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Average and Median Net Worth Data by Jordan at Investing Blog

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I keep seeing all these news articles about wealth, and how much net worth the average American has lost since the stock market crash and the financial crisis of 2008. (See: What is Wealth?) I wanted to do some research and see how rich (read: poor) the average American really is.

The data below is part of a study conducted by the Federal Reserve board. How accurate it is depends on their methodology, but with how much this institution spends each year to conduct research and new studies, I’d say it is about as accurate as it gets. Besides, none of the numbers look fudged or inflated, so I think this study makes a pretty good measure.

Breaking Down the Numbers

In 2007, the median net worth for all individuals of all incomes, genders, everything boiled down to $120,300 and an average of $556,300. The fact that the average is substantially higher than the median goes to show how just a few people can distort the average net worth of 300 million people.

The study also broke down the numbers by employment type. Those who were employed, or worked for someone else, had a median net worth of $350,100. Those who weren’t working had a median net worth of $124,100. Those who were retired had the second highest net worth of $543,100 and those who were self-employed or owned their own business had a median net worth of a whopping $1,961,300.

Clearly, those who work for themselves or own their own business have a massive lead! The study also broke down the statistics by home ownership. It should be not at all surprising that when this study was conducted at the height of the real estate bubble in 2007, those who owned their home had an average net worth of 11 times higher than those who didn’t. Homeowners had a median net worth of $778,000 while those who rented had a net income of $70,600.

Other Net Worth Data

Breaking the median net worth data down by age brackets paints a very interesting picture. Some of us aren’t saving enough for retirement with the baby boomer generation far behind the curve when it comes for planning for the future.

Median Income by Age:

Younger than 25: $1,475
25-34: $8,525
35-44: $51,575
45-54: $98,350
55-64: $180,125
65+: $232,000

People younger than 25 have a pass, either because they have limited work experience or because they have significant debt loads from college costs. Real net worth growth doesn’t seem to pick up until the average person is in between 35-44, when mortgage payments on a home purchased in the mid-20s on a 30 year term really starts to attack the principle, increasing the asset to debt ratio.

Those who are 65+ are either incredibly wealthy or on government assistance, and those who are 55-64 must be expecting to work until they’re 80 at the rate they’re saving. Hopefully the projections are right, and social security isn’t completely dead.

Net Worth By Income

I’ve always said that it isn’t what you make, but what you save that makes all the difference. The data wants to disagree with me, but I think it’s due mostly to the fact that A: those who make more money are likely to save more in pure dollar terms B) those who make more are likely to buy bigger homes, which have unfortunately become the basis for net worth and nest eggs C) those with higher incomes are more likely to have retirement accounts sponsored by their employers D) those who earn more are more likely to be older and have the power of compound interest behind them.

Anyway, here’s the data for incomes and median net worth:

Less than $25,000 in annual income: $1,250
$25,000-$49,000: $34,375
$50,000-74,000: $168,500
$75,000-$99,000: $301,475
$100,000-$124,000: $301,475
$125,000-$149,000: $644,100
$150,000 or more: $1,122,900

I’m not sure why those who had incomes of $75,000 to $99,000 and $100,000-$124,000 show the same numbers. Maybe they were put together for the survey, or it has to do with certain geographical reasons. ($100,000 in Minnesota might as well be $124,000 in New York, for instance).

Other Net Worth Numbers

One site is working to provide data based on employment, age, gender, and every other divisor under the sun. While its data is interesting, I’m not sure it’s accurate since users must sign up and report to the site. Also, since users can make data public, I can only assume the statistics are skewed higher rather than lower. You might want to check them out anyway at NetWorthIQ.com.

I found it interesting in their data that those who work in the finance industry have a quarter of the net worth of those who work in the medical field. Though incomes tend to be higher in medical care, shouldn’t it be safe to assume that those who work in the field of finance are more likely to appreciate saving for retirement or investing? Maybe they’re just poor investors, who knows.

About Jordan

Jordan is the web master of www.investingblog.org, a site dedicated to skillful investing, news and recent trends. You can read the original article here.

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