Americans’ incomes rose for the first time in eight years, according to a new report from the U.S. Census Bureau. Specifically, real (inflation-adjusted) median household income jumped by 5.2 percent to $56,516 in 2015, the first annual increase since 2007. The gains were broad last year as well, with incomes rising for basically every demographic group expect for individuals living outside of metropolitan areas. Adults ages 35 to 44, particularly female householders, experienced the largest boost to their incomes in 2015, and if you are under the age of 60, 2015 was (statistically) the best year for real median wage growth in your career.
As encouraging as this latest report is, there remains a lot of room left for improvement. For example, median household income in 2015 was still 1.6 percent lower than the median in 2007, the year before the most recent recession got fully underway, and 2.4 percent lower than the median household income peak that occurred in 1999. Further, it is worth remembering that these are just statistics, and therefore do not perfectly describe the unique experience of every individual. In fact, many Americans’ perceptions of the recovery are nowhere near as positive as what the Census Bureau’s data would suggest. General economic confidence, for instance, actually trended lower throughout 2015, according to Gallup, and has struggled to rebound this year.
Another new report from Gallup found that many surveyed U.S. workers remain worried about the possibility of job-related setbacks, e.g. benefits cuts (30%), lower wages (20%), being laid off (19%), and a reduction in hours (17%). Such concerns are well below the extremes seen during the “Great Recession” but still somewhat elevated compared to pre-crisis levels. It also appears that any near-term gains in median income have not yet translated into a significant improvement in Americans’ long-term financial outlook because a recent poll conducted by Fifth Third Private Bank found that nearly half of surveyed U.S. adults reported “serious concerns that they may outlive their money in retirement.”
Forty-three percent of respondents also said that they feel like managing their finances has gotten “more complex” over the past half a decade, and just one in 4 reported that they are currently more optimistic about their financial future than they were a year ago. Similarly, a new survey by Bankrate found that 70 percent of pre-retirees plan to work as long as possible in old age. A quarter of these respondents said that delaying their true retirement will be solely because they anticipate needing additional money to shore up their nest egg, something which we learned last month is often not an ideal situation to be in.
Sources: U.S. Census Bureau, WSJ, Reuters, Twitter, Gallup, Fifth Third Private Bank, Bankrate