2022 Survey of consumer finances (Federal Reserve)

[2sk22]

The 2022 survey of consumer finances (collected by the Federal Reserve) is out and is full of interesting information. There is a lot to unpack so let me start with the attached chart showing amounts in retirement accounts distributed by income percentiles. Even people in the 60-80th percentile range of income have startlingly low balances.

[wageslave23]

I don't think this information really means much.  It only includes "retirement" accounts.  Whatever that means.  If you only include my 401k, I have about $200k saved for retirement.  I'm almost 40 and just about FI. The only interesting take away from my point of view is that balances are increasing across all percentiles in 2022 dollars.

[Turtle]

Often the news reporting on "retirement accounts" numbers is from a 401k provider, and thus they wouldn't know if the customer had additional retirement accounts elsewhere.

In theory, the folks answering this survey should have been combining any accounts that they have.  What's interesting to me is how much the top 10 and top 20 percentile bands are diverging from the remainder over time.   

[mizzourah2006]

Often the news reporting on "retirement accounts" numbers is from a 401k provider, and thus they wouldn't know if the customer had additional retirement accounts elsewhere.

In theory, the folks answering this survey should have been combining any accounts that they have.  What's interesting to me is how much the top 10 and top 20 percentile bands are diverging from the remainder over time. 

I wonder what impact the commonality of pensions for older folks that would have had the most money in 401ks in the late 90s has on this. Those likely to be in the 90th % in the late 90s were probably 40-50 and a lot of those probably had pensions. Transition to today where pensions are less common it's likely that those were saving more to plan for that. But even if that's true that difference is astonishing.

[GilesMM]

Harper's magazine this month reports that 50% of American have saved zero dollars for retirement. 80% have saved less than $100,000.

[SmashYourSmartPhone]

Harper's magazine this month reports that 50% of American have saved zero dollars for retirement. 80% have saved less than $100,000.

People expect to rely on social security.  If you have your expenses low enough, it seems to work just fine.

I miss my Harpers subscription.  They sold my address to far too many spammy left-wing fundraising groups, though, so I refused to renew it.

[reeshau]

Harper's magazine this month reports that 50% of American have saved zero dollars for retirement. 80% have saved less than $100,000.

My favorite expression of this was a print ad from Fidelity (I think) in Money magazine.  It was a picture of a burrito.  The caption read: "half of Americans' retirement savings couldn't buy this burrito"

Really hit you when you were going out for lunch.

[wageslave23]

Harper's magazine this month reports that 50% of American have saved zero dollars for retirement. 80% have saved less than $100,000.

Probably 25% are in their 20s and buying houses and starting families, 25% have pensions or real estate investments or own a business they plan to sell to fund retirement. And 25% are drug addicts, have severe health issues, or are generally just bums who have skipped around in and out of employment.  Again it's hard to make any judgements based on one statistic with an issue as complex as retirement.  I'd love to see a breakdown of assets, expected retirement income by source, age, etc but that info is never included in these click bait articles written by people who have no finance background.  They are truly meaningless.

[Scandium]

I don't think this information really means much.  It only includes "retirement" accounts.  Whatever that means.  If you only include my 401k, I have about $200k saved for retirement.  I'm almost 40 and just about FI. The only interesting take away from my point of view is that balances are increasing across all percentiles in 2022 dollars.

Yes this makes is much less useful. Since there is an upper limit to how much you can contribute (i.e. $22k for 401k, + ~$6k IRA/roth), that upper percentile people will definitely run into. So yeah, duh rich people will have bigger accounts, but they'll hit a ceiling. And most likely they also have taxable accounts, which in most cases those are probably much bigger!

[Ron Scott]

The Survey also reports household net worth by age group, which combines cash and investments, retirement accounts, real and personal property, and debt.

Median net worth in households where the head is between 65 and 74 years old is about $410,000. This is the richest age group. Their personal real estate equity is more than $250,000, so their total invested assets is not great.  35-44s NW is ~$135k; 45-54s, ~$250.

And the median is positively skewed. I believe almost 40% of Americans nearing retirement age have practically nothing saved and will rely mostly on SS.

[GilesMM]

The Survey also reports household net worth by age group, which combines cash and investments, retirement accounts, real and personal property, and debt.

Median net worth in households where the head is between 65 and 74 years old is about $410,000. This is the richest age group. Their personal real estate equity is more than $250,000, so their total invested assets is not great.  35-44s NW is ~$135k; 45-54s, ~$250.

And the median is positively skewed. I believe almost 40% of Americans nearing retirement age have practically nothing saved and will rely mostly on SS.

Nothing wrong with SS. It is inflation-protected monthly income for life.  If your house is paid off, you are on Medicare, and you are just buying groceries and whatnot $3-4k/mo seems like plenty.

[LaineyAZ]

The Survey also reports household net worth by age group, which combines cash and investments, retirement accounts, real and personal property, and debt.

Median net worth in households where the head is between 65 and 74 years old is about $410,000. This is the richest age group. Their personal real estate equity is more than $250,000, so their total invested assets is not great.  35-44s NW is ~$135k; 45-54s, ~$250.

And the median is positively skewed. I believe almost 40% of Americans nearing retirement age have practically nothing saved and will rely mostly on SS.

Nothing wrong with SS. It is inflation-protected monthly income for life.  If your house is paid off, you are on Medicare, and you are just buying groceries and whatnot $3-4k/mo seems like plenty.

Can confirm.

[2sk22]

The Survey also reports household net worth by age group, which combines cash and investments, retirement accounts, real and personal property, and debt.

Median net worth in households where the head is between 65 and 74 years old is about $410,000. This is the richest age group. Their personal real estate equity is more than $250,000, so their total invested assets is not great.  35-44s NW is ~$135k; 45-54s, ~$250.

And the median is positively skewed. I believe almost 40% of Americans nearing retirement age have practically nothing saved and will rely mostly on SS.

Related to what you posted, there are some interesting trends in recent years. The flowchart showing the categorization of assets and liabilities is also very interesting. The original document is here: https://www.federalreserve.gov/econres/files/Networth%20Flowchart.pdf

[Turtle]

The Survey also reports household net worth by age group, which combines cash and investments, retirement accounts, real and personal property, and debt.

Median net worth in households where the head is between 65 and 74 years old is about $410,000. This is the richest age group. Their personal real estate equity is more than $250,000, so their total invested assets is not great.  35-44s NW is ~$135k; 45-54s, ~$250.

And the median is positively skewed. I believe almost 40% of Americans nearing retirement age have practically nothing saved and will rely mostly on SS.

Related to what you posted, there are some interesting trends in recent years. The flowchart showing the categorization of assets and liabilities is also very interesting. The original document is here: https://www.federalreserve.gov/econres/files/Networth%20Flowchart.pdf

Interesting the way the different age brackets cross over and under each other in the early 2000's.  It seems to correlate with which generations started to have more $$ in the market due to 401k coming into effect and pensions starting to go away.