How Does Your Net Worth Compare to the Average Middle-Class American's?

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Americans have a long, rich tradition of comparing themselves to each other in ways big and small. For example, the phrase "keeping up with the Joneses" is about exactly that -- competing with the neighbors, presumably named Jones, who may have bigger and better vehicles, a nicer house, better wardrobes, and so forth. A lot of those "achievements" are incredibly superficial and won't really get you far in life.

What may matter to some (or many) Americans is their net worth. By understanding what the net worth is of our peers, we can all better understand if we're headed in the right direction or if we need to be playing catch up.

What is net worth?

Net worth is measured in many different ways, but the most common and basic definition of net worth, and how the Federal Reserve defines net worth is this: "The difference between families' assets and liabilities."

It's that simple. So, if you have a house worth $300,000 and a mortgage of $200,000 and that's your only asset, your net worth is $100,000. $300,000 − $200,000 = $100,000.

If you have more assets, though, it can get a lot more complicated.

Defining assets

Assets, for the purpose of this calculation, include securities like certificates of deposit, bonds, and stocks, as well as other investments like retirement accounts. Transaction accounts like checking accounts and savings accounts are also included in the calculation, as is real estate, whether a primary home or a rental property. Cars, boats, airplanes, motorcycles, RVs, and the like are considered assets as well.

The government basically considers anything that can be easily valued to be an asset -- for example, employment-related stock options are not considered an asset because they are often not publicly traded and are bound by many rules that make their valuation very uncertain. This also implies that valuable antiques or collectables are not strictly assets since they can be difficult to value and liquidate.

Defining liabilities

Liabilities are much more straightforward than assets. Liabilities are essentially any debts you owe to anyone for any reason. This includes balances on credit cards, mortgages, car loans, loans against your retirement accounts, and even "buy now, pay later" plans.

Defining America's middle class

Just who makes up America's middle class is a different question, and another that's vital to answering the question of how your net worth compares to the average middle-class American's. After all, if your net worth is higher or lower, what does that even mean if you don't know if you're middle class?

There are lots of definitions, but we're going to use a very simple slice of data provided by the Federal Reserve's recent publication "Changes in U.S. Family Finances from 2019 to 2022." In this report, the median income for all American households in 2022 was $70,300. If we drill down deeper, we see that the median band of "usual income" for the 40th through 80th percentile, which is a pretty good chunk of Americans, is $71,200 to $115,700.

So, the question is now, how does your household compare to those making $71,200 to $115,700?

Middle class net worth

Now, the moment you've all been waiting for, where we reveal the big number – the median net worth of America's middle class. First of all, as a point of comparison, the median net worth of all American households in 2022 was $192,900.

For American households that are within our definition of the middle class, median net worth was $159,300 to $307,200.

Why net worth matters

Some might argue that net worth doesn't matter, or at least it doesn't matter with a lack of specificity.

"Net worth" as a general term could mean you inherited a valuable house that you're living in with no debt, or that you have a substantial nest egg put aside for retirement. So, when you're asking about net worth, you should ask yourself why you want to know to find the answer you really need.

If you're trying to determine if the net worth of your assets is enough to retire on, for example, you'll want to subtract the net worth contained in your current home if you intend to remain there through your retirement. After all, there's no equity you can use in your retirement if you choose to keep your home; it will remain locked up and inaccessible. In this scenario, the answer to your real question is more about retirement than overall assets, and net worth is just a starting point.

If you want to know more about your net worth because you're simply trying to see if you're keeping up with the Joneses, well, now you know the average middle-class American's net worth. But remember that the Joneses in rural areas have less net worth than those in metropolitan areas, and other factors like race, age, and education hugely influence net worth, too.

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