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Average Net Worth of an American Family

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Do you know what the average net worth is in the United States?

Every three years the Federal Reserve Board does a survey of consumer finances, which looks at a wealth of financial information, including income and net worth. They even have statistics of the percentage of people who use the Internet to find financial data broken down by the age of the head of household (did you know that in 2007, 16.5% of families with the head of household above 75 years of age used the internet?)

Well, that’s where I turned to find out the average net worth of an American family.

FRB Net Worth Data

The Federal Reserve Board slices and dices the net worth data better than the CNN Net Worth calculator, which I’ll talk about next. They discuss it as a value of income and age (of the head of household), but they also do it based on family structure, education of the head, race, work status of head, occupation of head, region, urbanicity, housing status, etc.

Across all groups, the 2007 median net worth was $120,300 and the mean was $556,300 (guys like Bill Gates and Warren Buffett really mess things up).

Here are a few of the more interesting ones (2007 median data, 2007 dollars):
Current work status of head:

  • Working for someone else: $350,100
  • Self-employed: $1,961,300
  • Retired: $543,100
  • Other not working: $124,100

Race or ethnicity of respondent:

  • White non-Hispanic: $692,200
  • Nonwhite or Hispanic: $228,500

Housing status:

  • Owner: $778,200
  • Renter or other: $70,600

How can you use this? It’s important to remember that you can’t make broad conclusions based on this data. Owning a home can help you get a higher net worth, but it doesn’t guarantee one. On the flip side, renting doesn’t mean you’ll always have a lower net worth. The same is true for your race or ethnicity and your work status (though I would imagine “other not working” will likely have an impact in improving your net worth).

The FRB has packaged up their data into a nice 56-page document called Changes in U.S. Family Finances from 2004 to 2007: Evidence from the Survey of Consumer Finances. (25.2% of people without checking accounts gave this reason for not having one: “Do not like dealing with banks.”)

CNN Net Worth Calculator (Age, Income)

The easiest way to see how you stack up is by using CNN Money’s Net Worth calculator. I don’t know how fresh the data is, they only cite Nielsen Claritas as their source (with no date), but it’s good enough for our entertainment purposes. They offer two median net worth charts, one based on your income and one based on your age (the two charts are independent).

Age:

  • < 25: $1,475
  • 25 – 34: $8,525
  • 35 – 44: $51,575
  • 45 – 54: $98,350
  • 55 – 64: $180,125
  • 65+: $232,000

Income:

  • < $25K: $1,250
  • $25K – $49K: $34,375
  • $50K – $74K: $168,500
  • $75K – $99K: $301,475
  • $100K – $124K: $301,475
  • $125K – $149K: $644,100
  • $150K+: $1,122,900

How can you use this? It’s tough, which is why I don’t spend too much time with these things. It’s good to know where you stand based on your age and income but it doesn’t give you a good path forward. It would be more useful to know how the net worth was distributed between the different asset classes. For example, if you’re 45 with $125,000 of income, where are your assets? Do you have a home in which you have $100,000 in equity and a stock/retirement portfolio with another $250,000? Are you the $644,100 net worth person (based on income) or the $98,350 (based on age), and where is that net worth?

This is like knowing your credit score relative to the national average of credit scores, without a path forward the information is useful only for entertainment.

Average Net Worth Dropped 23%

Did you know that between the fall in the stock market and the housing market, the average American net worth fell 23% in the last year? It was reported in February in an AP story published on CBS News and while there has been a bit of a market recovery, it’s stunning to think a quarter of all assets held by Americans were wiped off the accounting books. The median net worth fell 17.8%.

How can you use this? Knowing the average went down 23% can really help you psychologically. If you saw your net worth fall by 10%, knowing nothing else, you’d probably be devastated (I know I would). It’s like seeing your retirement account fall 40% last year, it’s very painful. However, knowing that your net worth fell 10% when the rest of America, on average, fell 23%, means you’re better off than most. It means while you may have lost some, you dodged the bullet somewhat because you didn’t fall as much as the average.

Average Net Worth of Congress

A study by the nonpartisan Center for Responsive Politics revealed that the median net worth of the incoming members of Congress is about $1.8 million, compared to the median net worth of the re-elected incumbents, which was $815,000. An executive director then says Congress “remains short on lawmakers who can personally relate to what the average American is going through financially,” which I think is an unreasonable statement when you consider $815,000 – $1.8M is not a ridiculous sum for someone who has worked as a professional and been prudent with their money for thirty or forty years. I’m not saying they’re pinching pennies or in the poorhouse, but to say they can’t personally relate is a bit inflammatory.

I’m always hesitant to put too much stock in “average” or “median” values for anything (I think net worth by age is meaningless), whether it’s net worth or average credit scores, but it’s always good to know where you stand relative to everyone else.

So, how do you stack up? :)

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100 Responses to “Average Net Worth of an American Family”

  1. John says:

    The Prodigious Accumulator of Wealth (PAW) calcuator is flawed as it implies you start with a certain amount of savings. If you were 20 and entered you salary there is no way you would have that much in net worth.

    A better indication is that on average you should be adding 28% of your annual salary to your net worth. Your net worth should be at least 28% of your cumulative salaries since you started working.

  2. DC says:

    My net worth at 48 is ~1.0 Million excluding my debt-free paid off home (It is probably worth ~200K). Worked since I was 14 years old, finished high school, paid my way through some college (some debt) before joining the service for 6 years in the mid-late 80’s, finished college while in the service, debt free, got a technical job and worked overtime whenever offered. Worked my tail off my whole life so far. Probably lost upwards of 600K in the 2 recessions being the dot-com bust and the “Great Recession” of the last 3 years. Married a long time, >25 years w/2 kids and still act and think the same as when I was a teenager. No one has or is going to give me anything. I had to earn all of it. Proud? No, just know the reality of life. Taught by Great Depression mentality of my Father. Always am talking to my kids. They seem sensible about things such as this. Hope they remember these conversations we have. People need more than they think by these charts. By 55 I hope to “retire” to another location, still work if I have to but probably will even if I don’t, part time if nothing, just to be active. I figure that a person with a paid off home, can hope to “retire” at about 55-60 years old if they have about 750K-1M stashed. Medical I assume is covered at that time by employer (if you are lucky) to take you to 67 for Medicare. I figure a minimum amount needed monthly is about $3,200-$3,500 to live in the paid off home and be comfortable. This will cover all taxes, insurance, food, utilities, clothing, auto repairs, little bit of travel but not much, and other sundries. NO EXTRAVAGANCES. Anything able to be gotten above that is gravy. Once you hit 62, Social Security can kick in and help out, and the outlay from the 750K-1M initial can start to be built back up from prior withdrawals, hopefully to the point that it becomes self sustaining with positive cash flows into instead of out. Wish all well and hope those that need to save start doing so as soon as they are back on their feet from this terrible economic situation we are in now.

  3. Amy says:

    Net worth is meaning less. What if I have a large net worth but no medical insurance of retirement? NYS workers who have a retirement income and health benefits have it made.

  4. David says:

    The combine the National Debt (the debt held by US bond holders) and unfunded liabilities (Social Security, Medicare, Medicaid) to name the big ones. The federal government could confiscate the total assets of very American citizen and still not have enough to pay it all off. And that does even include the individual State’s debts.

    Approx U.S debt 13 trillion (Bond holders)
    Low ball approx. unfunded debt 76 Trillion
    total round 90 trillion

    Approx. Net worth of Americans less than 70 Trillion

    After they confiscate all our stuff and investments they’ll have to sell Alaska and Hawaii to the highest bidder to break even. The Sarah and Obama were born. Well who knows where Obama born(and who cares)

    Well at least then we’ll all the equally poor.

  5. Scott says:

    It would take a real stupid congressman not to exceed the average American family when youconsider they vote themselves a pay increase. I wish I could go into my employewrs ofice and adviser them a pay incease has been approved. Congress and obama work for us as public servints.

    I feel the real keys to becoming a self made millionaire are

    1 Never get anything but a fixed rate 15 year mortgage when you buy the house you plan to raise to raise your family in. Make sure the school district is a very god onew as it wil have a direct effect on the value of your house and how well your kids do in college. Think about it – you get rid of your mortgage abnout the time college expenses start. This stabilizez your cash out flow, whereas a 30 mortgage is still on your back.

    2 Start saving all you can in a 401-k,Roth or 403B. Make sure you start in your mid to early 20s. Night clubs are not that important and neither are new boats or cars.

    3 Never get yourself in a position where you cannot pay off your credit card every month. I just finished 30 years in the banking business. YThe retail guys call those of us that zero the cards out “deadbeats”.

    Boats andcars are new for only one day. Get a demo and/or fishing boat that has a few miles on it. The dealer will often add the miles to the warrenty.

    4 Draft a five year budget and follow it. If you get off course find out why and fix it.

    • Greg says:

      I (especially) second the 15-year mortgage comments, along with the paying no credit card interest comment. We have done both since age 27 (house was purchased at age 30), and are now debt-free. Being debt-free lowers your monthly expenses quite a bit, gives us more financial flexibility in general, and therefore will allow us to retire sooner if we wish to do so.

  6. Scott says:

    Ladies and gentleman please forgive my many typeos. My daughter had her wisdom teeth this morning and it is very late. I am just too tired to edit as I am beginning to see double.

    Hope tis info helps.

    Regards to all

    Scott

  7. D says:

    Great posts everyone. The most fascinating stat is that small B-owners have the highest net worth as a group. Personally I’m starting over at 38 with 0. Have an amazing education and vocational experiences and am excited as the recovery takes root. Thanks to the poster that suggested the 5 year plan with regular review. The stats can definitly bes misleading, but conversation like this give real insight. Also; you can run 4-plexes through FHA w/ 3% down if you live in one of the units. That can be an amazing deal for the eight person in the right market, but as always do your own due diligence. Real estate agents are like wall street, they make money off the transaction and will sell you anything your dumb enough to buy!

  8. longwalksinparis.blogspot.com says:

    The top 2% of Americans own 55% of everything… total wealth of US & Canada is 35-40 trillion bucks

  9. longwalksinparis.blogspot.com says:

    That’s alot of change in the hands of a few people.

  10. longwalksinparis.blogspot.com says:

    The average American’s wealth was in their home and that’s going, going, gone. Time to recalculate what really counts in life. You’ll never beat the uber wealthy – they got the game rigged.

  11. Bandido says:

    Interesting. In one sentence you say these are meaningless statistics. And, in the next sentence you say they’re good to know. Can you tell me why it’s good to know something that’s meaningless?

  12. never says:

    People are given the message that it is difficult to amass material wealth and that their best means at such a petty end is through the likes of gambling via state and national lotteries.
    If you are of this mindset, then shape up. Otherwise, you will remain poor- a cycle that leaves you open to experimentation by the elites of the mainstream world.
    If your aim is money, technology and real estate are always your best bet. Finance and insurance, the “invisible exports”/services, are potentially more lucrative (though it leads to bankers (lenders of others’ savings/worthless paper with security fibers and watermarks)becoming extremely wealthy while leaving a mass of debtors who usually revolt and kill the rich who so unjustly impoverished them).
    Remeber:
    Stick to technology and/or well-priced/cheap real estate
    (insurance is dicey, finance is spawn of evil, stocks/commodities are easily manipulated)
    Use your own judgement in defining cheap/well-priced realestate while keeping in mind the possibility of govt. seizure (they are so entitled) the absolute worthlessness of currency, location, location, location.

    That the biggest companies aren’t publicly traded.

    Keep clear of those clubs that are supposedly for the “captains of industry” as they are mostly scams or cultist groups with the idea of either kidnapping you and stealing your money or coercing you into some sort of initiation and helping them implement plans for population reduction and human enslavement.

    Sun Microsystems and the founder are alright/normal.

  13. FlyFisher says:

    Interesting. Big variety between categories. Working for yourself and owning a home are two big indicators of high net worth.

  14. Lamar says:

    yes but working for yourself and owning a home are simply massive risk factors with lots of survivorship bias. you can’t sample those who took big risks and lost, only those who’ve won.

  15. Mark says:

    Andrew quote: “Then I’ll retire and hope I have enough. It sucks, but it’s capitalism.”
    It’s amazing how so many Americans have bought into the MSM’s demonization of Capitalism. While certainly not perfect – it’s the best economic system available for a country/society. Bottom line – it’s a system where personal income is directly related to individual hard work and ingenuity. The reason Socialism NEVER works as well as Capitalism is because there are always those who decide to cheat the “system” – reaping the benefits while providing nothing in return.
    That said – I pretty-much totally agree with Scott’s comments (and others along that line), and I’m another example of someone well north of the PAW calculation. I’m almost 50, married with 2-kids, my wife stopped working when the kids came 14 years ago – and if memory serves we only had a few years (wife was a chemical engineer) of our 25-year marriage where our combined salary was just over 100k. For the last 14-years, it’s been just my salary: from ~ mid-50s then to mid-70s now. We pretty-much began saving right after we were married (when I was 26-years-old.) I have inherited nothing.
    IMO the “secret” to building wealth is so simple – a caveman could do it. But over the past few decades, Americans have been brain-washed to believe happiness is determined by the amount of “toys” you can accumulate right NOW. The crazy part (which I have NEVER understood) is that Americans are willing to pay 3, 4, or 5-times the price of a product to have it NOW. Think about that… you buy something today and put it on your 18% credit-card. In 8-10 months – you’ve probably made payments equaling the purchase price – and still owe over 2-years of monthly payments to pay-off the debt. Why can’t people use some self-discipline and WAIT! SAVE for 8-10 months, then go out and buy the product with cash.
    So the simple answer is nothing more than… LIVE BELOW YOUR MEANS (which allows you to start saving NOW.) That’s it! It’s that simple! If you net 30k/yr – only spend 27k (and save 3k.) If you net 50k – only spend 40k. And so on… Adjust the amount as necessary, but the important thing is to save SOMETHING, and start EARLY.

  16. Don K says:

    100% great advice…and free. I’m telling my kids, nieces and nephews these things all the time – but – the one-eyed monster tells them something else. Oh? You don’t know that expression? I mean the square-eyed television through which people learn behaviors.

    Spend, buy, get, trade, keep up!

    I lived modestly. Worked a regular Joe’s job and saved. At age 50 I retired with a small pension and a net worth well above the average. For those who aren’t lucky; aren’t skilled at arbitrage; have had a little bad luck now and then, I say: Use common sense. Save for your future and your kids. I can live off of my retirement and earnings from my nest egg, and still leave my kids, nieces and nephews (maybe grand kids too) enough to get them off ahead of their PAW figures when they begin to compare notes.

  17. Science guy says:

    Just stumbled across this site searching for net wealth comparisons. Some interesting perspectives. In my case I didn’t finish grad school and get a job until I was 26 (early 1990′s). I had never made more than 10K (as a TA) prior to my current position. I work in academics and am in my mid 40′s making 50K. I maxed my retirement from the day I started (16% of pretax income) and now have ~300K. Other odd investments total 100K, exclusive of home. I should add, the 300K was accumulated exclusive of my wife and 50% of the 100K is due to me. She has a pension and has saved ~100K in various IRA vehicles on her own.

    The deceptive thing to me with calculating these saving scenarios is they don’t account for income variability during life. I am married and have one child and although my wife currently works (makes more than me – 75K), she was home with our child for two years. She went back to work full time when our child was 5, but we had to live very frugally during those years, as our income was ~40-48K (pretax) for a family of three. Our home was purchased for 108K, now worth ~170K. We put down 50% and payed off our 15yr loan in 10 years. We entered our 40′s debt free. We have since purchased some property – taken on ~100K debt – with the intention of building in the next few years.

    I think the individual stories on here add a nice complement to the data and tell the true story of how we save. Ultimately for my wife and I the money serves no more of a purpose than giving us the opportunity to provide a debt free education to our child, and possibly succeeding generations, as well as help out others and travel. We don’t really want for much, but I view the money as a safety net. I believe that was ingrained in me from a childhood of insecure fiscal status. My parents, whom I loved, were the proverbial grasshoppers. I prefer the ant approach, although interspersed with periods of experiential joy – not all work.

    Peace and good luck to all!

  18. bill says:

    I’ve got (we have; married) over a million in assets, not counting the house. I expect to live another 20 years; my wife, another 30.

    Do I worry about money? All the time.

  19. Brandon says:

    Age 25

    I own a business…..have for a little over 3 years. I have progressively increased my income and over the past 3 years have averaged about $140k/year. Since I own a business most all of my monthly expenses to live are paid for by the company, thus being able to keep most of my income (minus taxes of course). Before I started my business I worked as a salary employee for 3 years and made an average of $75k/year. I never finished college because I was making good money and inspired to own my own business and not have to answer to anyone.

    I have not inherited ANY MONEY AT ALL. I own a home in which I owe exactly what it is worth, I have about $158k in cash, $13k in 401k, no credit card debt and owe $30k on a boat.

    I will probably make $250k in income this year and of course most of my monthly bills paid for in addition to that (vehicles, utilities, phones, internet, gas, etc, etc).

    I am not sure where I land in terms of NW but I always think I am doing fairly well.

    Thoughts?

    Brandon

  20. Anonymous says:

    The figures shown for net worth are actual the mean rather than the median amounts. Of course the mean is substantially higher than the median as it includes the superwealthy, etc.

  21. wayne says:

    8 years ago, i had a net worth of, well, basically, zero. i was living paycheck to paycheck, deluding myself into believing that my $100,000 income meant i was doing alright. of course, again, i saved nothing, nor did i really think about the future.

    then, at the age of 38, with basically zero net worth, i suddenly woke up. no more credit cards. no more luxury cars (what a waste!), no more shopping at Abercrombie (still wearing now what i bought then and it’s all just fine).

    today, my net worth, again from nothing, is $491,500. i’m happy with that but know that i could have done much better if i woke up earlier-in fact, i ignored all the advice around me to save, why i don’t know. anyway,
    now saving $90,000 per year and my goal by age 50 is 1 million.

    so why am i sharing this? well, maybe some people will realize the need to save, and just how powerful compounded interest rates work in returns (my interest income increases 4k per year and currently is $18,500 annually). as well, i by no means have “made it” but i think i am on the right track to future stability.

    wish all you the very same!

    wayne

  22. john smith says:

    Saving is a habit. To many people here in US, it is hard to stay with this habit. For a regular family with 120,000 pretax income, it is easy to spend everything, or save a significant portion of it (such 15% annually). Education, house related monthly payment, day care expense, medical bills, cars, travels, entertainments, dining out a couple times a week, if you add them together, can easily leave you no space for saving.

    When people said “saved 10%+”, usually they sacrificed some of above expenditures. For regular Americans, it is hard to save anything. The major savings they have are – their homes. Besides this, government is their only hope (social security, medicare.) And they have to lower their retirement living standard substantially, or continue to work until they die.

    The FRB Net Worth number is amazing, and I wonder what are included by this number. 401K balance? (it should be counted after being taxed – that’s probably 25% off), cars, TVs, ? And working median is 350K?

  23. Dave says:

    If these are true statistics then there is no reason that with such wealth accumulation people making over 124k a year cant afford another tax hike. I call it the paying for the so called American dream.
    Or really the reason why FRB takes this infornmation from you is to find out how much they can bilk tax payers to pay off government bank loans.
    I think to eliminate FED Reserve and have the banks eliminated from this country would make it possible for us to balance our books a lot faster then let our government take advice from the bankers that steal from American tax payers. I know thats why they have this information its so they can gage exactly what tax payers will put up with in terms of being taxed. Here is an idea shut off the spicket of cash to bankers and only pay money to our services like military and fed employees and ss and maybe minimal gov services and go on an all cash as you go budget. In the beggining the taxes would be high to pay off debt but after 7 years the taxes would litereally drop to about 80% of what they are now. Our 200 billion dollar budget consists of almost 30 billion in interest alone that generates nothing for the US economy and its people. Get these banksters out of our lives and watch everyone get wealthy from the Middle class up. Imagine how easy it would be if the price of homes was lower and the price of every item was lower and loans didnt exist no interest paid. all would be better off. The debt is a plague to this country that can only be resolved by eliminating its source the banks eliminate the fed and state charters and watch this country get rich. Also stop all outflow of money to foriegn powers abroad and the IMF which is using our tax money to fund bail outs of the bankers making loans to 2nd and 3rd world nations without congressional approval.
    Imagine we might actually have money for the more important things in this nation like quality roads and schools and parks. I also believe that congress and senate should get one term since they really arent doing us any good by staying in Washington for 20 years. Do this and maybe we stand a chance to turn around America. Im not saying default on debts I am saying pay it off then get rid of the banks that steal so much wealth from this country and do so little in exchange. Investing with savings is far more powerful then borrowing anyways since it reduces risk.

  24. Ron says:

    Ben Franklin knew the way to wealth was industry and frugality. Definitely still true.

    And the way to happiness – not getting and wanting more and more because you will find yourself miserable with envy. But by eliminating desire so you are never miserable about not having stuff.

  25. Anonymous says:

    to what you want


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