December 17, 2014





Wealth is the difference between the value of a family’s assets (such as financial assets as well as home, car and businesses) and debts. It is an important dimension of household well-being because it’s a measure of a family’s “nest egg” and can be used to sustain consumption during emergencies (for example, job layoffs) as well as provide income during retirement. Wealth is different from household income, which measures the annual inflow of wages, interests, profits and other sources of earnings. The data have also shown a growing gap in wealth along racial and ethnic lines since the recession ended.

In our analysis, we categorized families by their household income, after we adjusted their incomes for family size. Middle-income families are families whose size-adjusted income is between two-thirds and twice the median size-adjusted income. Lower-income families have a size-adjusted household income less than two-thirds the median and upper-income families more than twice the median.

Middle Income and Upper Income HouseholdsThis methodology results in 46% of America’s families being classified as middle income in 2013. One-third of families were lower income and 21% were upper income. For a family of three in 2013, a household income of $38,100 qualifies as middle income and $114,300 or greater qualifies as upper income.

The tabulations from the Fed’s data indicate that the upper-income families have begun to regain some of the wealth they lost during the Great Recession, while middle-income families haven’t seen any gains. The median wealth among upper-income families increased from $595,300 in 2010 to $639,400 in 2013 (all dollar amounts in 2013 dollars). The typical wealth of middle-income families was basically unchanged in 2013 — it remained at about $96,500 over the same period.




It could help explain why, by other measures, the majority of Americans are not feeling the impact of the economic recovery, despite an improvement in the unemployment rate, stock market and housing prices. In October, just one-in-five Americans rated the country’s economic conditions as “excellent” or “good,” an improvement from the 8% who said that four years ago, but far from a cheery assessment. And a new poll released this week found higher-income adults are hearing about better economic news than lower-income adults, with 15 percentage point difference between the two groups on the “good news” they’re hearing about the job situation, for example.


Topics: Economic Recession, Economics and Personal Finances, Income, Income Inequality, Socioeconomic Class, Wealth

  1. Photo of Richard Fry


  2. Photo of Rakesh Kochhar

    is an associate director of research at Pew Research Center.


  1. Robert Bender1 year ago

    Not hard to believe that upper-income families wealth grows at a faster rate than others. The more excess/discretionary income you have, the more willing you are to invest it in riskier investments which can often lead to bigger gains. People living paycheck to paycheck can’t afford to take such a risk, as income is too valuable. Also the reason behind racial incomegrowth disparities. Lower income people are less likely to have financial managers or invest, so their economic gain is limited to their investment in their homes, which has proven to be marginal at best over the last 8 years

  2. Shasta Jones1 year ago

    Yeah, we gotta get that Flat tax rate! Us so-called middle class people just aren’t paying enough taxes! The poor upper class they need some tax relief so they can enlarge their homes and buy anther porche. How about a straight 25% tax. It’s fair and the upper class deserve–after all they work so much hard than we do. (If you don’t know–this is sarcasm. I’ve had some people take my sarcasm seriously)

    1. DB Stevens1 year ago

      Look, you can spin all you want, but the top 10% pay about 70% of the total federal income taxes while the entire bottom 50% pay less than 3%. The top 10% pay to run the country and that’s just the reality of it.…

      Here’s the bottom line: If you want to build any significant wealth, you really have two choices:

      1. Invest
      2. Go into a high paying career e.g. become a Dr. or get into a relatively small number of other lucrative careers most of which will require significant investment in higher education.

      Most people will never build enough wealth just working 9 to 5. For the average worker, diversified investment and at the very least home ownership is the only way it’s going to be possible.

  3. Jerry Kaczmarowski2 years ago

    I am wondering if this is because most middle income families had the vast majority of their wealth tied up in their home. Since home prices have not rebounded to previous levels, this would leave them stuck. High income families of course saw the value of their homes go down as well, but they generally have a lot of their money invested in stocks, etc.

  4. Randy Edwards2 years ago

    Why do economists so often come to conclusions based on estimates of median household income, when median can be so misleading or uninformative? Of course, median avoids problems of outliers, but for something like income, what is meaningful is how much income is now being brought in overall and the shape of the curve of distribution of income.

    For example, in many occupations, the distribution of incomes has changed drastically. In some occupations there are many individuals in the lower half of incomes receiving very much lower incomes than in the past, while the upper half remain relatively unchanged in terms of income. The net result is that people in that occupation are now receiving substantially less aggregate income, while the median income has changed little.

    I am surprised that economists have not developed or do not use measures that integrate this aggregate income (yet avoiding the problems of outliers and the problem of the often times meaninglessness of the median income).

    The economic reality of present day conditions is probably much worse than that indicated by looking at changes in median income or wealth. Why can’t economists make more meaningful and more accurate analyses? Is it strictly a matter of the fact that the statistics released by the government are only medians and cannot be further analyzed? If so, why, in this day of computers and information technology, does the government not provide all the numbers, or at least provide the distribution curves for the data on which the medians are calculated?

  5. Rayyyyyyy2 years ago

    I don’t understand, what is a wide class gap? Is when the wealthy and poor are so far apart that it is bad? I just don’t understand. Someone please tell me in simple words what it is. I’m just a kid I really need help understanding this

    1. LFrem2 years ago

      A simple way to put:
      Imagine you have an older brother. Your parents say, “you both will get an allowance, but because your brother is bigger and has more responsibilities, you will get less money. Hence, we decided that you will get 1 dollar, while your brother gets 30.”

      Well, this at first doesn’t sound bad, but in reality you can just buy a bag of chips, while your brother can probably go to the movies with that money. Of course, I am oversimplifying things, but at a basic level, this is one of the many reasons why some dislike the wide class gap.

      1. Shasta Jones1 year ago

        Yes and both of you are taxed 25 percent. You get 75 cents to meet your needs while your older brother gets 22.50.

        1. DB Stevens1 year ago

          25% is coming out of thin air. The tax on the lowest bracket is 10% and that is on taxable income which is nowhere near an effective rate of 10%. 25% for 2016 starts at $37,650 and again that is net taxable income so even then it is nowhere near a flat effective rate of 25%. The reality is that lower income earners pay very little federal income tax. With the bottom 50% paying less than 3% of federal income taxes and maintaining current deficits the country would run for roughly 10 days on what’s paid by the entire lowest 50%. They get a pretty good deal on federal income taxes. They run the country for 10 days and the upper 50% run it for the other 355.

    2. Anonymous10 months ago

      People who have money have the best all the time and people without wonder where their next meal will come from year after year, generation after generation.

  6. sedrick2 years ago

    what about the lower class its only middle class an upper class

  7. Tom Price2 years ago

    Did you factor in inflation from 1983 to 2013 , if not how would this affect comparisons ? Also present value of $1 in 1983 vs $1 in 2013 – some have lost more ground over the period while others have remained about the same? Lastly would be interested in comparison for various other periods mentioned in report factoring in inflation and present value .

    1. Richard Fry2 years ago

      Yes, we adjusted for inflation using the CPI-U-RS. All dollar amounts in the post are in 2013 dollars.

  8. Daniel P. Doyle, Bayside, New York2 years ago

    Financial intermediaries are one of the obstacles families face in attempting to build wealth. Lots of actively managed funds charge hefty fees yet fail to come close to matching the performance of the broad markets–the S&P 500, the Russell 1000 and so on.

    Yet we live in a time when an investor will little financial background can come very close to matching that performance via low cost index funds, whether the mutual fund or the exchange traded fund variety. The data for 2014 indicate that lots of investors are catching on to the concept that “expenses matter” and should be avoided.

    It is a good idea to share in your house of worship but to avoid doing so with the return on your investments. Over time, the difference is quite significant.

  9. pumi do2 years ago

    One of the biggest reasons for wealthy people are getting richer is the result of easy money policy by the Federal Reserve following the Great Recession. Fed policy’s goal is to get our economy back to its feet again after the financial collapse. This policy has helped the stock market to recover and reached to its highest level ever. S&P 500 has more than doubled since 2009. People who benefited the most from this are those of us who have money invested in the stock market. Middle Class Americans have not recovered from the Great Recession because their net worth is closely tied to their home equities. They don’t have much money left after paying for their housing expenses. Housing market has stabilized but it was still no where near before the housing bubble burst in most parts of the country. This drives wealth gap. Wealthy Americans have about 15% of their net worth tied to their home equities, but Middle Class Americans have more than 60% of their net worth tied to their home equities. Interestingly enough, more and more developed and developing countries also use easy money as a tool to manage their economies as well. So wealth gap will widen pretty much around the world.

    1. Richard Fry2 years ago

      I concur that the increase in the value of stocks since 2009 has not been vastly shared among American families and that it likely has contributed to the rise in the wealth gap between upper income families and middle income families. I am agnostic however on the role of the Federal Reserve and monetary policy and quantitative easing in contributing to the run-up in the stock mkt since 2009. Stocks are definitely up since 2009 but it is debatable how much the Federal Reserve has to do with that upswing.

      1. Anonymous10 months ago

        It is a difficult point in time. Some single mothers with 2 children are being told to go back to school. Schools provide then $16,000 per year in Silicon Valley, so all their food has to come from soup kitchens and charity pantries. Every other month they are evicted or rescued by family members to keep a roof over their head. Mothers constantly are depressed and consider suicide. It’s not the dust bowl or Great Depression, it’s the next best thing. Their kids are told to try to get arrested because at least these kids can have a roof over their head. High school educated mothers are not finding life today is not worth it. The rich should feel it wasn’t their goal but it’s the true trickle down economics effect. Just be happy it’s not the wealthy they have to support political campaigns to ensure the status quote.

  10. Jeff Barber2 years ago

    You have students leaving Colleges/Universities with debt in excess of $100,000 they are indebted for 20 years. They can’t afford a car, they can’t afford a house. Theres a real problem here.

    1. DB Stevens1 year ago

      The only reason it costs $100,000 is because the government has chosen to subsidize the cost via guaranteed loans. Take away the guarantees and let lenders loan only what students are actually credit worthy of and the price will plummet as universities face the choice of reducing tuition or closing their doors. That said, you post is exageration. The terms of student loans are such that anyone who gets a MARKETABLE degree will be able to afford to repay it and maintain a reasonable standard of living. Loans for non-marketable degrees should not be made at all, the same way you will be hard pressed to get a loan for an obviously non-sustainable business. Go to a bank with a halfbaked business plan and no collatoral and try to get a small business loan and see how far you get. Tuition loans for degrees with a poor chance of generating a decent return on investment should be treated the same way.

  11. Jeff Barber2 years ago

    It’s only matter of time. 99% of the people will not put up with the 1% that control all the wealth. Revolution is going to happen. I think we already seeing it protests. Big banking, corporations that do not respond to the public. Low wages.

    1. Jeff2 years ago

      Difficult to have a revolution on a full stomach. This must be the only country where the poor people have obesity issues (all of the U.S. Has the issue).

  12. Kevin2 years ago

    Lower-income and middle-income wealth has stagnated but look at the price of some things that improve quality of life. Computers, smart phones, HDTVs, generic drugs, etc. have all fallen in price since the 80s, so the focus needs to shift from solely income and wealth to quality of life.

    This is especially true when additional wealth and income doesn’t increase quality of life like paying for a son’s private college instead of public college or buying a $60,000 car instead of a $30,000 car.

    If one tracked happiness, health, lifespan, etc. by income/wealth since the 80s I’m sure there would not be much of a gap, such as upper-income families being three times as happy as long as middle-income families, or living three times as long. You might also see happiness go up for middle-income families since the 80s.

    Anyone can spend a nice day in the park with their family and that’s just as important as how much the wealth and income a family has.

    1. Richard Fry2 years ago

      Your point is well-taken. Wealth is an impt measure of family economic well-being, but it is not the only measure. It is not the same as the “standard of living,” nor is it a measure of happiness. Those are impt in their own right and not the subject of this posting.

    2. Joan2 years ago

      Are you for real? There is a cost associated with a flat screen tv and internet access and the electricity needed to run them. Did you not read a word of this article. These are happy days for the haves, trying times for the have nots, that have to supply the laptop, Internet access etc for their grade school students/children. Please take your blinders off.

  13. Richard Tebaldi2 years ago

    Obvious to me that “The Global Market” has affected the U.S. in a negative way. I am retired and over 70 now, but worked until I was 71, part time after I was 66. It enabled me to increase my net worth so that we could have a nice retirement. JOBS are the key. We don’t make anything in the U.S. like we used to in the 50’s and 60’s. Jobs started going overseas in the 50’s. We no longer make cloth, clothing, milinary; That went in the 50’s. Now in turn of the century we no longer make bullets either. We spend fortunes to tune up coal plants, then shut them down. Congress did it. We taxpayers are no longer represented by our Congressmen. They appear to be doing the bidding of those with PAC MONEY. It is time for us to rethink where election money is coming from. We need to have taxpayer elections. We are “Doing the cooking, but you won’t let us buy the groceries”! A revolution is beginning. We demand to make the decisions. Congress is out of style. America is NOT too big to fail. We will if Congress is allowed to do as it pleases.

  14. Solomon Belette2 years ago

    Very informative report on the lingering impact of the Great Recession. What will it take to have a full and transformative recovery that narrows the wealth gap and mitigate the growing disparity?

    1. Richard Fry2 years ago

      Thanks and you ask a fair question. I suspect the answer is complicated and, in any event, my expertise is more in the area of documenting economic trends rather than providing full-blown explanations and developing policy responses.

  15. Scott Lenger2 years ago

    Seems to be a fallacious assumption that people/families don’t move between income groups. In 1983 I would have been in the “middle income” and net worth category at best but have moved solidly into “upper” range. In a capitalist society people move up and down the wealth and income spectrum – we do not live in a caste society and thus this type analysis is essentially meaningless.

    1. Richard Fry2 years ago

      I think you are correct that it is important to note that families can and do move between income groups over time. As has been noted in earlier comments, the analysis is not following the same families over time. Rather, it provides the typical wealth levels of groups of families categorized by household income. You are right that the particular families in a group may change over time. While I agree that this is important to note in thinking about how your own particular family has fared over time relative to other families, I don’t concur that the analysis is essentially meaningless. A good deal of research on tracking economic well-being over time is based on this sort of repeated cross-section analysis.

  16. Superb2 years ago

    Imagine what the gap would like without African americans and Hispanics. It would obviously be a lot lower.

    1. Sage2 years ago

      A useless point as not based on reality. More appropriately, what can and should be done by society and the government to encourage more widespread and robust economic opportunity for all? If socialism doe snot work then what does? Obviously, crony capitalism fails as well.

  17. Thomas2 years ago

    DHFabian – is that an intentional name? Fabianism? Reagan’s campaign on the poor? What? Perhaps you overlook that Democrats held MASSIVE majorities in Congress throughout Reagan’s years? What basis do you have for this comment?

  18. DHFabian2 years ago

    We really can’t have a legitimate discussion about our overall economic conditions as long as we ignore the masses of poor. I can say that when Reagan was first elected, launching the long campaign against our poor, the overall quality of life in the US was rated at #1. By the time Obama was elected, this had already fallen to #43. 42 nations are now doing better than the US, and we go to great lengths to avoid this issue. Instead, we just keep numbly waving the Middle Class Only banner.

  19. Robert Peifer2 years ago

    Lower income and middle income families count a much larger percentage of their total wealth as equity in there home. Clinton’s affordable housing goals, mandates by his HUD Secretaries Cisneros and Cuomo, directed toward Fannie Mae and Freddi Mac, laid the foundation for the financial collapse that followed. Middle America and lower income America saw a much larger decline, percentage amount, in their wealth. The rich don’t have nearly the percentage of their wealth in their homes. HUD Document 99-131 details one of HUD Secretary Cuomo’s 2.4 Trillion Dollar mandate. (…) There was no way to comply with a mandate like that without throwing lending standards out the window. Over 50% of Fanni & Freddi’s loans were mandated to be sub-prime compliant. Social engineering, though well intentioned, as well as The Commodity Futures Modernization Act of 2000, which prohibited the regulation of derivatives (CDO’s & CDS’s), signed by Clinton, all contributed to the catastrophe. Naturally, predatory lending followed. Because Fannie & Freddi were GSE’s (Gov sponsored enterprises) they had an implied AAA rating.

    1. Mark Osborne2 years ago

      Robert, your understanding, and explanation of the subject is spot on. The only point I might add is Phil Gramm (R) Texas lead the midnight (hour) vote to remove the trading restrictions under Clinton

  20. Viplav2 years ago

    Thanks for an informative report.
    Apart from the widening wealth gap, it is very interesting to notice that the one-third of the households(the lower-income ones) lost wealth during the last three decades and almost one-half (the middle-income ones) barely managed to keep their wealth while the top one-fifth (the upper-income ones) doubled their wealth.
    One question: Is the wealth calculated taking into effect the inflation? If not, the figures would indicate an even worse situation for four-fifths of American families and speaks volumes about the direction the country is heading in.

    1. DHFabian2 years ago

      No, today’s low income people don’t have homes. We rearranged our thinking (and our statistics) by simply erasing the truly poor from the discussion. This is also the generation that insisted those who were trying to get on their feet on $4k to $4500 annual welfare aid were “living better than the middle class.”

    2. Richard Fry2 years ago

      Yes, inflation has been taken into account. All the figures on median wealth are presented in inflation adjusted dollars.

  21. Calluna Lepus2 years ago

    One of the things that I find interesting, additionally, is how our median income numbers compare to the poverty line. My family, for example, is around the median for family size. And we are low-income, as defined by earning less than twice the federal poverty rate for our family size (6 people). We do pretty well because we live in a low cost of living area and my husband’s job is not tied to his location. For now.

    Even though we own our house outright (we bought a dirt cheap foreclosure in an iffy neighborhood and are making improvements when we have the cash to do so), own our vehicles, and don’t use credit cards, our net wealth is negative due to student loans.

    Like most Americans, we’re one lay-off, major illness, or injury away from poverty. We’re putting what we can into the 401K but it isn’t going to be much. Our Social Security is almost certainly going to be garnished for the aforementioned student loans.

    Our kids are living at home and going to university on scholarships so they will at least be starting out debt-free. That’s about the best we could do for them.

    So far, we’ve been pretty lucky. We’re a lot better off than a lot of the people we know and our position is alarmingly precarious. It really just seems crazy to me that in a country this rich, we’ve got so many people in dire or near-dire circumstances. I believe we (as a country) can and should be doing better and that our policies unfairly benefit the well-off at the expense of nearly all of the rest of us. A lot of good, hard-working people are going through really rough times for, what seems to me, no good reason.

  22. Pasquale Research2 years ago

    Fascinating study. I had one methodological question regarding the definition of low-income. It is people at 2/3 the median income, correct?

    I know that the 2010 census figures showed that, in 2011, the bottom quintile (wealthwise) was about $6,000 in debt, and the second quintile had about $7200 net worth. A rough estimate would be that 67% of the bottom 50% = about 38.5%; i.e., just about an overlap of the bottom two quintiles, with a net worth near $1,000 (or perhaps less if there top 5% of the bottom 40% had nearly all the wealth of the bottom 40%).

    My question is: is that measure of 2/3 of the median wealth about the same now? If so, it seems that looking at the median wealth of those with 2/3 of the median income may give people an exaggerated sense of the financial well being of the bottom 40%. And just to confirm: the study did count those people in the lower-income category who had net debt?

    1. Richard Fry2 years ago

      I am sorry, I don’t understand your 2nd question. On your first question, yes, the study defines lower income families as those families with a household income less than 2/3 the median income (adjusted for the size of the household). On your third question, yes, the study is representative of all American families, including lower income families whose total debts exceed their assets.

      1. DHFabian2 years ago

        Are there any studies on no-income people, and those who still have the means to rent a room or apt. and go the temp help route? Because we no longer have welfare aid, I realize it is extremely difficult to have stats concerning this chunk of the population. (Note to those who fell behind on the news: The last welfare check was issued back in the 1990s. TANF is a short-term, marginally subsidized job program, only for those with minor children.)

  23. Jeff C2 years ago

    I see studies like these and wonder how, if at all, defined benefit programs have been accounted for. A middle income person facing retirement is better off with a median net worth of $96,500 and an annual pension of $30,000, than an upper income person facing retirement with a 401 (k) at the median net worth of $639,500 and no pension.

    1. Richard Fry2 years ago

      You are not the only commenter who is wondering how defined benefit plans are handled. As you will see in the discussion in the comment thread, the Survey of Consumer Finances (the data used in this research) does not include the value of defined benefit plans. Whether your assessment of the middle income family with the pension and the upper income family w/o the pension is correct probably depends on what assumptions one makes as to interest rates, mortality and the specific terms of the pension.

      1. Jeff C2 years ago

        It is true that my conclusion depends on various assumptions regarding a given pension, but it seems to me that while your three income groups are statistically defined, without taking into account the impact of defined benefit programs, something which affects millions of households, could dramatically undermine the ability to draw valid conclusions about the various groups’ financial well being.

  24. Tim McCormick2 years ago

    It seems there is a fundamental issue with the conclusions stated in this article: it makes claims about longitudinal patterns of people/families — “most American families remain financially stuck, upper-income families have seen their median wealth double” — but it is not based on longitudinal data that would support that.

    It’s possible that the upper-income families at time A are the same, or nearly the same, as at time B, but as far as I can tell, the data simply don’t tell us: they are snapshots/cross-sections of the set of people who are in each income for that time. Perhaps there is great turnover in who qualifies in each group at each time. I doubt it, but I’d want to know data on that before asserting, say, “most American families remain financially stuck.”

    I am not a statistician, but this seems to be a common question/issue: what data support longitudinal claims. Unless I’m really missing something, I don’t see how the report conclusions stated in this article are not significantly misrepresenting the data. At a minimum, the way the data are presented seems obviously prone to misinterpretation, as I saw in stories about it (e.g in The Atlantic’s CityLab) and a responsible, unbiased writeup would take care to address that.

    Tim McCormick
    San Francisco

    1. Richard Fry2 years ago

      Mr McCormick, your point is spot-on and well-received. This is not longitudinal data and the same families are NOT being followed over time. On the basis of repeated snapshots or crosssections of data, the results are describing the wealth of GROUPS of families. As an example, the specific families that were in the middle income group in 2010 are not necessarily the same families in the middle income group in 2013. I concur that some families may change income groups over time. So, yes, the results pertain to income groups of families, not specific families.

      In research reports I have the space to illuminate the cross-sectional nature of the data. Unfortunately, in a shorter blog posting the details of the data sometimes get less attention. I concur that we are describing the net worth of groups of families, not following specific families over time.

  25. Jenny Gray2 years ago

    these stats are confusing. as they do not seem to jibe. 1) The typical wealth of middle-income families was basically unchanged in 2013 — it remained at about $96,500 over the same period. & 2) “For a family of three in 2013, a household income of $38,100 qualifies as middle income ” 60 grand is significant.

    1. Richard Fry2 years ago

      Stat 1) refers to the wealth of middle income families. Stat 2) refers to the minimum household income needed to be classified as “middle income.” Since wealth and household income are measuring different aspects of family well-being, the two statistics are not inconsistent or they jibe.

  26. Wal Ford2 years ago

    Collectivism favors the elites at the expense of everybody else.

    Obamacare has made it so companies will keep employees’ hours below the 29-hour threshold. So people have to work multiple low-paying part-time jobs [with no benes] in order to somewhat make up for the good full-time jobs they had.

    Essentially, this means that people are switching from 40-hour workweeks with healthcare to more hours for less pay for fewer or no benes. Before Obamanation, the majority of newly created jobs were full-time. Now they are part-time.

    The percentage of working age adults who have jobs [labor participation rate] is the lowest it’s been since America was recovering from Jimmy Carter. Compare the number of unemployed Americans to the that of economic refugees who are here illegally. They are welcomed into this country by political interests who see them as fraudulent votes that can be bought with taxpayer-funded benes and economic interests that are addicted to cheap, exploitable labor.

    All of this has been great for the stock markets as employers are are getting more work for less pay. Those who still have jobs are expected to do the work of the workers who were laid off or never hired in the first place, for no extra pay — and be grateful.

    This is not compassion. This is not ‘social justice.’ This is a cruel, arrogant elite lording over a citizenry that is deliberately kept ignorant, impoverished and disenfranchised.

    1. Jenny Gray2 years ago

      whoa — talk about double talk “collectivism favors the elites” as in the wealthy ? as in the 1% ? eh hem. That should read — capitalism favors the wealthy.

  27. Larry2 years ago

    How are the values of defined benefit pensions calculated?

    1. Richard Fry2 years ago

      Excellent question. In this data both the value of defined benefit pensions and federal Social Security are NOT included. The value of defined contribution plans are included. The reason the survey does not attempt to inc defined benefit pensions is that the current valuation of the future income streams from these pensions depends on assumptions about future events (such as mortality, discount rates, retirement decisions, etc.) and there is no wide consensus on what assumptions to make.

      1. Another Jeff2 years ago

        Mr. Fry,

        If defined benefit is not included in net worth and defined contribution is included, wouldn’t the sample group’s net worth increase over time because defined benefit plans have been replaced by defined contribution plan as an employer’s only offering?

        For example, aren’t a 65 year old with no net worth and a $40k annual pension in 1983 and a 65 year old with $1M in a 401k ($40k x 25 yr) and no pension in 2013 in similar financial situations?

        Looking at the limited data presented here, I assume the group has not invested in defined contribution plans. Correct?

        1. Richard Fry2 years ago

          I concur that it is significant that defined benefit plans are not included and that since the 1980s more households have defined contribution plans and fewer have defined benefit plans.

          In regard, to your question as to whether the two 65 year-olds are in similar situations, my assessment is perhaps. As I mentioned in an earlier reply, it is difficult to value defined benefit plans and depends on what assumptions one makes. Seems to me that one can easily come up with scenarios in which the 65 year-old with a million in his/her 401(k) is NOT in a similar situation as a 65-year-old with a $40k pension. Suppose the 65 year-old only lives one more year. With the pension he/she received $40k. But with the $1 million in the 401(k) his/her heirs have a bequest of somewhere around $1 million. As long as the 65 year-old has some positive vibes toward his/her heirs receiving an inheritance, I think the 65 year-old with the $1 million in his/her 401(k) would be deemed to be in a superior financial situation. This is an example that the assessment of the value of a defined benefit plan depends on what you assume about mortality.

          1. 3rd jeff2 years ago

            Second jeff had a question about your valuation of defined benefit (probably mostly government) pensions. You appear to value them at zero. This will shock the annuity market! Is there any problem with giving defined benefit pensions their annuity value? Does this have a significant effect?

  28. Jeff2 years ago

    Mr. Fry,

    This a simply question. In your research, is the income figure net or gross?


    1. Richard Fry2 years ago


      The family income figures are cash income, BEFORE taxes.

  29. Gary2 years ago

    Mr. Fry,

    Is the data (the wealth divide illustrated in top chart) available for all years – from ’83 -’13 (excepting 1986)? Would be instructive, considering the bubble collapse in 2000 (leading to recession in 2001) as well as the housing bubble collapse – leading to the economic crisis in 2008 – leading to the recession following. Would be a short list of numbers – you could post in a reply. Thanks

    1. Richard Fry2 years ago

      No, the Federal Reserve data on family wealth is collected every three years, not annually. So I have the figures for 1998, which I can make available to you. But, 1999 and 2000 do not exist. Thanks.

  30. Tom Johnson2 years ago

    I find the data interesting but wanting. We, for example, have a middle class income, but through a lifetime of saving and investing, have a median net worth greater than the median for an upper income family and have been the beneficiary of the stock market rise. It would be useful to see a cross tabulation for income X net worth to see what percentage of each income class is benefiting from the market rise.

  31. Packard Day2 years ago

    Since March 9, 2009 (six weeks after Barack Obama’s inauguration) the S&P 500 Index has tripled in value while an investment in the Obamacare Health Insurance Providers (i.e. Humana, AETNA, Cigna, and WellPoint) did even better by increasing fourfold during this same period. Assuming you had a significant investment portfolio at the beginning of 2009, then your economic life has not only just done good. It has been extraordinarily good. God Bless Barack Obama, his big government policies, the “Washington DC/Wall Street Patriot Class,” and crony capitalism too…ehh?

  32. CFletcher2 years ago

    Interesting study, but once again the critical dimension of location and cost of living is over looked. A family of 4 living in the greater Boston, New York, or San Francisco metropolitan areas is substantially less well off both in terms of income and of wealth than a family living outside of, say, Salt Lake City or Albuquerque.

    There may be more granularity in the full Pew Research report but of course the details never make it through the media: sound bites and a call to emotion generate more click-throughs.

    1. Matt Austin2 years ago

      No national figure can reflect the local variations, but neither location nor cost of living is overlooked by these figures. It’s all blended into the aggregate. Yes, there are places where $66,000 and no debt lets you live like royalty, and some where you couldn’t even dream of buying a run-down shack. But a family of 4 living in the areas you describe is not automatically “less well off” simply because they live there vs. elsewhere.

      It’s especially not true that locality is overlooked for net worth–since the “wealth” figures capture home value, which is the primary asset of lower and middle income groups, as well as personal debt, cost of living *is* reflected in the net number. Metro areas with high prices put downward pressure on net worth because people who live there are spending more on living expenses than on investments. This is further offset by the fact that expensive cities attract higher-income people.

      On the income side, more expensive cities also tend to pay higher wages. If those same people moved somewhere cheaper, their income level would also reflect the market in that other location. Obviously, not all cities fully offset locality costs, but some also pay in excess. Again, it’s an aggregate of the nation. Virtually no one can afford San Francisco by any standard measure of affordability, but many people make it work by sacrificing in other ways.

      Plenty of details make it through if you look in the right places. It’s not ALL media conspiracy and traffic-seeking. These figures are available for any major metro area you choose, and you can compare them to the national distribution easily. Expecting a short piece about the country as a whole to cater to 100+ smaller locales is silly.

  33. Innocent2 years ago

    ARGH… The funny thing about this is it is not difficult to see WHY this has happened. What would have happened had you shown 2008 or 2009 in this chart is a fairly simple understanding that the ‘wealth’ of the upper class comes from the stock market by in large ( oh there are additional factors as well ) In 92 there was an economic slump and you show the wealth gap was very narrow. What has happened is that QE has supported a large amount of borrowing by those who can afford it ( had SOME assets ) back in late 2009 and early 2010. They threw their money at stocks when the Federal Reserve said they were going to engage in QE. Stocks began to rise, The middle class, meanwhile was simply trying to survive and pay down debt as their greatest asset their home took a hit, they did not have the luxury to borrow against this asset and invest in the market place.

    The result is fairly predictable. The market is up, by quit a bit, ergo the wealth of ‘the wealthy’ is up a lot as well.

    1. Richard Fry2 years ago

      I concur that differential ownership of stocks & bonds across family income groups is likely part of the explanation for the different recoveries in wealth since 2010. I am uncertain as to the specific role that monetary policies and quantitative easing (QE) has played. There seems to be a pretty healthy debate as to the effects of monetary policies over the past few years and the mechanisms and channels by which new Federal Reserve interventions have impacted financial markets and the wider economy. This research does not attempt to illuminate any of that.

  34. Syriac George Mathews2 years ago


    Thank you Mr Fry and Mr Kochhar bringing this up. This information is immensely useful to aid discussion towards bringing about improvement in society.
    The median is a very important statistic. This shows the mid point of the data. Were the other parameters of this data made available? i.e. the Average, mode and the distribution curve at ranges of $5000 for example. A statistician understands that even with the inclusion of the greatest amounts of the minutae, the day to day hardships of living cannot be adequately communicated except to may be point out a direction in which the path may lie. The added statistics would be an interesting perspective to judge YoY if society is improving.

    1. Richard Fry2 years ago


      Yes, the mean, mode and other statistics are available upon request. For any one year the total unweighted sample size is roughly 5,000 households. So, in any one year there are roughly 1,000 “upper income” households. The sample size therefore limits how finely grained one can analyze the data.

      1. Syriac George Mathews2 years ago

        Thank you, Mr. Fry, for responding back to me. I would be indebted if you could send me the other statistics. Is there a methodology on the selection of the 5000 households or are they randomly chosen, say circa 1998, and then kept the same from year to year?

        1. Richard Fry2 years ago

          You are welcome. I will try to get the additional statistics to you before week’s end.

          On the sample, the families are not followed from survey to survey. Each triennial survey is a different crosssection of households. As far as how they are selected, my quick synopsis is that about half the sample is randomly selected. But, the Survey of Consumer Finances is specifically designed to try to accurately capture wealth. So to do that, the other half of the sample focuses on likely high net worth families that the survey identifies on the basis of other federal govt administrative data (IRS tax records). There is a good overview of the survey design and weighting issues in the Fed Bulletin that accompanies the release of the data:…