Median & Average Net Worth by Age in America


Table of Contents:

  1. What is net worth?
  2. What’s the average American net worth
  3. Average & median net worth by age
  4. How to calculate net worth
  5. Steps for increasing your net worth
  6. The bottom line

You’re here, and what brought you here is a question we all come to reach at a certain point in our lives: what’s the average net worth by age? As we grow, thoughts about our finances, how to build for a wealthier future, and how our finances compare to our peers may all be questions that come to mind. So, what’s the average net worth of Americans, and what does the average wealth by age mean for you? First, let’s define net worth and how this is an important factor that plays a role in the bigger picture.

Key Takeaways:

  • Net worth is the difference between your total assets and total liabilities.
  • Median net worth in the U.S. is determined by listing the entire population’s net worth from the least to the highest number or vice versa and selecting the number that falls in the middle of the list.
  • The average median net worth in the US is $121,700.
  • What’s the average net worth of an American? The average net worth of an American is $748,800.
  • Net worth is determined by many different factors such as age, income, education, ethnic background, etc.

What is net worth?

Net worth is the difference between how much you own and how much you owe. In other words, net worth is the value of assets owned after all of your debt or liabilities are subtracted. Your net worth is an indicator that can help you determine the overall health of your financial position and whether or not your finances are in good shape.

When your net worth increases, this is a good indicator that your financial situation is positive and in great health. However, when your net worth decreases, this can be a negative signal that your liabilities have grown relative to your assets. Although net worth is a good tool to use to determine your financial condition, it’s also not inflexible. When comparing your net worth, and where you land in relation to your peers, it can feel intimidating or like you are far behind. However, it’s important to note that net worth has the potential to increase or decrease and is something that constantly changes over time. In addition, as you get older, your net worth typically increases as you may own more assets and have fewer liabilities. Learning how to invest in stocks can contribute to the growth of your net worth over time. However, we will cover how to increase your net worth a little later. Let’s move on to the average net worth for Americans.

What’s the average American net worth?

So, what’s the average person’s net worth? According to the Survey of Consumer Finances (SCF) for Americans, the mean, or average net worth, in the U.S. is $748,800. The Survey of Consumer Finances is a report issued every 3 years by the Federal Reserve Board that gives insight into the incomes of U.S. families. This report issued in September 2020 collected data from the years 2016 to 2019. The mean or average net worth may seem pretty high. This is because the average net worth is calculated by subtracting the total debt from the total assets from all households in the entire population. That result is then divided by the total number of households. Finally, the outcome is the average net worth for the U.S. population.

The Survey of Consumer Finances takes into account the different characteristics that play a role in the wealth gap or lack of the distribution of wealth across groups, which affect the average net worth. Some of these factors impacting access to wealth, and therefore have an effect on the average net worth, include education, racial or ethnic background, urbanicity, and housing status. These factors impact the differences and access to income and are stark in wealth across groups.

As stated earlier, net worth typically increases as you get older. However, with age also comes the possibility of retirement. This means that as you near retirement or graduate to an older age group, your net worth can humbly decline due to increased spending or pulling from your retirement savings once retired.

Lastly, an important thing to note is that we must also consider the median net worth when looking at the average net worth amongst Americans. The median net worth allows for a better representation of the everyday person. This is because when calculating the average net worth, wealthy households tend to move this number upward, which is not a full representation of the average person. So, what is median net worth, and how does this differ from the average net worth?

Average vs. median net worth

The Survey of Consumer Finances reports that the median net worth for all households in the U.S. population is $121,700. The median net worth in the U.S. is determined by listing the entire population’s net worth from the least to the highest number or vice versa and selecting the number that falls in the middle of the list. As mentioned earlier, the median net worth gives a more accurate representation of the financial position of each age group. This also allows you to see the polarity in income disparity across different groups when comparing the median net worth to the average net worth. So, what’s the average net worth across age groups, and how can you use this data to take advantage of building your own financial health? Let’s take a look!

Average & median net worth by age

Below we will compare the average American net worth by age to the median American net worth by age according to the Survey of Consumer Finances report from the Federal Reserve (2016-2019) reported in 2020. Keep in mind that net worth is dependent on many different factors such as age, income, education, ethnic background, etc.

Age Median Net Worth Average Net Worth
Younger than 35 $13,900 $76,300
35 – 44 $91,300 $436,200
45 – 54 $168,600 $833,200
55 – 64 $212,500 $1,175,900
65 – 74 $266,400 $1,217,700
75 and older $254,800 $977,600

By comparing the median net worth to the average net worth for each age group, you will see that there is a drastic difference between the two. You will also see that the average millennial net worth compared to the net worth at 40 and over increases drastically and subtly declines as people near the retirement age. It’s essential to understand that the average and median net worth, when looked at in totality, show the net worth of Americans for the overall U.S. population. However, breaking the net worth down by groups based on specific characteristics such as age, education, family characteristics, race or ethnicity, etc., gives more insight into the drastic differences between groups and how these different factors contribute to the wealth gap.

Average net worth at retirement

When looking at the table above, you will see that the average U.S. net worth by age from 65 to 75 and older starts to subtly decline from $1,217,700 to $977,600. As mentioned earlier, when reaching the retirement age, the average person’s net worth generally starts to decrease due to individuals withdrawing from their retirement savings. The 50s and 60s age groups are usually the years where people will start to max out their retirement savings to prepare for retirement and budgeting during the retirement phase. Remember, although these numbers can be overwhelming when thinking about where you fall on the financial scale, looking at the average net worth by age as a metric to use for your personal finances and how you can improve your finances can make it a little less intimidating. Whether you are a beginner investor or well into planning for your future financially, it’s never too late to learn how to save for retirement or how much you need to retire.

How to calculate net worth

Now that we’ve talked about the median wealth in the U.S. and the average American net worth, you may wonder how to calculate net worth. To calculate your net worth, you will subtract your total assets from your total liabilities. The amount left over is your total net worth.

Total Assets – Total Liabilities = Net Worth

Although the average assets by age can vary, as you grow older, you will generally start to own more and owe less, but what counts as assets and liabilities? The Federal Reserve considers assets and liabilities to include the following:

Assets

  • Bank accounts (checking accounts, savings accounts, money market accounts, call accounts, etc.)
  • Prepaid debit cards
  • Other investment accounts (certificates of deposit)
  • Savings bonds and other bonds
  • Stocks
  • Pooled investment funds
  • Retirement accounts (individual retirement accounts (IRAs), Keogh accounts, and employer-sponsored retirement plans, such as 401(k), 403(b), and thrift savings accounts.)
  • Vehicles
  • Real estate (residential or non-residential property)
  • Business equity
  • Cash value of life insurance
  • Other

Liabilities

  • Credit card balance or credit card debt
  • Mortgages
  • Home equity lines of credit and home equity loans
  • Installment loans (student loans, auto loans, personal loans, etc.)
  • Other

Steps for increasing your net worth

So, we’ve looked at the entire scope of average wealth in the U.S. and the median net worth in the U.S., but there’s still one more thing to cover, and that’s how you can increase or improve your net worth. Let’s review some steps that may help you along the way.

  • Retirement savings

    Maximizing your retirement savings can be a great way to start saving early for your future. Whether you have an employer-based retirement plan such as a 401(k), or an individual 401(k) this is an essential step that can not only set you ahead for retirement but can also help with increasing your net worth.

  • Strategy to pay off debt
    Coming up with a strategy to pay off debt can be challenging and time-consuming. However, sticking to a plan can drastically reduce your liabilities in the long run and lead you to a debt-free future.
  • Learning how to invest
    Although investing comes with a plethora of risks, it can contribute to building wealth over time. Speaking to a financial advisor and using an investment strategy for the long term can also help in other personal finance areas.
  • Setting up a savings account
    Coming up with a savings plan and putting money away over time is one of the most traditional ways to build wealth. However, looking into different savings account options such as a high-yield savings account can help with earning more interest on your money and can also show you the different options available to increase your personal finances.
  • Income increase
    Advancing your skills over time and working toward your career goals can ultimately help with growing your net worth through an increase in salary. This can allow you to save and contribute more to your investment portfolio.
  • Organizing your expenses
    Just like spring cleaning, an expense overhaul from time to time can be a healthy way to look at your finances. It can help you make the best decisions for yourself and also allows you to see where you may be spending a little more than expected.

The bottom line

The average net worth by age and the median net worth show the differences in net worth between age groups and also how drastically different they are to each other when compared. However, the median net worth can help you gain a better perspective on where different age brackets fall on the financial scale. While these metrics are good tools to use to improve your financial health, it’s also important to keep in mind the different characteristics amongst groups that can affect the overall net worth as a whole. Wherever you fall on the financial scale, remember that net worth is something that can constantly change over time. To get started with saving and investing in your future, download the Public App today.

The above content provided and paid for by Public and is for general informational purposes only. It is not intended to constitute investment advice or any other kind of professional advice and should not be relied upon as such. Before taking action based on any such information, we encourage you to consult with the appropriate professionals. We do not endorse any third parties referenced within the article. Market and economic views are subject to change without notice and may be untimely when presented here. Do not infer or assume that any securities, sectors or markets described in this article were or will be profitable. Past performance is no guarantee of future results. There is a possibility of loss. Historical or hypothetical performance results are presented for illustrative purposes only.

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