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Average Net Worth of Americans by Age, Education, and Race

  • Aditya 
  • 19 min read
Average Net Worth of Americans by Age, Education, and Race

USA is the strongest economy in the world, and every citizen within its geographic boundary contributes to its wealth. However, you may like to know about their financial position relative to that of the average population to analyze and take financial decisions accordingly. In this article, we will explore the average net worth of Americans, classified by age, education, and race. This will provide an idea about overall economic health of the nation and how to achieve financial stability in the current demographic.

What is Net Worth?

Net worth represents the total value of assets owned by an individual or corporation, minus any outstanding liabilities. This financial metric is crucial for assessing the current financial standing of a company, offering a snapshot of its overall financial health. Credit Suisse classifies high net worth individuals (HNWI) as those with a net worth ranging from $1 million to $50 million. The category above this, known as ultra-high net worth individuals (UHNW), encompasses individuals with a net worth of $50 million and beyond.

In finance, net worth plays a significant role in determining eligibility for specific investment strategies or financial products like hedge funds, structured products, and other intricate or alternative investments. Beyond the financial realm, net worth has garnered attention in popular culture, with rankings showcasing individuals with the highest net worth and publicizing the financial standing of various celebrities.

The Average Net Worth of Americans

The Survey of Consumer Finances, published by the Federal Reserve Board every three years, provides insights into family finances, including income and net worth. The most recent report, released in October 2023 with data collected mainly in 2022, indicates that the average net worth of US households is around $1.06 million. However, it’s important to note that this average is skewed by affluent households.

For a more realistic picture of the typical person’s financial situation, it’s better to consider the median, which is the midpoint value. This figure offers a more accurate representation of the financial standing of the average individual, helping to alleviate concerns about the seemingly high average net worth.

In 2022, the Federal Reserve reported that the median net worth of Americans was $192,700. This marked a substantial increase of $51,555 from the 2019 figures, reflecting a significant 37% jump. It stands out as the most substantial recorded growth since the Federal Reserve started collecting this data back in 1989.

How To Calculate Average Net Worth of Americans?

Person using a calculator

Net worth is essentially the financial picture that results from subtracting what you owe from what you own. Assets, which are things of value that you own, are pitted against liabilities, which are your financial obligations like loans and mortgages. A positive net worth implies that your assets outweigh your liabilities, indicating good financial standing. Conversely, a negative net worth suggests the opposite.

Your net worth is basically the sum of all the valuable stuff you own, like cash, investments, retirement savings, property, jewelry, art, and collectibles. To figure it out, you subtract what you owe, which includes things like credit card debt, student loans, mortgages, and auto loans. It’s like weighing what you have against what you owe.

Maintaining or boosting a positive net worth involves either cutting down on liabilities while keeping assets steady or on the rise or increasing assets while ensuring that liabilities either remain stable or decrease. The concept of net worth is applicable not only to individuals but also to businesses, industries, and even entire countries. Monitoring and enhancing net worth serve as key indicators of financial health and stability. To find the average net worth, you add up the net worth of everyone in a group and then divide that total by the number of people in the group. This is often done for specific age groups or for the entire American population.

  • To figure out the average net worth of a bunch of people, you’d first need to know how much money each person has.
  • Once you have everyone’s net worth, add them all up to get a total for the whole group.
  • Then, count how many people are in the group – that’s the bottom number you’ll use to find the average.
  • To get the average, you just divide the total net worth by the number of people. Simple math gives you the average net worth of the group.

But keep in mind, especially if the group is diverse in terms of income, age, and jobs, the average might not tell you everything about everyone’s financial situation. It’s a bit like saying everyone is “average” when there could be big differences between individuals. When assessing the overall financial standing of a group, relying on the average net worth might be misleading, especially if there’s a significant disparity in individual wealth.

In such cases, using the median net worth is a more prudent approach. The median represents the middle value when the net worth figures are arranged from smallest to largest. This provides a more accurate reflection of the group’s financial status by minimizing the influence of extreme outliers.

Tips to Increase Your Net Wealth

While personal net worth may vary substantially, there are a few attempted strategies for boosting it. If you want to make your net worth bigger, you can do a couple of things. One way is to boost your assets by investing in things like the stock market. Another way is to stash more money in an account that gives you a good chunk of interest – these days, some of the top ones offer over 5% APY. So, it’s basically about growing what you have and trimming down what you owe. Let’s look at the ways to increase your wealth:

1. Revise Your Budget

If you’ve got a budget in place – and hopefully, you do – take a closer look and make any necessary updates. And if you don’t have one, now’s the time to create it. Begin the year by examining your monthly spending, distinguishing between “essential lifestyle expenses” and “nonessential expenses” like a gym membership or dining out.

After that assessment, make a thoughtful decision on how much discretionary income you can allocate to your financial goals. Once you’ve figured out the amount you can comfortably put towards retirement or savings each month, commit to setting that money aside. If your budget is already in good order, consider taking it a step further by developing a comprehensive financial plan.

2. Enhance Your Savings

Having a savings account is crucial for managing your finances effectively. Not only does it serve as an emergency fund, but it also helps you avoid borrowing from external sources during unexpected situations. By growing your savings, you’re essentially creating a financial cushion for yourself. This means that when emergencies arise, you’re tapping into your own funds rather than relying on loans from banks, reducing your overall debt and boosting your net worth.

A savings account is the foundation of a strong financial portfolio, providing the flexibility to handle cash flow and cover unforeseen expenses like significant car repairs without resorting to personal loans. Additionally, having a substantial savings balance can position you to seize investment opportunities that may come your way. As long as you’re meeting your financial obligations, there’s no downside to building up your savings, ultimately contributing to the growth of your net worth.

3. Settle Outstanding Debts

Reduce Your Debt

Getting rid of debt is a key initial move toward creating wealth. Wealthy individuals often steer clear of hefty interest payments, and accumulating debt is a fast track to incurring those costs. Your net worth is essentially your assets minus your liabilities. So, as you chip away at debt and see your income and assets grow, your net worth sees an upward trajectory.

The primary principle for boosting your net worth involves tackling debt and should be an integral part of any financial strategy. It might not be feasible to eliminate all your debt overnight, but when it comes to paying off credit card balances, always aim to exceed the minimum required payment.

4. Augment Your Contributions to Retirement

It’s a good idea to boost your contributions to your retirement fund. Most experts recommend dedicating around 10% to 15% of your yearly earnings to retirement. If hitting that target seems challenging, consider starting with smaller amounts like 1% or 2%, gradually increasing over time. Making modest but consistent contributions with each paycheck can accumulate significantly over the years.

If you’re contemplating whether to prioritize paying off debts or setting up a retirement plan, many financial advisors suggest a balanced approach. If clearing your debts is a lengthy process, it might be wise to simultaneously contribute to your retirement fund. Striking a balance between investing and reducing debt in your budget could enhance your overall financial well-being. Opting for a well-rounded strategy, rather than focusing solely on saving or debt repayment, may lead to a quicker increase in your net worth.

5. Invest in Personal Development

Investing in your future is crucial, and while putting money into retirement or your children’s education is wise, don’t overlook the value of investing in yourself now. Consider pursuing graduate school as it has the potential to open doors to better job opportunities, though it’s essential to carefully weigh the potential earnings against the incurred debt.

Alternatively, hiring a career or financial coach could provide valuable insights that might propel you towards a promotion. While investing in yourself doesn’t guarantee instant wealth, addressing personal roadblocks can pave the way for increased income and the accumulation of wealth. It’s a strategic approach to living your best life and achieving financial success.

6. Optimize Your Tax Strategy

It’s important for everyone to contribute their fair share, but leveraging tax breaks can be a smart strategy to boost your overall wealth. Take, for instance, credits like the child and dependent care tax credit and the lifetime learning credit, which directly offset what you owe in taxes. On the flip side, deductions work by reducing your taxable income.

The key here is to potentially save a significant amount by lowering your tax rate. Let’s consider your tax bracket: if you’re a single earner making $86,376 annually, your tax rate is 24%. Now, if you follow the guidance of a financial advisor and manage to bring down your taxable income even by a small amount, like through qualified charitable contributions, you could shift into the next lower bracket – in this case, 22%. This isn’t about avoiding your responsibility to pay taxes; it’s about maximizing the opportunities the government provides to increase your net worth.

7. Elevate Your Professional Trajectory

To take your career to the next level, consider boosting your income by requesting a salary increase, aiming for a promotion, exploring new job opportunities, or even venturing into entrepreneurship. Additionally, expanding your skill set beyond your current role, gathering feedback from your supervisor to track your progress and stay on course, growing your professional network, and taking on challenging projects can all contribute to advancing your career.

8. Review and Update Your Insurance Coverage

Person signing insurance papers

Insurance costs can really add up, especially for self-employed individuals with health insurance or parents covering teenage drivers. Even if you have great insurance, the monthly payments for health, life, or car coverage can be a real financial strain. If you find yourself wincing every time you make those payments or questioning whether you’re getting the best deal on your homeowners or renters’ insurance, it might be worth considering some comparison shopping. By exploring options and potentially reducing your insurance premiums without compromising coverage too much, you could redirect those savings towards your retirement or other investments, ultimately boosting your overall net worth.

Average Net Worth in America by Age

The Federal Reserve’s 2019 Survey of Consumer Finances revealed that the average net worth for American families was $746,820, with a median figure of $121,760. It’s important to note that these numbers might not provide an accurate reference for individual situations due to various influencing factors such as age, education, family structure, and race/ethnicity.

One’s net worth tends to be closely tied to age, with the opportunity to accumulate assets like real estate, stocks in stable companies, and valuable commodities such as gold and silver. The potential for these items to appreciate over time significantly impacts overall net worth. Accruing interest on deposits further contributes to net worth, particularly in the context of retirement savings. The ability to earn interest on the initial investment amplifies the overall savings. Conversely, mortgage debt or the value of one’s home, minus any outstanding mortgage obligations, tends to increase over time.

Net worth can be significantly impacted by personal circumstances, including income, living costs, family inheritances, housing status (renting or owning), and educational background. To gauge your financial standing relative to others, looking at the net worth of individuals your age can serve as a helpful benchmark, considering the diverse factors that contribute to these figures.

Age Average Median
Under 35 $76,340 $14,000
35-44 $437,770 $91,110
45-54 $833,790 $168,800
55-64 $1,176,520 $213,150
65-74 $1,215,920 $266,070
Above 75 $958,450 $254,900

Average Net Worth of Americans by Education Level

Education significantly influences net worth, with college graduates typically having a net worth four times higher than those who started but didn’t complete college and five times higher than individuals with just a high school diploma. However, it’s important to note that net worth isn’t solely determined by education. People across various education and income levels in America have opportunities to enhance their financial standing.

Education Level Average Median
No high school diploma $137,580 $20,780
High school diploma $304,590 $73,890
Some college $374,010 $89,280
College degree $1,516,910 $308,800

Average Net Worth of Americans by Race

While the pandemic led to a notable increase in the wealth of Black families compared to non-Black households, the substantial racial wealth gap persists. Black households, on average, experienced a 32% growth in net worth, reaching over $340,000 by the third quarter of the previous year from the close of 2019, spanning just 11 quarters. Despite this positive trend, the disparities in wealth between racial groups remain considerable.

Race or Ethnicity Average Median
White, non-Hispanic $980,550 $189,100
Black, non-Hispanic $142,330 $24,100
Hispanic $165,540 $36,050
Other $656,600 $74,500

Other Factors for Classification of Net Worth

Let’s see how net worth of US citizens depend upon other economic and social factors:

By Home Ownership

Home Warranty

Owning a home has always been celebrated as the quintessential American dream, and while there are valid reasons some people may choose not to pursue homeownership, the positive impact it can have on one’s net worth is undeniable. The typical net worth of a US household stands at $121,700. However, the contrast between the net worth of homeowners and renters is striking. In 2019, homeowners in the United States boasted a median net worth of $255,000, while renters lagged far behind at just $6,300. This signifies a substantial 40-fold difference between the two groups.

Several factors contribute to the higher net worth of homeowners. One could argue that owning a home functions as a sort of compelled savings account, with a portion of each mortgage payment contributing to the home’s equity. In contrast, renting is often viewed as a fixed expense with no return on investment. The appreciation of home values over time is another significant factor that enhances a homeowner’s overall net worth. Additionally, homeowners can leverage valuable tax advantages that are unavailable to renters, further contributing to their financial well-being.

By Family Structure

Research often focuses on the income levels and distribution of families with children, but some scholars argue that the impact of net worth on children’s well-being surpasses that of a family’s income. Owning a home is particularly highlighted as a factor that helps families maintain and potentially increase their wealth, especially when dealing with the additional expenses that come with raising children. In 2019, the homeownership rate for couples with children was 75.7%, while for singles with children, it was 50.4%. These numbers underscore the importance of homeownership in family financial dynamics.

The average cost of raising a child in the United States in 2017 was $233,610 from birth to age 17. A substantial portion of this cost, 29%, is allocated to housing, and 18% to food. Considering that the average family in the US had 1.9 children in 2017, the total child-rearing expenses can be calculated by multiplying $233,610 by 1.9, resulting in $443,859. Interestingly, this figure is remarkably close (less than a 2% difference) to the $435,340 gap in average net worth between married couples with kids and those without.

By Occupation

People in managerial and professional roles constitute the wealthiest segment among working Americans. This particular group has consistently shown the highest average net worth since 1989. Retired individuals generally possess a higher net worth compared to those in sales, services, or technical occupations. In 2019, managerial and professional class had an average net worth of $1,395.67, while for individuals having sales, services, or technical roles, the value was $389.93. People from other occupations had an average net worth of $290.88 in 2019, and those not working or retired have a value of $640.73.

Millionaires and Billionaires in the US

According to the Global Wealth Report by Credit Suisse, as of the end of 2020, there were approximately 21.95 million millionaires in the United States. This figure is expected to increase by 28% to reach 28.06 million by the year 2025. Forbes notes that the number of US billionaires saw a rise from 614 in 2020 to 724 in 2021. In the USA, there are currently seven Black billionaires, constituting less than 1% of the total billionaire population. Additionally, there are 87 women who hold billionaire status, making up around 12% of the US billionaire demographic.

Factors for Calculating the Net Worth of Americans

The Federal Reserve considers various asset categories when calculating the net worth of an individual, including:

  • Bank accounts, including checking, money market, brokerage cash accounts, prepaid debit cards, etc.
  • Certificates of deposit, government bonds, and savings bonds.
  • Investments in health savings accounts, 529 college savings plans, and individual taxable investment accounts.
  • Cash value life insurance policies and annuities with equity, such as IRAs, 401(k)s, and 403(b)s.
  • Retirement accounts like IRAs, 401(k)s, and 403(b)s.
  • Automobiles, recreational vehicles, motorcycles, boats, and helicopters are also factored in.

Real estate, particularly residential properties, is included in the calculation. However, it’s important to note that liabilities or obligations, such as debts, are subtracted from the total value of assets when determining net worth. Debts considered in this assessment include:

  • Mortgages.
  • Home equity loans or home equity lines of credit.
  • Balances on credit cards.
  • Installment loans like auto and student loans.

What Is a Good Net Worth?

Make Money

Determining what’s considered a good net worth can vary from person to person. For instance, a recent college graduate in their 20s may find satisfaction in a net worth of $1,000 while juggling student loans. On the contrary, a 40-year-old just starting to save for retirement might feel uneasy with the same amount.

A common guideline suggests calculating your net worth by dividing your age by 10 and multiplying the result by your annual income. For example, a 40-year-old earning $100,000 annually would aim for a net worth of $400,000. Another rule advises having a net worth twice your annual salary by age 40. Following this, for each subsequent decade, you’d aim to accumulate an additional two years’ worth of income. By age 50, it would be four times your salary, and so on.

It’s crucial to distinguish between high net worth and ultra-high net worth classifications. High net worth individuals typically possess $1 million or more in investable assets, while those considered ultra-high net worth have $30 million or more in investable assets.

Why is Net Worth Important as an Economic Factor?

Tracking your net worth over time serves as a valuable gauge of your financial stability. While earning a paycheck is a significant accomplishment, understanding where your money goes afterward isn’t always straightforward. Monitoring your net worth provides insights into past financial decisions and aids in shaping future ones.

  • Understanding Your Spending Habits: Being aware of your net worth allows you to pinpoint areas where you might be overspending, acting as a safeguard against accumulating excessive debt. This awareness helps you maintain a balance between your wants and needs, fostering better financial discipline.
  • Navigating Towards Financial Freedom: By assessing your assets and liabilities, you can formulate a strategic plan to eliminate debt. Understanding your net worth also plays a crucial role in retirement planning, empowering you to make wise decisions that positively impact your cash flow.
  • Staying Committed to Financial Goals: Your net worth serves as a compass, keeping you aligned with your financial objectives. When your net worth reflects progress towards your goals, it serves as motivation to persist in your current financial practices. Conversely, if there’s a misalignment, it can inspire you to adjust your savings and investment strategies for better outcomes.

Also Read: Net Worth Meaning: How is it Calculated?

The average net worth of Americans depends on factors like income, investments, and debts. It’s important to recognize the diversity in financial situation across the population to make optimal economic policies.

Source: Average Net Worth of Americans—By Age, Education and Ethnicity

Aditya Farrad

Aditya Farrad

Aditya is a seasoned business expert and the founder of Moneymint. He became a self-made millionaire at a young age thanks to his various online businesses. With years of experience running his own successful businesses, Aditya understands the unique challenges and opportunities that come with entrepreneurship.

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