The Money Scorecard: How Do You Rate?

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Ed Koch in New York 1980'sBy RICHARD EISENBERG

When Ed Koch was mayor of New York City, he loved to ask passers-by: "How'm I doing?!" We all want to know the answer to that question in our lives, too.

That's why Next Avenue is launching the series: "Next Avenue Scorecard: How Do You Rate?" We're starting with my area: Money.

Below you'll find the latest statistics for how Americans in their 40s, 50s and 60s are faring, on average, based on: net worth, income, savings and investments, and debt -- along with my two cents after each.

The good news I can report: According to a spanking new Fidelity Investments survey on retirement savings, individuals in their 40s, 50s and 60s are saving more for retirement these days than other age groups.

"We're seeing many midcareer investors taking advantage of catch-up contributions [extra money people 50 and older are allowed to put into retirement plans], which is encouraging because this can have a significant impact on reaching savings goals," says Ken Hevert, vice president of retirement products for Fidelity Investments.

On to the Next Avenue Money Scorecard:

NET WORTH

Median family net worth

Age 45 to 54: $117,900
Age 55 to 64: $179,400
Age 65 to 74: $206,700

(Source: Federal Reserve Survey of Consumer Finances, 2012)

My two cents I think net worth -- what you get when you subtract your household's debt from its assets -- is a somewhat meaningless number, since yours could look puny if you have a sizable mortgage, despite your savings. You can compare your net worth versus others with your income using the CNNMoney.com Net Worth: How Do You Stack Up? calculator.


INCOME

Median household income

Age 45 to 54: $63,861
Age 55 to 64: $55,937
Age 65 and older: $33,118

(Source: U.S. Census Bureau Current Population Survey, 2011)

My two cents As you can see, household income generally shrinks once you hit your mid 50s and plummets after 65 (many in that age group are retired). A clever calculator on the Payscale.com site lets you see how your salary compares with others in your field with your experience; you can also get a free customized salary report with career path predictions for your job and names of companies who hire people like you.

SAVINGS AND INVESTMENTS

Total savings/investments, workers age 45 to 54

Less than $10,000: 46%
$10,000 to $99,999: 26%
$100,000 to $249,999: 12%
$250,00 or more: 17%

Total savings/investments, workers age 55 +
Less than $10,000: 31%
$10,000 to $99,999: 29%
$100,000 to $249,999: 18%
$250,000 or more: 22%

Percentage of workers currently saving for retirement
Age 45 to 54: 57%
Age 55+: 66%

(Source: 2012 Retirement Confidence Survey, Employee Benefit Research Institute and Mathew Greenwald & Associates)

Percentage of families owning retirement accounts
Age 45 to 54: 60%
Age 55 to 64: 60%
Age 65 to 74: 49%

(Source: Federal Reserve Survey of Consumer Finances, 2012)

Average total contribution of workplace savings plan and IRA in 2012
Age 45 to 49: $11,077
Age 50 to 54: $12,880
Age 55 to 59: $13,360
Age 60 to 64: $12,867
Age 65 to 69: $12,505

(Source: Fidelity Investments 2013 survey of 999,000 individuals with IRA and 401(k) or 403(b) balances at Fidelity)

Percentage of households owning mutual funds
Age 45 to 54: 24%
Age 55 to 64: 21%
Age 65 or older: 18%

(Source: Investment Company Institute Characteristics of Mutual Fund Investors, 2012)

Percentage of families owning stocks (directly or in mutual funds/retirement accounts)
Age 45 to 54: 58%
Age 55 to 64: 60%
Age 65 to 74: 46%

Percentage of families owning bonds
Age 45 to 54: 1%
Age 55 to 64: 2%
Age 65 to 74: 3%

(Source: Federal Reserve Survey of Consumer Finances, 2012)

My two cents I'd be a cautious about taking too literally the dollar figures in the savings tables, because they're based on survey data rather than the entire U.S. population. Still, they'll give you a sense of whether you should pat yourself on the back, go into manic saving mode or something in between.
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For retirement saving guidance, Chris Farrell's Next Avenue article, "Money Rules of Thumb You Need to Follow (and Ignore!)" is recommended reading.

If you're in your 40s, 50s or mid-60s and don't have a retirement account, you're not only in the minority, you're endangering your financial future. Once you have an emergency savings fund, please either contribute to your employer's retirement fund or open an IRA.

There's still time to fund a 2012 IRA if you had earned income last year. The Next Avenue article, "Last Call to Get Your 2012 IRA," has the details.

DEBT

Percentage of families with mortgages on primary residences

Age 45 to 54: 60%
Age 55 to 64: 54%
Age 65 to 74: 41%

Median value of mortgages on primary residences
Age 45 to 54: $114,000
Age 55 to 64: $97,000
Age 65 to 74: $70,000

Percentage of families with installment loans
Age 45 to 54: 50%
Age 55 to 64: 41%
Age 65 to 74: 30%

Median value of installment loans
Age 45 to 54: $12,000
Age 55 to 64: $11,300
Age 65 to 74: $10,000

Percentage of families with credit card balances
Age 45 to 54: 46%
Age 55 to 64: 41%
Age 65 to 74: 32%

Median value of credit card balances
Age 45 to 54: $3,500
Age 55 to 64: $2,800
Age 65 to 74: $2,200

Percentage of families with debt payments past due 60 days or more
Age 45 to 54: 13%
Age 55 to 64: 8%
Age 65 to 74: 6%

(Source: Federal Reserve Survey of Consumer Finances, 2012)

My two cents I'm encouraged to see that Americans' debt loads drop as retirement nears. Making loan and credit card payments when you don't have a full-time income can be a bear.

That said, a full 41 percent of people 65 to 74 are still carrying a mortgage and those with installment loans (car loans, student loans and the like) owe $10,000, on average, which is pretty steep.

If you can pay off your home before retirement begins, do it. (As Forbes recently noted, Bankrate.com has a handy amortization calculator that can help you time your mortgage payoff to your retirement date.)

I bet that getting out of debt will make you a whole lot cheerier the next time you ask yourself, "How'm I doing?"

Photo Credit: Pat Carroll/NY Daily News Archive via Getty Images


14 PHOTOS
How A Family Of Four Manages To Live Well On Just $14,000 Per Year
See Gallery
The Money Scorecard: How Do You Rate?

"My husband told me he'd heard about this book, ["America's Cheapest Family Gets You Right on the Money]," she said. "We talked about it over the phone and I read it and thought how it could apply to us."

The couple had a single savings goal in mind –– scraping together $30,000 for a downpayment on their home in their native Henderson, Nevada.

The mindless spending was out, and Wagasky came up with a budget she could make work.
"I changed the way I was grocery shopping and started working my way up, " she said.

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Wagasky barely knew her way around a kitchen when she started her money makeover.

Now she's an avid cookbook collector (she checks them out from libraries or asks for them as gifts to save), and it's one of the simplest ways she's managed to cutback on spending.

With a $7 bread-maker she scored at a local thrift shop, she never spends on store bought slices. She's not shy about professing her love for wholesale stores like Costco, which is her go-to source for baking ingredients.

Above Wagasky's twist on homemade Sloppy Joe's.

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"Everything must be budgeted," Wagasky wrote in a June entry on her blog. "From family outings, to toiletries to clothes purchases. It must be budgeted."

And she takes Do-It-Yourself to the extreme. Everything from laundry soap and clothing to the kitchen her husband installed in their new home was either crafted by hand or thrifted.
She swears by this home-made laundry detergent recipe. (pictured above)

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When it come to cutting costs, cable was as easy luxury to part ways with.

With two children aged 6 and 8 to entertain, Wagasky invests $14.99 in a Netflix plan and recently added Hulu to the mix.

The family also uses a simple antennae to pick up basic cable channels.

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With a single source of fixed income, there's no room for impulse purchases in the Wagasky household.

They budget $400 for groceries each month and that's it.

"Once that $400 is gone, it is gone," she writes. "There are no extra shopping trips made because there is no more money."

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Wagasky said they have no credit debt, but they do charge emergency expenses on plastic when absolutely necessary.

"We recently had some medical bills we had to pay, and we were able to take our savings and pay those down as fast as we could," she said.

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With gas prices creeping higher each all the time, the Wagaskys watch their mileage like hawks.

That means combining errands together and doing all they can to make one take of gas last a month.

"We know we don't get to drive and visit family often, so when we do we cherish it," she wrote in a blog entry.

"We don't go just for an hour, we stay and visit and even run errands that may be close to where we have family. We try to remember that when the gas is gone...it is gone."

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After Wagasky's husband left active duty and started school, the couple knew they would only have $14,000 per year to live on.

So they paid off the $8,000 he owed on his truck while he was earning more and they could afford the expense.

They also bought a van, which they saved $10,000 for initially and were able to pay the remaining $12,000 owed within a year.

Having zero car payments is a nice relief.

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Like anyone with simple math skills, Wagasky was quick to realize how much cash she was wasting on prepackaged snacks for her children.

She cut them out completely and whips up homemade granola bars and trail mix instead.

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If you're on a tight food budget, your freezer will become your best friend.

Wagasky chops vegetables and fruits and freezes them for a month. She actually does the same for dairy products like cheese, butter and yogurt.

"I am able to freeze about 8 gallons of milk each month," she writes. "They sit at the bottom of my freezer and we thaw them out when we need them." Baked goods get the same chilly treatment.

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Wagasky was dubious about joining a food co-op, but after three months, she realized she would never beat the savings or quality she found.

Food co-ops pool membership fees together in order to fund a monthly harvest that's distributed at designated pick-up points.

A couple of times per month, Wagasky gets a basketful of in-season produce for $15 –– way better bargain than she'd ever find in stores.

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By the time Wagasky's husband came home from Iraq, they had managed to scrape together the $30,000 they needed for a downpayment on a home.

"But we decided the best option would be not to have a mortgage payment at all," she said. "We found a fixer-upper that didn't have a kitchen ... and we paid cash."

Price tag: $28,000. With the leftover cash, they were able to finish the kitchen and install wood flooring throughout the house.

By Business Insider

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