Net assets by age group, Sept. 2020 edition
How do your net assets compare to others in your age group?
I first posted on this topic back in August of 2020, based on a report published in 2017. Of course, this was only about a month before new data came available. After all, I'm always late to the party—I've gotten used to it over the years! 😂
Here's a link to a PDF summary of the latest data, published in September of 2020.
Because I found this information interesting the last time I ran across it, I've updated the net worth chart, based on the new data:
Just like last time, remember that these numbers typically include home equity. So if you don't have hundreds of thousands of dollars sitting in the bank, don't despair!
A couple points of interest:
- The median net worth increased 18% from the previous survey, from $103,500 in 2016 to $121,700 in 2019 [adjusted to 2019 dollars. Note that if you look at the SCF 17 report, it lists the median net worth as $97,300—measured in 2016 dollars]
- The mean net worth increased 2%, from $736,000 to $748,800 [again, adjusted to 2019 dollars. SCF17 gave the mean net worth as $692,100]
- “Net worth tends
to rise systematically with income, as higher-income families have
higher levels of saving, which results in…higher income from the
accumulated assets.”
- “Net worth
generally increases with age until it plateaus (or decreases
modestly) for the oldest age groups as they retire…”
- “Among families with a college degree, declines in median and mean net worth were more modest, leaving median net worth essentially unchanged from its 2013 level and mean net worth well above its 2013 level. As with income, these patterns generally point to a shrinking gap in net worth between families with and without a college degree between 2016 and 2019…”
- “The fraction of families that reported saving has increased over the past three surveys. Between 2016 and 2019, the proportion of all families that saved increased from 55 percent to 59 percent.”
- “The median net worth of homeowners grew modestly between 2016 and 2019, while their mean net worth essentially did not change. Renters or other non-homeowners, whose average levels of net worth are far exceeded by those of homeowners, experienced an 18 percent jump in median net worth and a 1 percent decline in mean net worth.”
“Median and mean net worth rose for much of the net worth distribution, with the bottom quartile’s 5 percent loss in mean net worth representing the only decline.”
“The wealth portfolio of families in the middle of the net worth distribution is dominated by housing, and, as such, changes in their wealth between surveys tend to reflect the extent to which growth in house prices surpassed inflation.”
“98.7 percent of families in 2019 owned at least one financial asset—which includes transaction accounts, certificates of deposit, savings bonds, other bonds, stocks, pooled investment funds, retirement accounts, cash value life insurance, and other managed assets—little changed from 2016.”
“The conditional median value of retirement accounts increased a modest 2 percent between 2016 and 2019, to $65,000, while the conditional mean value rose 5 percent to $255,200 in 2019.”
“Finally, following outsized increases in both median and mean net worth between 2010 and 2016, families near the top of the wealth distribution saw very little change in net worth…”
- For the bottom two
income quintiles (that is, the bottom 40% of earners), net worth
increased from 2016 to 2019—both median and mean. In fact, median
net worth for both groups jumped by over 35%!
- The top income
quintile, however (the top 20% of earners), actually saw their median
net worth decrease by nearly 10% between 2016 and 2019!
- Does that mean the 'wealth gap' is narrowing?...
- It’s interesting to compare the median & mean values of financial assets vs. non-financial assets. Specifically, compare the values of something like retirement accounts (a ‘financial asset’) vs. primary residence (a ‘non-financial asset’). If you’re familiar with personal finance, the results are fairly predictable:
- Median in financial assets: $25,700
- Median in non-financial assets: $194,300
More detail:
Financial assets:
-
Median retirement account value: $65,000
-
Pooled investment funds (e.g. mutual funds, ETFs, REITs, and hedge funds): $110,000
-
Cash-value life insurance: $9000
Non-financial assets:
-
Median primary residence: $225,000
-
Other residential property: $160,000
-
Equity in non-residential property: $72,000
-
Vehicles: $17,200
[Note that the mean values, rather than the median values displayed here, are considerably higher, as is often the case when it comes to money.]
Essentially, the typical person in this survey has a lot more money in a residence than in a retirement account. That’s not really surprising, but seeing the numbers puts the gap into stark relief.
Can't use home equity to pay for groceries! Maybe that's why they started running all those ads for 'reverse mortgages'...
***
It’s also interesting that, between 2016 and 2019, the median retirement account in this survey gained only 2% and the median balance for ‘pooled investment funds’ actually dropped 9%—in a time period when the S&P 500 compounded at over 15%!
I guess that’s just more evidence that people generally aren’t great at handling their investments.
It's also evidence of the insidious nature of inflation. Remember the 'jump' in net worth figures just below the big chart? A 'jump' that resulted entirely from the adjustment from 2016 dollars to 2019 dollars?
The percentage of people with a retirement account? 50.5%, down from 52.1% in 2016. Does this mean that people are cashing out their retirement accounts in exchange for a down payment for a house?
Maybe. But of course, the data can’t show that.
All in all, these findings are interesting, at least to data nerds like me. :)
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