The typical U.S. family earns about $71,000 per year, according to the Census. Yet, the average American believes a family needs at least $85,000 in annual household income to get by, according to a recent Gallup poll.
“We’re just coming out of this really unusual time when we had pandemic scarcity, we had loss of work. And I think it’s sort of distorted perceptions about the cost of living,” said Peter C. Earle, an economist at the American Institute for Economic Research. “Lockdowns were a sort of existential experience for a lot of people.”
Lower-income families, earning less than $40,000 per year, told Gallup pollsters a household needs $66,310 a year to get by, on average. Upper-income households, earning $100,000 or more, said nothing short of $100,000 would suffice.living paycheck-to-paycheckTen years ago, in an earlier Gallup poll, the average American believed a household could get by on $58,000 a year. That number exceeded the median household income at the time, $52,250.
A lot has changed in a decade. In 2023 America, the average family might reasonably expect the price of groceries and gas to climb by 5 percent or 10 percent per year into perpetuity. The average homeowner might assumein the 5-percent to 7-percent range for the foreseeable future, after a decade of historically low rates.
Salaries haven’t kept pace with inflation. Rising interest rates have pushed up housing costs. The SmartAsset report found that the average income to maintain a “comfortable lifestyle” rose by 20 percent between 2022 and 2023, from $57,013 to $68,499 in take-home pay, in the 25 largest metro areas., assumes the average family will allocate half of its after-tax income to basic living expenses, 30 percent to discretionary spending and 20 percent to savings and debts.
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