[quote=Diego Mamani][quote=AN]What surprises me even more is the $3662 median net worth. I have more money than that saved working during the summer in HS.[/quote] Not surprising at all. Some people have huge debts, and therefore have negative net worth. The $3.6K is only the midpoint: 50% of the people in that age group have higher net worth, and 50% have lower.[/quote]

Exactly, and a “kid” who “works during the summer in HS” usually does not have any living expenses as they are still living with mom and/or dad. So they can save everything they make, if they wish 🙂

[quote=AN]In 1984, the life expectancy is 71 for white men vs 75 today. How much does pension pay per year and what was the retirement age? People are living longer and longer every year.

http://www.infoplease.com/ipa/A0005148.html

You’re right, $120k with pension is > than $170k w/out pension. However, what’s the ratio of people retiring with pension in 1984 vs today? I tried to find this data but can’t find anything. There are people today who retire with pension. It’s not like it’s completely disappear.[/quote]
Here’s what I was able to find:

By 1974, nearly 31 million workers were covered by private pensions, with 27 million enrolled in defined benefit plans.2 Private retirement plans had become the major source of income for many retired workers.

http://www.bls.gov/opub/cwc/cm20050325ar01p1.htm

Another source of data shows the trend away from defined benefit (pension) plans to defined contribution plans.
http://www.dol.gov/ebsa/pdf/historicaltables.pdf
1984: 168k pension plans in force. Or 28% of retirement plans were DB.
2008: 48k pension plans in force. Or 6% of retirement plans were defined benefit.
(page 5 of the link)
Looking at page 9 of the link. In 1984, 55% of people with DC (defined contribution) or DB (defined benefit plans were in DB plans.
In 2008 it was 33% DB for those with DB or DC plans.

There’s a lot more data in the dol.gov link… it’s going to take me some time to absorb it. Lots of pretty charts, too.

[quote=AN]I understand what net worth and median mean. But, I’m still surprised that many people are spending more than they make.[/quote] I see your point, AN. People should save more, but so many are buried by credit card debt and student loans… and this is by choice, I might add. If people didn’t throw their money away on silly gadgets and consumer items, they’d have a far better financial situation.

The latest TIME magazine issue has a sob story about how we’ve become a less socially mobile society. As an example, they give the case of a 24-year old schoolteacher who earns $24K a year, but has over $35K in student loans, and is therefore “forced” to live with her parents to make ends meet.

Teaching is a noble profession, but it shouldn’t be done at the expense of your financial wellbeing. In this particular case, incurring debt to pursue a teacher’s degree was a lousy investment. Had she been smarter about it, she would have gone to state college in her hometown, stayed with her parents (to save on room and board), and pursued a degree in business.

She could have zero debt, income in the $50K+ range (or substantially more), and savings. But she chose not to.

Let’s keep in mind in this thread the difference between stocks and flows. Your net worth is a stock concept–assets minus liabilities at a certain point in time. Your personal balance sheet. It is one measure of well-being. Another is measured by two flows over a period of time, such as a year or a month. Income minus expenses = saving (which can also be negative–dissaving). A year’s worth of saving is added to your net worth (or subtracted in the event of dissaving).
During the housing bubble years, many people’s net worth was ballooning because of the increase in their house value. If they extracted this gain via HELOCs, their spending went up accordingly, giving them the illusion they were doing well and could afford to ratchet up their spending. New consumption habits were hard to curb when the values stopped going up, making the return to spending no more than one’s income extra difficult. All this is well known to long-time Piggs.
What’s made this housing decline have such a negative impact on the economy is the subsequent decline in housing values, decimating the homeowner’s net worth. They correctly feel poorer and must cut back more than normal on their expenses to build back their balance sheet. That largely explain the economy’s lingering weakness–housing values must stop falling for a real recovery to take hold.

That there is a disparity between the accumulated wealth of the young and the older is not surprising, is it? Isn’t it kind of common sense?

Nor is this “issue” new. Here is what The Who had to say about it in 1969:

You know in the old days
When a young man was a strong man
All the people they’d step back
When a young man walked by

But you know nowadays
It’s the old man,
He’s got all the money
And a young man ain’t got nothin’ in the world these days