What income in the USA makes you rich, and what income is a sign of poverty?

In the United States, a person's net worth is a barometer of their financial situation, especially as they approach retirement. This figure, calculated by subtracting liabilities from assets, varies widely across the population, determining the retirement lifestyle and economic security of millions of people. Edition Yahoo! described how Americans are divided into financial classes depending on their assets.

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Financial expert and author Jeff Schmidt estimates retiree wealth using the latest data from the Federal Reserve's Survey of Consumer Finances.

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• Poor: Families in the 20th percentile, with a net worth of about $10, are classified as poor. This group most likely does not own their own home and spends financial resources on basic necessities.
• Middle class: this category is at the 50th percentile, and the median net worth is $281 for Americans age 000 and older. This typically includes home equity, savings, and a 65(k) account.
• Rich: To be considered wealthy, a person must be in the 90th percentile with a household net worth of $1,9 million. This level of wealth allows for travel, charitable donations, and funding for children's colleges. The 95th percentile with a net worth of $3,2 million is considered very affluent, allowing for estate planning and possibly owning multiple homes. The top 1%, or 99th percentile, has a net worth of $16,7 million and represents the very wealthy who enjoy significant financial freedom and luxury.

Average level of well-being depending on age

Based on Zippia data for 2023:

• Americans aged 55-64: The average net worth of this group is estimated at $1,18 million. This figure is significant because it represents people who are typically nearing the end of their working years and at the peak of wealth accumulation.
• Americans aged 65-74: The average net worth for this group is higher than for the 55-64 age group at $1,22 million. The increase in average net worth for this age group is likely due to continued asset growth and possibly the start of retirement accounts .
• 75 years and older: The average net worth for this age group is $977, which is lower than younger age groups. This decline can be explained by the fact that people in this age group are later in their retirement and may be using their assets more aggressively.

Perception of Wealth in America

According to Schwab's Modern Wealth 2023 study, Americans consider people with an average net worth of $2,2 million to be wealthy.

According to Knight Frank research, to be in the top 1% in America, you need to have a net worth of $4,4 million, which is significantly higher than in Japan, the UK and Australia.

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More Americans are retiring with debt. The share of households headed by people aged 65 and over with debt increased from 38% in 1989 to 61% in 2016. Debt among people age 70 and older has grown 614% from 1999 to 2021, with mortgages accounting for the majority of the debt.

The Importance of Financial Planning

Net worth in retirement in the United States varies markedly and is driven by elements such as home ownership, savings, and debt. While middle-class and wealthy people often experience financial security, a significant portion of the population faces economic hardship. This disparity highlights the critical role of financial planning and management, including the valuable assistance of financial advisors, in ensuring a stable financial future throughout life.

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