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In a recent conversation with AXA’s head of National Accounts and Business Development, a startling (at least to me) statistic popped up that the Senior Executive seemed to revel in: Household Disposable Income in the United States is at an all-time high.

In his opinion, it was a forgone conclusion due to recent data from the likes of the Organisation for Economic Co-operation and Development (OECD), that in fact the economy is great, and that investments into the markets as well as insurance and annuities purchases would remain steady.

He went on to explain the the average household is actually doing much better than ever before and had evidence to prove this theory.

According to OECD’s “Better Life Index”, it has been concluded that Americans have on average, a “household net-adjusted disposable income per capita of $39,531 USD a year”. The problem, as stated by this AXA executive, is that the average American just isn’t saving enough for his or her retirement, let alone for their financial future. But is he right?

Are Americans earning more than ever before, and do they have more disposal income than ever before? I for one found this comment to be utterly baffling, but then again I knew I was conversing not with a person who works in the field, but a corporate aristocrat who defines “working in the field” as “having to play a round of golf at Pebble Beach in June”.

Now in order to get to the bottom of this, it would make sense to define what is actual “disposable income”. According to Investopedia, disposable income is “Personal Income minus any Personal Income Taxes”. But wouldn’t disposable income mean more than that?

Wouldn’t one who is a responsible adult also include the necessities of life like food, utilities, and shelter for themselves and their family? Wouldn’t common sense work its way into the equation at all, or is it really about twisting truths in any way possible to convince people that they are failing unless they give financial institutions such as AXA, more of their money each year?

Some would say yes, but some, like this AXA executive, would say it’s more a matter of budgeting, and that Americans should be better than that. But what is reality, and what is the truth?

According to the US Census, as of December 31, 2012 the average household income was $50,500, which if adjusted for inflation would equal $51,627 in 2015 dollars. It would seem that the total disposable income theory set forth by this AXA executive and the OECD may well be accurate then, if we are only deducting taxes.

By using the tax brackets as provided by the IRS, this household would pay about $6,836 for the year before any deductions, while if they lived in a state that had a 6% income tax, they would pay another $3,097 before any deductions, leaving them with $41,693 in disposal income, or just enough for a weekend with the fam at Disneyland.

But shouldn’t we factor in other taxes that the average American has as well? Shouldn’t the Social Security tax of 6.2% and the Medicare tax of 1.45% also be factored in?

This would drive the amount of disposable income down even further to about $37,745 which still less than what this AXA executive and the OECD believe is to be the true number, but again, we are also not factoring in any deductions, so in fact people may have more than what has been projected.

And here is where the hard truths intervene in perception versus reality: It could be perceived that Americans have plenty of cash at hand, that the U.S economy (thanks to a low tax rate) is actually doing better than expected, but once responsible adults factor in, gee, I don’t know… things you have to pay for in order to exist – it is less than ever before.

According to the Bureau of Labor Statistics 2013 Consumer Expenditures report, the expenses that the average American has totals $37,989.00, which exceeds what is left in their pocket before any deductions from what they already paid in taxes.

Please note that this $37,989.00 only includes the necessities of life, the things that the average American must have in order to live and also be compliant to the rules set forth by the U.S. government (i.e., the fact that you must now have health care, or else).

A breakdown from the Consumer Expenditure report:

  • Food – $6,602.00
  • Housing – $17,148.00
  • Transportation – $9.004.00
  • Healthcare – $3,631
  • Apparel and Services – $1,604.00
  • Total – $37,989
  • For those of you checking the data, you will notice that Cash Contributions, Personal Insurance, and Other expenditures were not included, nor were debts owed for Student Loans and Credit Cards.

    According to, there is over $1 TRILLION owed in Student Loans, while estimates that the average credit card debt owed per household is $15,661, which computes to about $331.22 in monthly charges, or another $3,974.64 a year.

    Is it any wonder that the average American is finding it harder and harder to get by? Well, not if we talk to those executives that sit in ivory towers of the biggest insurance companies like AXA. But those are the same people that would have us believe Eastasia is at war with Oceania, so take that for what it’s worth.

    What may hurt even more is the simple fact that since 1967, when we adjust for inflation, the average household income for Americans has not really increased at all.

    A breakdown of the average household income per year when adjusted for inflation using the U.S. Department of Labor Inflation Calculator:

    Income adjusted for inflation

    The average American household is clearly underwater before those in it can even start saving for retirement or buying those wonderful products that the Big Insurance Companies offer.

    But are the Big Insurance Companies, like AXA or at least this executive really trying to help them anyways?

    Apparently whoever said that the backbone of our country is a strong middle-class never worked as the “Head of National Accounts and Business Development”for a large insurance company as it should be apparent that the middle-class is being squeezed and is in more trouble than ever before.

    There is a lot of rhetoric when it comes to there being a “war on” certain segments of our society, but it should now be obvious that at least this executive and most likely AXA have waged a war consisting of misinformation on the middle-class in order to shame them as a way to get more of their money.