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Americans’ Average Net Worth By Age

A man reviews his finances and calculates his net worth.

A man reviews his finances and calculates his net worth.

Net worth is the difference between your assets – what you own – and your liabilities – what you owe. This figure represents your financial health at a given point in time, providing a snapshot of your current financial position. But understanding the distinction between average net worth and median net worth is crucial when comparing yourself to others in your age group or community. A financial advisor can help you assess your financial situation and create a comprehensive plan for your money.

Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

Average vs. Median Net Worth

When examining the net worth of others, it’s important to grasp how averages and medians can differ from each other. Average net worth is obtained by adding up all the net worths of a given population and dividing that figure by the number of people in the group. However, this can be skewed by extreme numbers.

For instance, if we factor in the net worth of multi-billionaires like Elon Musk when calculating an average, it substantially inflates the result. On the other hand, median net worth identifies the middle point of a data range, reducing the impact of outliers.

The average net worth gives you a sense of the collective wealth in a given population, while the median net worth provides a measure of the middle value in a data set, potentially making a more accurate representation of what’s typical. Both of these figures can provide context for how your finances stack up against others, but they shouldn’t necessarily be what drives your financial decisions.

How to Calculate Average Net Worth

As mentioned above, the average net worth is calculated by adding up all individual net worths in a populace and dividing it by the number of individuals. This figure can give you a window into the total wealth in a demographic.

Let’s look at a practical example. Say we have three people with net worths of $50,000, $75,000 and $100,000, respectively. The average net worth would be calculated like this:

($50,000 + $75,000 + $100,000) / 3 = $75,000

This means that on average, each person in this population has a net worth of $75,000.

How to Calculate Median Net Worth

A couple looks over their assets and liabilities to calculate their net worth.

A couple looks over their assets and liabilities to calculate their net worth.

The median net worth, conversely, is the middle value when all individual net worths in a population are ranked from smallest to largest. If there is an even number of individuals, the median is the average of the two center values.

For example, using the same three individuals from our previous example, the median net worth would be $75,000, as it lies in the middle when arranged from smallest to largest. This figure is identical to our average in this case, but that won’t always be the situation, especially when working with larger populations or skewed data. For instance, if there are five people in a group with net worths of $500,000, $400,000, $300,000, $200,000 and $100,000, the median net worth would be $300,000.

When to Use Median vs. Average Net Worth

The average and median net worth concepts help you understand and achieve specific financial objectives. The average net worth is most insightful when dealing with normally distributed data, offering a measure of the central tendency – a single value that’s used to represent a larger dataset. However, the median net worth is more informative when dealing with skewed data or outliers, providing a more accurate reflection of the “typical” net worth.

Average Net Worth By Age

Net worth often changes with age due to factors like income, expenses, investments and inheritance. Every three years, the Federal Reserve and researchers from the University of Chicago conduct the Survey of Consumer Finances to get a snapshot of Americans’ financial positions. According to the Federal Reserve’s most recent Survey of Consumer Finances from 2019 the average net worth by age is as follows:

  • Under 35: $76,300

  • 35-44: $436,200

  • 45-54: $833,200

  • 55-64: $1,175,900

  • 65-74: $1,217,700

  • 75 and over: $977,600

It’s important to note that the average net worth reported in the Survey of Consumer Finances are significantly higher than the median net worth. Here’s a look at the median net worths of Americans by age group:

  • Under 35: $13,900

  • 35-44: $91,300

  • 45-54: $168,600

  • 55-64: $212,500

  • 65-74: $266,400

  • 75 and over: $254,800

These figures underline how net worth tends to increase with age as individuals progress in their careers, increase their incomes and accumulate assets. But life expenses like housing, education, and raising children can impact net worth, as well as the decumulation phase of retirement.

How to Calculate Your Own Net Worth

A couple reviews their financial plan and tracks the growth of their net worth over the years.

A couple reviews their financial plan and tracks the growth of their net worth over the years.

You can calculate your own net worth by listing all your assets and liabilities and then subtracting your total liabilities from your total assets. The formula is simple:

Net Worth = Total Assets – Total Liabilities

Assets may include cash in your bank accounts, investments, property and personal items like cars or jewelry. Liabilities, on the other hand, include any debts you owe, such as student loans, credit card debt, mortgages or personal loans.

For example, if you own a house valued at $250,000, have $10,000 in a savings account and $40,000 in a retirement account, your total assets amount to $300,000. But if you have a mortgage of $200,000 on the home and student loans worth $50,000, your total liabilities come to $250,000. By simply subtracting your liabilities from their assets, your net worth comes out to $50,000.

Regularly evaluating and tracking your net worth can help you monitor your financial health over time, set financial goals and make informed decisions about saving and investing.

Bottom Line

Both the average and median net worth are benchmarks you can use to compare your financial status with others. While average net worth offers a snapshot of the collective wealth in the group, median net worth is less sensitive to outliers and extreme values, making it a better indicator of the typical financial status of a group.

Financial Planning Tips

  • While asset allocation is an important component of financial planning, asset location can also be just as vital. Asset location refers to the strategic mix of accounts – tax-deferred, tax-free and taxable accounts – that hold different assets. For example, it may be advantageous to keep assets that regularly incur taxes in tax-deferred accounts like 401(k)s and traditional IRAs and more tax-efficient assets in brokerage accounts that are subject to capital gains taxes.

  • A financial advisor can do more than just manage your investments. Some advisors specialize in financial planning, helping you build a comprehensive roadmap for reaching your money goals. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

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