The Federal Reserve recently estimated total household net worth in the U.S. to be about $80 trillion, including real estate and financial assets. And data from the Fed’s Survey of Consumer Finances imply that the top 10% of households by net worth hold about 75%—or $60 trillion—of this total. The bottom 90% of households therefore have a net worth of about $20 trillion.
These data seem to show a country whose wealth is highly concentrated. But the true picture is hardly as stark as critics of inequality claim, because it leaves out the large amount of wealth held in the form of future retirement benefits from Social Security and Medicare. Moreover, the public’s traditional financial wealth is depressed because the current entitlement programs lower people’s real incomes and deny them the higher returns available through investment-based retirement savings like IRAs or 401(k)s.
Wealth is the ability to spend more than one’s income... Most Americans count on Social Security to finance their consumption in retirement. The Social Security trustees estimate that Social Security “wealth”—the present actuarial value of the future benefits that current workers and retirees are projected to receive—is $59 trillion. Excluding the top 10% of households reduces the amount to about $50 trillion.