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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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.
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.
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.
Upper middle class: Anyone with earnings in the 60th to 80th percentile would be considered upper middle class. Those in the upper middle class have incomes between $89,745 and $149,131. Upper class: Finally, the upper class is the top 20% of earners and they have incomes of $149,132 or higher.
Here's the income it takes to be a top earner in your state
You'll need to earn more than half a million annually to be considered among the highest earning residents in 11 states and Washington, D.C. "This comes down to cost of living," Murray said.
Net worth is the difference between the values of your assets and liabilities. The average American net worth is $1,063,700, as of 2022. Net worth averages increase with age from $183,500 for those 35 and under to $1,794,600 for those 65 to 74. Net worth, however, tends to drop for those 75 and older.
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.
Assuming an inflation rate of 4% and a conservative after-tax rate of return of 5%, you should aim for a savings target of $1.3 million to fund a 30-year retirement that begins at age 67. This would give you an investment portfolio that produces about $50,000 a year in income.
A majority, 65%, say they live paycheck to paycheck, according to CNBC and SurveyMonkey's recent Your Money International Financial Security Survey, which polled 498 U.S. adults. That's a slight increase from last year's results, which found that 58% of Americans considered themselves to be living paycheck to paycheck.
According to Schwab's 2023 Modern Wealth Survey, its seventh annual, Americans said it takes an average net worth of $2.2 million to qualify a person as being wealthy. (Net worth is the sum of your assets minus your liabilities.)
To be considered very high net worth, one might need assets ranging from $5 million to $10 million, while an ultra-high net worth status could require $30 million or more. These figures underscore the subjective nature of financial classifications across different thresholds of wealth.
In 2021, the median household income is roughly $68,000. An upper class income is usually considered at least 50% higher than the median household income. Therefore, an upper class income in America is $100,000 and higher. However, an upper class income also depends on where you live.
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.
A Smart Asset report based on MIT's Living Wage data found that the average salary required to live comfortably in the U.S. is $68,499 after taxes. This is nearly $10,000 higher than what the average salary currently is.
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