Median Net Worth Of Families By Age In America

Median net worth of families by age

It’s perplexing to me why Americans don’t have more in retirement savings given we’ve seen a massive boom in the stock market, bond market, and real estate market for the past…. forever. This article will look at the median net worth of families by age. Sadly, the numbers are very low.

If I was a working adult back in 1980, I’d like to think I’d be worth at least $10 million today. $10 million is the ideal net worth amount before retiring thanks to inflation. Not only would I be worth $10,000,000, so would all my friends.

How hard can becoming a deca-millionaire be when the S&P 500 is up over 24X since 1980? Look at all the real estate you could have bought for dirt cheap 40 years ago as well. But let’s get real. Life happens. Everything is easier said than done. If only I had a time machine.

The main reason why I think more Americans aren’t doing financially better is due to a lack of financial education. Why aren’t personal finance fundamentals indoctrinated in kids by the 12th grade, I don’t know. I certainly plan to teach my child about the power of compound returns, saving, investing, asset allocation, and the importance of optionality.

Let’s take a look at a couple charts from the Economic Policy Institute report. The Economic Policy Institute is a 501(c)(3) non-profit American think tank based in Washington, D.C. that carries out economic research and analyzes the economic impact of policies and proposals.

Median Net Worth Of Families By Age

Here are the latest numbers available as of 2021. The data takes years to compile and then get released to the public. The average net worth of families age 32-61 is roughly $80,000.

If you are in the top 90th percentile, the average net worth of families age 32 -61 is roughly $900,000. That is a huge difference in the median 50th percentile and the top 90th percentile.

Average Net Worth Of Families By Age And Percentile

Although a bull market tends to financially help everyone on the spectrum, there is often more dissatisfaction due to a widening wealth gap.

Those families in the 90th percentile have a net worth of almost $1,000,000. Meanwhile, those in the 50th percentile or below have hardly any net worth at all!

Median Net Worth Of Families Age 32 – 61

Now let's look at the median net worth of families age 32-61 instead of the average. As you can see, the oldest families in the 56-61 age range only have a median net worth of $180,000. After six years of living off a very modest $30,000 a year in retirement, the median family in this demographic will be left with ZERO.

It's true that Social Security should help keep the median family afloat with an extra $1,000 – $2,000 month in income. But this is truly a spartan level of income, especially if the median family's primary residence is not paid off. If the median family is renting, then they are at the mercy of forever rising rents, which will eat into its earnings power.

Median net worth of families by age

One of the most alarming observations from the above media net worth chart is the steep decline of median net worth for those older than the 38-43 age groups. Going from a $330,000 net worth in 2007 down to only a $180,000 net worth in 2013 (latest year the report has data) is a whopping 45% decline, six years closer to retirement age.

What happened? Fear and selling at the bottom. It has consistently been shown that active investors underperform passive index investors. Therefore, most of our investments should be in passive investments.

The Solution To Greater Financial Security

The obvious solution to greater wealth and financial security is to own stocks and real estate over the long run. You can own one or the other, or preferably both. But certainly don’t own nothing. Inflation alone will destroy your wealth over the long term.

Here are some reasons why you might want to own real estate or stocks to help you get started, or help encourage you to own more of either asset class. Ideally, you want to have a median net worth 10X greater than the typical American household.

Why You May Want To Own Real Estate

1) You are more in control. Every physical real estate investment you make puts you in charge as CEO. As CEO, you are able to make improvements, cut costs (refinance your mortgage), raise rents, find better tenants, and market accordingly. Of course you are still at the mercy of the economic cycle, but overall you have much more leeway in making wealth optimizing decisions. When you invest in a public or private company, you are a minority investor who puts his or her faith in management. Nobody cares more about your investment than you.

2) Leverage with other people’s money. Leverage in a rising market is a wonderful thing. Even if real estate only tracks inflation over the long run, a 3% increase on a property where you put 20% down is a 15% cash-on-cash return. In five years you will have more than doubled your equity at this rate. Stocks, on the other hand, generate roughly 7% – 9% a year including dividends. Leverage also kills on the way down, so remember to always run the worst case numbers before purchase. See: How To Start Investing In Stocks With Little Money

3) Tax advantageous. Not only can you deduct the interest on up to $1 million in mortgage indebtedness on your primary home, you can also sell your primary home for tax free profits up to $250,000 for singles and $500,000 for married couples if you live in the home for the last two of a five year period. If you are in the 28% or higher tax bracket, it behooves you to own property. All expenses associated with managing your rental properties are also deductible towards your income.

4) Tangible asset. Real estate is something you can see, feel, and utilize. Life is about living, and real estate can provide a higher quality of life while also making you money. Stocks aren’t even pieces of paper anymore, but ticker symbols and numbers. When the world comes to an end, you can seek shelter in your property. Real estate is one of the three pillars for survival, the other two being food and clothing.

5) Easier to analyze and quantify If you can calculate realistic expenses and rental income that’s all you really need when it comes down to valuing a piece of property. If you can borrow at 3% and rent out for a 7%+ gross yield, you’ve likely found yourself a winner. Real estate is immediately exploitable if you have the financial means to invest. There’s not only the cash flow component but the underlying equity component that helps investors build wealth. Take a look online for the latest estimates, comparables, and sales history.

See: BURL: The Real Estate Investing Rule To Follow

6) Less visible volatility. Your house value could be tanking and you would never know it since there isn’t a daily ticker symbol. During bad times, the utility of your home really helps soften the blow as you enjoy your home and create great memories. During the 2008-2009 downturn, I still got to enjoy my vacation property in Lake Tahoe 15-20 days a year even though its value was plunging. Meanwhile, looking at tickers on the TV or computer screen stressed me out sometimes. When your investment is less volatile, it’s much easier to stay the course and not sell at the bottom.

7) A source of pride. Making money for money’s sake feels empty after a while. Every time I drive by my rental properties I feel proud to have made the purchases years ago. I know that my money is working as hard as possible so I don’t have to. Real estate is a constant reminder that taking calculated risks over time pays off. There is an indescribable feeling nobody tells you once you’ve closed on your property. Even though the bank probably owns most of it in the beginning, you literally feel like the King or Queen of your castle. When you die, you can pass on your pride to your children or closest companions to let them create their own memories.

See: Two Retirement Philosophies Will Determine Your Safe Withdrawal Rate

8) More insulated. Real estate is local. If you’ve made a good decision to buy in an economically strong region, you will be more insulated from the national economy or the global economy. Spain blowing up is likely not going to affect the rent you can charge in Silicon Valley. Brexit actually helped drive mortgage rates lower as foreign investors bought safe US Treasury bonds.

Look at prices in superstar cities such as NYC, Hong Kong, Singapore, London, Paris, and San Francisco over the past 20 years. They fall the least, recover the soonest and gain the most. Of course, industries in your area could suddenly disappear and leave you broke as well. Of course, it’s also a good idea to diversify into lower cost regions of the country with much higher yields. I do this through real estate crowdfunding to arbitrage lower valuations and higher net rental yields in non-coastal city real estate.

9) The government is on your side. Not only do you get generous mortgage interest tax deductions and tax free profits, you get bailouts if you can’t pay your mortgage. The government also aggressively went after banks to force them to extend loan modifications to bad and good creditors. I even got a free loan modification from Bank of America to my surprise (cut my 30-year fixed rate from 5.875% to 4.25% for free).

Programs such as HARP 1.0 and HARP 2.0 are allowing folks to put down a minimal downpayment. There are plenty of non-recourse states such as California and Nevada which don’t go after your other assets if you decide to stop paying your mortgage and squat for months. When was the last time the government bailed individual investors out of their stock investments?

Future Home Price Predictions 2016, 2017, 2018

Favorite Way To Invest In Real Estate

My favorite way to invest in real estate is through REITs and real estate crowdfunding. This way, I can gain a broad exposure to real estate, diversify away from where I currently own, and earn income passively.

Take a look at my two favorite real estate crowdfunding platforms. I've personally invested $810,000 in real estate crowdfunding in the heartland of America. Both platforms are free to sign up and explore.

Fundrise: A way for accredited and non-accredited investors to diversify into real estate through private eFunds. Fundrise has been around since 2012 and has consistently generated steady returns, no matter what the stock market is doing. For most people, investing in a diversified eREIT is the way to go. 

CrowdStreet: A way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations, higher rental yields, and potentially higher growth due to job growth and demographic trends. If you have a lot more capital, you can build you own diversified real estate portfolio. 

Why You May Rather Own Stocks

To achieve above a median net worth of families, owning stocks for the long-term is a good idea too.

1) Higher rate of return. Stocks have historically returned ~7-9% a year compared to 2-4% for real estate over the past 60 years. You can also go on margin to boost your returns, however, I don’t recommend this strategy given your brokerage account will force you to liquidate holdings to come up with cash when things go the other way. Your bank can’t force you to come up with cash or move out so long as you are paying your mortgage.

2) Much more liquid. If you don’t like a stock or need immediate cash, you can easily sell your stock holdings. If you need to cash out of real estate you could potentially take out a home equity line of credit, but it’s costly and takes at least a month.

3) Lower transaction costs. Online transaction costs are under $10 a trade no matter how much you have to buy or sell. The real estate industry is still an oligopoly and fixes commissions at a ridiculously high level of 5-6%. You would think the invention of Zillow would lower transaction costs, but unfortunately they’ve done very little to help lower expenses. They are in cahoots with the National Association of Realtors because they are their source of advertising revenue.

4) Less work. Real estate takes constant managing due to maintenance, conflicts with neighbors, and tenant rotation. Stocks can literally be left alone forever and pay out dividends to investors. Without maintenance you’re able to focus your attention elsewhere such as spending time with family, your business, or traveling the world. You can easily pay a mutual fund manager 0.5% a year to pick stocks for you or hire a financial advisor at 1% a year. Or you can just track and analyze your portfolio yourself due to so many free financial tools online.

5) More variety. Unless you are super rich, you can’t own properties in Honolulu, San Francisco, Rio, Amsterdam and all the other great cities of the world. With stocks you can not only invest in different countries, you can also invest in various sectors. A well diversified stock portfolio could very well be less volatile than a property portfolio.

6) Invest in what you use. One of the most fun aspects about the stock market is that you can invest in what you use. Let’s say you are a huge fan of Apple products, McDonald’s cheeseburgers, and Lululemon yoga pants. You can simply buy AAPL, MCD, and  LULU. It’s a great feeling to not only use the products you invest in, but make money off your investments.

7) Tax benefits. Long term capital gains and dividend income are taxed at lower rates (15% and 20%) than the top four W2 income rates (28%, 33%, 35%, 39.6%). If you can build your financial nut large enough so that the majority of your income comes from dividends, you could lower your marginal tax rate by as much as 20% or so, depending on the current legislation.

8) Hedging is easier. You can protect your real estate investments through insurance. If disaster strikes, it’s often a pain to get your insurance company to pay for damages because the burden is on you to prove your claim. With stocks, you can easily short stocks or buy inverse ETFs to protect your portfolio from downside risk.

9) Potentially less ongoing taxes and fees. Holding property requires paying property taxes usually equal to 1-3% of the value of the property each year. Then there’s maintenance costs, insurance costs, and property management costs. You can build your own portfolio of individual stocks and bonds for just $5 a trade. Or you can have a digital wealth advisor like Personal Capital build and maintain your investment portfolio for a nominal fee. They utilize tax loss harvesting and other great technologies to help you grow your wealth faster.

Suggested net worth targets by age, income, work experience - median net worth
Suggested net worth targets by age, income, work experience

Further Reading

Here are some additional articles for further reading.

Recommendation To Build Net Worth

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Planning for retirement when paying for private grade school
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The median net worth for families in America is truly too low. Seek to achieve a much higher median net worth by the time you retire.

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About the Author

Sam began investing his own money ever since he opened an online brokerage account in 1995. Sam loved investing so much that he decided to make a career out of investing. He spent the next 13 years after college working at two of the leading financial service firms in the world. During this time, Sam received his MBA from UC Berkeley with a focus on finance and real estate. was started in 2009 and is one of the most trusted personal finance sites today with over 1.5 million pageviews a month. Financial Samurai has been featured in top publications such as the LA Times and The Chicago Tribune.