According to The Wall Street Journal, the average net worth per person in America was $182,000 back in 2010. Then came a 2014 Credit Suisse survey highlighting the average net worth in America is a whopping $301,000 (see pic)! Now in 2017, the average net worth for Americans is even higher thanks to a bull market in stocks and real estate.
Originally, I had my doubts about the $182,000 figure, since the median 2007 net worth of all US households is $109,000 based on a Federal Reserve survey. However, could it be that everybody in America can all buy new Porsche 911 Turbos with plenty of money left over if they wanted to? After some thought, I shared the story over social media to see what the community would say, and the negative responses astounded me!
NOBODY BELIEVES IN REALITY
No sooner did I send the link out did people start discrediting the figure. They used straw hat arguments such as “Bill Gates skews the average” and using average, instead of median, or mean is misleading. Average is average, and we can have 10 Bill Gates in America, and the average net worth still wouldn't be abnormally skewed among a denominator of hundreds of million! Don't believe me? Do the math yourself and see how much change an average $150,000 per person net worth figure out of 200 million is once you include 10 people worth $50 billion each.
What's more interesting is that the naysayers who are so determined to discredit the Wall Street Journal and Credit Suisse all have net worth's greater than $182,000. It's the darndest thing I tell ya. It would be one thing if they were all 35 years old with only net worths of under $50,000 or something. But they aren't.
I'll admit I'm over this figure, and so are all my colleagues who are over 30 years old as well. Given this is the case, I now easily can see why the average net worth per person is around $182,000. Heck, it might even be higher! The average age in America is around 35, and based on a sample set of around 20, there's no reason not to believe in this figure.
The Dow Jones Industrial Average is at a record highs at 19,100+, the S&P 500 is at a record high at 2,200+, and real estate prices in major metropolitan areas like New York City and San Francisco have all breached 2007 prices to reach new all-time highs as of 2017. Clearly, the economy has improved a lot since the 2008-2010 financial crisis.
THE REASON WHY THERE ARE DISBELIEVERS
There are two main ways to get ahead: 1)outperform others or 2) hope others underperform you. I always prefer to rely on myself to try and outperform because I have no control over what others do. The only person I can control is myself! Furthermore, the better the average does, the less you feel great about yourself.
As a result of this phenomena, it is no wonder why everybody tries to discredit the Wall Street Journal's $182,000 average net worth per person figure and Credit Suisse's $301,000 average net worth figure? The figure is an attack on their own success and makes them not feel as good about their own wealth accumulation.
See: Abolish Welfare Mentality: A Janitor Makes $271,000 A Year, Why Can't You To?
HUSTLE AND MAKE NO EXCUSES
It's important to realize there's no escaping the bell curve. At every level of competition, there will always be underperformers, folks in the middle, and outperformers. We consistently tend to OVERESTIMATE our own success and abilities and think we're better than everyone else. You know by definition that this is statistically impossible.
Instead of trying to keep people down to make yourself feel better, I encourage everyone to celebrate the success of others. Use their success as motivation for your own sake. The more you encourage others to succeed, you will rid yourself of that negativity that plagues your mind and flourish.
If you want to know what the average net worth is for the above average person is, here's a table for you to check out. Remember, this table is for above average people. The above average person regularly maxes out his or her 401k, saves at least 20% of their after tax, after 401k income, regularly invests in a well-diversified portfolio, and believes they deserve to be rich.
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About the Author: Sam began investing his own money ever since he opened an online brokerage account in 1995. Sam loved investing so much that he decided to make a career out of investing by spending the next 13 years after college working at two of the leading financial service firms in the world. During this time, Sam received his MBA from UC Berkeley with a focus on finance and real estate. He also became Series 7 and Series 63 registered. In 2012, Sam was able to retire at the age of 34 largely due to his investments that now generate roughly $200,000 a year in passive income. He spends time playing tennis, hanging out with family, consulting for leading fintech companies and writing online to help others achieve financial freedom.
FinancialSamurai.com was started in 2009 and is one of the most trusted personal finance sites today with over 1 million pageviews a month. Financial Samurai has been featured in top publications such as the LA Times, The Chicago Tribune, Bloomberg and The Wall Street Journal. Post has been updated for 2018 and beyond.
” Clearly, the economy has improved a lot since the 2008-2010 financial crisis.”
I laughed at this reading it today as the World Bank warns of “darkening skies”. Government propped up the banks with free money that they then squirreled away or chased after speculative investments with. Here we are a decade later and the crisis reemerges on a more powerful basis. It was only delayed, not eliminated.
Just you wait for what’s to come: a repeat of the Great Depression but on a more international level.
Read Paul Mattick.
Cool. You’ll enjoy this post then: https://www.financialsamurai.com/dire-movement-delay-inherit-retire-expire/
How are you investing to protect your net worth or Grow it?
I don’t invest, because I don’t want to blood suck the exploited workers which are the real source of all profit. I’m not a parasite or mosquito. I’m a human.
I’ve move out of the United States and I live a better life for 1/10 of the cost, and without fear that I’ll die in a mass shooting spree or at the hands of a killer cop.
I’m betting that capitalism will collapse in my lifetime. So the only thing to plan for is a new form of society based on human needs instead of greed.
Good luck with your new future. I suspect your negativity mindset won’t serve your well in the long term.
I don’t blame you, the triumphalist tone of these investment blogs belie an insular view of the world …
But in the real world… millennials are incurring an extra $5200/yr in total costs, more than offsetting the putative $3000/yr gain in income over their parents’ first jobs.
Everyone’s feeling the pinch, w/ corporate rent-seeking imposing a not-so-invisible tax on everyone … just from healthcare & ISP/telco’s alone, we’re talking easily $500/yr overhead per capita. Just plain ol’ monopoly gouging.
Wither the infrastructure spending? It went to a big fat $trillion tax break to the ultra-wealthy, the 8 million families who make up the 1% & believe the bobble-head blondes on Faux News…. Reactionary politics almost always have their origin w/ the classic rentier obsessions.
And wage suppression is what happens to somebody else & excessive gains-taking without consideration to the burden it imposes on society is just fine, so long as we have our comfortable lies to salve our consciences….
lol if you don’t invest when you get older will not be able to pay for your own survival. It just smart to invest. I’m a low income investor that has made more money investing then I ever did at the factory. When I retire at a young age it will be with an income higher then my factory pay.
The per capita median income which the last I saw said was $49,000 is a better measure of wealth in the US. That means half of the people are below $49k and half are above. The average is heavily skewed by the multi-millionaires and billionaires in the US. A simple example. Let’s say you have 9 people who have $1 in wealth and 1 person who has $91 in wealth. The average wealth is $10 which doesn’t come close to measuring the reality for 9 of those people. The median of $1 does a far better job. Wealth in the US is not normally distributed because of the vast wealth held in the US by a very small percentage of the population which skews the average wealth number.
“The per capita median income which the last I saw said was $49,000 is a better measure of wealth in the US.”
—————————————-
Median income is not a measure of wealth at all. Neither income nor wealth are normally distributed, but they are entirely different things.
As for the original post, the part that says “using average, instead of median, or mean” is quite odd considering that the average, as used here, IS the mean. Also, as others have noted, the fact that the extreme concentration of wealth in the hands of a small proportion of the population accounts for the mean being much higher than the median is hardly a “straw man argument.” Statistics do not seem to be a strong suit of the author.
I made less then $49,000 for 20 years. But I invested as much of my money as I could. My net worth is over a million now so anyone can be rich if they really want to. They just have to invest and not spend every penny they get.
Average net worth is pretty meaningless for talking about most Americans’ financial situation. That’s because you have crazy outliers.
The top 1% of Americans hold about 20% of the wealth in the nation.
I bring that up not as a political rant, but just to point out that it explains the difference between the average and the median values. Warren Buffet walks into a bar, and the average wealth of people in the bar goes through the roof.
Hustle and save is always good advice, no matter where you’re at on the income ladder. Still, income inequality is the reason for the sky-high average and a persistently low median. Framing these numbers as a matter of disbelief, and not the result of the current structure of our economy, is misleading.
The people that have money at the top absolutely skew the numbers for people at the bottom. Let math put things into proper perspective
There is a total of $85 Trillion in wealth in the US
The top 20% has 80% of that wealth.
That is $68 Trillion for them and $17 Trillion for the rest
The top 20% represent 62,000,000 people
The bottom 80% represent 248,000,000 people
The Average for the top 20% is $1.097 Million per person
The Average for the bottom 80% is $68,500 per person
You see how they skew the numbers? If rich people didn’t skew the numbers, you could pretend they didn’t exist, take their wealth out of the equation and the average wealth would be $274,000 per person. But they DO skew the numbers because if you take them out, the average is much, much less. Hardly more than the price of a brand new truck while the average top 20% person has enough wealth to spend $3,000 per month for 30 years.
The majority of people in the US are poor, and the ones at the top have their wealth largely calculated by assets that have hugely and falsely inflated values. Most Americans can’t cover an unexpected $1000 expense – isn’t that more meaningful than a simple average?
This article made me laugh. It’s so naive.
Claiming Bill Gates or a few millionaires don’t skew the data must be the stupidest thing ever. The wealthiest top 1% own around 40% of US wealth. Basic maths shows that the very rich are massively skewing the average wealth when calculated over the entire population.
Even worse, the value of the average house is about $180,000 – $190,000. That means average net worth of $182,000 is equivalent to the average American having nothing but their home paid off an nothing else. (And since money is fungible this comparison is perfectly suitable as net worth doesn’t distinguish what the worth is from, just what the sum is).
Combine the fact that a big proportion of wealth is held by 1% of the population, and the average net worth is about the same as the average house, and you can see that the vast majority of people have very little actual wealth.
This article is misleading. Only the simplest math is being used in this article which is why the author is coming to irresponsible simple-minded conclusions. What makes this article virtually irrelevant? Consider this: 1) The bell curve mathematics that are being touted here WERE NEVER EVEN APPLIED in this article and therefore are only being speculated about. Furthermore, 2) a bell curve is not really the mathematical formula that would be helpful in understanding the distribution of wealth discussed in the article. Finally, 3) the bell curve model goes completely against the ideas expoused here about “hustling”. Bell curve mathematics begins with the postulation that distribution throughout the entire curve is required. This ultimately means that if there is a top 1% in wealth, there MUST also be a bottom 1% in wealth such that your efforts at climbing the income ladder only result in someone else HAVING to be forced down to a lower level because you “came up” by our own hustle.
Points debunked by responsible mathematics:
(Error number 1) The author says, “Average is average, and we can have 10 Bill Gates in America, and the average net worth still wouldn’t be abnormally skewed among a denominator of hundreds of million! Don’t believe me? Do the math yourself and see how much change an average $150,000 per person net worth figure out of 200 million is once you include 10 people worth $50 billion each.” – See more at: https://www.financialsamurai.com/average-net-worth-is-huge/#sthash.hYCaumtA.dpuf
Well, I did the math based on the research, and according to an article on Forbes.com, https://www.forbes.com/sites/moneywisewomen/2012/03/21/average-america-vs-the-one-percent/#7940c33911a8, the wealthiest 1% of American households make up 43% of the net worth of all Americans. That is approximately $36.5 trillion of the total $84.9 trillion total net worth. Add in the next 4% weathiest American households and the top 5% of all American households own 72% of all net worth in America or approximately $61.13 trillion of the total $84.9 trillion networth for the whole country.
So, billionaires, even in limited number, do have the ability to greatly skew the numbers.
The numbers indicate that within the top 1% of American households, there are 2 million households with a net worth range from $9.2 million to upwards $50 billion. If all 2 million of the top 1% of households had the same bottom level $9.2 million net worth, it would still represent $18.4 trillion of total net worth. Since the actual net worth of the top 1% is closer to $36.5 trillion, it’s apparent that even within the top 1% of all American households the top earners do greatly skew the numbers higher as wealth disparity becomes more and more of a factor.
(Error number 2) Author’s comment: What’s more interesting is that the naysayers who are so determined to discredit the Wall Street Journal all have net worth’s greater than $182,000. It’s the darndest thing I tell ya. It would be one thing if they were all 35 years old with only net worths of under $50,000 or something. But they aren’t.
I’ll admit I’m over this figure, and so are all my colleagues who are over 30 years old as well. Given this is the case, I now easily can see why the average net worth per person is around $182,000. Heck, it might even be higher! The average age in America is around 35, and based on a sample set of around 20, there’s no reason not to believe in this figure.
– See more at: https://www.financialsamurai.com/average-net-worth-is-huge/#sthash.hYCaumtA.dpuf
This is a complete failure in statistical mathematics and his conclusions would be laughed at by any first year statistical mathematics student. The author’s own statements make it laughably apparent. The error here is one of improper conclusion based on statistically unreliable data. The first point shows that he did not do the math. This point shows that his conclusions are based on bad math. The mathematical error here is the attempted a=b=c conclusion that the author tries to make. What is the a=b that the author is postulating? He is stating that his sampling of 20 people is akin to an unbiased scientific poll, and that based on this highly unscientific and less than random sampling, he can make a reasonable conclusion about all 200,000,000 American households.
Let’s discect this argument. The author places the statistic that he has found on what he perceives to be an engine for scientific study, Twitter. Apparently, he forgoes the need for at least a controlled randomness in his sampling, which is a requirement for reasonable accuracy. While Twitter does contain millions of users and can reasonably be used to conduct somewhat scientific research that can give insight to America as a whole, it’s obvious that the author’s research falls far short of the mark.
First, the author indicates that he knows that the “naysayers” have incomes above $182,000. He can only know this if he has intimate knowledge of the particpants. The second reason to disavow the value of his conclusions is that his access to Twitter would only be limited to people that he has connected to which indicates that there is likely not much variety in the sampling. Furthermore, he admits that all of his colleagues over 30 have more than the average American household’s networth. The combination of these things alone represent statistical bias in the research thereby rendering the conclusions totally invalid. The author gives no indication that he employed Twitter’s help in reaching its total community. Hence, the randomness of the community to which the author submits the link to the article’s statistics FAILS to meet the mathematical requirement of being EQUAL to a properly conducted scientific study. Thus, ‘a’ is not equal to ‘b’ and therefore, his conclusion, ‘c’ cannot be understood to fall within the tolerances of statistical reliability.
Like I said earlier, this is just bad mathematics! The only thing that we know is that the author lives among a priviledged group in which everyone 30 years old and older has exceptional net worth. This is hardly a person well rounded enough to give anything less than an elitest interpretation of a very simplistic statistical calculation. My conclusion, this article is not to be taken seriously!
Thanks for your comment. This post is meant to be a little facetious, as I couldn’t believe the number either.
Check out these three posts:
1) The Average Net Worth For The Above Average Person
2) Financial Samurai Reader Demographic – With 80+ surveys and thousands and thousands of entries. I think you’ll realize a lot more people are a lot wealthier than we all think.
3) The Median Net Worth Of US Households Over Time Has Gone Nowhere – A good look at the data over time.
Hmmm if you’re here to learn about the financial situation of most Americans you should be wary of what this guy is saying.
I’m pretty sure he’s right about average net worth, but when he argues that that figure isn’t skewed significantly by the wealthiest class of Americans because there aren’t many Bill Gates types, he’s being crazy. There millions of millionaires in America that skew the average, and many many more millions of Americans with significantly lower net worths who’s impact on the figure is outweighed.
If you want to get a sense of what a typical American’s net worth is based on average, you should check out the average net worths of people in the 99% (or whatever percent) of people. Like what is the average net worth of the person who is wealthier than 80% of all americans and everyone below him? Probably wayyyy lower than that figure this dude gives. If you saw it on a graph probably at some point the graph would spike hugely, probably when you hit the 90th percentile-ish.
Anyway this guy isn’t wrong, just pretty misleading.
Instead of blaming Bill Gates and other billionaires for skewing the numbers out of your favor, why not just save more, invest more, make more to accelerate your own net worth? Why be average? The moment we stop making excuses is the moment we soar. Everybody knows about median and averages, and how they are different.
Read: The Average Net Worth For The Above Average Person
Now, share with us your age and net worth so we know where you are coming from. thx
To jump from 182 to 301 in 4 years… how does that happen?
Stock market gains.
Look up S&P500 gains from 2010-2014. I know my net-worth doubled. The few measly bucks I have invested did very well in the past few years.
Now look up how many Americans own brokerage accounts and have money invested in retirement accounts. Unless you live in a hole, or in another country, you must not see the same America we all see.
There are plenty of Americans with 0 dollars. More with negative net worth because of student loans and credit card debt. I think it is safe to say, that because you truly believe the average American has that much money you either know very few people or you do not understand averages and medians.
Crazy. Financial Samurai… please
Sadly, analysis based on average wealth is painfully divested from reality.
While it is true that 10 people worth $50 billion dollars would hardly tip the scales of average net worth of several hundred million people (although for ten people to tip the scales by several thousand dollars per American is still rather impressive), the fact remains that the upper 1/5 of the U.S. owns ~6/7ths of the wealth. That means that the average for the remaining 1/5 is about 1/7th of the wealth between them. If the average American is worth $300,000 and there are 300,000,000 Americans, that means there are 90 trillion dollars of wealth. 1/7 of that is about 12 trillion (generously), and if you split that between the 240,000,000 people left over, the total average net wealth of that 80% is ~$48,750. Considering that half of that 80% of the populace (the ‘middle’ 40%) possesses 99% of that net wealth, that leaves an average net wealth of the bottom *forty percent* of the American populace of around $500. Granted, there are probably plenty of folks in that group who live plenty well but are underwater in debt, but that doesn’t change the fact that snappy one-liners like NOBODY BELIEVES IN REALITY don’t really apply, since for the staggering majority, the figures pictured above aren’t reality.
Thank you for the data. I use the data to see if I fit roughly into the mainstream, more like goal setting. Retirement financial calculators often asks us to enter our spend level in retirement. That could be almost as uncertain as it is with our portfolio value over the decades of retirement. Even professional money managers may have a challenging time managing money for 30 to 40 years to meet some abstract life style that is defined over three to four decades, let alone an average citizen. We have some rough idea of what average US life style is, even with its variations. If I fit the general center of bell curve, I can probably expect a life style more like the retired folks today. The figures also fit with my belief that $3M networth is needed for a comfortable, not luxurious, retirement life style, where one doesn’t have to watch every penny. I wish financial advisors would just make things super simple, not accurate, but simple, by stating that US$3M networth is needed to have a comfortable retirement. Instead, we always hear that goal depend on many things. Short of that, some budgeting is required during retirement. The lower the network is from $3M, the more one has to pinch’s one’s life style. In this case, having an unclear goal could lead to a much worse consequence than having a rough and not so accurate goal. If we could possibly share this data with high school kids and let them realize this is the goal in life, it might help our citizens to be more self sufficient financially when they retire.
Interesting data to throw on the fire or rich vs. poor:
“In 2005, the typical household defined as poor by the government had a car and air conditioning. For entertainment, the household had two color televisions, cable or satellite TV, a DVD player, and a VCR. In the kitchen, the household had a refrigerator, an oven and stove, and a microwave. Other household conveniences included a clothes washer, clothes dryer, ceiling fans, a cordless phone, and a coffee maker.” (Source: Herritage.org)
I’m all about helping the poor (it’s what I do), but the truth is that the best help we can give is education- like Financial Samurai. But most (and I say most) of America’s poor is not too distraught to pick themselves up. They just don’t yet know which direction to run.
And in the mean time, let’s focus on directing charity to those who actually need our help. Not those whom falsely claim to be a part of the bottom 95%, but those who actually are (individuals making under $17k USD a year).
Let us focus on improving our standard of living through innovation, business and charity. After all, they’ve helped us get to where we are today.
As James Q. Wilson puts it, “The poorest Americans today live a better life than all but the richest persons a hundred years ago.”
I like that last quote. It is so true. We’ve got it GOOD in the States! I just got back from Cambodia, and wow.. talk about poverty. We all need to go travel and see the world!
that honestly doesn’t mean much. america has the largest wealth inequality of any first world nation in the entire world. we have the most total wealth of any nation yet we are ranked 22nd by median wealth, with the average joe sixpack in slovenia having more to his name than the average joe american. and the median australian man / woman having over 5x as much! the inequality is absolutely disgusting, and needs to be changed.
wealthy republicans will act like your typical american is asking for a handout whenever the proposal for more public services such as free public university education are made, when they are the very same people who stole all the wealth necessary to pay for such things in the first place. it is like a robber breaking into one’s house, stealing all of their stuff, and then expecting that person whom was robbed, to be grateful to the robber for giving them their tv back. saying that we should bow down to the wealthy because they “pay the most taxes” is a joke. where did they get that money from in the first place? oh yeah, as a group they stole it. 8.5 trillion missing from the pentagon since 1996 anyone?
src for median: https://en.wikipedia.org/wiki/List_of_countries_by_wealth_per_adult
src for pentagon:https://finance.yahoo.com/blogs/daily-ticker/want-cut-government-waste-8-5-trillion-pentagon-142321339.html
lol. That’s like an anachronism. A feel good one at that.
You cant compare different times because human civilization will continue to progress & devices that were non-existent few decades ago are commonplace now. Does that mean the poor should compare themselves against living standards of the 19th century and feel better ? Hardly.
If we have to deal with inequality, the only sensible comparison is contemporary.
You can bring a horse to water but you can’t make him drink. I have helped people in the passed. So far I have had 0 luck in helping someone that will not help themselves. I found out helping someone that makes less then 10k a year is burning money. Helping someone that makes 20-30k a year sometimes works sometimes don’t. I stopped helping the ones that will not help themselves.
saying that mathematically the average wealth in america is x dollars, is a fundamentally different statement than saying that the average person on the street is actually making x dollars. if i have a village with 10 people in it, and nine of those people make a dollar a day, while one person in it makes one million dollars a day, then the average income for that village is $100,000.90 per day. but the median income is one dollar per day, the actual dollar amount that 50 percent of people make less than, and 50 percent of people make more than. so YES the average income IS misleading. it is not a reflection of how the actual *average* person on the street is doing. just because one person is doing really well doesn’t mean that nine out of ten people aren’t suffering, like in the example i just gave.
all looking at the average does is tell you that those making more than the median are making WAY more than the median. that’s how math works.
I came across this site while researching American’s net worth for a college class. None of the other sources came close to $182,000. Most say the number is $77,300, and that that is according to the Federal Reserve. I am not close to either number but it’s amazing how much this number varies from one source to another, and reminds me not to believe everything I read on the internet.
Definitely do your own due diligence. I would read this post if I were you: https://www.financialsamurai.com/2012/05/14/the-average-net-worth-for-the-above-average-person/
It talks about the ABOVE AVERAGE person.
If you can’t tell by my writing in this article, I have my doubts that the WSJ says the average net worth is $182,000. The latest Federal Reserve stat says for 2007, the median net worth is about $107,000.
Again, there is a fundamental difference between average and median. I can easily believe the average to be $182K and the median to be $107K. They are two entirely different measurements.
uh, dont forget that the millionaires and billionairs at the top blow the curve. What would really be more interesting would be the median. This would let you know what the average American makes.
“What would really be more interesting would be the median. This would let you know what the average American makes.” Do you hear yourself?
Median= the middle number; the number that 50% make below and 50% make above.
Average= the equal distribution of the total amongst all who were polled.
It is a statistical, logical, grammatical and every-other-kind-of fallacy to say that the median would let you know the average.
Argue, if you want, that the median provides a better impression of the situation, but do not argue with terms unless you understand the definitions.
Of course the median provides a better impression. If 5 people are standing in a room; One has a net worth of $5M and the other 4 have a net worth of $0, then their average net worth is $1M. How is that anywhere near an accurate representation of the situation? Like… at all?
Good thing there’s more than 5 people in America. There are over 300 million.
But that doesn’t change the equation. There is incredible disparity between average net worth and median net worth.
If you can’t comprehend the story being told when the median net worth is a fraction of the average net worth, then quite frankly, you’re clueless when it comes to economics.
Actually the top 10% control 77% of the wealth… so the difference between median and average is huge.
Why do you ask what each commenter’s net worth is, and why does it matter? Do facts change depending on who is presenting them? Is this like the Heinsenberg uncertainty principle or the theory of relativity?
In Italy and EU the net worth average is much more.
The median wealth in Spain is even higher than the US. Something we should be proud of?
This guy is nuts. Over 24% of Americans have no net worth or a negative net worth. So then the average is much higher for those at the top. Apparently some people are ok with the greed mentality over compassion for human beings.
I am retired and would like to ask the community whether it is legitimate to figure my SS and my wife’s SS as an annuity in our net worth?
Sure why not. It’s a real asset that is paying you a cash flow. You can even NPV it. Just hope the government doesn’t welch!
That is why median net worth and average net worth is different. If four people have $5 and 2 people have $6 and three people have $7 and one person has $1,000,000, the average worth of the group is $100,000.30/person. Whoo hoo everyone is rich!
Oh wait, but 9 people are way way way below that and one is really really far above that. But the mean is $6/person. Half are equal to or below $6 and half are equal to or above $6. Pretty different.
On the chart the US ranks 4th in average but 19th in median because the distribution of wealth is so great with such a small number of rich and a large number of poor. Countries where their average and median are close show balanced wage distribution.
Now the chart doesn’t give numbers so we cannot accurately asses the scales of distribution variance, but the closer the average rank and the median rank the more equal the distribution. On this scale of twenty the U.S. has a 15 place delta between average and mean. However only Finland(10) and Sweden(12) join us with deltas above 10. The rest are 8 or below with 60% having deltas equal to or less than 5 (Australia – 1, Canada -1, Israel – 1, Singapore – 2, Taiwan – 2, Netherlands – 3, Ireland – 3, France – 4, New Zealand – 4, Switzerland – 5, Norway 5, Germany 5) . In other words we are rich but not universally so. Everyone appears rich in Australia and everyone is sharing the pain in Israel and Ireland.
Why is there no dateline on this?
The median – mean discussion is important, and those posting that the median is probably more informative are correct- the skewness of income distribution is legendary. And of course, even if one does include “negative net worth,” there are a LOT fewer with negative net worth in the 100 million dollar range than those with a positive number in that range and above.
I suggest people take a look at some information put together by the US Census, which looks at median net worth (by quintile, so you get five numbers- the median worth for those in the bottom 20%, the next 20%, and so on ,up to the median net worth for the top 20%). It also provides information breaking things down by age, whether people are married, etc. The data are from 1999 and 2000, but the basic information is extremely robust. Check it out at http://www.census.gov/prod/2003pubs/p70–88.pdf. A couple of major points- the median for the bottom 20% is a little less than $7500. The median for the richest 20% is…. $185,500. That alone demonstrates the skewing issue and why it is so important in figuring out where the majority of people are.
Note that for most people, the largest component of net worth is home equity (sensible, really- for an avaerage person, at least. The importance of home equity decreases as net worth increases. The often cited Bill Gates could not spend enough on a home to make it the major source of his equity). In 2000, home equity accounted for about one third of all household net worth. Obviously, as real estate prices decline, net worth declines- and the percentage decline in net worth is greater for those most relying on home ownership to boost net worth.
Median net worth when you exclude home equity, according to the Census data, for those 55 to 64 years old, was only $32,314. That is the highest figure once you look at things like age- for those under 35, it is about $3300. For those over 75, it is a bit under $20K.
Another point- $182,000 may sound like a lot of money, and it is. But, when you look at the decreasing percentage of Americans who are part of any defined benefit pension plan (from what I can see, usually not included in net worth calculations, and not included in the Census calculations) and recognize that the WSJ and other calculations DO include things like IRAs, Keoghs, etc, you start seeing how much most people have saved up to help them in old age. Does anyone think that Social Security plus a cushion of under 200K is enough for retirement (bear in mind that 200K also includes home equity, so if you have 200K in the bank, you are renting)?
Additional, and a bit more recent, data from a Federal Reserve Boards “Survey of Consumer Finances” (2007) seem to agree largely with the Census figures. The Federal Reserve Board uses averages instead of medians (easier to get the information, I suspect). Here is what they reported – remember, this is 2007 data.
Bottom 25%- average net worth $4600
25 to 50%- $21,700
50 to 75%- $78,900
75 to 90%- 242,800
top 10%- $1,606,600
Again, the skewing is pretty clear- just compare even the top 10% to the bottom 25%- if you see a bell curve there, it is a pretty oddly shaped bell.
I would love to see some good statistics of more recent vintage- I suspect we will be gettign some in another year or two from the US Census- and I suspect they will indicate that for most people, net worth has decreased over the past several years, and that the %decline will be greater for those on the lower end of the economic scale. I hope I am wriong, but that is certianly what it looks like.
Thanks for your detailed comment! What is your net worth then to help us get a better picture. Thx.
$182K is considered high? Let’s have some reference points to compare with:
Our national debt about $500K per capita.
The average Taiwanese net worth is $282K in 2007. Taiwan has lower standard of living than the US.
Singaporean publications suggest citizen needs to save up US$3M to retire in Singapore.
If that’s true for Taiwan, that’s awesome! Happy for them.
And, I assume you think $182K is low, and it’s actually much higher. Makes me all the more bullish on our economy.
Yes, I believe the US is OK. We are going through changes and not on a path to demise. Ultimately our competitive differentiation is our creativity and our ability to convert creativity into wealth. That has not changed.
The wealth distribution around the world is changing. Our industries know it and will take advantage of it. At least the capitalist theory is that wealth among nations is not a zero sum game. US is not getting poorer. Many other nations are getting wealthier.
We’re sort of in-between the European socialist system (heavy tax and benefits) and the extreme right system of the East Asian nations (low tax and benefits). East Asians have to save a lot partly because many of them do not have the benefits of a social security system like ours.
I believe our gov’t is doing the right thing – trying to sustain the social security system, joggling the priorities among items such as defense vs welfare cost.
The top few % control about half of America’s wealth. Once you remove them (how many 50 millionaires are in YOUR circle of friends?), the average drops close to the Median net worth of about $80k. Net worth does NOT mean cash. Much of that is trapped in retirement and pension accounts as well as difficult to extract home equity.
Fact is though, that 80% of Americans own less than 7% of America’s net worth. So 4 out of 5 Americans have the average net worth of $13,340, not $182,000. America is decaying from ineguality it would seem.
And how are you doing? Are you one of the haves or have-nots?
the way that this average was calculated is about as contrived as a CNN Poll, Most of the rapidly dwindling class of “haves” ( unless you owner of a “financial Samural Bot ) in this country are living so far beyond their means, that if some how they manage to catch up by the time they retire, the medical cost from the stress related illness caused from years of play musical chairs at the “HAVES” table will take any assets they have anyways The reason that there are “haves and have-nots” is simply because most people dont have the ability to display high virtues without being burdened with having any virtues at all or we would all be politicians or media jesters
The average net worth says nothing about the financial state of health for most Americans since the net worths of America’s mega-rich heavily skew these figures upwards. A more reliable indicator is median wealth. That figure is MUCH lower, well less than 100K.
If you look at these more indicative statistical indicators, your boy oh boy cheery optimism might be due for a reality check. But it is much easier living in ignorant bliss, I guess.
Well, when I happily invested another couple hundred thousand in the market last summer, my cheery optimism 8 months later has made about a 33% return. I’ll take it :)
good for you, that’s great–I did pretty well myself–but that has nothing to do with your claim that the average American net worth is huge. It is clearly not.
Of course you did well. That’s my point, EVERYBODY is doing well, and we are everybody, which is why the average American net worth is so huge!
The dollar will cease to be the world’s reserve currency before the end of 2012. China is unloading all of it’s US money as we speak and pushing in private meetings for the Euro or Japanese Yen to replace the dollar as the new reserve currency.
Like you said yourself, look at the bell curves (history has them too); a graph you might like to overlay are the financial graphs of stock trends in the dip before the great depression through the great depression itself, and what we have gone through the past few years. It is an almost perfect overlay; we have reached the peak of our post ‘pre-depression dip’ recovery and are about to dive. With these two facts stated, understand that the United States is TRILLIONS AND TRILLIONS of dollars in debt, while we’re also facing trillions of dollars in internal deficits over the next few years. China has already started collections of the majority of the United States debt over the past few years; what most people don’t understand is that because the US dollar is the world’s reserve currency it is the only country legally allowed to print it’s own money, and that’s what we’ve been doing since 2009 to pay off our debt. This will not last forever though because the dollar is quickly becoming obsolete, as facilitated by own government (intentional or not).
Furthermore, the media has never been obligated to tell the truth and it is naive to assume that they will. The fact is that the richest people in the world, and the government, control the majority of the media– and they already know all the facts I have just stated to you. If they let you know what’s going on then you would be more likely to try and protect your own money. That is the exact opposite of what anybody in their position would want however, because the only thing it would do is make it more difficult to protect their own money by trying to unload all of it on you ‘the peasants’–( a phrase used to refer to working-class Americans in multiple business and legal documents, look it up!).
In conclusion: people are perfectly ALLOWED to lie to you about the fact that ALL the money you have today will likely be worth next to nothing (.000001). in around the span of a year. Like I said earlier, look it up. AND check who has a stake in telling you what you’re seeing. Please.