Net worth: what it measures, and the four things it misses
Net worth is one of the easiest personal-finance numbers to calculate and one of the easiest to misread, because the arithmetic hides four things it was never designed to capture.
The definition, stated precisely
Net worth is everything owned, valued at what it would fetch today, minus everything owed. The Federal Reserve, in Changes in U.S. Family Finances from 2019 to 2022 (published October 2023), defines it as "the difference between families' assets and liabilities." Nothing in the formula covers income, cash flow, job security or the date the figure was measured.
On the asset side, the Fed's Survey of Consumer Finances (SCF) counts transaction accounts, retirement accounts, directly held stocks, pooled investment funds, vehicles, the primary residence, other residential and non-residential property, and equity in privately held businesses. On the liability side it counts amounts owed, with categories covering property-secured debt, education debt and vehicle debt, among others — here, only line items to subtract.
Two things many people assume are included are not. The Fed excludes Social Security (the OASDI program) and employer-sponsored defined-benefit pensions from the asset measure, because a future income stream cannot be converted into a present value without assumptions about work decisions, earnings, inflation, discount rates and mortality for which no widely agreed standards exist. The consequence is large: a long-serving public-sector worker with a defined-benefit pension and a private-sector worker with an equally valuable retirement account show very different net worth, purely because of how the two promises are recorded.
Valuing the things that have no price tag
Cash and marketable securities price themselves. Everything else is an estimate.
A home. The SCF asks respondents to report their home's value — self-reported, not appraised, so it tends to track asking prices rather than completed sales. Among the 66.1 percent of families who owned their primary residence in 2022, the median reported value was $323,200. What belongs on a net worth statement is net housing value: the home's value minus debt secured by it. The Fed put that median at about $200,000 in 2022, up from about $139,100 in 2019 in 2022 dollars; the same report's summary bullet rounds the 2022 figure to $201,000.
Recorded asset value is not the cash a sale would produce. Selling costs come out of the proceeds, and gain above the exclusion limit is taxable: on a main home the IRS allows up to $250,000 of gain to be excluded from income, or $500,000 for a married couple filing jointly, subject to 24-month ownership and use tests within the five years before the sale (IRS Topic no. 701, updated September 24, 2026). No such exclusion applies to a rental property or a business stake.
A car. The relevant number is resale value, not purchase price and not replacement cost. Among the 86.6 percent of families owning a vehicle in 2022, the SCF median value was $27,700.
A private business stake. The SCF records business equity at net value. In 2022, 14.6 percent of families held some: a median of $90,000 among holders, against a mean of $1,622,500. The Fed attributes that gap to the small fraction of privately held businesses with very high valuations. A private stake has no quoted price, often carries transfer restrictions, and a valuation built from a revenue multiple remains a guess until a buyer signs.
One discipline worth applying in the net worth calculator: enter what a willing buyer would plausibly pay within a month, and enter pre-tax retirement balances at face value while noting separately that the spendable amount is lower.
Median versus mean
In the 2022 SCF, median family net worth was $192,900 and mean family net worth was $1,063,700 — the mean 5.5 times the median. That is not a rounding quirk; it is the shape of the distribution.
| Group (by net worth) | Median, 2022 | Mean, 2022 |
|---|---|---|
| Bottom 25% | $3,500 | −$5,300 |
| 25th–49.9th percentile | $93,300 | $98,800 |
| 50th–74.9th percentile | $356,300 | $373,700 |
| 75th–89.9th percentile | $1,036,200 | $1,102,400 |
| Top 10% | $3,794,600 | $7,810,500 |
Within the middle groups median and mean nearly match. The divergence sits at the two ends: a mean of negative $5,300 in the bottom quartile, and a mean just over twice the median in the top decile. Weighting those published group means by each group's share of families implies the top 10 percent hold roughly 73 percent of all net worth the survey measures and the bottom half roughly 2 percent — arithmetic on the Fed's own table, not a separately published statistic, and it reconstructs the published overall mean to within 0.05 percent.
The mean also rests on a sample that leaves out the very top: persons listed by Forbes magazine among the 400 wealthiest people in the U.S. are excluded from sampling. That exclusion is the Fed's; the inference that the published mean therefore sits below the true average is this guide's. The tail is also where the survey is thinnest — 4,602 families were interviewed for 2022, against 5,783 for 2019 — so a top-decile estimate carries more uncertainty than the overall median. For comparing a personal figure, the median is the reference point; the mean is a statistic about the tail.
Net worth by age, 2022 survey
| Age of reference person | Median net worth | Mean net worth |
|---|---|---|
| Under 35 | $39,000 | $183,500 |
| 35–44 | $135,600 | $549,600 |
| 45–54 | $247,200 | $975,800 |
| 55–64 | $364,500 | $1,566,900 |
| 65–74 | $409,900 | $1,794,600 |
| 75 or more | $335,600 | $1,624,100 |
The pattern rises through working life and peaks at 65–74, with the 75-or-more bracket lower. Because each of these waves is a different cross-section rather than the same families re-interviewed, that step down is not one group spending down its savings; it is a different set of families, formed in different decades. The mean-to-median ratio stays between roughly 3.9 and 4.8 in every bracket, so the skew is not an artifact of one age group. The under-35 median more than doubled between the 2019 and 2022 surveys, rising 143 percent in real terms — the largest gain of any bracket, from a small base.
These brackets are also what a widely repeated rule of thumb runs into: expected net worth equals age times pre-tax income, divided by ten. Median before-tax family income in the 2022 SCF was $70,300, measured for 2021 in 2022 dollars; the formula puts a 45-year-old family on that income at $316,350, against an actual median of $247,200 for the 45–54 bracket. Because it scales with current income, two people of the same age get different targets and a raise raises the bar — it describes an earnings profile, not whether a household could absorb a shock.
These are 2022 figures in 2022 dollars. The SCF has been conducted every three years, in a consistent manner, since 1989. The Board's SCF program page, last updated February 28, 2025, says the 2025 wave was expected in the field from March through December 2025, and still lists 2022 as the most recent published results; no 2025 results had appeared as of October 2026.
Four things net worth does not tell you
1. It is a snapshot, not a trend
The Fed describes net worth as "a stock measure on the date of the interview." A single reading says nothing about direction. Between the 2007 and 2010 surveys, real median net worth fell 39 percent and the real mean fell 15 percent. And because each of these waves is a fresh cross-section, the 37 percent real rise in the median from 2019 to 2022 does not mean any particular family's net worth rose 37 percent. A figure recorded with its date and recomputed on the same basis produces a series; the series carries information a single reading cannot.
2. It ignores liquidity
Two families, each with net worth of exactly $250,000. Family A holds $200,000 of net housing value, $42,000 in a retirement account and $8,000 in transaction accounts — $8,000 being the SCF median transaction-account balance in 2022, against a mean of $62,500. Family B rents, holding $60,000 in transaction accounts and $190,000 in pooled investment funds outside a retirement account. Identical net worth; Family A can reach $8,000 this week, Family B roughly $250,000 less any tax on gains. If Family A's $42,000 sits in a pre-tax account, its spendable value is lower again.
The Fed's Economic Well-Being of U.S. Households in 2025 report, published May 13, 2026, found 63 percent of adults would cover a hypothetical $400 emergency expense exclusively with cash, savings, or a card paid off at the next statement — a measure of which method people would reach for rather than of what they hold, which is why the emergency fund guide carries this statistic and the comparable three-month figure alongside it. Net worth cannot distinguish between those situations; a liquidity line kept separately can, and the emergency fund calculator sizes it.
3. It ignores income stability
The same 2025 report measures how common variable income is, and finds it far commoner among the self-employed than among people working for someone else; the emergency fund guide gives those figures and a method for sizing the gap they open. Two households with the same net worth and the same annual income are not in the same position if one is paid in equal monthly amounts and the other in irregular lumps. Net worth has no field for that, or for how secure the underlying work is.
4. It ignores purchasing power
Net worth is a nominal figure unless deliberately restated. Putting two Fed bulletins side by side shows why: median family net worth was $121,700 in 2019 dollars in the 2019 survey and $192,900 in 2022 dollars in the 2022 survey — a 58 percent rise on paper, against the 37 percent real rise the Fed reports once both are expressed in 2022 dollars. The CPI-U rose 3.4 percent over the 12 months ending August 2026, with the all-items index at 334.980 on the 1982–84=100 base, per the Bureau of Labor Statistics release of September 11, 2026. At that rate, $192,900 left untouched would buy about $168,800 of today's goods in four years, and a flat balance loses roughly 28 percent of its purchasing power over a decade. The inflation calculator converts any past or future figure to comparable terms.
Using the number without being misled by it
Net worth earns its place as one of several readings, not as a scoreboard. Measured on a fixed date every few months it shows direction; paired with a liquidity line it shows resilience; restated in real terms it shows progress rather than price inflation. Stated consistently — the same valuation basis for the house and the business stake every time — it is comparable to itself, which is the comparison that holds up. A fuller picture usually needs a monthly budget view and, for the retirement-account component, a projection of contributions over time.
This is educational information about how a measure is constructed and what it leaves out, not advice about anyone's circumstances. The right balance between accessible cash, property and long-horizon holdings depends on when money is needed, how stable the income behind it is, and how much variation a household can absorb — which is why the same net worth figure means different things to different readers.
Common questions
Is net worth simply assets minus liabilities, including the house?
Yes. The Federal Reserve defines it as the difference between a family's assets and liabilities, and the primary residence is included as an asset. What belongs on the statement is net housing value — the home's value minus any debt secured by it. The Fed put the median net housing value for owners at about $200,000 in the 2022 Survey of Consumer Finances (the report's summary bullet rounds the same statistic to $201,000), against a median self-reported home value of $323,200.
What is the average net worth in the United States?
In the 2022 Survey of Consumer Finances, published October 2023, mean family net worth was $1,063,700 and median family net worth was $192,900. The mean is 5.5 times the median because wealth is heavily concentrated at the top — the top 10 percent of the distribution had a mean of $7,810,500. For comparing one household against typical households, the median is the more informative figure.
Why are the median and mean so far apart?
Because the distribution is skewed, not symmetrical. In the 2022 survey the bottom quartile had a mean of negative $5,300 while the top decile averaged $7,810,500. A handful of very large balances pull the mean far above the midpoint. Weighting the Fed's published percentile means by population share implies the top 10 percent hold roughly 73 percent of measured net worth. The Fed also excludes anyone listed by Forbes magazine among the 400 wealthiest people in the U.S. from its sampling, so the published mean very likely sits below the true average.
Does net worth include Social Security or a pension?
Not in the Federal Reserve's measure. The Fed excludes Social Security (OASDI) and employer-sponsored defined-benefit pensions from its asset list, because a future income stream cannot be converted to a present value without assumptions about earnings, inflation, discount rates and mortality for which no widely agreed standards exist. Defined-contribution balances such as a 401(k) or IRA are included at their account value.
How can two people with identical net worth be in very different positions?
Liquidity. A household with $250,000 of net worth concentrated in net housing value and a pre-tax retirement account may be able to reach only a few thousand dollars within a week — the median transaction-account balance in the 2022 survey was $8,000 — while a household with the same total held mostly in accessible accounts can reach nearly all of it. The Fed's report on 2025 household well-being found 12 percent of adults could not cover a $400 emergency expense by any means.
Does the "age times income divided by ten" rule work as a net worth target?
It is a rough yardstick, and it is worth seeing what it implies. Median before-tax family income in the 2022 survey was $70,300, so the formula sets a 45-year-old family on that income a target of $316,350 — above the $247,200 actual median for the 45–54 age bracket. Because the formula scales with current income, two people of the same age get different targets and a raise raises the bar, so it tracks an earnings profile rather than whether a household could absorb a shock.
How often should net worth be recalculated, and is newer data coming?
Recomputing on a fixed date every few months is what turns the figure into a trend; a single reading is a snapshot and shows no direction — real median net worth fell 39 percent between the 2007 and 2010 surveys. On national data, the Survey of Consumer Finances runs every three years. The Board's SCF program page, last updated February 28, 2025, says the 2025 wave was expected in the field from March through December 2025 and still lists 2022 as the most recent published results; no 2025 results had appeared as of October 2026.
Sources
- Federal Reserve, Changes in U.S. Family Finances from 2019 to 2022 (October 2023) — Net worth defined as the difference between families' assets and liabilities (Table 2 note); 2022 median and mean family net worth ($192,900 / $1,063,700); all five net-worth-percentile rows and all twelve age-bracket figures (Table 2); 2019-22 real changes of 37% and 23%; 2007-10 real declines of 39% and 15% (footnote 19); 143% real rise in the under-35 median; asset ownership rates and conditional values for homes (66.1%, $323,200), vehicles (86.6%, $27,700), business equity (14.6%, $90,000, $1,622,500) and transaction accounts ($8,000, $62,500); median net housing value of about $200,000 in Box 3 and $201,000 in the overview bullet, up from $139,100; home values are self-reported (Box 3 footnote 1); exclusion of Social Security (OASDI) and defined-benefit pensions and the stated reason (footnote 42); exclusion of persons listed by Forbes among the 400 wealthiest (Appendix B); 4,602 interviews for 2022 and 5,783 for 2019; survey conducted every three years in a consistent manner since 1989; net worth as a stock measure on the date of the interview; median before-tax family income of $70,300 for 2021 in 2022 dollars
- Federal Reserve, 2025 Survey of Consumer Finances (program page, last updated February 28, 2025) — The 2025 SCF was expected to be conducted from March through December 2025; the page lists the 2022 results as the most recent published. Verified directly: the page's own Last Update date is February 28, 2025, so it predates the question of whether 2025 results exist. A separate search for published 2025 SCF results found none as of October 9, 2026.
- Federal Reserve, Changes in U.S. Family Finances from 2016 to 2019 (Bulletin Vol. 106) — 2019 median family net worth of $121,700 in 2019 dollars, used for the nominal-versus-real comparison against the 2022 figure
- Federal Reserve, Economic Well-Being of U.S. Households in 2025 — Savings and Investments (May 2026) — 63% of adults would cover a $400 emergency expense with cash or its equivalent; 12% could not pay it by any means; 55% had three months of expenses set aside
- Federal Reserve, Economic Well-Being of U.S. Households in 2025 — Income and Expenses (May 2026) — 30% of adults had income that varied at least occasionally month to month; 11% struggled to pay bills because income varied; 58% of self-employed adults reported varying income
- Federal Reserve Board press release, Economic Well-Being of U.S. Households in 2025 (May 13, 2026) — Publication date of May 13, 2026 for the 2025 household well-being report
- Bureau of Labor Statistics, Consumer Price Index — August 2026 (archived release, September 11, 2026) — CPI-U rose 3.4 percent over the 12 months ending August 2026, not seasonally adjusted; all-items index level of 334.980 on the 1982-84=100 base (Table 1 of the same release); release date of September 11, 2026. Fetched and verified directly; this is the dated archive copy, which replaces the rolling bls.gov/news.release/cpi.nr0.htm and cpi.t01.htm pointers the draft cited.
- IRS, Topic no. 701, Sale of your home — $250,000 single and $500,000 married-filing-jointly exclusion of gain on a main home, with 24-month ownership and use tests within the five years before sale; page last reviewed or updated September 24, 2026