FINANCE
This is the average net worth of Americans by age: what would be your position?
Net worth is often discussed with celebrities and politicians but in reality it is near impossible to determine very accurately.
Readers always froth to find out the net worth of politicians and celebrities. However, depsite it being difficult to pin-down and quite nebulous, it can also be applied to pretty much anyone. Not as interesting, sure, but still worth looking at nonetheless.
The Federal Reserve has published its Survey of Consumer Finances for the last three years. The survey collects data on various aspects of household finances, including income, assets, liabilities, net worth, and demographic characteristics making it one of the most authoritative sources for the financial conditions of American households.
Page 11 of the survey goes into detail about household net worth. On the whole, these values have grown a lot since the previous survey.
| Age of Head of Family | Median Net Worth | Average Net Worth |
|---|---|---|
| Less than 35 | $39,000 | $183,500 |
| 35-44 | $135,600 | $549,600 |
| 45-54 | $247,200 | $975,800 |
| 55-64 | $364,500 | $1,566,900 |
| 65-74 | $409,900 | $1,794,600 |
| 75+ | $335,600 | $1,624,100 |
Be careful as the ‘average’ column is massively skewed by high earners; analysing the ‘median’ column is a better representation.
Why does net worth taper-off for seniors?
Younger individuals have lower net worth because they are in the early stages of their careers with their income and earning potential may be limited. A growing student debt crisis could affect average net worth in the future.
As Americans age they earn more money through work. Some of this is put toward savings though as a percentage of earnings this is beginning to decrease. By retirement age this saved money is then accessed, represented by the falling-off of net worth for over 75s. By this age it can be expected that mortgages are paid off and expenditure is reduced.
Indeed, older generations are on the whole much more secure in their finances; having a mix of retirement accounts, such as 401(k)s and IRAs, Social Security, and housing equity.