The U.S. Census is conducted every 10 years. Among the data collected is information on household income, which can then be used to determine the average American household net worth. The most recent U.S. Census available data on income and net worth from 2017 show that the average American net worth is $104,000.
Average net worth is defined as a measurement of wealth in the United States. Net worth is the total of your net assets, which is all the assets a household owns minus all the debt it owes. Net assets include home equity—your home's resale value—minus mortgages and selling costs. Net assets also include an automobile's resale value minus its outstanding loan value, retirement account, savings and cash; the resale value of household items such as consumer electronics, jewelry, or art can also be included.
Household debt is the combined amount of debt an entire household owes—credit cards, student loans, medical debt, remaining mortgage or auto loans, or any other debts.
- The median American net worth is $104,000
- Net worth equals your owned assets minus your debt
- A huge gap exists between the top 20% and the bottom 20% net worth
- Age and educational level contribute to wealth
Average Household Net Worth by Age
The U.S. Census Bureau uses census data to determine the median net worth of Americans by age group. The median is the middle number in a sorted list of numbers—this measurement is the mid-point of household wealth across America, instead of an average. If the average were used (adding up the net worth of the entire population and dividing it by the number of households) the result would be an inflated value due to the tremendous wealth some households have.
The Census Bureau uses the median for its measurement of household net worth.
You might look at the median net worth of $104,000 and think, "I'm doing really well!" or "I'm way behind!" However, net worth is only a useful indicator when it is grouped by ages. Young people haven't had time to accumulate much wealth. Older households live on their wealth. You should compare your net worth to the median in your age bracket to determine your net worth comparability.
Using census data, the median net worth of those younger than 35 is just $9,773. The median net worth for those older than 75 is $237,900. Here's the complete breakout by age group:
Another important factor in accumulating wealth is education. The median net worth of households without high school diplomas is only $4,863. A high school degree increases that to $34,460, and a bachelor's degree dramatically raises it to $198,000—despite the burden of college debt. A graduate or professional degree doubles that the average net worth to $396,900. Education helps you accumulate wealth because you can find better-paying jobs.
The Difference Between Net Worth and Income
The U.S. government defines wealth by income, not net worth. For example, President Barack Obama defined the middle class as households that make less than $250,000 during the debates over an extension of the Bush tax cuts. During the fiscal cliff crisis, Congress said the middle class constitutes households making less than $450,000. President Trump's tax plan of 2017 said middle-class couples earn between $75,000 and $225,000.
Income doesn't account for the assets a household has. In 2019, the median household income was $68,703. This doesn't mean everyone who earns this much is in the middle of the wealth range. This doesn't include their assets, which means income is not an indicator of overall wealth.
Many retired households have a high net worth, but low income.
Generally, seniors had a higher income earlier in their lives while they were saving for retirement. Once in retirement, their income drops but their net worth stays fairly high, due to the assets they have built up. Many younger families may have a high income but low net worth because they are immediately spending on child care, housing, car payments, and other bills.
On the note of income and worth, it's safe to assume that those living below the federal poverty level with incomes of $12,880 for a single person per year have a low net worth (add $4,540 per person per household for poverty levels for families).
How the Nation's Wealth Is Distributed
The U.S. Census Bureau also reports median household wealth by quintiles. A quintile is one-fifth of a group, just like a quartile is one-fourth of a group. Dividing Americans into five income groups gives researchers a way to see how wealth is distributed in America.
The bottom wealth quintile is the poorest fifth of households. The top wealth quintile is the richest 20% of households. As we've seen from the data so far, the bottom quintile will probably be younger households and those without much education. The top quintile will include older households and those with the most education.
In the United States, there is a huge difference between the bottom and top quintiles.
The median net worth of the bottom quintile is $4,715. That's not much cushion from the economic impact of a major disaster. Many in this quintile may have a negative net worth, meaning they owe more than their assets are worth.
The median net worth of those in the richest quintile is $554,700. This allows them to afford a lifestyle that is vastly different than the bottom quintile. This group owns three times as much as the fourth quintile and seven times as much as the third.
Here is the complete breakout by quintile:
|Quintile||Median Net Worth|
Trends in Household Wealth
Median U.S. wealth has actually increased significantly since the last full census in 2010. At that time, the median net worth was $68,828. This is likely due to the steady economic recovery since the 2008 recession. It remains to be seen, however, what the COVID-9 recession will do to median net worth in the U.S. Here is how each group fared from 2010 to 2017:
|Quintile||Median Net Worth (2000)||Change by 2017|
In the Federal Reserve's most recent Survey of Consumer Finance—released in 2017—it reported that the wealthiest 1% of Americans now control 38.6% of the nation's wealth. This is a 2.3% increase from the 36.3% they owned in 2013. Every other wealth level in America saw their percentage of wealth fall. The wealthy benefited from a booming stock market, while average Americans didn't because they couldn't afford to build large investment portfolios—if they could invest at all.
The rise in wealth inequality is similar to the trend in income distributions.
In 2000, 5.5% of households earned $200,000 a year or more. In 2017, 7.7% did. It's another indication of the growing income inequality in America. The 2016 Phoenix Wealth and Affluent Monitor found similar trends, although it divided wealth up differently. The researchers reported that 0.9% of U.S. households have more than $5 million in net worth.
However, that 0.9% accounts for 24% of the nation's wealth. 5% of U.S. households own between $1 million and $4.9 million—35% of the nation's wealth; 25% of households who have a net worth between $100,000 and $999,999 own 32% of the total wealth in the country; and the remaining 70% of households have a net worth of less than $100,000—meaning the bulk of America only controls 9% of its wealth.
Determining Your Net Worth
To calculate your personal net worth, add up the resale value of all your assets. Then add up all the debt you owe. Subtract your debt from your assets to find your net worth. When calculating your net worth and comparing your household to the rest of the country, keep in mind that there are no intangibles calculated in these figures, and compare yourself to your age group.
Everyone would like to have more money, but there are many aspects of life that can become neglected in the pursuit of riches. While you may not have a luxury yacht or a large mansion, if you have found happiness in your life and what you have, you might have more wealth than the top 1%.