How much does the average US family earn? How is wealth distributed?
Latest update on March 2, 2023There are many ways to measure the state of wealth and savings in the US. This includes median household net worth, the distribution of overall wealth in the US, homeownership rates, and savings rates.
What is the role of the government in wealth and savings?
USAFacts categorizes government budget data to allocate spending appropriately and to arrive at the estimate presented here. Spending in the wealth and savings category primarily includes two federal programs — Medicare and Social Security — and government obligations such as employee retirement and debt interest.
Government revenue and expenditures are based on data from the Office of Management and Budget, the Census Bureau, and the Bureau of Economic Analysis. Each is published annually, although due to collection times, state and local government data are not as current as federal data. Thus, when combining federal, state, and local revenues and expenditures, the most recent year for a combined number may be delayed.
Focus | Key actors | Responsibilities |
|---|---|---|
Mandates savings through taxation and disburses benefits | Social Security Administration, Internal Revenue Service | Enforce retirement savings in the form of Social Security |
Incentivizes homeownership | Internal Revenue Service | Provide tax breaks to homeowners (e.g., mortgage interest deduction, real estate tax deduction) |
Incentivize savings | Internal Revenue Service, Congress | Provide tax-free defined contribution plans such as IRA and 401(k) plans |
Insures and regulates pensions and retirement benefits | Pension Benefit Guaranty Corporation, Department of Labor, Congress | Encourage continuation and maintenance of defined benefit pension plans |
Service debt | Department of Treasury | Pay interest on government securities |
Focus |
|---|
Mandates savings through taxation and disburses benefits |
Incentivizes homeownership |
Incentivize savings |
Insures and regulates pensions and retirement benefits |
Service debt |
How much is the average American family worth?
Wealth, or net worth, is calculated by taking a family's assets including bank accounts, retirement accounts, and home equity, and subtracting liabilities, including debt from mortgages, student loans, and credit cards. Conducted once every three years, the Federal Reserve's Survey of Consumer Finance (SCF) provides the best government data on the financial state of American families. The median family net worth in each year is the dollar value of wealth owned by a family where 50% of families own more wealth, and 50% own less. While this can be taken as an indicator of a typical American family, additional SCF data shows that this measure can vary based on factors like home ownership, family type, and other demographics and characteristics of a household.
What percentage of Americans are homeowners?
Homeownership has historically been a central goal of the American Dream. It also is central to wealth and savings in the US, accounting for more than a quarter of all household assets. Based on data from the Census Bureau's American Community Survey, the homeownership rate is the percentage of owner-occupied housing units versus the overall number of housing units.
Homeownership rates vary by state. As of 2021, the state with the highest homeownership rate was West Virginia, where 75.2% of households were owner occupied. New York's homeownership rate was nearly 20 percentage points lower.
How is wealth distributed in the US?
Quarterly data from the Federal Reserve's Distributional Financial Accounts shows how wealth has shifted and is impacted by major events like the Great Recession or the aftermath of the pandemic. In this data, households are divided into groups based on the percentile of their overall wealth. During the 21st century, the wealthiest 10% of households have had more growth in net worth than the other 90% of households. One way to interpret that is that households that already ranked among the wealthiest in the US increased their total net worth by a higher percentage than less wealthy households.
The Federal Reserve data breaks down the data by other categories, including income percentile (ordering households by the income they make in a year), educational attainment, age, generation, and race.