This post will look in depth at the average net worth by age for the upper middle class. The upper middle class, aka the mass affluent, is loosely defined as individuals with a net worth or investable assets between $500,000 to $2 million. The upper middle class is also sometimes referred to as the aspirational class or HENRYs.
Some also define upper middle class as those who are college educated with incomes in the top 15%. A top 15% income is roughly $100,000 or greater for households or $65,000 or greater for individuals.
The upper middle class is an aspirational class that many aspire to achieve. With enough hard work, determination, and a long enough life, many of us can achieve upper middle class status.
The upper middle class didn’t inherit their money. They mostly earned it through hard work. On the other hand, getting rich with a net worth of above $10 million, often takes a tremendous amount of luck.
The Middle Class And Upper Middle Class Are Different
The middle class is different from the upper middle class. The middle class is defined as those earning between 67% and 200% of the U.S. median household income. The Pew Research Center defines middle-class households as those .1 That’s between $42,330 and $126,358, using the U.S. Census Bureau’s 2020 median income of all households.
We can also define middle class in terms of net worth. According to the U.S. Census data, the average net worth for U.S. households in 2019 (latest data available) was $299,700. The median net worth was $94,670. In other words, wealth is concentrated at the top.
We all aspire to be upper middle class or rich. However, statistically, it’s not possible.
The Average Net Worth By Age
To calculate the average net worth for the upper middle class, let’s first look at the average net worth of all Americans. This data comes from the US Federal Reserve.
- The average net worth for Americans less than 35: $73,500
- The average net worth for Americans between 35 – 44: $299,200
- The average net worth for Americans between 45 – 54: $542,700
- The average net worth for Americans between 55 – 64: $843,800
- The average net worth for Americans between 65 – 74: $690,900
- The average net worth for Americans 75 or more: $528,100
- The average net worth figures are quite impressive.
The middle class is a fine class. However, let us aspire to get into the upper middle class in our lifetime. After all, we’d all much rather achieve financial freedom sooner, rather than later.
Key takeaways from average net worth by age data:
1) Volatile wealth. There’s a huge 37% decline in the average American’s net worth for the same period (55-64 to 75+), which may signify that the average American isn’t as adept in making their money last into retirement. They are perhaps spending down their principal instead of investing their net worth in stable, income producing assets.
2) The average American starting out is struggling. For the first 35 years, the average American is struggling to make ends meet. They’re probably in school, paying off debt, and saving for a rainy day. There’s probably a lot of angst about never being able to get financially ahead in such a competitive and expensive world.
3) The average American does well later in life. The average net worth by age in America is actually quite healthy, contrary to popular belief that most Americans don’t save enough for retirement. Clearly, extremely wealthy individuals will skew the averages higher. But, the biggest surprise is the $843,800 average net worth figure for the typical American ages 55-64. That’s almost like saying everybody who is between the age of 55-64 is a millionaire!
The More Money You Have, The Better
This data should stand out as much as the incredible study which says that 100% of Americans who make more than $500,000 a year are happy. But the media doesn’t want to report on positive financial findings because poverty and suffering garners more traffic and advertising dollars.
For the average American, their financial lives get so much better later on in life. Perhaps this is why older people are more relaxed, less insecure, and almost all agree with my own average net worth and 401k charts.
Median Net Worth By Age
I can hear a cacophony of complaints about how absurd the data is by the US Federal Reserve regarding the average net worth by age. Don’t worry. I’ve already got a headache listening.
Averages tend to skew the numbers higher due to a concentration of very wealthy individuals. Therefore, let’s take a look at the median and average net worth for Americans according to the Federal Reserve.
Median net worth by age provides for potentially a more realistic picture of the “average” American. The sweet spot for net worth amount continues to be ages 55 – 64, right before the traditional retirement age of 65.
The curve of the median net worth chart, if we were to graph it, looks the same as the average net worth chart. By the time the median American reaches 75+, s/he has spent down 35% of principal.
Let’s look on the bright side of things. If you still have $163,100 in median net worth by age 75+, you’re probably going to turn out just fine, especially if you have long-term care insurance. Protect your family.
If we add on pensions or Social Security, is the retirement crisis really so bad? None of us have to live in expensive cities such as San Francisco, New York, Honolulu or Los Angeles during our non-working years either. We can hop on a bus to Iowa, Indiana, South Dakota, or Louisiana to allow our net worth to last longer.
For those of you who are really bearish about the financial health of the average American, or who feel upset because your net worth isn’t in-line with the upper middle class net worth figures, here’s a chart to justify your concerns. The chart below shows that the median US household has gone nowhere in the past 50 years!
Remember, when it comes to data, we can pretty much believe whatever we want to make ourselves feel better. We see what we want to see, in order to justify our actions.
Average Net Worth For The Upper Middle Class
Now that we’ve analyzed the data for all Americans with averages and medians, let’s look at the average net worth for the upper middle class.
The above average person isn’t drawing down capital to survive due to their creation of multiple income streams, smart asset allocation, discipline to consistently live within one’s means, and the desire to leave money for loved ones and charities who are in dire need of funding. The Financial Samurai ideology is to leave the world better off than when we first entered.
Finally, the financially savvy person understands the estate tax (death tax) doesn’t kick in until assets are over $12,060,000 for persons dying in 2022. That’s pretty huge.
Therefore, every single person might as well shoot for accumulating up to $12,060,000 to help other people. But the reality is, anything above $10 million is a top 1% net worth and rich, not upper middle class. After a few million dollars in net worth is considered closer to upper middle class.
Anything earned beyond such an amount should be spent with great enthusiasm while alive!
Be Careful Having Too Much House
One of the problems with the average American is that the value of their house dominates their net worth. The upper middle class (top 20% of Americans) have a net worth where their primary residence is worth less than 30% of their overall net worth.
Conversely, notice how a house takes up more than 60% of the average American’s net worth. Therefore, the average net worth for the upper middle class should have a very diversified net worth.
How To Join The Upper Middle Class
If you want to join the upper middle class per your age group, I recommend the following:
1) Max out your 401k and/or IRA as soon as possible. Try and save an equal or greater amount in after-tax investments as well.
2) Think about the proper asset allocation in relation to personal risk. Your assets should be deployed in a way that aims to beat the risk-free rate of return by at least 2-3X. Stay diversified and never confuse brains with a bull market!
3) Voraciously read as much as possible about wealth management, investing, retirement, taxes, and other issues. Subscribe to the Financial Samurai newsletter for free and other finance sites written by finance veterans. Don’t be afraid to seek professional financial help too.
4) Move to a part of the country where there is opportunity. Give yourself a chance to get financially lucky by coming to areas where there is robust employment and brain share. It used to take two months to cross the country. Now it only takes five hours by plane.
5) Buy a home that you can afford and own it for as long as possible. You’ll wake up 20 years from now and thank yourself for having something to show for all your monthly payments. Forced savings through principal payments may sound rudimentary, but most people don’t have enough discipline to save on a regular basis.
More Upper Middle Class Wealth-Building Strategies
After you’ve done the above five things, here are more recommendations if you want to join the mass affluent or upper middle class.
6) Don’t be afraid to seek professional financial help if you’re lost. Put it this way. The more lost you are, the more bang for your buck you get hiring someone to give you advice or manage your money.
7) Make sure you are properly insured: health, life, auto, house, and umbrella policy. Any number of bad things can happen that can easily wipe away your net worth.
8) Work and invest for as long as possible. “Time in the market is more important than timing the market,” as the saying goes. Half the battle is just surviving through all the ups and downs, which is why consistent dollar cost averaging and refining of work skills is important.
9) Once you’ve properly diversified your wealth, things start getting a little messy. Track your finances through Excel, or a free financial tool by Personal Capital in order to optimize your finances and make sure there aren’t any leakages. It’s hard to improve what you don’t measure.
10) Think positively. If you want to join the upper middle class, believe you deserve to be wealthy. Don’t let the government or naysayers keep you down. Use constant failures as learning points. Use rejections as motivation to prove others wrong. There’s so much money out there for the taking!
11) Never stop learning. The rich and upper middle class are constantly reading and learning. I recommend buying my new book with Penguin Random House entitled, Buy This, Not That: How To Spend Your Way To Wealth And Freedom. It is a #1 bestseller on Amazon.
Build Upper Class Wealth Through Real Estate
To achieve an upper middle class net worth, I highly recommend investing in real estate in addition to stocks. If you look at the average net worth by age for the upper middle class, real estate is a core component to the net worth composition. Real estate is a tangible asset that provides utility and a steady stream of income if you own rental properties.
Given interest rates have come way down, the value of rental income has gone way up. The reason why is because it now takes a lot more capital to generate the same amount of risk-adjusted income. Yet, real estate prices have not reflected this reality yet, hence the opportunity.
My two favorite ways to invest in real estate are through:
Fundrise: A way for accredited and non-accredited investors to diversify into real estate through private eREITs. 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 real estate fund is the easiest 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 and higher rental yields. Growth tends to be higher due to job growth and demographic trends. You can build your own select real estate fund with CrowdStreet.
Both platforms are free to sign up and explore.
I’ve personally invested $810,000 in real estate crowdfunding across 18 projects to take advantage of lower valuations in the heartland of America. The upper middle class are big investors in real estate to benefit from rent increases and property price increases.
Due to my real estate investments since 2003, I’ve been able to handily achieve a net worth far above the average net worth by age for the upper middle class. The key to building great wealth is through aggressive saving and savvy investments. Real estate is a proven wealth-builder long term.
Buy The Best Selling Personal Finance Book
One thing the upper middle class and the rich do is read a lot. If you want to drastically improve your chances of achieving financial freedom, purchase a hard copy of my new book, Buy This, Not That: How To Spend Your Way To Wealth And Freedom. The book is jam packed with unique strategies to help you build your fortune while living your best life.
Buy This, Not That is a #1 new release and #1 best seller on Amazon. By the time you finish BTNT you will gain at least 100X more value than its cost. After spending 30 years working in finance, writing about finance, and studying finance, I’m certain you will love Buy This, Not That.
FinancialSamurai.com was started in 2009. It is one of the most trusted personal finance sites today with over 1.5 million organic pageviews a month. Financial Samurai has been featured in top publications such as the LA Times, The Chicago Tribune, and Bloomberg.
Sign up for my free weekly newsletter here. The Average Net Worth By Age for The Upper Middle Class is a FS original post.
As younger retirees (50’s) we are very pleased and grateful for our financial position of several million, but, most importantly, we are pleased that we, and our kids lived the lives we wanted to live along the way, with homes on the Southern CA Coast, as well as via other lifestyle choices we made when we were young. We knew what we wanted and didn’t want at a fairly young age.
Everyone has different dreams, so I can’t say enough about how important it is to make good financial decisions at an early age, with a sustainable long-term plan, so you can live the life you really want to live as early as possible.
I’m 60, been a high school teacher for 35 years, almost always worked a second job too. I have a net worth of 8-million and I plan on working 4-5 more years because I love my job. So I’ll probably be worth more when I retire in a few years. I’m single, love working and helping others. I deliberately and methodically saved in my Roth, 403b, and pension accounts. I’ve saved and bought a couple of so-so homes and paid them off — nothin fancy.
It just didn’t seem that hard to become upper-middle class or rich for that matter. Just get educated (doesn’t even need to be a great university degree/major) and goto work for 35 years +, save tax deferred (don’t even need to make great returns on your invested savings,) try to stay healthy and eat well. Buy a little real estate, nothing fancy. Don’t tell people you are a millionaire, dress in Walmart clothes, drive an old car, mow your own lawn and paint your own house. Success starts with a 50-60 hour work week, for a few decades. It worked for me.
Love it! The power of consistency and time. Having that low operating cost is also great.
Any fun plans on how to spend the $8+ million?
What is equally important to accumulation of assets is the fact of how one spends down one’s nest egg. Many, if not more assets are lost in the spending (sourcing of income, taxes) as in the build-up to retirement!
“There’s a huge 37% decline in the average American’s net worth for the same period (55-64 to 75+), which may signify that the average American isn’t as adept in making their money last into retirement.”
I don’t think this signifies anything about their adeptness. Not everyone’s goal is to leave a huge inheritance after they die. Maybe that’s the “Financial Samurai Way”, but not everyone has to have the same goals. Not everyone has kids (or if they do, then perhaps leaving some inheritance may be a nice-to-have but not a priority), and most people feel good enough about leaving what they do have left to charity without stressing that it’s not 100% of the principal they retired with.
In fact, within the FIRE movement it’s much more common for people to actually desire to draw down principal rather than keep their principal perfectly intact by the time they die. It would be nice if my investments do better than I expected so I can leave a large amount to charity, but I’m not going to go out of my way and work several more years just to ensure I never draw down principal. If I outlive my money and am able to leave at least some for charity when I die, I consider that a win. If I never draw down any principal in retirement, I would actually consider that a personal failure in planning too conservatively and working way longer than I needed to.
Also, I agree with some of the comments the first chart should be redone using the median. You have a section below where you talk about the median, but you never made the chart or showed the numbers. Drawing conclusions about how ok Americans in general are doing based on averages rather than medians is pretty meaningless.
I just turned 27 and am building my second house on a lake. I have over $130,000 in real property paid off except $9,000, about $480,000 in my businesses liquidity and $15,000+ in tools I also have precious metal investments. I am going to start renting my second house out and eventually buy large apartment complexes. I’m doing well but I will do better just getting started.
Congrats! Keep on prudently going!
Upper middle class is is lifestyle. Umc people usually have college degrees, high incomes (low-mid 6 figures), and a great deal of autonomy in their work. It has nothing to do with being responsible or saving in a 401k. It depends mostly on your intelligence and the type of career you’re in. Working a blue collar job and saving money for 30 years doesn’t make you upper middle class. It just makes you a middle or working class person with money. It’s not the same thing.
“It depends mostly on your intelligence and the type of career your in.”
That’s the dumbest comment I’ve heard on here…
There’s plenty of blue collar workers that have high paying jobs, and who also have education. Yet they choose to work outside the confines of an office and house/community they cannot afford.
Your describing what’s called being a snob and wannabe elite Nothing cool or classy about either. In fact, I’m m glad you made that comment, because it’s a reflection of those with your mentality living in a delusion.
Your sense of superiority is amusing.
I do believe there is a difference between having a high income and having a lot of assets. I do believe you need to save and invest a high-income to become wealthy or possibly rich — especially if one starts with little to nothing.Earning a lot of money is one thing, but keeping and growing that money via savings and investment is another — one has to save and invest for retirement.
I know people who have nice homes and cars who don’t save and they are only a few paychecks away from insolvency. Upper middle class is everything you said in your introductory sentences, but it is so much more — saving, investing to grow one’s wealth. The old adage, “It’s not how much you earn, it’s how much you keep, grow and invest,” really is true when striving to move up the American class system.
“But, the biggest surprise is the $843,800 average net worth figure for the typical American ages 55-64. That’s almost like saying everybody who is between the age of 55-64 is a millionaire!”
It’s not though. The median is likely incredibly far below $843,800, because we know distributions of things like income, net worth, etc., are very positively skewed. That is, you could have one person with a net worth of $50MM and 49 people with a net worth of $0 and still end up with an average net worth of $1MM. I wouldn’t be surprised if it’s only 10-20% of people in that age bracket that have a net worth over $1MM.
K-Man, you’re correct. Why would anyone use the average (the “mean”)? Every other website uses the median or at least shows both the mean and median. The way this is shown is completely inaccurate.
Curious, why strive to be median when you can strive to be average?
Don’t be average but the median is a better reference point where you are. Percentiles would be better still.v
How do arrive at $596,500 for pretax savings at age 45 from the 401k table above (i.e., how mid end savings of $800,000 got converted to $596,500 for age 45)?
And, do you have similar data for couples where one spouse is a homemaker?
My IRA and 401 (tax deferred) accounts are about $2,000,000 with an additional money in taxable accounts. Actually, the tax deferred accounts (while this is their listed value) are worth less, as I owe taxes to the IRS as I withdraw the required minimum distribution. How do I account for this when computing net worth?
I went back and was reading your original charts. Each of your charts starts out with the “average person” or “above average person” or the “average American”.
How do you factor in married couples. In the above average category what is the case? Is it double the number we see or is it one half of the number we see.
Good question.
Check this out: https://www.financialsamurai.com/the-average-net-worth-for-the-above-average-married-couple/
I think these numbers are high for above average in the 30’s but low in the 50’s. My wife and I are 31-34 and our combined net worth is $550k. I’d be surprised to see many our age have a net worth that is much higher without inherited wealth. We have no debt (cars, mortgage, student loans) and are now saving $200k a year. I’ve done some projections and it’s crazy what we will end up with later in life. I think everyone’s real problem is the fact that they need to lease new cars, take expensive vacations and don’t enjoy saving. There is nothing better than watching your net worth increase every paycheck. Work hard, don’t have kids outside of marriage, and don’t get divorced. In my opinion these are the keys to success.
Hi Chad,
There’s more of us than you think. My wife and I (27-30 have) have a combined net worth of about 900K and we are both teachers. We started with nothing but I’ve heavily invested in real estate. I’m not sure that the early numbers are that far off.
Wow! That’s great!
I’d love to profile your story if you are willing to share. Please send me an email. I do want to ride profile about teachers.
Email sent!
So, I am nearly 70, single, and have an income of about $60K, but a net worth of about $2.5 million (thanks to compound interest).
Am I upper middle class or lower upper class in terms of net worth?
(Not that it really matters. I have far, far more than I need to live on and my goal is to give almost all of it away before I die, leaving enough for Long Term Care should I happen to need it and enough for the funeral. Still, it would be of curiosity to know.)
Hi John my name is Cheryl I found your comment very interesting on the site I wanna know how to do compound interest I’m very interested because I would love to have a good nest egg by the time I reach retirement can you please help me in the situation so I can make the right steps thanks