The median net worth for the middle class hasn’t changed for decades. Conversely, the median net worth for the top one percent has performed extraordinarily well during the same time period. Let’s explore the differences further.
Although making a high income is nice, having a high net worth is more important. High incomes come and go. They are also taxed aggressively. In contrast, a properly managed net worth could last forever.
One of the best incentives to get rich today is the record-high estate tax limit of $11.7 million per person in 2021. In other words, Americans can all pass down up to $11.7 million to our heirs tax-free. That’s huge!
We can create a generation of adult kids who end up having zero motivation or self-pride to make something of themselves! Whoo-hoo!
$11.7 million is an incredible amount to pass on tax-free given the estate tax exemption amount was only $1 million in 2003. With Joe Biden as president, there’s a good chance the estate tax threshold will decline.
The holy grail of personal finance is to amass a large enough net worth which spits out enough income to fully fund your desired lifestyle. If you can’t generate enough passive income to do so, sorry, but you are not yet financially independent.
On your journey to the promised land, it’s a good idea to gauge how you compare to others. After all, everything is relative when it comes to money. If we all have a $5 million net worth, being a multi-millionaire wouldn’t improve the quality of our lives at all.
The Median Net Worth Of Americans
Below is a chart from the Survey of Consumer Finances in 2019, the latest data available for 2021. The Federal Reserve only conducts the survey every several years. One can assume the figures are even higher today.
The data shows the median net worth for the middle class, the mass affluent, and the top one percent.
- The Top One Percent has a median net worth of $10,700,000.
- The Mass Affluent (80th – 99th percentile) has a median net worth of $746,950.
- The Middle Class has a median net worth of only $87,140.
Let me share some analysis on each of the three classes below.
The Median Net Worth Of The Top One Percent
Lower-Than-Expected Growth
Back in 1995, the median for the top one percent was $3,734,607. Therefore, the median net worth for the top one percent grew by 187% during the 1996-2016 time period. This is much lower than I would have thought given the fierce rhetoric surrounding how rich the rich have gotten over the years.
If you stick $3,734,607 into a compound interest rate calculator, you will see that the top one percent net worth figure grows by 5.4% a year for 20 years. However, this 5.4% compound annual growth rate also happens to mimic closely the 5.6% compound annual growth rate of the S&P 500 between 1999 – 2008.
Highest Volatility
The median net worth of the top one percent is much more volatile than the two other categories. In 2007, the median net worth of the top one percent was $9,578,000. By 2010, however, the median net worth had dropped to $6,658,000, a 30.5% decline.
If I lost $3 million in net worth in just three years, I’d be depressed. Therefore, if you have a top one percent net worth, your #1 priority should be capital preservation, especially after a 10-year bull market. A $10,700,000 net worth should be able to spit out between $200,000 – $300,000 a year with little-to-no risk.
If you have no dependents, then living off $200,000 – $400,000 a year should be no problem for an individual or couple. One can assume that most people who have amassed a top one percent net worth, if they have children, are older and have independent adults.
Aligned With The Estate Exemption Amount
The estate exemption amount of $11.58 million in 2020 is close to the 2016 median net worth for the top one percent of $10.7 million. When we finally get the 2020 data from the Survey of Consumer Finance, the top one percent net worth will likely be at around $11.58 million.
Historically, now is absolutely the most tax-efficient time to be a top one-percenter. Time to get cracking.
The Median Net Worth For The Mass Affluent
Mass Affluent Should Be The New Middle Class
The mass affluent class is where most personal finance readers are or aspire to be. Anybody who cares about their finances enough to read actively and listen to personal finance topics is usually way ahead of the middle class.
Caring about your personal finances motivates you to save more and invest more. You will figure out new ways to boost your wealth. Therefore, achieving a median net worth of $746,950 before becoming eligible for Social Security should be an achievable goal for the majority of readers here.
Using a 4% withdrawal rate, the mass affluent can fund $30,000 a year in gross expenses based on the $746,950 median net worth figure. Add on the average Social Security monthly check of $1,461 ($2,861 max), and the mass affluent has $47,532 gross to spend a year in retirement.
Given the mass affluent is defined as the 80th – 99th percentile income group, it is likely their average Social Security check is closer to $2,500. Therefore, the mass affluent should be able to spend closer to $60,000 gross a year in traditional retirement age.
Much Less Volatile Net Worth
In 2007, the median mass affluent net worth was $661,632. By 2010, the median mass affluent net worth fell to $560,400. This was only a 15.3% decline.
In other words, the median net worth for the mass affluent fell by half the percentage amount as the median net worth for the top one percent. For those who cannot stomach volatility, being in the mass affluent class is the way to go.
If you are currently in the mass affluent class then it’s probably worth still having a bias towards capital growth rather than capital preservation. Personally, I have consistently invested in growth stocks since 1995 to help boost my wealth. Dividend stocks are fine for after you’ve amassed a lot of capital.
Losing on average 15% of your net worth in a bear market isn’t unbearably painful. Continue to dollar-cost average in a downturn based on existing risk-appropriate investments.
It’s Worth Geo-Arbitraging
Relocating to a lower-cost area of the country or the world is a wonderful solution for the mass affluent class. A $746,950 net worth has multi-million dollars worth of buying power if one moves to Mexico, Thailand, Vietnam, Malaysia, Taiwan, or many Eastern European countries.
Although $746,950 won’t get you far in San Francisco, it should provide for a comfortable life in Minneapolis, where the median home price is only $267,000 and the median rent is only $1,591.
With herd immunity in progress, I suspect more of the mass affluent class will be moving to lower cost areas of the country or world.
The Median Net Worth For The Middle Class
Never Recovered From The Crisis
Unfortunately, the median net worth for the middle class looks like the EKG of a deceased person. Originally, I had thought its dark blue line in the chart was simply the horizontal axis. And I thought the mass affluent light blue line was the middle-class median net worth line. Let’s look at the chart again.
If you have a median net worth of $87,140 for a middle class person and you are the median age of 38 in America, you’ve still got plenty of time to grow your wealth.
However, if you’ve got a $87,140 net worth in your 50s and 60s, life is going to be stressful financially. It is highly likely you will need to work longer. Or you need to become dependent on government programs in addition to Social Security.
What’s most concerning about the median net worth for the middle class is that it actually peaked in 2007 at $118,025. The 26.2% decline in median middle-class net worth by 2016 should be one of the biggest causes for concern for everybody. A revolution is brewing.
It is important to figure out how to convince people you are middle class if you are actually rich.
Spooked Out Of Risk Assets
If you do not hold assets such as real estate and stocks, you cannot benefit from a recovery in asset prices. It looks like the middle class got shaken out during the financial crisis in 2008-2009 and never got back in.
If the middle class had simply held all its assets until 2016, its net worth would have recovered and surpassed its 2007 high.
According to an ongoing Gallup poll, the rate of stock ownership in 2016 is down significantly since the years before the recession.
In 2004, the U.S. homeownership rate peaked at 69.5%. The homeownership rate fell to a low of about 62.9% in 2016. But since then, the homeownership rate has steadily climbed higher.
The reasons are likely:
- It takes seven years for a short-sale or foreclosure to stop punishing your credit report
- Mortgage rates continued to decline
- Real estate is seen as a more stable asset class
- More people are spending more time at home
Life Is Still Pretty Good
Despite the middle class falling behind the mass affluent class and the top one percent class, being middle class is still a great class. When compared with non-Americans, the American middle class has a more comfortable lifestyle than most people in the world.
Most of us think of ourselves as middle class no matter our level of wealth. The reason is we adapt to what we have. Once we start comparing ourselves to others who have more, that’s when our disdain becomes apparent.
If you are in the middle class and want to break out, these median net worth figures are telling us that owning risk assets like stocks and real estate over the long term will likely help.
The worst thing you can do is rent for life. Don’t spend money on stupid things you don’t need. And please invest in the stock market. Unfortunately, it seems like this is what a significant portion of the U.S. population is doing.
Winner Take All Is Happening
According to the Survey of Consumer Finances, the top one percent owns 28% of all wealth in America. The middle class, on the other hand, only owns 21% of all wealth.
The inflection point where the top one percent begins to own more wealth than the middle class started in 2010. 2010 was also close to the bottom of the last stock market and real estate cycle.
The real estate market is strong on a national level. Meanwhile, the NASDAQ and S&P 500 are back to all-time highs. Meanwhile, there is still mass unemployment. The wealth gap is clearly going to widen during the pandmic.
The Median And Average Net Worth By Age
Let me leave you with one final chart to mull over. The chart shows the median net worth and average net worth amounts by various age ranges. I’ve also included a recommended column to shoot for based on my average net worth for the above average person framework.
The median net worth amounts by age show that Americans are better off than what the median net worth for the middle class indicates. If you’re retiring at 64 with $187,300, you’ll likely be fine so long as Social Security is still around.
The average net worth amounts by age are very telling. It shows the average American household is technically a millionaire by age 55-64. Is it any wonder why everybody wants to come to America. However, thanks to inflation, a million dollars doesn’t go as far as it used to.
The key net worth figure to shoot for is $3,000,000 by 55-64 if you’re just starting out. After all, $3 million is the new $1 million. It may sound hard to achieve, but if you save $25,000 a year on average for 32 years and earn a 7% compound annual return, you will get to $3,000,000.
Have Net Worth Goals
Now that you know the numbers, it’s good for you to have a net worth goal. I recommend everyone to at least have a net worth goal equal to the average net worth in America by age range.
If you’re doing very well, it’s best to spend more of your income and wealth before the government comes for it. Your spending will also help the economy. Paying a 40% death tax rate is terrible.
If you’re doing just OK, it may be worth taking more risk and working extra hours to generate greater wealth. Starting a side-hustle while having a job is absolutely one of the lowest-risk ways to try and make more money.
Even if you do nothing extra to improve your finances, know that life is still pretty great in America. Just try not to compare yourself too much with other people who have way more. Endless comparison is the thief of joy.
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Achieve Financial Freedom Through Real Estate
Real estate is my favorite way to boost net worth. It is a tangible asset that is less volatile, provides utility, and generates income. By the time I was 30, I had bought two properties in San Francisco and one property in Lake Tahoe. These properties now generate a significant amount of mostly passive income.
In 2016, I started diversifying into heartland real estate to take advantage of lower valuations and higher cap rates. I did so by investing $810,000 with real estate crowdfunding platforms. With interest rates down, the value of cash flow is up. Further, the pandemic has made working from home more common.
Take a look at my two favorite real estate crowdfunding platforms. Both 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 and higher rental yields. These cities potentially have higher growth too due to job growth and demographic trends. If you have a lot more capital, you can build you own diversified real estate portfolio.
Loading ...Related post: Net Worth Composition By Various Levels Of Wealth
I have about $10 million equity in a personal residence, a vacation home and an investment property. I also have about $5 million in cash, equities, IRA, resulting in a net worth of around $15 million. I am 57 and I certainly do not feel rich, particularly with high California income and property taxes. I am figuring I will need to have at more like a net worth of $18 million to ensure I can keep my properties and retire by 60.
You very well might given how much interest rates have fallen. Takes so much more capital to generate the same amount of risk-adjusted income. Keep hustling and good luck!
You have no worries unless cancer gets you
Why not even one mention of expensive long term care. At some point in wealth it will not matter so much as some little old just plain millionaire.
i think the writer is out of touch actual hand on touch with the middle class. the 2 keys to living a great life and having a happy retirement is the following. taxes should be cut ie any one family income of 100k should pay zero income taxes. after 70 years of age zero income taxes. the short fall would be made up with import tariffs. and less spending by the government federal. #2 is debit free on mortgage no credit cards no debit. experience being a canadian that s lived under socialism i can say if i lived in usa i would be 50% better off. free health care in ontario OHIP insurance cost us 16k person in tax money just think wife and i with 32k to spend what a health care program we would have.
I understand the desire to not pay taxes. But to say that there should be no income tax for households who makes under $100,000 sounds extreme. Who is going to pay for everything?
Shouldn’t we all try to Pitch in to help each other out?
Tell that to the top 1%
The top 1% pay over 37% of the taxes already. The bottom 10% pay only 30%. The top 1% not paying their fair share is a political illusion. They actually pay a significant amount
Well, technically they make and hold over half of the wealth; they should be contributing proportionally. Besides, the middle class is subsidizing them through tax credits and loopholes.
However, considering the language you use, I am well aware of the lack of good faith and wont pretend to think otherwise. We should be working towards are more egalitarian system of economics that adequately meet peoples’ needs, rather than top-down hierarchy one.
A couple of observations:
1. Wow! You have nearly 1,000 voters (or > 3%) with a net worth of > $10M. That’s a lot of rich folks reading this blog.
2. The 1% line keeps moving over time. I thought I was doing well financially but so are many people near the top. Probably best to focus on personal financial goals than to keep up with the Joneses but admittedly I’m a subtly competitive person.
3. Net worth data can be deceiving since there Is always a big debate about whether to include primary residence. Without the house, my parents would appear low income and destitute. With their home equity, they are suddenly millionaires.
I also think it’s important in networth to estimate total tax liability. I estimate my 401k/IRA at 70% value assuming 30% fed and state tax in retirement. Given the way things are going it may be higher!
Why I’m giving serious thought to liberating large amounts of 401k and converting it into Roths, keeping it low enough I won’t jump two brackets, once I can get out of a state with state income taxes.
I certainly won’t be living in one by choice once RMDs kick in.
“We can create a generation of adult kids who end up having zero motivation or self-pride to make something of themselves! Whoo-hoo!”
Or we can immediately create a class of totally unmotivated parents by taxing their estates. To be specific, those exact parents who are most likely to create new jobs by the hundreds.
“TOTALLY unmotivated” huh?
It’s amazing how people chasing wealth their whole lives, who are so successful and accomplished, can suddenly become TOTALLY unmotivated when contemplating how their estate will finally be taxed with all those taxes that were deferred all those years.
Sure, it’s nice to leave your heirs a good chunk of change, and $11+ million tax-free is pretty great! If each additional million is then taxed 40%, I’m amazed how this will TOTALLY demotivate folks…. I guess it’s pretty important to grasp for each and every penny, eh? Or else I vastly underestimate the powerful force of greed.
I’m demotivated and withdrawn already. At about $7M with the mere threat of lowering the estate tax exemption looming perhaps sometime in the future — I’m already out of the workforce. I’ve probably created about 80 full time jobs in my lifetime (some high paying) and could probably create a lot more since I’m still relatively young.
However working to be subject to 35% federal tax + 12% California + 7% Fica + the threat of having to pay another 45% at the end so I can be away from my family 60 hours a week working for 25c on the dollar is not my idea of a fun life. Perhaps you are more generous so it is yours, so when you become financially independent to are welcome to work.
You can wish I return to work all you want but I’m sorry I’ll disappoint you. Though I suspect that in your societal model you believe in the finite pie whereby the more I stay out of work the less money I make and the more is left for you? Yes, some, many many unknowns are already past the Laffer curve. You just don’t hear about them because they are not famous, they quit way before achieving fame, and are happily enjoying their withdrawal from work.
Hey friend, my net worth is approaching yours, and I’m fully FI with paid off mortgage and plenty of passive income. Just turned 50 with (probably) many years left to accumulate. So I’d encourage you not to make assumptions about me, what I believe, and what I want you to do.
Work, don’t work, do whatever you want.
My point is, complaining about estate taxes that we won’t even pay (by definition you’ll be dead) is IMHO sad, and funny. It’s supremely entitled to think that we should be able to pass on to our heirs mountains of untaxed income that they didn’t earn.
I mean, why not go full bore and start passing on hereditary titles, too?
I get that you don’t agree with me. Just sharing my opinion as a patriot.
Treasury department is certainly accepting donations from generous people like you. No need to wait for your children to do so. That way you can donate not only the 50% marginal tax when you earned the money but an additional 40%, and, why not, more.
Its MY MONEY!!! Not the governments!!!
I earned this money to take care of MY responsibilities (ie. my children and siblings). Dont be so generous with MY money!!
The top 2 reasons why people save comes down to securing their financial future and independence and to have something to pass on to their children and family. When you take one or both of those motivating factors away through high taxation or double taxation with an estate tax, at some point, it will disincentivize more and more people to take risk with their assets and be job creators.
BTW — and this should go without saying for someone as savvy as you — you are quoting marginal tax rates (35%), not the effective rate you actually pay on your earnings. You are NOT paying 35% federal and 12% state taxes on every dollar you earn. And if a lot of your earnings are from dividends and/or capital gains (as mine are), you are paying a top rate of 20% and those earnings are not subject to FICA, either. So, it is demonstrably false that you are keeping only 25 cents on every dollar you earn.
You are really exaggerating your ‘hardship‘ here.
Motivation for the extra dollars happens at the margin. I’m talking about why I I’m no longer working ie not contributing to GDP in that capacity. So that is earned income. Had my wealth been “untaxed” as you claim then my net worth would have been at least 10M now instead of 7M. So that’s is my “hardship”, 3M less. I don’t think that paying another 40% is worth it. You seem more motivated to work and earn more (though somehow you FIRED too as you say) so go ahead work and pay the tax. For me I just choose to withdraw and spend lots of time with my children, we go camping, we go fishing, I even do some taichi and have belatedly started to learn how to play the trumpet, something I’ve always wanted to do but never had time to when I was a much more significant contributor to the economy.
And my asset allocation is already distorted by capital gains taxes. For one I invest primarily internationally in lower risk higher dividend stocks. I don’t partake much in the more dynamic (and thus risky) part of the US growth economy because if I make a profit I’m taxed, while if I have a loss it’s all mine to keep, no refundable tax credits for that other than a paltry $3000 exclusion. This asymmetry makes me shy away from higher risk higher value investments.
If taxes on capital gains were increased or if step up basis at death were eliminated I’d go down to even less risk, probably concentrating more on Chinese and some other Asian government bonds.
Once you withdraw from work and meet other FIRED people, you realize that there is already an enormous amount of withdrawn idle talent out there, staying three steps ahead of the pitchforks.
Nicely stated. I’ve lost count of the times I’ve argued with people that in increase in income will not result in a lower after tax net receipt. It is only the last dollar you earn above a new higher tax bracket that is taxed at that bracket rate.
Why the sarcasm? Just try to make a thoughtful point. The person who EARNED the money (not greedy to want to keep something you earned) was motivated to make things easier for his/her heirs. They earned that high income by producing something of high value others voluntarily purchased using their best judgement. This dynamic benefits individuals and society. Greed would be people wanting that money with no exchange. Wasteful would be forced confiscation by the government who then gives people free stuff in exchange for votes. Instead of teaching envy and entitlement, why not teach people the joy and satisfaction of earning their money with energy and creativity and persistence?
I think you are (deliberately?) missing my point, which was not sarcastic.
To wit: being able to pass on $11 million to heirs ($22 million as a married couple) completely tax fee is amazingly generous of the government. It’s truly fantastic.
Complaining that any estate you will leave behind above and beyond the $11-$22 million will face estate taxes (including all the IRA assets and/or capital gains that may NEVER have been taxed) is vividly demonstrating the dark side of capitalism, i.e., entitlement and greed.
My point is not “teaching envy.” As a multi-millionaire myself, well on my way to 8-figure wealth, what do I have to be envious of? My point is the exactly opposite of entitlement: we who have been so incredibly fortunate have no justification to complain about the current estate taxes in the U.S.
I can’t believe the estate tax threshold is $11.58 million per person either.
Which means it’s probably going to go down, not up in the next 10 years. $11.58 million is a lot!
That is why at 7M I’m not thinking of returning to work. Guarantee me the 11M exclusion and I may start considering it. I’m a few steps ahead of the pitchforks.
You can not have your cake and eat it too, mate. It makes no sense for you to have people earn their money, while also believing in having heirs inherit money. If heirs inherited money, they would not have earned it. What about those who get no inheritance, but would actually know how to use the money effectively?
Considering the language used, you are perhaps uninformed on markets and economics, or just blindly trust the systems in play. I wont pretend that I would get a good faith argument from most, if any, comments from this site. But, we should consider, perhaps, a more egalitarian economic system that be able to support those who participate; thereby, allowing people to pursue their interests and enjoy freedom.
So now my new aspiration is the hit the median net worth to be a 1 percenter!
While my husband and I are in semi-retirement we are still motivated to grow our businesses and portfolio in order to create a legacy for our kids and extended family. The job market will just get more volatile, so we would love to have a family annuity that offers a universal basic income at the least. Interesting to see the 3 different levels. I feel like $5 MM would be more than enough but shooting for $10 MM and beyond assures you’ll be happy even if you fall short!
I have real trouble with the estate tax. In my view, it should be an inheritance tax. Each inheritor would then only pay taxes on what they get.
Combine that with a huge exclusion, 20 million or more in today’s dollars, and then place a very sharply graduated tax on increments over that, becoming asymptotic as it approaches, what? 500 million?
This would allow all of your money to be inherited tax-free, so long as you are willing to break it up, which is what society needs done when it gets to ridiculous levels. Beyond a certain point, unearned money is only unearned power. Those of us who wanted a system like that could have stayed in the old world with hereditary titles and lands.
“The worst thing you can do is rent for life, spend money on stupid things you don’t need and never invest in the stock market”
That is up there with Einstein‘a alleged quote regarding compound interest. Needs to go on a t-shirt. I”d buy it. Heck I’ll put it on a t-shirt and take credit. Just kidding.
If everyone adhered to these 3 ideals everyone would be better off. I’ll speculate the vast majority of people in the mass affluent / 1% sectors engage in these exact principles.
Question – any numbers on the vertical
Growth between all sectors? I wonder if the numbers would correlate with more mass affluent attaining 1%. Maybe this dynamic would account for some of the inflection point?
One of these days when you’re writing about geoarbitrage you should address State imposed estate taxes.
My parents currently split their time between homes in Washington & California, and are residents of Washington. Washington state is one of a few states with zero income tax, but it has a significant estate tax that kicks in at $2.2M.
There is a big tax advantage to earning a lifetime of income in a state without income tax, and retiring in a state without estate tax.
Great idea! I’ve decided to write A detailed post based on the states with no estate or inheritance taxes. Have a look here to help you do you geoarbitrage and pass down as much money as possible.
https://www.financialsamurai.com/states-with-no-estate-tax-or-inheritance-tax/
Sam, regarding your comment about spending and not leaving behind an amount greater than the estate exemption of $11.58MM – no disagreement that if you have it you should elevate your lifestyle or give some to a charitable cause. I am curious as to your thoughts when I suggest that the 40% estate tax rate is somewhat analogous to the personal income tax rate of 35% as taxes you would have paid had you liquidated the appreciated financial assets during your lifetime instead of passing it on to your heirs. In other words, the government was always going to get its tax share whether you had paid in while you were alive vs. after your demise. Or were you thinking this was just a tax free exemption? Your thoughts? Thanks,
Genius! :D
Agree. I would also like Sam’s take on CA’s recent attempts to increase the income tax rate to an eye-popping 16.8% and also implement a state wealth tax of .4% on high net worth folks. Would like his take on the effect of the rich fleeing that state. I got out just recently and in a WFH environment would think the numbers will skyrocket if the new taxes pass.
We are Washington State residents and became aware of the state’a $2.2M estate tax.
We just completed our estate plan that provides individual Trusts for each spouse, and a Family Trust in the event of a simultaneous death, or the eventual death of the surviving spouse.
This structure is designed to avoid probate, and the liquidation of assets, which is an effective strategy that avoids the estate tax because there is never a taxable event, and/or the tangible assets in the estate immediately transfer the the surviving spouse, and those assets are exempted. We have a really good estate planning attorney.
Great article!! Grand slam!! ⚾️
Thanks Sam. I had realized the current tax gift exemptions when we were doing our living trust and will, but I had not known the historic trends. That is a very helpful graphic.
Being a 1 percenter is getting further and further out of reach for net worth purposes. I will be curious to see how high it will be in 5 years. When you have all that extra capital you can take advantage of all the buying opportunities the current pandemic provides.
I definitely have a 1% income as a physician but because physicians start out late in terms of earning power (plus my divorce along the way), it does not translate to 1% net worth.
Mass affluent is not a bad class to be in. You are right most people think of themselves as middle class (I grew up feeling I was in the upper middle class).
Like you, I also have top 1% income, but not yet top 1% net worth. Like you, I was a late starter, in that I was in grad school until I was 30, and still paying off student loans until I was just about 40.
However, I believe top 1% net worth is well within reach, eventually.
There are two things I’m doing to achieve that:
1. Live on less than 50% of my net income (after taxes)
2. Invest aggressively and it time. According to actuarial tables, I’ve got another 30-40 years on this planet … I’m pretty sure I’ll hit top 1% net worth in the next 10-15 years.
Good point on the high volatility of the top one percent’s net worth. I can’t imagine what it would be like to suffer a 30.5% net worth decline in 3 years. Ouch! Gotta capital preserve for sure and keep making and reaching for new goals.
That has to be one of the very most readable and articulate posts I’ve ever read that was just chock full of data! You are a 5.0 at word craft as well as at tennis. It was also wonderfully encouraging to the middle class reader who has some time on his side. Wealth concentration in the top 1% is worrisome, I think it makes lesser multimillionaires likely to become political targets because having 3 or 5 or 10 million isn’t distinguishable from having billions to someone who has nothing, or very little.
Appreciate your comment Steve!
I was just surprised that the average person over the age of 55 is a millionaire in America. Therefore, we might as well all shoot for multi-millionaire status.
Yes, it’s really the top 0.1% where the wealth gets truly obscene.
I think you understand that the average person isn’t a millionaire. That’s the average net worth.
A group of 1,000 people including Jeff Bezos will have an average net worth of over $100 million. But the median will still be only around $70K.
I’d be very interested in digging out the net worth government data to see where the 10th & 90th percentile lies for each age range.
Indeed. And it still doesn’t deny that the average 55+ year old is technically a millionaire in America.
We can shoot to be average or above average.
The average 55-64 year old – half having more, half less – has a net worth of a bit under $200K.
Because those who have more have a lot more, the median is much lower than the average.
Being a millionaire at age 55 would put you in the top 20% of households by net worth for the 55-59 age bracket.
If you were in your early 40s, you’d be in the top 10%.
I saw another interesting stat that says there are ~130M Households in the US and the number of households that are millionaires range from 11M to 15M, depending on whose numbers you look at. If you split the difference and say there are 13M households in the US who can claim millionaire status then that means only 10% of the households are millionaires.
Sam,
Thanks again for your insightful data-driven articles. This one is a keeper.
I was curious about the following statement you made:
“If there is ever a coronavirus vaccine, I suspect more of the mass affluent class will be moving to lower cost areas of the country or world.”
What drives your expectation here? Anecdotal? Stats? Intuition?
I feel that all of us are now questioning our purpose of making money, living where we live, and grinding so hard. Once the vaccine comes, if it does, it gives millions of people a second chance to rethink their lives and their lifestyles.
I love New York City and San Francisco, these have been the two cities I’ve lived in my entire post college life. It’s very hard to leave. But if you feel uncomfortable in an expensive city, and you feel like you’re getting squeezed all the time, then I think this postvaccine window is an opportunity to finally change your life.
I’ve been talking about escaping to Hawaii for years now. I set a date for the year 2022. My intention is higher than ever to move. I need to spend more time with my parents. I certainly will not let the coronavirus rob me of my time with them.
I love this. Ghandi like. I chase money for the fun of it. Owning Tesla is a hoot. I don’t even know I have money without a computer screen. I have never seen my money or touched it. It lives inside a computer
I carry $800 in my wallet. That is the only money I know I have. That $800 makes me happy, not the money I’ve never seen or spent.
My computer money is a number with no meaning but I enjoy this artificial world because it is mentally and emotionally a nightmare and at times a delight.
Where else can I have a guy like Tim Cook working to make his company the best in the world and I profit from it. Thanks Tim
Would love to see an annotation for a multiplier for the Recommended – Average Household Net Worth.
I would guess that (on average) that the Top 1% will more often live in higher than average COL areas.
“It shows the average American household is technically a millionaire by age 55-64.”
Not crazy about this assertion, using the mean instead of the median. When you have a long tail distribution rather than a symmetric bell curve, the very wealthy dramatically shift the mean up, as your chart shows. The actual 50% level is 200some k, less than 1/4th that “average.” While that too looks great against the developing world, and with SS would still fund a nice retirement in a banana republic, it no longer stands out. Not when health care costs for retirement are estimated to be in that same ballpark of 200some k.
It’s not by accident that when we talk about real estate prices, household income, and wealth, the median is the dominant figure used. In no circumstances should we use the mean without at least mentioning the median.
Good thing the median net worth and the figures are mentioned everywhere in the post.
I think it would be most useful to use a word like “typical”.
The typical American (half has more and half have less) has a $124k net asset value – at least for a midrange age point of a 50yo
Therefore, the vast majority of Americans are no where close to being millionaires…
She think the average person probably doesn’t have 1) the time to read personal finance and 2) the extra money to invest. If you’re working more than one job to get by, it’s just not something of value to you.
As for the middle class not recovering from the financial crash, I can see why. It’s a scary thing. I had an adjunct professor in law school who was a 1 percenter, and he gave us all great financial advice. He said, “you’re young. Ignore what happens in the market, and let your money ride. Put it in an index fund, and don’t look at it.” That’s what I’ve done, and everything looks good, despite any financial crisis. I don’t know if everyone has the stomach for that though.
Wow. Sam, so much data :-). I think this is the best one liner – Endless comparison is the thief of joy. Good one and keep up the good work. I think once you cross a million, stop comparing and enjoy what you have, and above all be thankful.
Well said! I think once you cross a million, money suddenly starts becoming more of a game and less about survival. Gratitude is the ultimate lens that makes us feel rich.
I should start leveling up faster and boost my net worth to over $10 million dollars within my five year business plan! Multiply my net worth with self-storage acquisitions and equity partner(s)!
Financial Samurai “Recommended” column on “American Household Net Worth by Age” for 45-54 yr old
= YEP. DONE.
It looks like I’m beating the pants off the rest of the Millennials, though I still don’t have the $500,000 net worth that you recommend. Still, roughly $360,000 is not bad, right?
There’s a page on my 401(k) that estimates how much I’ll be able to draw at retirement. The thing estimates that I’ll be able to draw $192,000/year at retirement with only my 401(k) and Social Security. I’m fairly skeptical of that number, though, since I’m fairly solidly middle class and nowhere near mass affluent (yes, I know, “We all think we’re middle class”). I only just started making more than the median national salary (in a high HCOL area) this year, so it’s tough to imagine me suddenly having access to a lawyer’s salary or whatever come retirement.
Great article, though. Shame the middle class never recovered from the Great Recession, especially with another one right around the corner.
Sincerely,
ARB–Angry Retail Banker
In a bull market, the game is definitely stacked in favor of people with a high net worth at the start of the bull market. A 10% return on $100,000 gives you $10,000. Nothing to scoff at but a 10% return on $10 million produces $1 million. That is a large number. The same % return but totally different dollar outcome.
Capital preservation is key once you have made it. A 30% reduction in net worth might impact someone’s lifestyle if already FI but a 30% increase in net worth might have little bearing on spending habits.
If middle class, I would try to have as invested in investment assets as possible heading into the next bull market run..
Hi Sam, thanks for the interesting post. Does net worth include a subtraction for mortgage? Have a hard time believing how the median net worth for the <34 group could be positive assuming they live in an average mortgage financed house. Thanks!
Yes net worth includes a subtraction of mortgage debt. The home value is listed as an asset and the mortgage is the debt amount, so unless they’re underwater, the home will be a net positive to their net worth.
Thanks! Obviously was I mistakenly taking equity as an asset (instead of home value) and the mortgage balance as a liability, but your explanation makes sense.
In that case, i’m a little worried about where the <34 age group is!
This is great benchmarking stuff! It’s natural for us to compare to one another even though we’re all on a different path. I was amazed to see how stagnant the middle class is VS how accelerated the top 1% is. It suggests that it is hard to get out of the middle class and it is easier, once you are wealthy to continue to grow your wealth to new heights.
Since you receive so many survey respondents, I’m wondering would it be possible for you to do a survey of net worth and associated age of the readers here? Maybe it can help us gauge the progress of each other.
See this post:
https://www.financialsamurai.com/net-worth-targets-by-age-income-work-experience/
https://www.financialsamurai.com/the-average-net-worth-for-the-above-average-person/
I expect all readers here to be above average because average people do not read personal finance sites. Let’s rock!
Love this stuff! Comparing your net worth against others is probably a bit of a losing game. I think it’s good to track your progress, but you need to base it on YOUR ultimate goal – not what society believes you should be worth. However, this does provide some awesome insight into America’s wealth. Thanks for another great post!
To be fair to Sam, he says just that.
“Once we start comparing ourselves to others who have more, that’s when our disdain becomes apparent.”
On the one hand, comparing yourself to others can be a waste of time and emotional energy. On the other hand, you are competing with others for the same resources — so if the market suddenly becomes flooded with people in your demographic/psychographic with the same goals as you, then in order to attain those goals you may need to spend more than you planned or modify your goals.
Are you requesting net worth for an individual or a couple? My spouse and I have separate property totaling 2 million in assets each, so do I vote in the 4 million category or 2 million? “[the mass affluent] average Social Security check is closer to $2,500”. Do you mean a couple’s or an individual’s? We will each draw $2,000 at 62. This is an important detail that affects retirement, estates and estate planning.
Household net worth.
Social Security check is individual.
Financial Independence is the detachment from other people money – their money can no longer enslave you.
Financial Freedom is the freedom from money itself – money plays no role in the true meaning of your life. This is where all passions are rooted.
The math for FI is very simple: Annual Living Expenses ÷ 0.04 = Financial Independence Target.
If you passed the FI marker, you are more financially secured than the 52 States financial budget.
FS is half correct with regard to high net worth – the fundamental component to the FI equation.
The other half is Annual Life Style Expenses – the critical component to the FI equation.
99 percents of the readers on FS still have many years before the crossing of the FI mile marker because of the Annual Life Style Expenses – ALSE prevents many you from crossing over the high net worth barrier.
On the average and with diligent, most people will achieve FI in 10 to 35 years. All your efforts will be governed by the mathematical equation above.
If you crossed the FI mile marker before the age of 45, it is time to think about Financial Freedom. This is much harder to implement because many deployed Financial Independence strategies are now work against passion.
This is why many FIRE achievers found themselves in the uncharted territory beyond the FI mile marker.
Passion spawns progress. Life feeds on progress. Without progress, life will wither and drain out of existence.
Very interesting read! My question is how would you assess what class you are if you are still in your early 20s as opposed to near retirement age? My net-worth is significantly higher than my peers and I’ll probably reach the ‘mass affluent’ net worth in my mid 30s.. I’ve always wondered if I fall into the lower middle class just because of my age? I’m also not taking into account any family wealth only what I have saved and invested myself.
Good question. Check out this guide: https://www.financialsamurai.com/the-average-net-worth-for-a-30-year-old/
Does net worth include primary residence equity?
Yes.
Eliminate estate taxes, implement inheritance taxes.
An estate tax is levied against the estate of a dead person and therefore is seen by many as a form of double taxation. Why do we tax estates? We should be taxing inheritances. The purpose of the tax should not be to raise money for the government, but to prevent the rise of a hereditary American aristocracy.
So instead of an estate tax, it should be an inheritance tax, which is paid by the inheritors, and it should be graduated on a steeply rising asymptotic curve to the point where even an 80 billion dollar inheritance would leave no more than a billion (while a billion might leave half a billion). Also, it should have a very large exclusion. The exclusion should be large enough to preclude all talk about how it might break up family farms, and so forth, say forty million in today’s dollars, and is should be tied to leading economic indicators.
For years, the exclusionary portion of the estate tax was held stationary, to the point where it began to jeopardize family farms and businesses. This was probably a deliberate strategy by those who didn’t like it. Make it affect more people and you have a chance of getting the whole thing tossed out.
The tax needs to be paid by the inheritor, not the estate, then it would be taxed depending on how much each inheritor was receiving, not as a lump sum. This also encourages breakup of mega-wealth for, if Jeff Bezos died today and left his fortune in 40 million dollar chunks, evenly spread among several thousand inheritors, all of them would be in the exclusion range and pay no taxes.
The whole point of inheritance taxes should be to prevent all the wealth from getting concentrated into too small a segment of the population. When this happens the economy either tanks, or a large numbers of people are pushed outside of it. History says riots, revolutions, and a quick slide into third world-like status usually accompany this.
I have no problem with someone making as much money as they can (providing it is made legally, ethically, and, hopefully, morally). I have no problem with a person who makes eighty billion dollars doing with it as they please (within the law) and exercising the power that comes with it. I have a problem with someone who did nada, except collect it from daddy’s estate, exercising that kind of power — OVER ME. So should you.
It doesn’t matter if everyone else is “taken care of.” What do you call serfs and slaves with nice homes, cars, central air, giant flat screen televisions, and wonderful health care? “Serfs and slaves” is still the correct answer.
Of course, estate taxes and inheritance taxes could both be useless if current efforts to radically extend human lifespans are successful. Better start planning for that now, before the opposition gets organized.
Disagree. “So should you”. Don’t tell us what to think. If I make billions and want to give it to my family, that is my choice, not yours or the government’s.
@Snazster Envious? Move to Cuba or China and they will support your ideas of stealing money.
@PG I agree with your sentiment, but not the way you said it. Snazter has a legitimate argument. While I disagree with it, it still deserves more than a simplistic and disrespectful answer.
Because socialism is bad; very bad. It’s been proven to be disastrous everywhere it has been attempted. It might work for some insects, it does not work for humans in any group larger than a pretty small tribe.
In fact, it’s every bit as bad as letting .01% of the population scoop up the vast majority of the wealth and income.
Trouble is, people make a religion out of this stuff.
“If you are against unlimited concentrations of wealth then you are a socialist.”
So if you don’t like cold you should permit and encourage unlimited heat? If you don’t like hot summers you should move to Antarctica? If you live in place that is having a drought you should permit and encourage floods? If you live in a place that floods you should eliminate all water, everywhere on the planet?
We call people with this kind of mindset “extremists.” It’s great to have ideals, but saying that because some amount (a lot or a little) is good, and that, therefore, more (or less) is automatically better is . . . well . . . it’s becoming more and more common these days.
Absolutes are easy. For the media, it sells papers and gets web hits, for the politicians, it focuses their voters (you are good and with us or you are evil and against us). And people grab on because they don’t like to think for themselves; because finding decisions in gray areas can be hard.
Like trying to figure out when the needs of the many outweigh the needs of the few. If you just accept that as a universal truth, you are a communist, clinging to an ideal that can never be successfully implemented. On the other hand, holding that the rights of the individual always outweigh the good of society is effectively saying that your neighbor’s right to swing his fist does not stop at the end of your nose. Saying otherwise would be interfering with his rights. This is also called anarchy. Anarchy seldom lasts long because people quickly discover they are willing to accept almost anything else to eliminate it.
Your “solution” to concentrated wealth places too much wealth into the hands of corrupt politicians. NO GOOD can come from allowing excessive amounts of wealth from private citizens to be STOLEN by the evil, corrupt politician.
It amazes me how, despite millions of examples of how bad gov’t manages money and power, people still advocate for more of the same.
I would rather take my chances with having a few too many undeserving wealthy folks around rather than a society where gov’t controls and calls all the shots.
You worry too much about a trivial matter and further your cure is worse than the disease.
Nope. What I suggest is that they are encouraged to break it up into, say, 50 million dollar chunks or less (in today’s money). With multiple inheritors and/or contributions to various qualifying organizations, the government can’t get a dime of it.
Regardless, you are saying don’t let the government have any money because they are corrupt. That’s kind of like saying you are never going to have your car repaired because so many mechanics are crooks.
Would you really just let your car fall apart or would you try to find other mechanics, or at least keep a better watch on the ones you are stuck with?
Admittedly, with Congress, you might be right. More than a third of the House and over half of the Senate have law degrees, and lawyers consider being amoral to be admirable in their profession, while the rest of us equate amoral with immoral. Legal and ethical behavior are two different things and NEITHER if them is the same thing as moral behavior.
Also, with PACS and around 93,000 big contributors providing about 80% of their campaign contributions, they have a lot of incentive to play favorites. Also, most spend over half of their time just trying to raise more money, presumably stealing time from their employers . . . us.
Coincidentally, consider that 93,000 is about the same number (83,600) as that of households in the US that have 50 million or more in wealth. Also consider that their interests may not be completely the same as those of us with only a few million, or the 94% of the population with substantially less, including the “common” millionaires, yet, when they show up no-notice in DC and call their representative, or one of their senators, for a quick meeting, they probably don’t have a problem getting it.
And don’t even get started on lobbyists and the very rich giving them insider information, which members of Congress used to be free to profit by. Presumably, the STOCK Act in 2012 cracked down on this but we have no way to tell if it is being enforced or, perhaps worse, selectively enforced when it come to the President, the vice-President, and Congress. Congress deliberated less than 14 seconds before voting unanimously to exclude their own financial transactions from public review when, logically, they would be more visible, rather than less so, than those of the general public.
Nor should we get into gerrymandering, and many other questionable activities.
Why couldn’t the $40M chunks of wealth just be reassembled back into the original amount and avoid the tax completely? Like all of Bezo’s inheritors become investors in the same company?
Good idea to tax the inheritors, since they will be getting the funds for the first time. But whether the estate pays or the inheritor pays…. I guess it doesn’t matter from the government’s POV.
Taxing the estate above a certain amount encourages the wealthy to spend more and give more while living.
I’ve noticed and now understand why adult parents want to help out there kids more, even after their kids are adults. It feels much better to help your children with their struggles alive than dead. At least when alive, you know what the problem is, have control over your money, and can see a real difference.
re: “It feels much better to help your children with their struggles alive than dead.”
YES.
With ~$3.5 mil net worth, three single family residences (primary and rental in our HCOL coastal state, “vacation” in a LCOL midwest state), both of us 60+ with chronic and potential health issues, why should we make our two 35+ adult offspring wait until after our demise to start benefiting from funds we are planning for them to eventually receive anyway?
As long as our gifts remain under the IRS annual gift tax threshold, and do not negatively affect our overall financial position or somewhat lavish lifestyle, why not? Not only does it reduce our tax deferred assets (making our future government forced RMD withdrawals smaller), it also helps to keep our offspring living nearby rather than moving to a LCOL state.
Ok, I guess our true motivation has been exposed. But if our offspring are going to be slaves or serfs to someone’s money, I’d rather it be to our money. We don’t treat them like our slaves or serfs (well, ok, except for when it comes to providing our hardware and software IT support). I hope they don’t feel like slaves or serfs to us!
BTW, they both have jobs they enjoy, so they are productive members of society and not simply leeching off their parents.
Besides, I would feel way too guilty if I had the means to help out and did not do so (which explains why at one time we had two “vacation” homes in that midwest state).
Why would you feel guilty for not helping your kids if they’re doing okay? I’m asking because my parents have a sizable estate at this point, and my siblings and I similarly have good jobs, and my parents have stood firm in their “promise” to cut us off financially once we finished school. I even pick up the check when we go out to dinner, and it actually feels nice to be able to do it. It makes me feel “self-made” and proud, even though in reality I also recognize how privileged I am that I got through undergraduate and law school with no student loan debt. I don’t resent my parents at all for not helping us as adults. And more than that, I’m grateful that they’ve got a big enough nest egg that they won’t run out of money in retirement, which is their top priority now, as it should be.
Isn’t your parents paying for law school for 3 years after college, helping you out massively as an adult?
Most folks graduate college at 22. So having $200,000 – $300,0000 covered from 22-25 sounds like a great gift to me.
What am I missing? Perhaps our definition of adult is different? Most say 18 is an adult age.
What you said about parents helping their adult children is so true. My husband’s parents gifted us down payment for our new house which we were going to pay back. But my FiL said it’s more meaningful for him to help us out now instead of waiting until they pass away since now is when we really need the money.
Survival of the fittest is the mother of all inventions and creativity. Your lives are living and benefiting from the modern progress because of the past and present of geniuses who possessed the survival of the fittest instinct.
You are hurting your kids if you give them financial resources for the basic survivals beyond the college years (22). In some extreme cases, the 18th birthday is the best time to throttle back financial support to stimulate the “Survival of the fittest” edge for your children.
It is a high probability you are an investor if you are a reader of FS. You would feel dump by invest in a stock that has no capital growth and or zero dividend – that is exactly the mistake you are making just because you want to protect and cuddle your genes.
Some levels of taxations are important, estate tax or inheritance tax, just to make sure the wealth accumulation does not get out of hand as in the past.
Any innovation has its shelf life. Wealth accumulation prevents new innovation because in most cases, it propagates stupidity genes and suppresses genius genes from the population.
Do invest in your children dreams and aspirations, but not their biological desire for more comforts and pleasures.
Your financial wins in many cases are better off for genes outside of your bloodline – whose innovations and creativity have the greater probability of building a better world for your great, great, great, great, great grand children.
This is nothing more than the self-preservation regardless of logic, and it is being mistaken as “LOVE”.
The primary point of the estate tax is to collect on those untaxed capital gains that got a step up basis at the time of death. The very wealthy shouldn’t get a free pass. So it’s either the estate tax or the step up benefit. We were (currently) already compensated for the risk by having a lower tax rate on LTCG.
Is the American household a household of four?
If you want to get busy.
Are your figures for 2019? The charts only go up to 2016.
The 2016 Survey Of Consumer Finances is the latest report. They do these surveys every 3 years or so. Once they compile the data, it takes another year or so to put out the report. You can expect the numbers to be higher today.
I used to think your recommended net worth is too high, but I’m coming around. It looks about right to me now. The top 1% increase their wealth through investing, not working. The middle class needs to learn that lesson. Working is great, but you need to invest to keep up.
Unfortunately, I think the middle class will keep falling behind. The mass affluent will barely keep up. The real solution is the top 1% needs to spend more. If they keep investing so much, they’ll keep pulling ahead. Spread it around a little. You can’t take it with you, right?
Something you’re not taking into account is that the middle class and wealthy class have different people in them every year. They aren’t the same people over time. I am in the poverty level right now but will be considered wealthy 5 years from now.
Joe,
I think the main reason the top 1% don’t spend more is that they already own all the “consumables” they need. I don’t think having more stuff moves the satisfaction level for them. Instead of buying just for the sake of buying they invest which continues to build their wealth.
The middle class will catch up BIG once the bear market arrives. We all will, compared to the super wealthy.
Just got to hold on.
How? I’m not sure I understand. Is this based on the previous 2016 analysis that shows that the mass affluent fared the best, post-recession? Could you please clarify? And thank you very much for always providing fantastic insight and content! :) Robin
Sure. Let’s say Warren Buffet is worth $50 billion and is 100% exposed to the stock market. You are worth $1 million and have 100% cash.
If the S&P 500 corrects by 30%, Warren loses $15 billion and you lose nothing. You were once $50 billion behind, now you are only $35 billion behind. You basically caught up to Warren by $15 billion.
The ore you have, the more you have to lose.
Except that’s exactly opposite of the majority of current scenarios. Warren Buffet, being the savvy businessman he is, currently has a much higher percentage of his portfolio in cash; most of us who have our mere $1M in managed retirement portfolios are fully invested as our financial advisors always tell us to ride out market swings. Bear market arrives, both Warren and us lose 20% of our invested funds; Warren pulls the trigger and re-invests his free cash at market lows. Market eventually recovers – we get back to break-even; Warren not only recovers but is now far ahead due to his market timing. So maybe for a year there is a narrowing of the wealth gap, but longer-term, Warren is the bigtime winner. I don’t know of any of my peers with $1M portfolios that are sitting in more than 20% cash, let alone 100%.
29 with 400k net worth.
Want to be FI by 40 with 3 million. Got a bit to go.
What’s your income trajectory looking like?
Oh boy. A lot of people on here with $10,000,000 +. I need to step up my game!!
Joshua:
Or not, perhaps. My wife & I are in the $2-3 million range which excludes house & vehicles & represents investments only. Consistent employment, frugality, saving & persistent investing are our keys. Couldn’t be happier or any more pleased with our quality of life. We aggressively saved & invested to retire at age 50 (55 now.) I do not feel compelled to attempt to hit the $10 million mark. 2 daughters in college which is covered via Vanguard 529 plans we established many years ago & those proceeds have doubled (those values also excluded from range vote.). Each year I take 1-2% in dividends from stocks acquired via direct stock purchase plans. DUK/T/NLY/NYCB/XOM, etc. Our most troubling expense is health insurance (thanks to politicians & obamacare.). Otherwise extremely pleased with what we have accomplished & our lifestyle. And still live a very frugal existence. This post submitted for those readers seeking profiles of others.
I’m surprised by how many are over 20 million. Would love to see a post on how someone gets there….
1-3 million seems very doable in this country
By lying.
Only 1% of the 17,000+ survey participants say that they have a net worth of $10 million or more. Given $10.7 million is the median net worth of the top 1%, I would say the survey participants are telling the truth.
I am surprised about the $20 million vote though.
After accounting for outliers, it was interesting to see that the net worth for the majority of your readers was spread fairly evenly across the spectrum. Just goes to show your content appeals to wide variety of people in all sorts of personal finance situations. GOOD JOB!
Thank you! I do feel that over the next 3 to 5 years, I need to appeal to a wider audience though.
I agree, that “having a high net worth is more important.” But few people are willing to take the steps to create a high net worth. The difference between the top 1% and the middle class will likely exist for a long time as people are focused on the immediate gratification of buying things now rather than building a net worth that will have money work for them, instead of working for your money.
I was a bit surprised that the top 1% had the largest decline in net worth as I would have thought that once you reach that level of wealth you can afford to take risk off the plate.
Median values are much more informational than average numbers as they can be skewed quite a bit by the extremes. I guess I fall into the mass affluent range already based on your figures although I think the range of 80-99% is a bit too generous. I think there should be subdivisions of top 5%, top 10%, and top 15%.
Ultra rich have most of their assets in real estate or stocks and bonds which are volatile. Cash component is limited. 30% is at par with the market drop so this is not surprising at all.
Quote: “If you have a median net worth of $87,140 and you are the median age of 38 in America, you’ve still got plenty of time to grow your wealth. But if you’ve got a $87,140 net worth in your 50s and 60s, life is going to be stressful financially. It is highly likely you will need to work longer or become dependent on government programs in addition to Social Security.”
I have plenty of TIME to achieve Multi millionaire Net Worth
Would love to see that breakdown as well.