How much does the average American family earn in 2020? Why household income figures are going to get shattered because of Covid-19 and 65 million Americans on Social Security

• Posted by mybudget360 

The typical American family was already having a tough time prior to Covid-19 and many were living paycheck to paycheck. Surveys conducted prior to Covid-19 showed that 1 out of 3 Americans were not able to sustain an emergency expense of $1,000. As many of you know, even a small illness would shatter this amount. This was before the global pandemic and now, we have over 36 million Americans that are unemployed or collecting unemployment insurance. That is a problem but we now have compounding issues hitting all at once. Do you know that we now have 65 million Americans receiving Social Security benefits? That is roughly 20% of the entire living population in the US, including babies and kids (they clearly don’t pay taxes). While we hear the horror stories, how much does the typical family earn in 2020? Let us dig into the data.

Median household Income 2020

Household income figures are hard to nail down. They usually lag the market by a year and don’t reflect sudden changes. Covid-19 has been the swiftest change to our economy in modern history so we won’t have clearer figures until late 2020 and 2021.

So let us take a look at household income figures first:

The median household income in the US is $63,179. Keep in mind this is 2019 data when the overall economy was doing much better. How does this break down on a monthly basis?

I ran these numbers for a married couple with two children. Take home monthly pay amounts to $4,468 after taxes. Let us see how far this money goes with some of the larger expenses people have:

Monthly housing payment:         $2,000

Groceries:                                       $1,000

Car payments:                               $500

Gas:                                                  $200

Utilities:                                           $300 ($100 electricity, $70 Gas, $50 water, $80 cable)

Health care:                                    $400

Total:                                               $4,400

So what about cell phones? What about saving for retirement? What about putting money away for college when some universities charge $50,000 a year in tuition right now? And I want to emphasize this is before Covid-19 hit. The typical household income has been hit extremely hard with this crisis.

Social Security

We also have 65 million Americans depending on Social Security:

This is a very high number. What was startling from some reports is that half of those receiving Social Security rely on it as their only source of income. So what happens if unexpected expenses come up? The typical payout for a beneficiary is $1,503 per month. That does not go far.

We also need to realize that Social Security funds are paid by actual working people. With 30 million Americans unemployed or on unemployment insurance, the system is being taxed very heavily.

Key takeaway? The economy needs to bounce back quickly or we face some incredibly deep structural deficits and while the Fed is digitally printing money, we do face serious challenges to our financial system beyond what we are dealing with now. There is an extended unemployment insurance payout that ends next month. There were structural issues that we are going to face and it appears we are going to need to juggle multiple things at once.   

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