Reflections on Americans’ Net Worth (Bryan Caplan, Sep 02, 2026, Bet on It)
- Economists have long known that inequality is relatively low for consumption, medium for income, and high for wealth. What they rarely emphasize, however, is how much wealth depends on age. The richest Americans aged 65-69 are worth about 30x as much as the richest Americans aged 18-24.
- Net worth is very high in absolute terms. The median is over six figures by the mid-30s. Americans at the 75th percentile are millionaires by their mid-50s. Americans at the 90th percentile are millionaires by around 40. Claims about middle-class, middle-aged Americans who “can’t afford” eggs or gas or beef are nonsense.
- The most sensible argument for worrying about trade deficits is that we’re “living beyond our means.” Trade deficits represent borrowing, and we can’t keep borrowing forever. But given Americans’ extraordinary net worth, the most sensible argument for worrying is still senseless. After 50 years of unbroken trade deficits, we’re wealthier than ever.
- Americans of staggering net wealth are all around us. If you walk around an American mall on a weekend, you probably cross paths with several decamillionaires. But except for being older, you probably couldn’t pick them out of a crowd. Even their cars rarely scream extreme wealth.
- Whatever your complaints about American capitalism, you’ve got to admit that a large share of Americans use the system to become staggeringly wealthy by the time they retire. Not 1% or 5%, but 25%.
- Americans with low or negative net wealth are also all around us. But who ever thought otherwise? In my 20s, I had very low net worth, and so did all my friends. And that fact contains a lesson: Almost all low-wealth Americans are young. If you have a regular job and age a couple decades, you’re rarely poor anymore.
- If you’re old and your wealth is still low, your financial situation is basically hopeless. You can still be happy, but it would take a miracle (like winning the lottery) for your finances to dramatically improve. Every other American, however, is already rich, or could become rich with durably cautious budgeting. The math behind “Skip a $5 coffee every day from the age of 18, invest the savings in the stock market, and you’ll have hundreds of thousands of extra inflation-adjusted dollars when you retire” is sound.
- Earning regular high income is the easiest way to end up with high wealth. But it’s neither necessary nor sufficient. A high-skilled worker who blows his whole paycheck week after week ends up with a net worth of roughly zero. A Costco cashier with a high savings rate ends up a millionaire. That’s not just a freak anecdote. It’s math.
- Wealth peaks around age 70, roughly what you’d expect given the permanent income hypothesis. What’s surprising is how slowly wealth declines from this peak! Americans over 80 are still loaded, generally having higher net worth than they had 30 years earlier. And despite this wealth, Social Security checks keep rolling in.
- Given their current net wealth, a solid majority of Americans can comfortably retire without Social Security. The federal government could cut them off completely and they’d still do fine. The best rationale for the status quo is paternalism, but most Americans are well-prepared for their futures even ignoring Social Security.
