A new report from the Center for Economic and Policy Research (CEPR) shows that most households now have less wealth now than they did in 1989. The report, “The Wealth of Households: An Analysis of the 2013 Survey of Consumer Finance,” presents data on household wealth by age cohort based on the results of the most recent Survey of Consumer Finance (SCF). The analysis shows little or no gains for the majority of Americans over the last 25 years, even in the years since the end of the recession. This is true of and particularly concerning for near retirees.
According to Dean Baker, a co-director of CEPR and an author of the paper:
“This is especially bad for those nearing retirement. Households in this age cohort will not have a chance to benefit from any strengthening of the economy and will only have the wealth they have accumulated to date to depend on in their retirement.”
The authors document several trends gleaned from the SCF. Between 1989 and 2013, average household net worth rose from $342,300 to $528,400 in 2013 dollars. However the average gains are misleading, as the population was older in 2013 than it was in 1989. More importantly, median net worth actually fell from $85,100 in 1989 to $81,400 in 2013, indicating that much of the gains of wealth accumulation went to those in the top quintiles. Other key points of the analysis include:
- The median net wealth of near retirees (ages 55-64) was $165,700 in 2013, down from $177,600 in 1989.
- The average non-housing wealth for the typical household in the 55-64 year old cohort was $89,300, compared to a peak of $160,700 in 2004.
- The net wealth for the middle quintile (ages 35-44) of mid-career workers averaged $50,100, less than half the net wealth of the same quintile ($103,800) in 1989.
- The average housing equity for the middle quintile of mid-career workers was also down considerably, from $63,500 in 1989 to $23,200 in 2013.
- There was some improvement for the middle quintile of recent retirees who saw their average net wealth go up from $142,900 in 1989 to $239,300 in 2013, but this was still less than the peak of $270,700 hit in 2007.
When compared with the previous Surveys of Consumer Finance, it can generally be said that wealth grew in the United States from 1989 to 2007 and shrank from then on. At the time of the 2013 survey, the stock market had almost recovered to its 2007 peak. House prices had not. With house prices representing a larger share of assets for the bottom three fifths of Americans, this helped increase the differences in wealth between the top and the bottom. All in all, the results of the survey yield a pessimistic picture of economic progress since the end of the recession.
Graphic images added by Econintersect to press release from CEPR.