In the United States, a person's net worth is a barometer of their financial standing, particularly as they approach retirement. This figure, calculated by subtracting liabilities from assets, varies considerably across the population, shaping the retirement lifestyle and economic security of millions.
Finance expert and author Geoff Schmidt evaluates retiree wealth using the most recent data from the Federal Reserve Board’s Survey of Consumer Finances.
Poor: Households in the 20th percentile, with a net worth of around $10,000, are categorized as poor. This group likely doesn’t own a home and focuses financial resources on necessities.
Middle class: The middle class is in the 50th percentile, with a median household net worth of $281,000 for Americans aged 65 and up. This typically includes home equity, savings and a 401(k) account.
Wealthy: To be considered well off, a person must be in the 90th percentile, possessing a household net worth of $1.9 million. This level of wealth affords trips, charity donations and college funds for children. The 95th percentile, with a net worth of $3.2 million, is considered wealthy, facilitating estate planning and possibly owning multiple homes. The top 1%, or the 99th percentile, has a net worth of $16.7 million and represents the very wealthy, who enjoy considerable financial freedom and luxury.
Americans aged 55-64: This group has an estimated average net worth of $1.18 million. This figure is significant as it represents people who are typically nearing the end of their working years and are at the peak of their wealth accumulation phase.
Americans aged 65-74: This group has a higher average net worth than the 55-64 age group, at $1.22 million. The increase in average net worth for this age group is likely because of continued asset growth and possibly the beginning of drawing down retirement accounts.
75 and older: This demographic has an average net worth of $977,600, which is lower than the younger age groups. This decrease can be attributed to the fact that people in this age group are further into their retirement and may be drawing down their assets more significantly
Wealth Perception In America
According to Schwab's 2023 Modern Wealth Survey, Americans perceive an average net worth of $2.2 million as wealthy.
Knight Frank’s research indicates that a net worth of $4.4 million is required to be in the top 1% in America, a figure much higher than in countries like Japan, the U.K. and Australia.
Economic Class Net Worth
A growing number of Americans are entering retirement with debt. The proportion of households led by people aged 65 and older with debt increased from 38% in 1989 to 61% in 2016. CNBC reports debt among those aged 70 and up surged by 614% from 1999 to 2021, with mortgages constituting the majority of the debt.
Net worth at retirement age in the U.S. varies considerably and is shaped by elements such as homeownership, savings and debt. While the middle class and wealthy often experience financial security, a notable segment of the population confronts economic difficulties. This disparity underscores the critical role of financial planning and management, including the valuable assistance of financial advisers, in ensuring a stable financial future throughout life.
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Poor: Households in the 20th percentile, with a net worth of around $10,000, are categorized as poor. This group likely doesn't own a home and focuses financial resources on necessities.
Middle class: Those in the 40th to 60th percentile of household income, ranging from $55,001 to $89,744. Upper middle class: Households in the 60th to 80th percentile, with incomes between $89,745 and $149,131. Upper class: The top 20% of earners, with household incomes of $149,132 or more.
In the United States, the concept of being rich is often a subject of discussion, curiosity and, sometimes, aspiration. Charles Schwab's 2023 Modern Wealth Survey provides insights into this topic, revealing that the average American equates being wealthy with a net worth of approximately $2.2 million.
To feel wealthy, Americans say you need a net worth of at least $2.2 million on average, according to financial services company Charles Schwab's annual Modern Wealth Survey. But even if you have that much in the bank, it might not be enough to be considered rich in certain places, the survey found.
The Pew Research Center defines the middle class as households that earn between two-thirds and double the median U.S. household income, which was $65,000 in 2021, according to the U.S. Census Bureau.
Middle-class income currently ranges from a little under $40,000 to a little over $119,000. The definition of middle class extends beyond income to factors like education, location and marital status.
Based on 2021 data, here's what you would need to earn in order to be in each class: Lower class: This is defined as the bottom 20% of earners. Those in the lower class have an income at or below $28,007. Lower middle class: This is defined as individuals in the 20th to 40th percentile of household income.
In 2020, according to Pew Research Center analysis, the median for upper income households was around $220,000 and the median for middle income households was slightly above $90,000.
The middle class is the economic stratum between the working class and the wealthy. In the United States, the middle class occupies about half of the population, mainly consisting of people who work in white-collar professions, small businesses, or skilled trades.
Some sources define the upper middle class as anyone making a lot of money but haven't crossed the threshold to become truly wealthy. These individuals often have a net worth of at least $500,000 to $2 million.
Household wealth or net worth is the value of assets owned by every member of the household minus their debt. The terms are used interchangeably in this report. Assets include owned homes, vehicles, financial accounts, retirement accounts, stocks, bonds and mutual funds, and more.
While people may use the terms “rich” and “wealthy” interchangeably, there can be a slight difference. We tend to use the word “rich” to refer to anyone with a lot of money to spend, even if they've gained it recently. On the other hand, “wealthy” more often refers to affluence that crosses generations.
Peak earning years are generally thought to be late 40s to late 50s*. The latest figures show women's peak between ages 35 and 54, men between 45 and 64. After that, most people's incomes typically level off. Promotions favor younger people with longer futures*.
There is a difference between being rich and being wealthy in terms of money and financial resources. Being rich typically means having a lot of possessions and material wealth, while being wealthy is more about having sustainable and lasting wealth.
In 2021, the typical lower-income White household had a net worth of $55,400, while the typical lower-income Asian household had $40,800. The net worth of lower-income Black and Hispanic households was much less.
Some sources define the upper middle class as anyone making a lot of money but haven't crossed the threshold to become truly wealthy. These individuals often have a net worth of at least $500,000 to $2 million.
According to EBRI estimates based on the latest Federal Reserve Survey of Consumer Finances, 3.2% of retirees have over $1 million in their retirement accounts, while just 0.1% have $5 million or more.
In the U.S., it may take you $5.81 million to be in the top 1%, but it takes a minimum net worth of $30 million to be considered among the ultra-high net worth crowd. As of the end of 2023, this ultra-high net worth population is on the rise, reaching 626,000 globally, up from just over 600,000 a year earlier.
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