What Is The Average Net Worth Of American Households?

A new survey shows that there are 11.8 million households with net assets of more than $1 million, according to the US Bureau of Labor Statistics (BLS). 

These households would place them in the top 1%, and this group has a net worth of $1.5 billion, which can be explained by the income they produce. Wealthy baby boomer households also account for 57% of total household wealth in this category, but boomer households “high net worth accounts for 56% of total household wealth. Millionaire households have a net worth of over $2.6 million, with a total net worth of over $4.7 million. The top 1% is the group with the highest net worth, at $3.3 million, and the bottom 10% with net worth under $500,000. These millionaire households each have a net income of between $5 million and $7.2 million. 

While average net worth looks pretty good for young people who have just graduated from college and are just starting their careers, the median tells a different story. Those who have not completed college or have only a college degree have almost the same median value as those with a median net worth. It is also interesting to note in the chart below that there is a significant gap between the number of college educated and those without college degrees, compared to the percentage of black and white households with college degrees. In fact, a black household without a college degree has a median net worth of $1.2 million and a white household has a median net worth of $2.3 million. 

To correct this, we use the median value of net wealth, that is, the value in which half of all households are or were. The median is because there are outliers that would distort the mean, such as those with a college degree and those without. 

The mean net worth is the average of all net assets of each group, one above the other, and we get to see the total net worth of the entire US population, not just the top 1%. 

This table divides the five wealth classes and then shows the average net worth of each group. Note: The IRS statistics state that the average net worth of the top 1% of households in the United States is approximately $3 million. 

One caveat is that this is the median value, and a person with $10,200 net worth does not necessarily match the average (excluding home equity, $044). This is because middle-income families have been much more likely to have negative effects on their wealth since the housing bubble burst in 2006. This median number is also distorted on average, but it is good enough to detect trends. Compare the net worth of other Americans on this page with the net value you have at hand, and you know what you’re seeing. 

Given this phenomenon, it is no wonder that everyone is trying to discredit it. It is possible that when a Facebook post says “1 percent of Americans are millionaires,” that means annual income that is different from net worth. The definition of which person, household or family is wealthy is based on the expected net worth, not the actual income of that person.

Jeff Bezos, who is valued at $121 billion, is included as the average American, compared with the average US tenant with a net worth of $2.5 billion. To put that figure into perspective, the “average American” renter has an annual income of only about $3,000, or $1,500 less than the median household income. 

The first thing you should understand about net worth is that it can be measured by looking at the typical household across the street. When we discuss the average net worth of each group, it is important to know that most of the “typical” “American” net worth is in the hands of a few very wealthy Americans like Jeff Bezos. The average “retirement asset value” is, however, a much higher figure, because there are a few very high-net-worth individuals in the 60s and 70s who make the socio-economic status of an average household seem far more important than the income and wealth of their tenants. 

The top income quarter is tied to the highest percentage of households with net wealth in the top 10% of the US population, and to the bottom 20%. 

I am surprised to see that a college-educated 44-year-old household in the top 10% has a net worth of $180,000. White households, having only college education, see only 9% of them have any assets. By contrast, 19 black families have zero or negative net wealth, while white households have only 0.5% or less of their income as assets, and only 1% with negative assets in their household. 

I doubt the figure of $182,000, because the average net worth of the top 10% of households in the US is $109,000, according to the Federal Reserve survey. This clearly skews the picture of the super-rich, who have done extremely well since the financial crisis. 

If you enjoyed this post click here to subscribe to a complete feed and stay up to date with today’s challenging market!