U.S. Median Wealth Only 27th in the World
As I discussed last week, U.S. median wealth per adult is lower than many other countries. To be exact, it comes in at #27 for 2012, at $38,786 per adult. This is more than 1/4 lower than had been reported by Credit Suisse’s Global Wealth Databook for 2011. I contacted one of the authors, Professor James Davies of the University of Western Ontario, to find out the reason for the big change for the United States as well as the even bigger change for Denmark.
Professor Davies was kind enough to lay out the technical issues for me. First, of all, data for mean wealth is more reliable than median wealth. For rich countries like the United States, there is usually household balance sheet information which provides high-quality information on total wealth and, when combined with population data, wealth per adult.
Wealth distribution data is more difficult to estimate accurately, although it is known to be more unequally distributed than income for every country, as the 2012 Databook reports. The reason Denmark had such a sharp increase in its estimated median wealth is that its wealth distribution survey information was becomingly increasingly questionable, so the authors changed to a different estimation method that is not comparable with previous figures.
Finally, Professor Davies said it was unlikely that U.S. wealth per adult dropped by 1/4 in one year, but that the new lower estimate is more accurate. The research team is still working on ways to make distribution estimates more accurate, such that year-to-year changes will be more meaningful. As he wrote to me, “We haven’t emphasized year-to-year changes in the shape of the wealth distributions since we are still improving our approach to that and making changes each year.”
That leaves the United States still with low levels of median wealth for rich countries. as Les Leopold reported on Alternet. In total, it trails 20 OECD countries and six non-OECD countries.
These low levels of wealth contribute, of course, to the coming retirement crisis as Americans have low levels of savings to supplement Social Security, while almost half of private sector workers have no retirement plan of any type. A solution to the crisis will require a tremendous push politically, but otherwise millions of Americans will be condemned to poverty in their old age.
Here is the list of the top 27 countries by median wealth per adult.
Country Median Wealth
Per Adult
1. Australia $193,653
2. Luxembourg $153,967
3. Japan $141,410
4. Italy $123,710
5. Belgium $119,937
6. United Kingdom $115,245
7. Iceland $ 95,685
8. Singapore $ 95,542 (non-OECD)
9. Switzerland $ 87,137
10. Denmark $ 87,121
11. Austria $ 81,649
12. Canada $ 81,610
13. France $ 81,274
14. Norway $ 79,376
15. Finland $ 73,487
16. New Zealand $ 63,000
17. Netherlands $ 61,880
18. Ireland $ 60,953
19. Qatar $ 57,027 (non-OECD)
20. Spain $ 53,292
21. United Arab Emir. $ 47,998 (non-OECD)
22. Taiwan $ 45,451 (non-OECD)
23. Germany $ 42,222
24. Sweden $ 41,367
25. Cyprus $ 40,535 (non-OECD)
26. Kuwait $ 40,346 (non-OECD)
27. United States $ 38,786
Cross-posted from Middle Class Political Economist.
just one thought
there is poverty and there is poverty. as long as you have been earning a wage that you can live on, and paying your Social Security “tax,” Social Security should keep you out of desperate poverty. As for whether you can learn to live in gentle poverty… well you might be surprised at how good life can be if you need to spend money to find it.
So I wouldn’t call it a retirement “crisis” because lots of folks won’t have as much money in retirement as they think they want. I object to the “crisis” language because it leads to panic and panic leads to stupidity.
Coberly,
Maybe you don’t know folks whose entire SS check is less than $800, after Medicare is deducted, but I do, and I honestly don’t know how they make it.
One does so by living with her kids. As a cancer survivor who spent many of her best yearning years taking care of dying parents, she didn’t build any cushion in her best years. It could be argued that she could have just let “the system” take care of her folks, but that isn’t in her.
Another lives on a SS check that is barely $800. How he survives in Brooklyn, I have no idea. Without rent controls, he would be on the street.
My own mother, a stroke survivor at 62 and widowed at 72, was in assisted living for 8 years, then a nursing home for almost two. Her SS check went straight for her care, once her money ran out, and she was basically a “ward of the state”, although I helped as much as I could.
I’ve worked since I was 14, except for the years I was blessed to be able to be a stay-at-home mom, but once my childrearing was done, I was back in the workforce. Never made much $$$, so my check is meager, compared to some.
These are not complaints; I live below my means, have for 30+ years. Our home is paid for, the only debt I have is having to replace my car right after I retired. We try not draw down savings unless And while my life is in no way in crisis mode, my two friends are one major expense away from disaster.
Proposed Social Security Bargain Makes No Sense for the Elderly
The median income of people over age 65 is less than $20,000. The solution is not to cut that further.
Dean Baker December 18, 2012
” the Obama administration is seriously contemplating a deal under which the annual cost of living adjustment for Social Security benefits would be indexed to the chained consumer price index rather than the CPI for wage and clerical workers, CPI-W, to which it is now indexed. This will lead to a reduction in benefits of approximately 0.3 percentage points annually. This loss would be cumulative through time so that after 10 years the cut would be roughly 3 percent, after 20 years 6 percent, and after 30 years 9 percent. If a typical senior collects benefits for twenty years, then the average reduction in benefits will be roughly 3 percent.”
[more] – http://www.thenation.com/article/171830/proposed-social-security-bargain-makes-no-sense-elderly#
And I’m pretty sure the situation is wose -will become worse, for eldely women.
But hell, real weekly wages for nonsupervisory workers PEAKED IN 1972 – [some rise later 1990’s and then…that ‘tiny winy’ 2001-02 recession that knocked rate and mass of mfg. sector profits off the tracks,,,a very marginal recovery and back to Recession with stagnant and falling real wages.
2013 – 1972 = 41 years, which, via personal credit growth, has certainly helped loan capital. Which Wants More…..And……More……
U.S. is already socially polarized but too many workers taking their anger out on one another while believing MSM [State TV]
wANT to save capitalism, force wages UP……otherwise our time has come….globally.
This post needs better supporting data. All of the links are dead.
US ranks 15th in per capital GDP.
Sammy,
The links work for me. Check your browser.
15th in GDP with the supposed worlds largest economy. You think that is something to counter 27th in median wealth?
Sandi
my SS is less than 800 per month. i do fine. of course i don’t go to doctors. so i am lucky.
your friends sound like they need welfare. that’s okay too.
i was talking about those people who can’t imagine living on less than 50k per year. there are lots of them. that’s the “crisis” i don’t believe in.
juan
i agree with all that. unfortunately i know people who think cutting SS is okay as long as you call it “rossers law” or “obviously”raising the retirement age because people are going to live longer is the right answer”. and of course our dear ol’ President who thinks it’s okay as long as you call it a “more accurate cost of living adjustment.”
what I was talking about, as I tried to explain to Sandi, was that calling it a crisis because some people used to hundred thousand dollar in comes might have to live on 26k SS plus whatever is left in their 401k’s is feeding the panic that the bad guys will use to destroy SS… one way or the other: either “privatize” it so we can all become millionaires by investing our “tax” on the markets, or “scrap the cap” and turn it into welfare so the rich can kill it at their leisure.
Sandi
also note i said “as long as you have been earning a wage you can live on and paying SS…” if your wages were very low while working, but you paid SS, and lived on those wages, your SS would replace about 60% of your wages, and assuming you have already bought your house, or learned how to live cheap in your neigborhood, and no longer are raising kids… you can live on that. even 800 a month unless you are sick.
Maybe Ronald Reagan was a total asshole. Maybe ?
Let’s tax the aristocracy. The Walton slavers. Duh !
The problem with the aristocracy is they don’t want to pay for anything including the system that made them rich.
Marginal tax rates have to go up. The Uncle Tom in the White House is of no use.
Coberly,
I certainly missed the “living wage” part. Neither of the two friends referenced made good money while working. And both do have health issues, so that is why I feel they are vulnerable, yes, maybe even crisis-prone.
Divorce or having never been married is costly, especially for women, who traditionally earn less. The old saying about “two leaving as cheaply as one” has some validity. As a single woman, I had the insurance, utilities, etc. to pay that are much less onerous with two incomes. Considering 50% of marriages in the US end in divorce, even assuming many remarry, that’s a hit. Not to mention the cost of divorce in itself.
So, I guess my advice to young and young-ish folks would be: “Stay as healthy as you possibly can, and get/stay married”! (All the usual advice, of course, still applies, about saving, living frugally, etc.)
Sandi
everything you say is true. and i certainly don’t wish to minimize the hardness of some lives.
i was just trying to make the point that for those people who aren’t going to retire in the love-boat style they were expecting, life still has possibilities. even on 800 a month… if you have your health.
i’d be glad to see SS benefits go up. but someone will have to pay for that, and I don’t think it should be “the rich” because they will turn it into welfare, which they will make sure is as ugly as possible.
and “in general” i think we can live on less money than we usually think we can. even a rather poor person could afford to “save” another five or ten percent…
not because it’s “easy” but because it’s better than having to live on even less when you are old.
Coberly,
Agreed, agreed, agreed, and ditto 🙂
Just heard a Ted talk from a guy who was on the plane Scully put in the Hudson, and how it changed his perspective “in a heartbeat”. I guess that is one thing we all need to keep in mind (I know I do), and prioritize accordingly. And when you do that, I suspect you see a LOT of things you can live without, material-wise.
Cheers!
Mr. Bill,
Gretchen Morgensen’s column in the NYTimes is pertinent, as is this page http://www.nytimes.com/interactive/2013/06/30/business/executive-compensation-tables.html?ref=business
If you are looking at returns on investment, etc., as Gretchen says, several of these CEO pay packets make no sense at all. If, as we have heard, ad nauseum, that the raison d’etre of a corporation is to
maximize shareholder value, looks like some of these boys (mostly boys), aren’t doing their jobs.
Link to Gretchen http://www.nytimes.com/2013/06/30/business/an-unstoppable-climb-in-ceo-pay.html?hpw
Sandi
good luck.
having said all that about the joys of poverty, i am not amused that Wells Fargo is trying to cheat someone I know out of their property. The technique for this has been described by some people who were told by Bank of America to cheat their customers the same way. Mostly by pretending “the paperwork is not complete” for month after month while refusing to accept the payments offered, in order to push the property into foreclosure. And the government refuses to do anything about it.
we are in the hands of criminals.
Coberly
A housemate of ours, now in Boston, lost her $300,000 Bay Area (CA) condo when Wells Fargo did precisely what you describe. For an entire year they took her mortgage payments and misapplied them, then argued she was behind, then put her into foreclosure. Now, ten years later, they settled with the Feds for massive fraud – and our housemate got a payment of….. $800. Yes, 8 hundred dollars. We are ruled by thieves and war criminals. The system is fixed.