262. Hispanic households continue to increase their median income of the last 10 years with $57,981 for 2021.
Black households is unfortunately still low at $48,297.
Nearly 55% of Black households in the US earn bring in less than $50,000 per year. Conversely, over 74 percent of Asian households bring in over $50,000 per year with 33 percent earning more than $150,000 per year.
| Race | 2021 | 2020 | Change from 1987-2021 | 2019 |
|---|---|---|---|---|
| Asian | $101,418 | $94,903 | +38% | $99,400 |
| White | $74,262 | $71,231 | +15% | $73,105 |
| Hispanic (any race) | $57,981 | $55,321 | +31% | $56,814 |
| Black | $48,297 | $45,870 | +35% | $46,005 |
Average income by education level
Education still plays a significant role in how much workers earn throughout the course of their careers. Although student loan remain a contentious issue, the benefits of education are undeniable.
| Education level | 2021 | 2020 | 2019 |
|---|---|---|---|
| Bachelor’s degree or higher | $98,461 | $106,936 | $110,002 |
| Some college | $61,111 | $63,653 | $65,510 |
| High school, no college | $50,124 | $47,405 | $49,316 |
| No high school diploma | $34,642 | $29,547 | $31,347 |
College degree households nabbed nearly $100,000 in 2022, nearly 100 percent more than those with a High school diploma of $50,124.
Workers with a bachelor’s degree or higher made as much as 184 percent more than those who didn’t finish high school.
Median income by state
According to the US Census Bureau, Maryland and DC had the highest median income. The North East continues to be the center for income growth potential. Also note that the median income in New Mexico, Arkansas and Mississippi had the lowest.
| State | 2021 | 2020 | 2019 |
|---|---|---|---|
| US | $70,787 | $67,521 | $68,703 |
| Maryland | $97,332 | $94,384 | $95,572 |
| District of Columbia | $90,640 | $88,311 | $93,111 |
| Massachusetts | $86,566 | $86,725 | $87,707 |
| Virginia | $80,268 | $81,947 | $81,313 |
| California | $81,575 | $77,358 | $78,105 |
| New York | $72,920 | $68,304 | $71,855 |
| Texas | $67,404 | $68,093 | $67,444 |
| Maine | $71,139 | $63,440 | $66,546 |
| North Carolina | $62.891 | $60,266 | $61,159 |
| Georgia | $61,497 | $58,952 | $56,628 |
| Florida | $59,734 | $57,435 | $58,368 |
| Louisiana | $57,206 | $50,935 | $51,707 |
How can you weather this Median Income Storm?
A 2.9 percent drop in US household income in 2020 was merely the beginning to the “reversion to the means”. Most households will have a tougher time keeping up with the Jones post Pandemic due to rising costs globally.
Expenses from 2020 to 2021 increased by 9.1 percent. 2022 is not looking any brighter. While 2023 will bring more of the same.
No matter how things shake out, there are still immutable laws of household income. Remember the golden principles which include Education, Structural Employment, Geo-arbitrage, Multiple Streams, and Marriage.
Education provides access if used wisely.
College is a precision exercise that pairs the student with a high paying in demand career. Anything short is a pipe dream. Never rest in comfortable and move around for opportunity.
Also, tap into making multiple streams of opportunity for yourself and your family. The more money coming in, the less likely you will fall into the two-income trap of marriage.
Here are so easy to use Net/Max Financial plans for any age range and situation.
How workers can preserve their income
Families will have to learn to navigate economic challenges, such as a surge in inflation, raising the costs of housing, food and other household expenses.
Remember to invest more than you spend. Tucking away your earnings in a retirement plan, IRAs or health savings accounts can help households afford to retire with dignity.
The average US family is mismanaging as much as $12,000 per year. Necessary changes in lifestyle habits and investing $625 per month, can yield as much as $1.5 Million in less than 40 years. Here’s how my household is changing our investment strategy while inflation hits a 30-year high.
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