| 2022 Average and Median Net Worth For Different Income Levels | ||
|---|---|---|
| Income Percentile | Average Net Worth | Median Net Worth |
| Less than 20% | $129,700 | $14,000 |
| 20% to 39.9% | $218,700 | $71,000 |
| 40% to 59.9% | $385,400 | $159,300 |
| 60% to 79.9% | $636,800 | $307,200 |
| 80% to 89.9% | $1,264,700 | $747,000 |
| 90% to 100% | $6,629,600 | $2,556,200 |
Note
In 2022, the most common places where Americans held assets were transaction accounts such as checking accounts (98.6% of people), vehicles (86.6% of people), their primary residence (66.1% of people), and retirement accounts (54.3% of people).
Net Worth That Defines Upper, Middle, and Lower Class
Another way to compare net worth among peers is by looking at net worths for lower, middle, and upper-income households. According to the Pew Research Center, the median net worth for a lower-income family in December 2021 was $24,500. The median rose to $204,100 for middle-income households and $803,400 for upper-income households.
As a percentage, lower-income households say their net worth grew significantly from 2019 to 2021, but the dollar amount increase was much lower. On the other hand, upper-income Americans saw the lowest percentage increase, but the dollar amount increase was many times that of lower-income households.
Understanding the Relationship Between Income and Net Worth
It probably comes as no surprise that there’s a strong correlation between income and net worth. Though higher-income households likely spend more money, they still have more left over for saving and investing.
Meanwhile, lower-income Americans spend far more of their income. One study found that families in or near poverty spend nearly 75% of their income on housing, food, transportation, utilities, and cell phone service. You can see how there wouldn’t be as much left for investing.
There are also other ways that income affects net worth. Consider your employer’s 401(k) match. It’s usually based on a percentage of your income, meaning the more you earn, the more your employer will contribute toward your retirement.
Finally, higher earners may be less likely to rely on debt for everyday purchases. A June 2024 study found that 65% of Americans are living paycheck to paycheck. One unplanned expense could cause them to go into credit card debt, negatively affecting their net worth. And this problem is likely to be more prevalent among lower earners than higher earners.
Other Factors Influencing Net Worth
Income is an important contributing factor to net worth, but it’s certainly not the only one. Another key factor that affects someone’s net worth is their savings and investing decisions.
- Savings rate: If two people earn $100,000, but one saves and invests just 10% of their income while the other saves and invests 30%, it’s easy to see how one person’s net worth would increase more quickly.
- Investment choice: While a healthy emergency fund is essential to helping you survive financial setbacks, investing is what grows your net worth over time.
- Owning a home: Homeowners had an average net worth of $1,530,900 in 2022, while renters had an average net worth of just $154,900.
- Debts and liabilities: The more debt you have, the lower your net worth will be. Higher-interest debt is also harder to pay off because less of your payments go toward the principal.
How To Calculate Your Net Worth
You can calculate your own net worth by subtracting your total liabilities from your total assets. Your assets are anything you own of financial value, including bank and investment accounts and physical assets like your home. Your liabilities are your debts.
Here’s a breakdown of some common assets and liabilities you might include in your net worth calculation:
Assets
Checking account
Savings account
Certificates of deposit
Money market account
Taxable brokerage account
Retirement account
Real estate
Business holdings
Valuables like jewelry or art
Liabilities
Credit card debt
Mortgage
Home equity loan or HELOC
Auto loan
Personal loan
Student loan
Past-due bills
Once you've calculated your total assets and your total liabilities, you can simply subtract your liabilities from your assets to find your net worth. If your assets exceed your liabilities, you have a positive net worth. If your liabilities are greater than your assets, you'll have a negative number at the end, and thus a negative net worth.
Important
More important than your net worth today is the way it trends over time. If your net worth is increasing, you’re on the right track.
How To Grow Your Net Worth
There are two levers you can use to grow your net worth: your assets and your liabilities. Let’s talk about a few specific strategies you can use to grow your net worth.
- Pay off high-interest debt
- Start investing early to take advantage of compound interest
- Maximize your retirement savings
- Live below your means
- Increase your income
- Build an emergency fund
- Refinance your debt at a lower interest rate
- Avoid new debt
Frequently Asked Questions (FAQs):
What Net Worth Is Considered Rich in the U.S.?
The term "rich" is subjective—there’s not necessarily a dollar amount someone must have to be rich. In Charles Schwab’s 2024 Modern Wealth Survey, Americans generally believe it takes an average net worth of $2.5 million to be considered wealthy.
What Is the Net Worth of the Top 1% in the U.S.?
While we don’t have a specific breakdown of the average net worth for the top 1% of American earners, we can assume it would be at or above the average net worth for the top 10% of earners, which is $6,629,600.
What Is a Comfortable Net Worth?
There’s no hard and fast rule for what net worth you should aim for. It can be helpful to compare your net worth to your peers, both based on age and income level, to get an idea of whether you’re on track. Most Americans believe you need a net worth of $778,000 to be financially comfortable, according to Schwab’s 2024 survey.
How Does Net Worth Vary by Education Level?
When comparing the net worth of people with no high school diploma, a high school diploma, some college, and a college degree, we can see that net worth generally increases with education. People with college degrees have an average net worth that’s over 91% higher than people without a high school diploma and about 79% higher than those with only a high school diploma.
The Bottom Line
Your net worth is a valuable tool to help you compare your financial well-being to others in similar income brackets. Though the average net worth in 2022 was $1,063,700, there’s a lot of variation across incomes, age levels, education levels, race or ethnicity, and more.
Ultimately, know that while net worth is a tool, it’s only reflective of your financial situation. It’s no indication of your value as a person, nor should you use these numbers to feel negatively about yourself. Instead, use them as a reference point and something to strive for.
