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Coastal Elite or Southern Struggle? How Median Net Worth Disparity Ranges Across U.S. States

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The recently released 2021 state wealth tables from the U.S. Census Bureau’s Survey of Income and Program Participation provide an illuminating snapshot of the median net worth disparity, assets, and debt held by households across the 50 states and the District of Columbia. These comprehensive data tables reveal striking disparities in wealth between states, as well as the composition of assets that make up household net worth.

Overall, the median American household had a net worth of $166,900. However, this figure masked significant variation between states.

Coastal states with high costs of living like California, Massachusetts and Washington had the highest median net worth, ranging from $252,300 to $367,500. States like Hawaii ($755,100) and Connecticut ($234,200) stood out for their extremely affluent populations.

At the other end of the spectrum, median net worth in states like Mississippi ($72,550), Alabama ($85,240), and Kentucky ($107,300) was far below the national median. These regional disparities point to broader economic and demographic differences between states that influence wealth accumulation.

Net Worth Disparity Among States
Net Worth Disparity Among States

Net Worth Disparity Among States

The notion of the American Dream conjures ideas of equal opportunity and economic mobility for all. Yet modern realities of wealth inequality reveal this dream remains out of reach for many across the United States today.

New data from the U.S. Census Bureau lays bare the stark divide in household net worth based on state of residence. From the tech millionaires of California to the poverty of Mississippi, a state’s median wealth reveals advantages and disadvantages in accessing the American Dream.

A state’s economic prosperity, housing costs, tax policies, and demographic makeup all converge to influence median net worth. This data unveils economic winners and losers based on state, pointing to deeply entrenched regional disadvantages in asset building and wealth creation. While aggregated medians conceal the extremes of wealth concentration, they nonetheless showcase troubling gaps for typical families.

Measuring how net worth diverges by state provides a financial portrait of regional inequality in America. Which states offer the most promise for amassing assets and long-term security? Where do households struggle to acquire even modest wealth? This state-by-state analysis will spotlight the best and worst environments for boosting net worth across the country.

Uncovering this disparity offers insights into why the American Dream seems distant for so many, stifled by regional factors largely outside their control.

Home Equity Driving Aveage Net Worth in Many States

The data reveals that real estate, particularly equity in one’s home, is the main driver of household net worth for a majority of states. Across the U.S., median home equity was $174,000 in 2021.

States with the most expensive housing markets like Hawaii ($500,000), Washington ($350,000) and California ($434,000) had much higher median home equity. Meanwhile, median home equity in states like Mississippi ($80,000), Alabama ($88,000), and Indiana ($100,000) was approximately half the national median.

Since housing is the largest asset most American families own, home equity accounts for the lion’s share of net worth for homeowners in states where home values are high. Conversely, low home equity hinders wealth accumulation in more affordable real estate markets. Beyond housing, households in lower net worth states tend to have fewer assets in financial accounts and retirement plans.

Increase Your Net Worth: Retirement Wealth Varies Widely by State

The aggregate value of retirement accounts represents the second largest component of household net worth after home equity. At the national level, median retirement savings stood at $79,900 in 2021.

However, retirement account balances ranged tremendously across states. States with older populations like Hawaii ($156,000), Connecticut ($141,000), and Massachusetts ($144,000) had the highest medians, while younger states like Mississippi ($30,300) and Idaho ($38,000) were at the bottom.

In fact, retirement savings accounted for over 20% of net worth in states like Iowa, Maine, Minnesota, and Connecticut. But in lower income states like Mississippi, Alabama, and Kentucky, retirement assets made up less than 15% of median net worth. This suggests many households are not adequately saving for retirement, which could lead to hardship in their later years.

State Differences in 401(k) and IRA Balances

Looking deeper into retirement savings, the prevalence and magnitude of 401(k)/thrift savings and IRA balances varied substantially by state. 401(k) plans made up the majority of retirement savings in most states, with the median balance ranging from $15,000 in Mississippi to $120,000 in Massachusetts. In contrast, IRA balances were lower and had greater state-to-state variation.

States with higher median incomes and rates of 401(k) participation like California, Virginia, and Massachusetts had higher average 401(k) balances.

Meanwhile, IRA wealth was significant in some Midwest states like Iowa ($63,000) and Wisconsin ($89,000) where IRAs play an outsized role in retirement planning. Overall, these state-level differences in retirement savings underscore the need to expand access and incentives around employer-sponsored plans and IRAs.

Financial Assets a Small Share of Net Worth

Liquid financial assets like checking and savings accounts represent a relatively small share of household net worth, according to the Census data.

The median value of assets held at financial institutions was just $10,000 nationally in 2021. States like California ($14,930), Massachusetts ($16,600), and Hawaii ($20,100) had the highest medians, while lower income states clustered around $5,000 or less.

Savings and checking account balances accounted for less than 10% of net worth across most states. This lack of accessible savings leaves many households financially vulnerable if they face unexpected expenses or job loss. Building emergency funds and increasing savings rates should be a priority to strengthen financial security.

Vehicle Ownership Similar Across States

In contrast to wide state variation in housing and retirement wealth, median vehicle equity was fairly consistent across most states. The middle 50% of states had median vehicle values between $13,000-$17,000. Montana ($22,610) and Hawaii ($17,110) were outliers on the high end, while Indiana ($11,900) and Mississippi ($12,340) anchored the low end.

This relative parity in car ownership likely reflects the essential nature of vehicles for transportation in most of the country. Automobiles tend to make up around 10% of net worth for the typical household.

Differences in median vehicle equity may be driven by whether households own newer or older cars. Overall, vehicles play a smaller role in median net worth comparisons than home equity, retirement savings, and other assets.

Median Net Worth: Wealth Inequality Within States

While the Census median net worth figures provide a snapshot of the typical household in each state, they do not show wealth distribution including inequality. Prior research indicates wealth inequality has increased significantly over the past few decades, even within states.

House-level data would be needed to analyze the concentration of wealth among top percentiles within states. However, the state medians likely mask the true extent of wealth disparities between upper, middle, and lower income households locally. Further analysis of wealth inequality is needed for a complete picture of asset accumulation across U.S. states.

Key Takeaways

The latest state-level wealth statistics from the Census Bureau reveal striking differences in median net worth and asset composition between states. Coastal and Northeast states with expensive real estate have higher net worth, while poorer Southern and Midwest states lag behind. Home equity makes up the bulk of household wealth in most states, underscoring its importance for family balance sheets.

Meanwhile, retirement savings vary widely, suggesting disparities in preparation for retirement across geographies. More progress is needed to increase financial asset holdings and emergency savings for households nationwide. While illuminating, these state-level medians likely understate wealth inequality within states. Further research should examine wealth concentration among upper income brackets locally.

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Note: The content provided in this article is for informational purposes only and should not be considered as financial or legal advice. Consult with a professional advisor or accountant for personalized guidance.

Michael Ryan
Michael Ryan
Who Am I? I'm Michael Ryan, a retired financial planner turned personal financial coach. And author and found of blog. My advice is backed by decades of hands-on experience in finance and recognition in esteemed publications like US News & World Report, Business Insider, and Yahoo Finance. 'here'. Find answers to your financial questions, from budgeting to investing and retirement planning, on my blog My mission is to democratize financial literacy for all.