Here's an interesting post from Thomas Stanley (the Millionaires Next Door author) that sheds some interesting light on average versus median net worths in the US:
The average net worth of an American household is $434,782. However, there is a major problem with this wealth figure. When it comes to expressing the net worth/wealth of a household the average figure is very misleading. The presence of high net worth households, billionaires like Buffet and Gates, for example, highly skews the distribution and thus the average in an upward direction.
The median measure of household net worth paints a much more accurate picture of the character of wealth in America than does the average. The median is that of the typical household, the mid point range of all of the more than 115,000,000 households ranked from bottom to top along the net worth scale.
Today the median net worth of an American household is $91,304. It now costs more than this amount for a one year stay, drugs excluded, in a high grade nursing home. Therefore, less than one half of the households in this country do not have enough to pay for such a service even if they sold everything they owned and worked for.
The $91,304 net worth figure also is indicative of something else. The typical American worker who becomes unemployed today has only about two years of wealth to live on before he hits economic ground zero.
Most American households are nowhere near being financially independent. Nor will most be able to retire in comfort. Yet there is more bad news. What if the equity in homes and motor vehicles is factored out of the median net worth figure? Then the median figure is about $34,000 or about 2/3 of the annual median income generated by a typical American household today.
A few thoughts on these points:
1. Ugh. $34,000. I am almost speechless...
2. Not surprising to me. I've quoted various stats/research showing that net worths in the US were low (though specific data is sometimes hard to come by). And you know what I think of the average American's ability to save/invest. This just confirms it.
3. As one commenter pointed out, it's not that Americans don't have high incomes, it's just that we spend too much of it. We've discussed previously that there are reasons why high incomes don't translate into high net worths. Yep, overspending. And overspending is the worst money move anyone can make.
4. The numbers are for the total population and are not age-adjusted. I'm guessing that older people would have higher median net worths and younger people wouldn't be as well off. That said, the numbers are so low that no one age group is likely to be doing that well even when separated from the pack.
5. Personally, I'm way above these net worth numbers (both median AND average). I'm sure many of you reading this today are as well.
6. As the post goes on to say, these numbers have huge implications for our country. Who takes care of an aging population that's living longer but doesn't have the financial resources to pay for their own care? It's a big, big issue for our country and one that's likely too big for the government. The author's solution? We all need to save and prepare to take care of ourselves and our own families -- and not leave it to others.