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Demographic Programs

U.S. Census Bureau

U S C E N S U S B U R E A UHelping You Make Informed Decisions

U.S. Department of CommerceEconomics and Statistics Administration

U.S. CENSUS BUREAU

P70-75

Did You Know? Homes Accountfor 44 Percent of All WealthFindings from the SIPPHousehold Economic Studies

1995Issued May 2001

CurrentPopulationReportsBySandra Luckett

A household’s economic well-being is mea-sured by the household’s income andwealth. Income is defined as the flow ofresources to a household, for example,earnings and interest from banking ac-counts; wealth is the household’s assetaccumulation minus any debts (see box).Wealth (for example, equity in a home) is aparticularly important dimension of well-being and is discussed in this report.

With data collected by the Survey of In-come and Program Participation (SIPP) be-tween February and May 1995, this reportexamines the median net worth (wealth)in 1995 of households withdifferent types of demo-graphic characteristics.

Median net worthremains stable.

The median American house-hold had a net worth, orwealth, of $40,200 in 1995,statistically unchanged fromthe 1993 median net worthof $39,590 (in 1995 dollars).

This overall stability maskschanges for particular finan-cial resources between the2 years. The median valuesof interest-earning assets atfinancial institutions and U.S.savings bonds fell. Thesedeclines were offset by gainsin the median values of in-terest earning assets notheld at financial institutions,stocks and mutual funds,rental property, motor

vehicles, and individual retirement ac-counts (IRA) or Keogh accounts.

Wealth is concentrated at the top.

The net worth of American householdsrises sharply with income. In 1995, themedian net worth of households in the topfifth of the income ladder was 23 timeshigher than that of households in the bot-tom fifth. The 1995 median net worth forthe bottom fifth, $5,000, was approxi-mately —

• One-fourth of that for the second lowestfifth of the income ladder,

Assets include: interest-earning assets held at fi-nancial institutions (passbook savings accounts,money market deposit accounts, certificates of de-posit, and interest-earning checking accounts),other interest-earning assets (money market funds,U.S. Government securities, and municipal or corpo-rate bonds), stocks and mutual fund shares, mort-gages held for sale of real estate, amounts duefrom sale of business or property, regular checkingaccounts, U.S. savings bonds, real estate, IRAs andKeogh accounts, and motor vehicles.

Debts include: secured liabilities (mortgages onreal estate, debt on a business or profession, ve-hicle loans, and margin and broker accounts), aswell as unsecured liabilities (credit card and storebills, medical bills, educational loans, and loansfrom individuals and financial institutions).

The Median is the middle value in the ordered dis-tribution of all U.S. households. Half of householdshave a value that lies above, and half below, themedian value.

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• One-seventh of that for themiddle fifth, and

• One-tenth of that for the secondhighest fifth.

Households in the top fifth of theincome ladder were more likelythan those in the bottom fifth toown —

• Their home (85 percent com-pared with 41 percent),

• Stocks and mutual fund shares(43 percent compared with6 percent),

• IRA or Keogh accounts (48 per-cent compared with 6 percent),and

• A business or profession (18 per-cent compared with 5 percent).

Net worth rises with age,peaks at age 65 to 69, andthen begins to decline.

Up to a point, increasing age repre-sents more time to accumulatewealth. In 1995, wealth peakedfor those aged 65-69, at approxi-mately $106,000, and then beganto decline gradually with increas-ing age. Median net worth was 15times higher for households with ahouseholder aged 65 to 69 than forthose with a householder under 35years old. The net worth of house-holders aged 75 and over wasabout 11 times that of household-ers under 35 years old.

Net worth differs by raceand ethnicity.

White non-Hispanic households hada median net worth of $49,030,about seven times that of Blackhouseholds ($7,073) and Hispanichouseholds ($7,255). (There is nostatistical difference in medianwealth when comparing Black andHispanic households.)

Figure 1.

How Our Wealth Is Divided Up

Source: U.S. Census Bureau, Survey of Income and Program Participation, 1995.

Distribution of Measured U.S. Net Worth by Asset Type: 1995

(Percent)

Unsecured liabilities

Checking accounts

U.S. savings bonds

Other financial investments

Other real estate

Other interest-earning assets

Business or profession

Rental property

Stocks and mutual fund shares

IRA or Keogh accounts

Motor vehicles

Interest-earning assetsat financial institutions

Own home 44

10

8

8

8

6

6

5

4

3

1

1

-4

Figure 2.

What Our Assets Are Worth

Source: U.S. Census Bureau, Survey of Income and Program Participation, 1995.

Median Value of Holdings for Asset Owners by Asset Type: 1995

(Dollars)

Checking accounts

U.S. savings bonds

Unsecured liabilities

Interest-earning assetsat financial institutions

Motor vehicles

Business or profession

Stocks and mutual fund shares

IRA or Keogh accounts

Other interest-earning assets

Other real estate

Other financial investments

Rental property

Own home 50,000

34,250

29,100

22,000

15,000

15,000

9,000

8,000

6,675

2,537

2,500

700

500

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The median net worth of house-holds in the top 20 percent of theincome ladder was —

• $123,800 for White non-Hispanichouseholds,

• $40,900 for Black households,and

• $80,400 for Hispanic households.

For households in the bottom20 percent, median net worthwas —

• $9,700 for White non-Hispanichouseholds,

• $1,500 for Black households, and

• $1,300 for Hispanic house-holds.1

Household type also makesa difference.

The net worth of households main-tained by married couples was$64,694, about four times that ofhouseholds maintained by womenwith no spouse present ($14,949)and of those maintained by menwith no spouse ($16,346).

Higher levels of educationare related to greaterwealth...

Householders who had less than12 years of education had a me-dian household net worth of$20,092 in 1995, while household-ers with 4 or more years of collegehad a significantly higher amount($80,416).

...as is participation in thelabor force.

In 1995, households with house-holders having a job for the entire4-month period from which data

1There is no statistical difference whencomparing the bottom 20 percent of Black andHispanic housholds.

Figure 3.

With Higher Income Comes Greater Wealth

1Quintile upper limits for 1995, in terms of monthly income, were: lowest fifth—$1,096; second-lowest fifth—$2,002; middle fifth—$3,109; second-highest fifth—$4,844.

Source: U.S. Census Bureau, Survey of Income and Program Participation, 1995.

Median Net Worth by Household Income Quintile:1 1995

(Dollars)

Lowest fifthSecond-lowestfifth

Middle fifthSecond-highestfifth

Highest fifth

116,232

52,860

35,949

21,966

5,000

Figure 4.

Wealth Rises With Age Until Retirement, Then Begins to Drop

Source: U.S. Census Bureau, Survey of Income and Program Participation, 1995.

Median Net Worth by Age of Householder: 1995

(Dollars)

7,428

31,691

61,248

91,330

106,408

97,414

81,600

75 and older70 to 7465 to 6955 to 6445 to 5435 to 44Under 35

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FIRST-CLASS MAILPOSTAGE & FEES PAIDU.S. Census Bureau

Permit No. G-58

U.S. Department of CommerceEconomics and Statistics AdministrationU.S. CENSUS BUREAUWashington, DC 20233

OFFICIAL BUSINESS

Penalty for Private Use $300

were collected had a median of January 1995; the second rota- report have taken sampling errorhousehold net worth of $33,848. tion group was interviewed in into account and meet the CensusHouseholds with householders March 1995, and their data refer to Bureau’s standards for statisticalhaving no labor force activity dur- February 1995, and so on. As a re- significance. Nonsampling errorsing the 4-month period had only sult, the data presented in this re- in surveys may be attributed to a$11,298. port represent an average of the variety of sources, such as how

assets and liabilities of people at the survey was designed, how re-

MORE INFORMATION: the end of January, February, spondents interpret questions,March, and April 1995. how able and willing respondents

See, Michael E. Davern and Patricia are to provide correct answers,J. Fisher, “Household Net Worth

CONTACTS: and how accurately answers areand Asset Ownership: 1995,” Cur- coded and classified. The Censusrent Population Reports, Series Asset ownership —

Bureau employs quality controlP70-71. Detailed tables of the Statistical Information Staff procedures throughout the pro-P70-71 report are on the Internet 301-457-3242 duction process — including the(www.census.gov). The data in hhes-info@census.gov overall designing of surveys, test-both this Did You Know report and ing the wording of questions, re-in the P70-71 report were collected This report —

viewing the work of interviewersby the Survey of Income and Pro- Sandra Luckett

and coders, and conducting statis-gram Participation (SIPP). The 301-457-3230

tical review of reports.sample of households in the SIPP is sandra.m.luckett@census.gov

divided into four interview groups For further information on statisti-called rotation groups. Each ACCURACY AND cal standards and the computationmonth, one of the four rotation RELIABILITY OF THE DATA and use of standard errors, con-groups is interviewed about the This report is one of a series that tact Kandasamy Selvavel, Demo-previous 4 months (the reference presents information of current graphic Statistical Methods Divi-period). The asset and liability policy interest. Statistics from sion, at 301-457-4182,data in this report were collected sample surveys are subject to sam- kandasamy.selvavel@census.gov.from the first rotation group in Feb- pling and nonsampling error. Allruary 1995 and refer to the last day comparisons presented in this