The Average Household Net Worth In America Is Huge

Ted

FYI: According to the Federal Reserve’s Survey of Consumer Finances, the average US household net worth is a whopping $692,100! And that’s based on data from 2016, when the S&P 500 was ~30% lower. Further, real estate prices in many major cities have also increased substantially since 2016. Surely, the average US household net worth will be even higher when the next survey comes out in 2019.
Regards,
Ted
https://www.financialsamurai.com/the-average-household-net-worth-in-america-is-huge/

AndyJ

The article lede is a biased presentation of the Fed data. Note that the data tables also include the median figures. Apparently the not-so-sharp "samurai" got (rightly) dinged for not including the median in his "analysis" under the original header. It's fairly clear he had a conclusion in mind at the outset, damn the data.

Also, he offers an extremely weak defense of his original data selectivity under the third header: "But it’s still a good number to know if you want to compare yourself to the average." Duh.

Mark

Correct AndyJ.

Subtract out the top 1-2%ers and get back to me. To be clear, SO much wealth is held in that top bracket that any reasonable data crunching will be skewed far out of true reality.

JoJo26

Averages are always skewed. One should always look at median figures in these cases.

Mark

Even the median is ridiculous. Take a walk in a few differing neighborhoods for reality.

hank

@Mark has it right. All that figure points to is the huge wealth gap in this country. Most likely, one in every ten is worth $600,000. That would put the net worth of the remaining nine (after subtracting mortgage debt, auto debt, credit card debt, etc.) at about $10,000 each.

Mark said:

Even the median is ridiculous. Take a walk in a few differing neighborhoods for reality.

Exactly. Take a walk or a drive through America and you will be amazed at the wealth disparity. Most of us do not live inside mansions or high rise towers inside gated / heavily guarded communities.

Sorry to run. Have to go catch my private jet.

Old_Joe

Run fast!

hank

Found this. Looks like data is from 2013. But hard to believe things have improved since than.

“Those families in the 90th percentile have a net worth of almost $1,000,000. Meanwhile, those in the 50th percentile or below have hardly any net worth at all.”.

Excerpt from: What Percentage Of Americans Own Stocks or Real Estate?
https://www.financialsamurai.com/what-percentage-of-americans-own-stocks-or-real-estate/

JoeD

https://www.nerdwallet.com/article/how-your-net-worth-compares-and-what-matters-more


Median and average net worth by age

Under 35: Median net worth: $11,100 (average net worth: $76,200).

35-44: $59,800 ($288,700).

45-54: $124,200 ($727,500).

55-64: $187,300 ($1,167,400).

65-74: $224,100 ($1,066,000).

75+: $264,800 ($1,067,000).

hank

So the average U.S. household (over age 75) has a net worth in excess of one million dollars? Umm ... Not where I live. Maybe elsewhere. That high net worth would seem strangely at odds with many states’ crumbling roads and infrastructure.

JoJo26

hank said:

So the average U.S. household (over age 75) has a net worth in excess of one million dollars? Umm ... Not where I live. Maybe elsewhere. That high net worth would seem strangely at odds with many states’ crumbling roads and infrastructure.

Do you not understand averages?

Average = sum of net worth of U.S. households (over age 75)/number of U.S. household (over age 75)

The super rich are going to skew that number high. Hence why it is 4x the median.

bee

Another topic that helps explain averages is the proposed repeal of the SALT tax deduction.

This is being proposed by democrats and its repeal would benefit the top 20% who pay taxes (a repeal of SALT would benefit 96% of these high earners) .

Here's how averages work:

Repealing the SALT deduction would cut taxes by an average of about $370, but that’s largely because so many households would get no benefit at all. Among all those whose taxes are reduced, the average tax cut would be about $4,100. For all middle-income taxpayers, the average tax cut would be $10. Those in the top 1% would pay an average of $31,000, or 2% of after-tax income, less. Among those who get a tax cut, middle-income households would pay an average of $360 less while those in the top 1% would pay an average of about $34,000 less.

Here's a visual:

msf

But what does household mean? It's not the term used in the source of these numbers. That source (Fed Reserve Board) uses the term "family", not "household". It goes on to note that its "family" is similar to, but not the same as, the Census Bureau's "household".

Moving on, what does "over age 75" mean for a "family" or a "household" here? Does everyone in the household (whatever that is) have to be over 75? Just one person? Which one?

https://www.federalreserve.gov/publications/files/scf17.pdf
(See Box 1 and Appendix for definitions)

Most of the data one is likely to run across elsewhere comes from the Census Bureau. So figures here are going to look a bit different. Thus it helps to be cognizant of the various definitions.

I think Hank conveyed a good sense of average. If his regional averages are lower than national averages, then regional averages elsewhere must be higher, as he suggested. Still, what exactly is being averaged?

MikeM

So the average U.S. household (over age 75) has a net worth in excess of one million dollars? Umm ... Not where I live.

No @hank, but where you live, the median value of $265,000 is probably pretty realistic. Average skews the data towards the high side because of the very rich.

I didn't read the article, but I'm assuming net worth includes all assets, your house, which actually would make the liquid assets like savings pretty low for the "median" house hold.

MOZART325

I wonder what the average net worth is in Medina, Washington? Both Jeff Bezos and Bill Gates live there?

Anna

MOZART325 said:

I wonder what the average net worth is in Medina, Washington? Both Jeff Bezos and Bill Gates live there?

The first hit on Google "median net worth Medina Washington gave:

https://www.point2homes.com/US/Neighborhood/WA/Medina-Demographics.html
Average Household Income $280,451
Median Household Income $188,080
Percent Increase/Decrease in Income Since 2000 40%
Percent Increase/Decrease in Income Since 2010 39%
Average Household Net Worth $1,267,004
Median Home Sale Price $1,480,000
Sales Tax Rate 8.6%
Average Household Total Expenditure $159,918

msf

ESRI demographic map for 98039.

Takes a little while to load. Median household income is off the scale, literally - the database tops out at $200K+.

hank

MikeM said:

I didn't read the article, but I'm assuming net worth includes all assets, your house, which actually would make the liquid assets like savings pretty low for the "median" house hold.

( @MikeM - I tried not to mention Michigan because I gathered someone here is tired of hearing about it.) Yes, net worth includes all assets, including house, but also subtracts all debt before arriving at a number. That explains why 75+ year olds might score highest. I’d guess a higher percentage have their homes paid off.

It’s hard to look at these figures without getting a bit cynical. Walk very far through America and you’ll get a perspective. Multitudes on multitudes live in extremely small and humble abodes - often densely packed tract houses or manufactured homes. If you don’t want to walk, look out the window as your jet approaches any airport (less expensive housing flourishes near the flight paths) - or ride a bus into Manhattan from LGA and gaze at some of the neighborhoods you traverse.

I realize there aren’t many Jeff Bézoses on the board. But I’m willing to bet this is a fairly affluent group here and that might distort somewhat our impression of how “average” Americans live. It’s paradoxical, but the average American does not enjoy a standard of living anywhere near what those average net-worth figures represent.

davidrmoran

Most everyone who takes stats for dummies at some point hears the phrase 'discard the highest and the lowest data and then take the average'; there should be a glib version of that for discarding only the highest tail. I guess it would just be called 'average the data below [$1M or other point]'.

MOZART325

Anna- Actually their average net worth seems way too low. Medina has a population of around 3,000. Just bezos and Gates alone have a net worth over $200 Billion. So the "average net" worth of Medina is at least $60 million. Of course the median is much lower.

Anna said:

MOZART325 said:

I wonder what the average net worth is in Medina, Washington? Both Jeff Bezos and Bill Gates live there?

The first hit on Google "median net worth Medina Washington gave:

https://www.point2homes.com/US/Neighborhood/WA/Medina-Demographics.html
Average Household Income $280,451
Median Household Income $188,080
Percent Increase/Decrease in Income Since 2000 40%
Percent Increase/Decrease in Income Since 2010 39%
Average Household Net Worth $1,267,004
Median Home Sale Price $1,480,000
Sales Tax Rate 8.6%
Average Household Total Expenditure $159,918

Ted

@MFO Members: "stats for dummies", I think the poster meant to convey the terms mean, mode, and median.
Regards,
Ted

JoeD

Another Net Worth calculation diced up a bit more (with and without HOUSE). Data comes from the 2016 Federal Reserve SCF.

https://dqydj.com/net-worth-by-age-calculator-united-states/


Age Average Median Average (No H) Median (No H)
18-24 $93,982.80 $4,394.53 $86,952.25 $4,012.26
25-29 $39,565.88 $8,971.58 $16,941.07 $4,397.11
30-34 $95,235.53 $29,125.08 $58,702.34 $15,980.13
35-39 $257,581.86 $40,666.52 $202,975.63 $17,247.23
40-44 $316,660.61 $87,842.71 $231,092.29 $36,392.69
45-49 $599,194.17 $105,717.43 $459,091.51 $50,462.52
50-54 $838,702.95 $137,866.81 $701,558.76 $50,154.48
55-59 $1,150,037.78 $168,044.19 $979,492.18 $69,338.65
60-64 $1,180,377.62 $224,775.17 $985,790.54 $105,875.74
65-69 $1,056,483.97 $209,575.26 $871,948.49 $94,665.45
70-74 $1,062,427.63 $233,614.37 $861,025.60 $77,472.59
75-79 $1,097,415.06 $242,699.75 $887,051.06 $69,551.59
80+ $1,039,818.04 $270,904.40 $826,304.45 $121,563.27

davidrmoran

Ted said:

@MFO Members: "stats for dummies", I think the poster meant to convey the terms mean, mode, and median.
Regards,
Ted

Not I. Reread.

VintageFreak

Median tells the real story.