In the United States, a person's net worth is a barometer of their financial standing, particularly as they approach retirement. This figure, calculated by subtracting liabilities from assets, varies considerably across the population, shaping the retirement lifestyle and economic security of millions.
Finance expert and author Geoff Schmidt evaluates retiree wealth using the most recent data from the Federal Reserve Board’s Survey of Consumer Finances.
Poor: Households in the 20th percentile, with a net worth of around $10,000, are categorized as poor. This group likely doesn’t own a home and focuses financial resources on necessities.
Middle class: The middle class is in the 50th percentile, with a median household net worth of $281,000 for Americans aged 65 and up. This typically includes home equity, savings and a 401(k) account.
Wealthy: To be considered well off, a person must be in the 90th percentile, possessing a household net worth of $1.9 million. This level of wealth affords trips, charity donations and college funds for children. The 95th percentile, with a net worth of $3.2 million, is considered wealthy, facilitating estate planning and possibly owning multiple homes. The top 1%, or the 99th percentile, has a net worth of $16.7 million and represents the very wealthy, who enjoy considerable financial freedom and luxury.
Americans aged 55-64: This group has an estimated average net worth of $1.18 million. This figure is significant as it represents people who are typically nearing the end of their working years and are at the peak of their wealth accumulation phase.
Americans aged 65-74: This group has a higher average net worth than the 55-64 age group, at $1.22 million. The increase in average net worth for this age group is likely because of continued asset growth and possibly the beginning of drawing down retirement accounts.
75 and older: This demographic has an average net worth of $977,600, which is lower than the younger age groups. This decrease can be attributed to the fact that people in this age group are further into their retirement and may be drawing down their assets more significantly
Wealth Perception In America
According to Schwab's 2023 Modern Wealth Survey, Americans perceive an average net worth of $2.2 million as wealthy.
Knight Frank’s research indicates that a net worth of $4.4 million is required to be in the top 1% in America, a figure much higher than in countries like Japan, the U.K. and Australia.
Economic Class Net Worth
A growing number of Americans are entering retirement with debt. The proportion of households led by people aged 65 and older with debt increased from 38% in 1989 to 61% in 2016. CNBC reports debt among those aged 70 and up surged by 614% from 1999 to 2021, with mortgages constituting the majority of the debt.
Net worth at retirement age in the U.S. varies considerably and is shaped by elements such as homeownership, savings and debt. While the middle class and wealthy often experience financial security, a notable segment of the population confronts economic difficulties. This disparity underscores the critical role of financial planning and management, including the valuable assistance of financial advisers, in ensuring a stable financial future throughout life.
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The 95th percentile, with a net worth of $3.2 million, is considered wealthy, facilitating estate planning and possibly owning multiple homes. The top 1%, or the 99th percentile, has a net worth of $16.7 million and represents the very wealthy, who enjoy considerable financial freedom and luxury.
According to Schwab's 2023 Modern Wealth Survey, its seventh annual, Americans said it takes an average net worth of $2.2 million to qualify a person as being wealthy.
As of 2022 (the most recent Census data), the average median household income in the U.S. was $73,914, meaning the national range for the middle class is roughly $49,271 to $147,828. Across the nation's largest cities, the range is between $51,558 and $154,590, according to SmartAsset.
So, who are low-income, high net worth individuals? They are people who have over $1 million in investable assets, but earn below the median income for their area. They may have inherited their wealth, or built it over time through strategic investing and financial planning.
Someone who has $1 million in liquid assets, for instance, is usually considered to be a high net worth (HNW) individual. You might need $5 million to $10 million to qualify as having a very high net worth while it may take $30 million or more to be considered ultra-high net worth.
Key Findings. In a large U.S. city, a middle-class income averages between $52,000 and $155,000. The median household income across all 345 cities is $77,345, making middle-class income limits fall between $51,558 and $154,590.
The American upper class can be broken down into two groups: people of substantial means with a history of family wealth going back a century or more (called "old money") and families who have acquired their wealth more recently (e.g. fewer than 100 years), sometimes referred to as "Nouveau riche".
Many have graduate degrees with educational attainment serving as the main distinguishing feature of this class. Household incomes commonly exceed $100,000, with some smaller one-income earners household having incomes in the high 5-figure range. "The upper middle class has grown...and its composition has changed.
Middle class: Those in the 40th to 60th percentile of household income, ranging from $55,001 to $89,744. Upper middle class: Households in the 60th to 80th percentile, with incomes between $89,745 and $149,131. Upper class: The top 20% of earners, with household incomes of $149,132 or more.
Where you rank by income. According to the Census Bureau's Income in the United States: 2022 report, the median household income is $74,580 (a 2.3% decline from 2021), while household income levels for each class level are as follows: Lower class: less than or equal to $30,000. Lower-middle class: $30,001 – $58,020.
Net worth is the difference between the values of your assets and liabilities. The average American net worth is $1,063,700, as of 2022. Net worth averages increase with age from $183,500 for those 35 and under to $1,794,600 for those 65 to 74. Net worth, however, tends to drop for those 75 and older.
1 The analysis by Bloomberg News puts Swift's total net worth at $1.1 billion as of October 2023, mainly driven by the success of the U.S. leg of her Eras tour.
Middle class: Those in the 40th to 60th percentile of household income, ranging from $55,001 to $89,744. Upper middle class: Households in the 60th to 80th percentile, with incomes between $89,745 and $149,131. Upper class: The top 20% of earners, with household incomes of $149,132 or more.
Household wealth or net worth is the value of assets owned by every member of the household minus their debt. The terms are used interchangeably in this report. Assets include owned homes, vehicles, financial accounts, retirement accounts, stocks, bonds and mutual funds, and more.
However, if you have $1m, are retired and are living an expensive lifestyle, you might go from wealthy to poor in a relatively short period of time. The Schwab survey found that overall, Americans say they need: $1.9 million to be wealthy in 2021 (down from $2.6 million in 2020)
Some sources define the upper middle class as anyone making a lot of money but haven't crossed the threshold to become truly wealthy. These individuals often have a net worth of at least $500,000 to $2 million.
Individuals with a net worth of $30 million or more might qualify as ultra-high net worth. Those numbers reflect how the financial industry typically views wealth. The average American views a net worth of $774,000 as enough to be financially comfortable, with a net worth of $2.2 million required to be wealthy.
Additionally, statistics show that the top 2% of the United States population has a net worth of about $2.4 million. On the other hand, the top 5% wealthiest Americans have a net worth of just over $1 million. Therefore, about 2% of the population possesses enough wealth to meet the current definition of being rich.
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