Average Net Worth in America by Age, Race, Education, and Location
Personal Finance Insider writes about products, strategies, and tips to help you make smart decisions with your money. We may receive a small commission from our partners, such as American Express, but our reports and recommendations are always independent and objective.
- The average American family has a net worth of $ 102,700, according to the most recent 2016 data from the Federal Reserve. Survey of Consumer Finances.
- Median net worth tells a very different story. According to these same data, the median family has a net worth of $ 52,700.
- Many factors contribute to net worth, including bank account balances, investment assets, and even real estate.
- The average net worth of a family varies by age, race, location and level of education.
- SmartAsset’s free tool can find a financial planner to help you grow your net worth “
The average net worth of American families is $ 102,700, according to the most recent data from 2016 Federal Reserve Survey of Consumer Finances. Between 2013 and 2016, the net worth of the average American family increased by 14%.
While the average net worth is $ 102,700, the median net worth tells a very different story, with the typical American family having a net worth of $ 52,700. The median, or mean in a set of numbers, is less sensitive to outliers, so can be a more accurate representation of a typical family. The median shows a very different reality for Americans, and we’ve included both numbers in this look at American family finances.
Your age has a lot to do with your net worth.
People tend to accumulate value in certain assets over time. Retirement savings, for example, are growing compound interest, where interest earns more interest on itself. Home equity, or the value of your home minus any mortgage debt, also tends to increase over time.
Here is the typical American’s net worth by age, according to
As the education level of the head of household increases, so does the average net worth. The average graduate has a net worth more than nine times that of the typical American without a high school diploma, and about four times that of someone who has not completed their education.
It should be noted, however, that median net worth tells a very different story. In median net worth, those with less than a college education and those with only a high school diploma have roughly the same median net worth.
Here’s how academic achievement plays into the average and median net worth of Americans:
Where you live tends to play a major role in your net worth. While the cost of living in American cities tends to be higher than the costs outside, the typical American living in a city tends to have higher net worth than people living in rural areas. .
Average data shows that the typical American in an urban area has a net worth 2.7 times the net worth of a rural American. In part, higher real estate values in cities could be contributing to the increase in urban America’s net worth.
Employment opportunities and income also contribute to this unequal distribution of wealth, as job opportunities have left rural America for large cities. Data from the same Federal Reserve study shows that families living in urban areas saw their incomes increase by 15% on average between 2013 and 2016, while Americans outside urban areas saw their incomes increase by 15%. % on average between 2013 and 2016. no average change in income during the same period.
the racial wealth gap is evident in the average net worth of the United States. The average black family still has a net worth only about 44% of that of white families, according to 2016 data.
Here’s how average net worth changes by breed in America:
Real estate is a big factor in net worth. Even with a mortgage, owning a home can still contribute to equity. According to Federal Reserve data, the average homeowner has a net worth of 2.8 times the equity of the typical person who does not own a home.
- Bank accounts, including verification, savings, money market accounts, cash accounts at brokers, prepaid debit cards and calling accounts.
- CD, government bonds and savings bonds
- Health savings accounts
- Investment accounts, including 529 college savings plans and individual taxable investment accounts
- Retirement accounts, including IRAs, 401 (k) s and 403 (b) s
- Cash value life insurance policies and pensions with equity
- Vehicles, including cars, recreational vehicles, motorcycles, boats and helicopters
- Real estate, including residential homes
In calculating net worth, liabilities or debts are subtracted from the value of the asset. In this survey, debts included:
The best way to build wealth is to play the long game: decide on your goals now and start working to achieve them in small steps. Here are three starting points:
Maximize your retirement savings
Whether you are saving and investing for retirement with your office 401 (k) or have a solo 401 (k) if you are independentOne of the most important ways to increase your net worth is to start saving for retirement.
If you qualify based on your income, a Roth IRA could help you save beyond your 401 (k) plan and let your money grow tax free. A Traditional IRA is available to almost everyone, regardless of income level, and can help you lower your tax bill now rather than later.
Start investing now
Opening a brokerage account is the first place to start. There are different types of brokerage accounts to suit your purpose, some more specific than others. If your goal is to someday pay for your child’s college, open a Plan 529 could be the right solution for your investment. For people who have already reached the maximum limits for retirement investment accounts, placing your investments in an individual brokerage account may be right for you.
Be smart with your savings
Reaching big assets, like real estate, that build your net worth usually involves saving money up front. That you want it save for the down payment on a house, or build up an emergency fund, having the right savings account is essential.
If your savings account earns 0.01% interest, it’s time to change your savings account on an account that allows your money to earn more. A high yield savings account could help you earn several times more interest each month and help you reach your goals faster.