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The middle class is a reflection of household economic resources, measured by either income or wealth. Many expert sources use income to define the middle class. For example, the Pew Research Center defines middle-class households as those earning between two-thirds and two times the U.S. median household income. That’s between $45,014 and $134,502, using the U.S. Census Bureau’s 2020 median income of $67,521.
Using income to define the middle class has one significant drawback: It doesn’t account for the assets a household has, such as real estate or investments. For example, many retired households have a high net worth but a modest household income. They don’t need a high income, because their homes and cars are often paid off, and they don’t need to save for retirement.
Key Takeaways
- Net worth equals your owned assets minus your debt.
- The average net worth of the American middle class is between $43,760 and $201,800
- Age and educational level tend to contribute to wealth
How Is Net Worth Calculated?
Net worth is a measurement of wealth: It is the total of all the assets a household owns minus all the debt it owes.
Typical assets include:
- Net home equity, which is your home's resale value minus mortgages and selling costs
- Your car or truck’s resale value minus its outstanding loan value
- Financial assets, such as retirement account, savings, and cash
- The resale value of household items such as consumer electronics, jewelry, or art
Household debt includes large amounts like mortgages, auto loans, and student loans. It also includes medical debt and outstanding credit card debt.
How Is the Average Middle-Class Net Worth Calculated?
Several government agencies calculate and report on net worth. To understand these reports, you first need to understand what averages and quintiles mean.
Averages
As a practical matter, there are two types of “averages”: the median and the mean.
- The median is the middle point in a range of statistics, sorted in order. For example, in the list of numbers 8, 10, 13, 20, 40, the median is the number 13 because it’s exactly in the middle of the five figures.
- The mean is determined by adding up the data set and dividing it by the number of statistics in it. For the same range, the mean is (8+10+13+20+40) / 5 = 91 / 5 = 18.2. This is the number we usually think of when we say “average.”
For U.S. wealth, the mean, or average, gives an inflated figure because of the concentration of wealth at the top of the range. As a result, the median provides a better sense of the actual American “average” than the mean does.
According to U.S. Census data, the average net worth for U.S. households in 2019 (latest data available) was $445,900. The median net worth was $118,200. That’s a pretty big difference, and it shows how the concentration of wealth among the richest households can skew the mean.
Quintiles
The U.S. Census Bureau uses quintiles to further dive into the nation’s net worth. A quintile is one-fifth of a group, just like a quartile is one-fourth of a group. Dividing Americans into five income groups allows a more detailed look at the middle class.
Note
The bottom wealth quintile is the division with the lowest net worth. The top wealth quintile is the richest 20% of households.
The bottom quintile tends to include younger households and those without much education. Younger groups have not really had a chance to accumulate wealth, and there is a positive correlation between levels of education and levels of wealth. The top quintile typically has a higher percentage of older households and those with the most education.
The middle class is often defined as the middle three quintiles. Some further classify this group as lower-middle class, middle class, and upper-middle class. The table below shows the median net worth for these quintiles:
| Quintile | Definition | Median Net Worth |
|---|---|---|
| Bottom 20% | Poverty Class | $6,030 |
| Next 20% | Lower-Middle Class | $43,760 |
| Middle 20% | Middle Class | $104,700 |
| Next 20% | Upper-Middle Class | $201,800 |
| Top 20% | Wealthy | $608,900 |
Note
If your net worth is between $43,760 and $201,800, you are in the middle class.
Average Net Worth by Age
Net worth increases by age, because households accumulate assets over time, including property, cars or other vehicles, and retirement savings. As the table below shows, wealth reaches a peak at retirement age and then declines as retirees spend down their assets.
Here’s a comparison of the median and mean net worth by age group:
| Age Bracket | Median Net Worth | Mean Net Worth |
|---|---|---|
| Younger than 35 | $15,700 | $98,220 |
| 35-44 | $83,150 | $282,100 |
| 45-54 | $139,200 | $467,500 |
| 55-64 | $203,900 | $582,700 |
| 65-69 | $266,400 | $690,800 |
| 70-74 | $305,100 | $738,600 |
| 75+ | $249,500 | $633,400 |
This comparison shows how the mean is much higher, regardless of age. Again, that’s due to the concentration of wealth in the richest households.
Average Net Worth by Education
Education is highly correlated with net worth, as shown in the table below. Those without a high-school diploma only own about $5,090 in median net assets. A high-school diploma boosts that to $40,560. A bachelor’s degree quintuples that wealth to $196,800. An advanced degree doubles that to $408,700. The mean is given in the table below for comparison.
| Education | Median Net Worth | Mean Net Worth |
|---|---|---|
| No High-School Diploma | $5,090 | $86,360 |
| High-School Graduate | $40,560 | $206,000 |
| Some College | $59,700 | $265,500 |
| Associate’s Degree | $110,300 | $305,800 |
| Bachelor’s Degree | $196,800 | $554,100 |
| Graduate/Professional Degree | $408,700 | $864,300 |
A Federal Reserve study found that education can help create wealth in three ways:
- The head-start effect: Families headed by college-educated parents are often in a position to earn more than those without college degrees, potentially giving these children a head start in life as they're more likely to have access to better-performing school districts, private schools, and tutors.
- The upward-mobility effect: When a child born into a family without a college degree earns their diploma, they can improve their economic standing substantially. Such a family is likely to rise 23% in income percentile ranking relative to where they'd be without a degree.
- The downward-mobility effect: This occurs when the children of parents who earned a degree don't earn a college degree themselves. Statistically, they drag down their wealth by 18 percentiles.
Racial Disparities and the Wealth Gap
Racial wealth disparities are most pronounced between White and Asian households, and Black, Latino, and Native-American households.
The median net worth for White households is $150,300, while for Asian households it's $206,400. For Black households, it’s $14,100. The net worth for Hispanic households is $31,700. For all others, it’s $37,850.
The racial wealth gap also exists among Black people who are highly educated and come from two-parent homes. In a 2013 study by the Economic Policy Institute, the median wealth of Black families with graduate or professional degrees was $200,000 less than that of similarly educated White families.
Note
Black or Latino college graduates tend to have disproportionately less wealth than White high-school dropouts.
Similarly, two-parent Black households tend to have less wealth than single-parent White households.
A McKinsey study found that this achievement gap has cost the U.S. economy more than all recessions. If there had been no achievement gap in the years between 1998 and 2008, U.S. gross domestic product (GDP) would have been $525 billion higher in 2008. Similarly, if low-income students had the same educational achievement as their wealthier peers over that same period, they would have added $670 billion in GDP.
Frequently Asked Questions (FAQs)
What does "middle class" mean?
There is no single definition of the middle class. Income, net worth, education, and occupational status all contribute to someone's wealth and sense of financial security. Ultimately, members of the middle class tend to have a modest sense of financial freedom but still must rely on things like their ongoing earning potential and sources of credit to cover life's major expenses or to purchase significant assets.
How many Americans are middle class?
Roughly 51% of Americans are considered middle class, according to a 2018 Pew Research Center analysis.
What does "net worth" mean?
Your net worth is one important measurement of your financial health. Because it measures the difference between what you own and what you still owe, it reveals important information about your ability to pay off your debts and have assets available for long-term living expenses, retirement, and your estate. The greater your net worth, the more financial freedom you are likely to experience.
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Sources
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
Pew Research Center. "America’s Shrinking Middle Class: A Close Look at Changes Within Metropolitan Areas."
United States Census Bureau. "Income and Poverty in the United States: 2020."
U.S. Census Bureau. "Wealth, Asset Ownership, and Debt of Households Detailed Tables: 2019." Download Excel Spreadsheet "Wealth and Asset Ownership," Table 5.
U.S. Census Bureau. "Wealth, Asset Ownership, and Debt of Households Detailed Tables: 2019." Download Excel Spreadsheet. "Wealth and Asset Ownership," Table 1.
St. Louis Federal Reserve. "Education, Income, and Wealth."
Federal Reserve Bank of St. Louis. "The Financial Returns from College Across Generations: Large but Unequal."
Economic Policy Institute. "The Racial Wealth Gap: How African-Americans Have Been Shortchanged Out of the Materials to Build Wealth."
Demos. "The Asset Value of Whiteness: Understanding the Racial Wealth Gap."
McKinsey and Company. "The Economic Cost of the U.S. Education Gap."
Pew Research Center. "Are You in the American Middle Class? Find out With Our Income Calculator."
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