It’s no secret that America has an income gap between the wealthiest and poorest citizens. If you’re trying to figure out which side of this divide you’re on, Ilventofailsuogiro suggests lots of ways to measure where you stand financially. This post will walk through some of the questions people often consider when determining how much they make, who is right for them, and where they can go from there.
1) How do I know if I’m middle class?
The U.S. Bureau of Labor Statistics (BLS) gives this definition of middle class: “Middle-class individuals, families, and households are those that fall in the middle range of income.” This is not really helpful.
2) How does the government define income?
The IRS defines the middle class in terms of Adjusted Gross Income (AGI). A single person with an AGI of $25,000 or less is considered to be in the lower income bracket, while a single person with an AGI greater than $65,000. A married couple with an AGI of less than $50,000 is considered to be in the lower income bracket, while a married couple with an AGI greater than $100,000.
3) Can I use my gross income to find out how much I make?
Gross income measures all your income before any deductions are taken out, including payroll taxes. As you can imagine, this is not very helpful if you’re looking to see where you stand financially.
4) How do I determine my net worth?
Net worth measures your assets minus your liabilities. There are plenty of online calculators that will quickly show you how to figure this out for yourself.
5) How do I determine what my monthly expenses are?
If you’re interested in seeing how much you make before taxes, this question is tough to answer. According to 2011 data from the BLS, the average American household spent $3,817 per month on goods and services. However, since most of us don’t know what our annual incomes are (let alone our monthly expenses), it’s hard to figure out exactly how much we make per year.
6) What’s a good salary for a particular job?
The Bureau of Labor Statistics has a range of salary benchmarks for different professions and specialties. If you don’t know what your salary should be for a particular position, you may be able to find out by searching on Google or conducting an online search.
7) How much does a CEO make?
According to a 2014 survey from the AFL-CIO, the average CEO made 354 times as much as the average American worker in 2013. That’s pretty staggering.
8) How much do I make compared to others who work in my field?
Glassdoor has a summary of the current median salary as reported by its users for hundreds of professions and careers. You can compare your own salary to those listed there, as well as read about what people working in your profession/industry say they’re making.
9) How do my earnings compare to those of people in my field who are paid less?
PayScale has a comparison of the median pay for people working in many different professions. If you’re interested in seeing what you should be making, simply enter your profession or occupation into the search box, and you’ll see where your earnings stand.
10) Should I expect to see my income go up year after year?
The Bureau of Labor Statistics says that over the 25-year period between 1990 and 2015, median family income actually decreased by 7%. However, this doesn’t mean that your income will decrease. It depends on your career path and how motivated you are to make more money.
11) How much money should I save every month?
The general rule is that you should save 10% of your income every month. The reason for this is that if you have a 25-year career, you will have at least 10 years when you’re saving a lot of money and getting a high rate of return on your savings. If you save a lot when you’re young, and invest in a reputable stock market index fund, then during the time that you’re receiving social security retirement benefits, it doesn’t matter how much or little you saved. You’ll have enough to take care of yourself no matter what. You can then take your savings and invest it into a stock market index fund, and if things go well you’ll be able to retire comfortably.
12) What’s the retirement age?
The government determines this for you every year. If you want to access your employee-sponsored retirement plan, such as a 401(k), or your personal IRA account, there is a contribution limit that applies to each of these plans. For example, if you’re in a 20% marginal tax bracket and have a total income of $50,000 per year, no more than $16,500 can be contributed per year into your 401(k).
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In one of the most comprehensive studies on this topic to date, a team of researchers from Harvard and Berkeley discovered a number of things about the American economy that surprised even them including what occupations earn top dollar.
