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Every three years, the Federal Reserve Board issues the Survey of Consumer Finances to share information about family net worth and income in the U.S.
The most recent report released in September 2020 (using data collected in 2019) shows the median U.S. household net worth is $121,700 — but it's more than double that for people ages 65 to 74.
According to the Fed data, the median net worth for Americans in their late 60s and early 70s is $266,400. The average (or mean) net worth for this age bracket is $1,217,700, but since averages tend to skew higher due to high net worth households, the median is a much more representational amount.
While $266,400 may seem like a lot of money at first, people in their 60s usually start tapping into their net worth to cover living expenses in retirement. When planning for your non-working years, it's important to understand how net worth works and how it relates to living on a fixed income.
Here's a look at the average and median net worth by age in the U.S., according to the Fed. As you can see, net worth tends to peak for most American during the decade after age 65.
Household net worth by age
| Age of head of family | Median net worth | Average net worth |
|---|---|---|
| Less than 35 | $13,900 | $76,300 |
| 35-44 | $91,300 | $436,200 |
| 45-54 | $168,600 | $833,200 |
| 55-64 | $212,500 | $1,175,900 |
| 65-74 | $266,400 | $1,217,700 |
| 75+ | $254,800 | $977,600 |
Net worth considerations for retirement-aged people
When you're still working, it's normal to put your net worth out of your mind, at least long enough to take care of more pressing household duties like paying the bills, saving up for future expenses like a house or college education and keeping up with home and car repairs. It may seem like another paycheck is always just around the corner, or that you could pick up a side gig if cash flow is tight.
Unfortunately, many Americans fall behind on their retirement savings as they struggle to keep up with all the various everyday expenses required to make ends meet.
According to retirement-plan provider Fidelity Investments, people should have the equivalent of 10 times their income put aside by age 67 to have a comfortable retirement. This means most people should build up a net worth of about $514,280 based on the U.S. Bureau of Labor Statistics' median American earnings data, though some experts suggest you actually need $1 million or more to retire comfortably.
Ahead, we look at exactly what makes up a person's net worth, so you can make sure you're covered in retirement.
What makes up net worth?
Net worth is simply the total value of assets you own minus any liabilities or debts. In its study, the Federal Reserve lists several kinds of assets, including:
- Cash within bank accounts, such as checking, savings, money market accounts, etc.
- Prepaid debit cards
- CDs and savings bonds
- Government bonds
- Health savings accounts
- Investment accounts including 529 college savings plans and individual taxable investment accounts
- Retirement accounts, including IRAs, 401(k)s and 403(b)s
- Life insurance policies with cash value
- Annuities with equity
- Vehicles including cars, RVs, motorcycles, boats and helicopters
- Real estate, including rental homes and primary/residential homes
In calculating net worth, liabilities (aka debts) get subtracted from the value of assets amount. In the Fed's survey, debts included:
- Mortgages
- Home equity lines of credit or home equity loans
- Credit card balances
- Installment loans, including personal loans, auto loans and student loans
How to calculate net worth
Net worth = assets - liabilities
Tips for navigating debt in retirement
While many financial experts recommend saving at least 10 to 20% of your income throughout your working years, the reality is most people have trouble saving up enough for retirement.
On top of the struggle to save, a surprising number of Americans are still carrying some form of debt even after they retire, which could be cutting into their net worth despite a lifetime of putting money away. A 2020 survey by the Transamerica Center for Retirement Studies found that up 46% of retirees had consumer debt not related to a mortgage, including 14% of respondents who had $10,000 or more.
If quickly paying off debt is impossible with a fixed retirement income, consider how to manage it comfortably. Some retirees may want to downsize or refinance their mortgage, which can free up money for everyday living expenses and allow them to pay off more high-interest debt. Make sure to do your research and even consider speaking to a financial advisor before you do.
Meanwhile, if you're overwhelmed trying to pay off high-interest debt that seems to grow daily, consider the popular avalanche method to knock out the balances with the highest interest rates first. With limited-time promotional 0% APR, a balance transfer card may allow you to pay no interest on existing debt for up to 20 months. Some of the best balance transfer cards include the Wells Fargo Platinum Card, the Citi Simplicity® Card and the U.S. Bank Visa® Platinum Card.
Need to get your retirement back on track?
Whether you're plagued with chronic overspending or just unsure of exactly how much you'll need to retire, using a budgeting app to set (and keep) clear goals can help you plan ahead for retirement.
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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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Here's the average net worth of Americans ages 65 to 74 - CNBC
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