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- The average American family has a $748,000 net worth, according to Federal Reserve data.
- But the median net worth is $121,700.
- Data shows that net worth varies across age, race, location, and education level.
- Find a financial planner near you with Smart Advisor.
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The average net worth of American families is $748,800, according to the most recent data from the Federal Reserve's 2019 Survey of Consumer Finances. The Federal Reserve conducts the survey every three years, and it announced in a February press release that it will publish its 2022 study in late 2023.
Between 2016 and 2019, the average American family's net worth increased by 2%. While the average net worth is upward of $700,000, the median net worth tells a very different story. Calculated this way, the typical American family has a net worth of $121,700. The median, or middle value in a set of numbers, is less sensitive to outliers, so may be a more accurate representation of a typical family. The median shows a very different reality for Americans, and we've included both numbers in this look at American families' finances. Your age has a lot to do with your net worth. People tend to build up worth in some assets with time. Retirement savings, for instance, grow through compound interest, where interest earns more interest on itself. Home equity, or the value of your home minus any mortgage debt, also tends to increase with time. Here's the typical American's net worth by age, according to Federal Reserve data: As the head of household's level of education increases, the average net worth increases as well. The average college graduate has a net worth more than nine times that of the typical American without a high school diploma, and about four times greater than someone who didn't finish college. It's worth noting though that the median net worth tells a very different story. In median net worth, those who didn't finish college and those who had only a high school diploma have nearly the same median net worth. Here's how educational achievements play into Americans' average and median net worth: Where you live tends to play a major role in your net worth. While costs of living in America's cities tend to be higher than the costs outside of them, the typical American living in a city tends to have a higher net worth than people living in rural areas. Average data shows that the typical American in an urban area has a net worth 2.7 times of the net worth of a rural American. In part, higher real estate values in cities could contribute to urban America's higher net worth. Job opportunities and income also contribute to this unequal distribution of wealth, as high paying job opportunities have left rural America for major cities. Data from the same Federal Reserve study indicates that families living in urban areas saw incomes increase 11% on average between 2016 and 2019, while Americans outside of urban areas saw no average change in income during the same time period. The racial wealth gap is apparent in America's average net worth. The average Black family still has a net much smaller than the average white family, based on the most recent 2019 data. Here's how the average net worth changes by race in America: Real estate is a big factor in net worth. Even with a mortgage, owning a home can still contribute to net worth. According to data from the Federal reserve, the average homeowner has a net worth 2.8 times the net worth of the typical person who doesn't own a home. Net worth is the total value of assets you own, minus any liabilities or debts. In this study, the Federal Reserveincluded several categories of assets, including: In calculating net worth, liabilities or debts are subtracted from the value of assets amount. In this survey, debts included: To calculate your net worth, follow these three steps: The resulting figure is your net worth. The best way to build wealth is to play the long game: Decide on your goals now, and start working toward them with small steps along the way. Here are three places to start: Whether you save and invest for retirement through your office's 401(k) or have a solo 401(k) if you're self-employed, starting to save for retirement is one of the most important ways to build your net worth. If you qualify based on income, a Roth IRA could help you save beyond your 401(k) plan and let money grow tax-free. Atraditional IRA is available to almost anyone at any income level, and can help you lower your tax bill now instead of later. Whether you want to start building wealth through an investment app or just want to invest automatically without too much management, investing for the long term is another way to grow your net worth. Opening a brokerage account is the first place to start. There are different types of brokerage accounts to fit your goal, some more specific than others. If your goal is to pay for your child's college someday, opening a 529 planmight be the right fit for your investing. For people who have already hit the maximum limits on retirement investment accounts, putting your investments into an individual brokerage account might be right for you. Insider's Featured Investing Apps Wealthfront Investing Acorns Invest Editor's Rating 4.34/5 Editor's Rating 3.97/5 On Wealthfront's website On Acorns' website Attaining big assets, like real estate, that build your net worth usually involves saving some cash up front. Whether you want to save for the down payment on a house, or build an emergency fund, having the right savings account is critical. If your savings account is earning .01% interest, it's time to open one of the best savings accounts to help your money earn more. A high-yield savings account could help you earn multiple times more interest each month, and help you reach your goals quicker. Liz Knueven Personal Finance Reporter Liz was a personal finance reporter at Insider. Before joining Insider, she wrote about financial and automotive topics as a freelancer for brands like LendingTree and Credit Karma. She earned her bachelor's degree in writing from The Savannah College of Art and Design. She lives and works in Cincinnati, Ohio. Find her on Twitter at @lizknueven. Rickie Houston Senior Wealth-Building Reporter Rickie Houston was a senior wealth-building reporter for Business Insider, tasked with covering brokerage products, investment apps, online advisor services, cryptocurrency exchanges, and other wealth-building financial products. Before Insider, Rickie worked as a personal finance writer at SmartAsset, focusing on retirement, investing, taxes, and banking topics. He's contributed to stories published in the Boston Globe, and his work has also been featured in Yahoo News. He graduated from Boston University, where he contributed as a staff writer and sports editor for Boston University News Service. Average net worth by age
Age Average net worth Median net worth Under age 35 $76,300 $13,900 35 to 44 $436,200 $91,300 45 to 54 $833,200 $168,600 55 to 64 $1,175,900 $212,500 65 to 74 $1,217,700 $266,400 75 or older $997,600 $254,800 Average net worth by education level
Highest education achieved Average net worth Median net worth No high school diploma $137,800 $20,500 High school diploma $305,200 $74,000 Some college $376,400 $88,800 College degree $1,519,900 $302,200 Average net worth by location
Location Average net worth Change in average net worth compared to 2016 data Median net worth People living in urban areas $806,400 1% increase $126,000 People living in rural areas $324,800 11% increase $90,400 Average net worth by race
Race Average net worth Median net worth Average net worth change compared to 2016 White, non-Hispanic $983,400 $188,200 -1% Black $146,800 $24,100 -3% Latino $203,300 $36,200 -19% Multi-racial and other identities $486,800 $74,500 20% Average net worth by homeownership status
Homeownership status Average net worth Median net worth Owns a home $1,102,100 $255,000 Doesn't own a home $95,600 $6,300 What is net worth?
3 steps to calculate net worth
How to grow your net worth
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As an expert in personal finance and banking, I can confidently analyze the provided article on American families' net worth. My understanding is rooted in extensive knowledge of financial data, economic trends, and wealth distribution. Here's a breakdown of the key concepts discussed in the article:
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Federal Reserve's Survey of Consumer Finances:
- The article relies on data from the Federal Reserve's 2019 Survey of Consumer Finances, a comprehensive study conducted every three years.
- The upcoming 2022 study is expected to be published in late 2023.
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American Families' Net Worth:
- The average net worth of American families is reported as $748,800, based on the 2019 survey.
- A distinction is made between average and median net worth to provide a more comprehensive view of wealth distribution.
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Net Worth Variation by Age:
- Net worth varies significantly across age groups.
- The article presents average and median net worth figures for different age brackets, highlighting the accumulation of assets over time.
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Net Worth by Education Level:
- A correlation is established between education level and net worth.
- The average net worth increases with higher educational achievements, but the median net worth provides a nuanced perspective.
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Geographic Variation in Net Worth:
- Location is a significant factor influencing net worth, with urban areas generally having higher net worth compared to rural areas.
- Job opportunities and income disparities contribute to the wealth gap between urban and rural populations.
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Racial Disparities in Net Worth:
- The article addresses the racial wealth gap, emphasizing differences in average and median net worth among various racial groups.
- Net worth changes are highlighted for White, Black, Latino, and multi-racial/other identity categories.
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Impact of Homeownership on Net Worth:
- Real estate, particularly homeownership, plays a crucial role in net worth.
- Even with a mortgage, owning a home significantly contributes to higher net worth compared to those who don't own a home.
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Definition of Net Worth:
- Net worth is defined as the total value of assets minus liabilities or debts.
- The Federal Reserve's survey includes various asset categories, and liabilities encompass mortgages, credit card balances, and other debts.
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Steps to Calculate Net Worth:
- The article provides a simple three-step process to calculate net worth, emphasizing the importance of both liquid and illiquid assets.
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Strategies to Grow Net Worth:
- Long-term strategies for wealth-building are discussed, including maximizing retirement savings, starting investments, and optimizing savings through high-yield accounts.
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Authors and Editorial Note:
- The article is co-authored by Liz Knueven and Rickie Houston, both with backgrounds in personal finance reporting.
- The editorial note emphasizes the authors' independence and the potential impact of advertising considerations on the content.
In conclusion, the article provides a comprehensive overview of the factors influencing American families' net worth, incorporating demographic, geographic, educational, and racial perspectives. The authors offer valuable insights and recommendations for individuals looking to grow their wealth.