Sunday, March 30, 2014

Interesting information on the age distribution of wealth in 2010

I suspect that the values for wealth shown here may be the median values for the ten percent of families, and the top one percent may be a lot richer than the top line would suggest. The younger members of the top ten percent can expect to inherit wealth when their parent's generation passes away.

The data are from 2010, near the bottom of the Great Recession. The wealthy have gotten a lot more wealthy since then, as the stock market and real estate values have rebounded.

As one might expect, in the USA some 60 percent of households accumulate wealth during their working lives, but the difference in wealth increases in older age groups.  Thus households with heads in their 60s in the top ten percent had median worth of nearly $2 million, while those in the median wealth group had about $200,000,

I assume that the middle class was able to buy a home by retirement, and would pull down any additional savings over time. The bottom groups probably never owned a home, and lived in retirement on pensions. The rich owned expensive homes, perhaps second homes, and lived on dividends, interest and pensions in retirement.

Note that someone who was 75 in 2010 was born in 1935. His/her first years were lived during the depression, and they also lived through World War II. The heads of those households may not have had the educational opportunities of later generations, nor perhaps the earning opportunities of the boomers. So the drop off in wealth of these oldest generations in wealth may be more a result of less wealth accumulation during their lifetimes, and not so much a draw down of wealth during old age.

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