An American aged between 55 and 64 may have vastly varying levels of wealth. On average, their net worth is approximately $1.567 million, but the median stands at around $364,000, making the average wealth more than four times the median.
Investopedia, on September 24, analyzed the financial situation of households nearing retirement age (55 to 64 years old) based on the Federal Reserve’s Consumer Finances Survey (SCF). The data shows that a minority of affluent households significantly boost the average. When all households are arranged in ascending order by net assets, the median household actually only has about $360,000 to their name.
This survey is based on the most recent comprehensive data available from 2022. Net worth refers to assets such as houses, retirement accounts, stocks, savings, vehicles, etc., minus debts like mortgages, car loans, credit card balances, to reveal the true bottom line.
Among households aged 55 to 64, approximately 78% own their primary residence. The median value of homes owned by these households is around $350,000.
However, nearing retirement age does not necessarily mean that mortgages have been fully paid off. Around 47% of households still carry mortgage debts or home equity loans, with a median debt of around $130,000.
Around 57% of households own retirement accounts such as 401(k)s or IRAs. In households with these types of accounts, the median savings amount to about $185,000.
Looking from another perspective, over 40% of households do not have such retirement accounts. Therefore, the statement that “people aged 55 to 64 have $185,000 in retirement savings” does not apply to all households.
Debts do not vanish with age either. About 77% of households aged 55 to 64 still have some form of debt; among those with debt, the median amount owed is around $90,000. Apart from mortgages, approximately 34% have car loans and about 44% have credit card debt.
Therefore, a net worth of $360,000 does not equate to having $360,000 in cash sitting in the bank; a significant portion is likely tied up in home equity and retirement accounts.
These figures highlight that comparing one’s financial situation to the “average of $1.567 million” can easily lead to misconceptions. For the average household, the median of $360,000 may better reflect the true financial standing of American households aged 55 to 64.