Alex, who works in midtown Manhattan, cries to his friends every day, complaining that his income is low and his life is difficult. He graduated from college only two years ago, and his annual salary is relatively low, but he also has $1,, far exceeding the income of ordinary American families and the average income of workers who graduated from new york for two years. According to a report by the US Bureau of Statistics last September, the median household income in the United States was $55,775 in 215. Alex, a bachelor who has been working for two years, earns almost twice the median family income, which is definitely not a low income.
but why does he cry poor?
for more than 1 years, the United States ranked first in the world's GDP, and has always been known for its deep pockets and lavish spending. Why do you still feel poor with an annual salary of $1,?
Disposable income leads the world
Trump once criticized that American taxes are too heavy to hinder economic development when promoting tax law reform. In fact, American personal income tax is not high in developed countries. Americans' disposable income after tax deduction is still ahead in the world. According to the research report of OECD (Organization for Economic Cooperation and Development), the average disposable income of American families is 41,71 dollars, ranking first among 38 OECD countries, far exceeding the average level of 29,16 dollars in OECD countries. Among OECD member countries, except the United States, most countries with high average household disposable income are small countries with small population and rich per capita resources, such as Luxembourg, Switzerland and Norway. The average household disposable income of Germany and Japan, which have huge overall economies, is only $31,925 and $27,323, respectively, which is significantly lower than that of the United States.
Americans not only have high incomes, but also have high family assets, with the average family financial assets excluding real estate reaching US$ 163,268, ranking first among OECD countries. In Germany, the average household financial assets are only $49,822, while the Japanese can save more, and the average household financial assets are only $92,818.
Alex is single and has not bought a house. There are not many items that can be deducted from the tax. The progressive maximum tax rate is 25%. In general, the federal income tax is almost $18,. Together with the social security tax of $6,2 and the Medicare insurance tax of $1,5, the total * * * will be paid to the federal government of $25,7. Among them, paying social security tax will enable Alex to get more than $2, a month in supplemental security income after retirement, which is equivalent to the compulsory retirement savings of the government. The medical insurance tax is similar in nature, which allows Alex to have free old-age medical insurance provided by the government after retirement.
Alex lives in new york, so he has to pay about $5,6 in state taxes to New York. New york also collects city tax, and he has to pay another $3,. In total, Alex paid nearly $35, in income tax. Although it is not small, he still has nearly $65, in disposable income. He should not feel that he is poor. However, Alex's money comes and goes quickly.
It's easy to spend money
In theory, Alex has a disposable income of $5,4 a month, but he loses more than half of it every month. Alex claimed to be very economical in finding a roommate to share a two-bedroom apartment in midtown Manhattan, which is equivalent to the inner ring or downtown of Shanghai. The apartment is not too far from his office building, and the rent is $5,5 per month, which Alex and his roommate share equally, so more than half of the monthly disposable income is gone.
In addition, Alex borrowed some student loans when he was in college. According to American standards, Alex's parents have been very generous, and they have paid for Alex's annual tuition of $5, at new york University. After four years of college, his parents gave him $2, for tuition. However, his parents did not bear his living expenses during school. Alex kept working at school and finally owed the bank a student loan of 5 thousand dollars when he graduated. Fortunately, the interest rate has been relatively low in recent years, and the student loans can be paid off in 1 years or even longer, as long as it is more than 5 dollars per month.
"I am lucky in this respect, and I am grateful to my parents for helping me pay my tuition. Many of my classmates rely entirely on student loans. " Alex said.
Holly, a senior American financial planning expert consulted by the author, also proved this point. She said that Americans have the concept of spending ahead of time. When a child goes to college at the age of 18, he pays the tuition, and he has the rest of his life to pay it back. However, if parents do not save their retirement pension to pay the tuition for their children, it will have a greater impact on their retirement life. When choosing between the two, parents will naturally take care of their pensions first. Holly said: "If you want to take care of your pension and your child's college tuition, most Americans don't have the financial strength."
in addition, Alex has to pay part of his own medical insurance. Although the company provides most of the cost of medical insurance, he still has to pay 15 dollars a month. If you go to see a doctor, Alex will have to pay the first 5 dollars of medical expenses every year before the insurance company starts to pay any fees.
"I began to miss the years before my parents retired. According to the Obamacare Law (ACA), although I am an adult, I can still be affiliated with my parents' medical insurance as a family member, and I don't need to buy my own medical insurance." Alex said.
in Alex's view, in the past few years, the premium has been rising year by year, while the proportion of insurance burden is getting lower and lower, and the deductible is getting higher and higher. Fortunately, he hasn't got a family and children, otherwise the monthly medical insurance expenses that he needs to be responsible for will go straight to $8.
The three fixed expenses of rent, student loan and medical insurance have already spent $3,4 on Alex's disposable income of $5,4 per month. On average, the remaining $2, is only $67 a day, which will be used for three meals a day, transportation, communication and shopping.
according to the data of the bureau of economic analysis (BEA), in 216, the overall personal consumption in the United States was $12.76 trillion, of which the largest was $8.66 trillion in service industry consumption. In the service industry, housing and medical care are the two biggest consumption. Americans spend $2.3 trillion a year on housing and $2.2 trillion on medical care, far exceeding the $1.4 trillion spent on durable consumer goods including cars.
Because the United States has 13 years of free compulsory education from kindergarten to high school, the expenditure on education is not high compared with medical care and housing. According to the U.S. Department of Education, Americans spent $517 billion on education after high school last year. Although this expenditure is not much compared with medical care and housing, it is essential for those who want to find white-collar jobs and enter the middle class. Most American parents don't think they have the obligation to pay the college tuition for their adult children. Because Alex's younger brother didn't meet his parents' expectations and didn't apply to a good university, he didn't get the treatment of tuition sponsored by his parents like Alex, so he had to rely on himself. Alex can't imagine how his brother will live under the pressure of repaying the loan after graduation.
Expenditure goes up and wages don't move
According to the Federal Reserve, the balance of student loans in the United States reached 1.44 trillion US dollars in the first quarter of 217. Ten years ago, the balance of student loans was only $544 billion, which almost tripled in 1 years. Of course, the increase in student loans is not only caused by the increase in tuition fees, but it is indeed a fact that college tuition fees have increased at a rate exceeding inflation. According to the statistics of the non-governmental organization College Board, the tuition fees of American universities have increased by about 5% every year in the past 1 years, while the inflation rate in the same period averaged 2% every year. Moreover, the tuition fees of public universities with relatively cheap tuition fees have increased even more because of government funding cuts and other reasons. According to the statistics of the Ministry of Education, the tuition fees of public universities have increased by 6.5% annually in the past 1 years.
There may be many differences between different cities in terms of house prices and rents, but the big cities on the east and west coasts, such as new york and San Francisco, are constantly rising. According to the research report of Douglas Elliman, a real estate agency in new york, the house price in new york reached its peak before the financial crisis in 26 after a round of rapid rise. In the ten years after the financial crisis, the house price in new york declined except for luxury houses with more than four rooms because of high unit price and more construction. The unit price of houses with less than three rooms has exceeded 1% of the price in 26 before the financial crisis.
The medical expenses in the United States are also rising. After the implementation of Obamacare, insurance companies claimed that premiums generally rose because they had to comply with laws and regulations and provide insurance at the same price for people who were already sick. In the past, if only one employee was insured, the company usually paid all the premiums, and employees did not need to share them. Now the company has begun to require employees to pay part of the premiums themselves.
Although tuition, rent and medical expenses are not necessary expenses for all Americans, for the middle class, going to college is a necessary investment. With decent jobs, they cannot apply for welfare housing and free medical care provided by the government. Therefore, these three kinds of expenses are really rigid expenses for the middle class. The rapid rise of rigid expenditure will naturally become a huge financial pressure.
after all, according to the research report of OECD, the disposable income of American families has only increased by .1% in the past 1 years, with little growth.
poor financial management
in fact, if Alex thinks that his income will not increase significantly, he may re-examine his expenses and make sure that he lives within his means. However, he has the characteristics of American optimism and self-confidence, thinking that his income will continue to rise and all difficulties will be solved. Of all Alex's expenses, there is no 41k savings for future retirement (note: enterprise annuity). This practice is common among young people in the United States, but it is a red light for economic experts.
"Most Americans have inadequate pension plans to support them to maintain their pre-retirement living standards." Nick Gillenas, a senior analyst at the Manhattan think tank in new york, said.
Americans not only have to pay social security tax and medical insurance tax for their retirement life at work, but also can voluntarily put money into retirement savings account 41k for investment. In addition to using social security tax and medical insurance tax to force Americans to make the most basic living savings after retirement, the government also provides tax incentives to allow individuals to deposit money into retirement savings account 41k tax-free every year. 41k is the number of the relevant law in the tax law, and the amount of tax-free savings is $18, a year, which is $1,5 a month. In order to encourage employees to save, the company will also introduce incentives. If employees save money in retirement accounts, the company will also deposit no more than $4, in employee accounts.
Alex thinks it's still early to retire anyway, and after deducting the rent, loan repayment and medical insurance, he only has $2, a month, and he can't save $1,5 to $ 41k anyway. It's better to wait until he gets a raise. According to the statistics of Fidelity, an American fund company, the average American retirement savings account is less than $1,, which is equivalent to more than five years of tax-free deposit.
Alex believes that young white-collar workers should have a certain standard of living and can't leave the circle of their friends, so they would rather not save their pension than move to a place where the rent is relatively cheap. From time to time, he goes to the bar to have two drinks with friends after work, with an average of about $1 per drink. Although he also knows that the bar price of the same thing is several times higher than that of the supermarket.
"when will we save money? It is when we are uncertain, the more uncertain the future, the more money we need to save. But Americans are very optimistic. And this society has always been ahead of consumption. Car, house and college tuition can be borrowed. The idea is that I can enjoy it now. As long as I can pay 2%, I can borrow the remaining 8%. I don't have to lock all my cash in one place. " Holly said.
Alex's lifestyle is a microcosm of Americans. While complaining that they have no money, they would rather not save money than live a natural life.
Holly said that in the United States, money can be greatly enjoyed, but life without money is decent enough. For the middle class, if they have no money when they get old, they can live in government-sponsored apartments for the elderly, and all the facilities in the apartments meet the standards set by the government. Of course, there are also senior apartments for the elderly in the United States that cost $3 to $5 a day, but for the middle class, that's a no-brainer.