It’s that time again. The data from the Survey of Consumer Finances, conducted every three years by the Federal Reserve, has been gathered, examined, organized and put into digital files.  So now we can get some idea of how we are doing as a nation and how each of us is doing as one of the millions of households in America.

One bit of good news is that the Internet is making this information readily available to the broad public. What once called for asking favors here and there to get resident nerds to parse the data is now available, free and in fine detail, on the web. Also, while age groups were by decade in the past, the new data is in five-year periods.

Want even finer detail?

Where to get more detail

You’ll have to go online to the dqydj.com website. That’s where you’ll be able to see how you are doing with, or without, home equity. Online, the data is sliced as fine as a single percentile. (The direct link for doing that is in the source line of the table below.)

These figures, all in thousands, represent the distribution of all the countable assets that we have – that’s the value of our homes, our businesses, our bank deposits, our stock, bond and mutual fund holdings, less what we owe in mortgages and consumer loans and other debt.

However you slice it, we’re talking about a lot of wealth, some $119 trillion, according to the most recent Federal Reserve figures on the household balance sheet.

But the consumer finances data doesn’t show the whole picture. Some forms of wealth (or at least well-being) are missing from the survey. The missing wealth makes a big difference, even though we can’t put our hands on a lump sum. Academic economists have struggled for decades to figure out how to measure our “imputed” wealth.

What’s imputed wealth?

It’s the virtual wealth that millions of Americans have by way of Social Security benefits and, if they have a pension, defined-benefit pensions.

You can get a personal idea of how much the virtual wealth of Social Security is worth by using my Social Security wealth calculator in the column at this link.

Here’s an example of imputed Social Security wealth: Suppose you are 64 and thinking about retiring at 65.  Recently, the average retiree Social Security benefit was about $18,000 a year.

What’s that benefit worth as a life annuity?

Answer: About $345,000.  That’s greater than the $272,000 net worth of the median household (see table above). It’s also greater than the recent value of a median existing home.

The threshold for being in the top 25 percent of Social Security benefits is about $1,900 a month – an annuity value over $433,000 at age 65.

The threshold for being in the top 10 percent of Social Security benefit recipients is about $2,200 a month – an annuity value of more than $500,000 at age 65.

Social Security: It’s a big, big deal

These are big numbers. They tell us that Social Security isn’t just for lower-income workers. Social Security benefits are a very big deal for all but the wealthiest Americans.

Are there other messages for us in the table? I think so. Here are two.

• You won’t get to the top 1 percent by working for someone else. The top 1 percent have seven times the wealth of the top 10 percent when wealth peaks in their late 50s. To get there, you’ll either need to start a successful business or be an early employee in the ever-increasing number of unicorn companies.
• Most wealthy people eventually realize they have “enough.” One of the consistent patterns in these groupings is that the greater the wealth category, the more likely net worth is to decline as people age beyond their late 50s. The only category that doesn’t decline much with age is for those at the median net worth. Clocking in at $229,000 at age 60-64, it then stays in the $200s to age 80-plus. Meanwhile, those with higher net worth reduce assets. That’s a good indication that most of us have some minimum net worth figure for security.

But after we reach that “enough” level, we start distributing assets to children, grandchildren and charities. Maybe we should start thinking more about exactly what “enough” is.

Related columns:

Scott Burns, “The amazing value of Social Security benefits,” 5/23/20  https://scottburns.com/the-amazing-value-of-social-security-benefits/

Scott Burns, “How does your Social Security benefit compare to others,” 10/18/18  https://scottburns.com/how-does-your-social-security-benefit-compare-to-others/

Scott Burns, “Our New Wealth Scoreboard,” 8/12/2018  https://scottburns.com/wealth-scoreboard/

Scott Burns, “Chasing the Big Dogs,” 5/15/2015   https://scottburns.com/chasing-the-big-dogs/

Scott Burns, “The New Wealth Scoreboard,”8/25/2012  https://scottburns.com/the-new-wealth-scoreboard/

Scott Burns, “Yes, the Rich Have (Still) More Money,” 8/13/2006 https://scottburns.com/yes-the-rich-have-still-more-money/

Scott Burns, “Score Yourself for Wealth, the Sequel,” 9/07/2003  https://scottburns.com/the-bigger-scoreboard-implied-wealth/

Sources and References:

Federal Reserve, “Changes in U.S. Family Finances from 2016 to 2019: Evidence from the Survey of Consumer Finances,” 9/2020  https://www.federalreserve.gov/publications/files/scf20.pdf

Net worth by Age Calculator for the United States in 2020, https://dqydj.com/net-worth-by-age-calculator-united-states/

Federal Reserve, Financial Accounts of the United States: Balance Sheet of Households and Nonprofit Organizations, 1952-2020   https://www.federalreserve.gov/releases/z1/dataviz/z1/balance_sheet/table/

This information is distributed for education purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, product, or service.

Photo by Karolina Grabowska from Pexels

(c) Scott Burns, 2020