Households age 55 or older earn about half of all household income in the U.S., but hold over two-thirds of the residential equity and other household wealth, according to the most recent (2016) Survey of Consumer Finances (SCF). The SCF is conducted every three years by the Federal Reserve and serves as one of the few federal sources of information on household wealth. The Fed released data from the 2016 SCF to the public toward the end of 2017.
The recently released SCF data show that, in 2016, households age 55+ earned $6.4 trillion in income, accounting for 49 percent of the $12.9 trillion in income earned by all U.S. households.
Older households have naturally had more time to accumulate wealth, so it should not be surprising that they hold an even larger share of the country’s net worth. In 2016, the SCF shows that households age 55+ accounted for $62.1, or 71 percent, of the total $86.9 trillion in net worth held by all U.S. households.
For households in general, home equity constitutes an important source of wealth, and the SCF can also be used to break this equity down by age. In 2016, the SCF shows that 55+ households held $10.6 trillion in residential equity (primary residence only), accounting for 67 percent of the $15.8 trillion total equity in primary residences for all U.S. households. This is a key driver of demand for new 55-plus housing. As previous NAHB research has shown, buyers of new homes in age-restricted communities often don’t take out a mortgage, and, when they do, overwhelmingly use equity in a home as the source of a down payment.
Equity in residential property tends to be particularly important for lower-income, older households. In 2016, median net worth for households age 75+ with an income below $25,000 was $67,000. For these same households, the median share of net worth held as equity in a primary residence was 62 percent.
In short, lower-income, older households may not have much, but what they do have is concentrated in the equity they have in their homes. This is something to keep in mind when considering changes to the tax code or other policies with a potential impact on home values.
For reference, the table below shows the counts of households in each income and age bracket used above.