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The difference between a median and an average net worth

| May 8, 2020 | Wills |

There are two main ways to look at net worth in America. The first is by looking at the average for every household, and the second is by looking at the median. These may seem similar, but they yield vastly different results.

If you consider the average, it clocks in at a hefty $692,100. If you’re nowhere near that yourself, you may be shocked. Is that really the average? Are you really that far below it?

You are, but the reason isn’t that you’re not doing well enough. It is that the super-rich, who make up a mere 1% or less of the population, drag that figure up. You have to remember that someone like Jeff Bezos is also looking at the same average, though he is worth around $140 billion. That much money can make up for a lot of households with little net worth or outstanding debt.

A better way to consider it is by looking at the median. Half of all people in the United States fall on either side of this line, with a higher or lower net worth. This way, the rich do not skew the numbers in the same way. When you do this, you find that the median is just $97,300.

That may even sound too low. If you own your home and it is worth $300,000, for instance, you’re already well over the median. But there are a lot of factors to consider, such as the fact that not everyone owns a home or that young people, even when they’re doing well, just haven’t had as much time as you have had to accumulate assets.

Net worth is a good place to start as you consider your estate planning options.

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