Asset Allocation Among Americans: Where People Keep Their Wealth (2024)

Consumers have tons of options for financial products to safeguard and nurture their hard-earned money. Some are simpler and more concrete, like a checking account, while others are nuanced and more complex, like futures trading. Which types of financial products are Americans most likely to use? It depends! People gravitate to different products depending on their age, needs, lifestyle, financial literacy, and more.

In this blog post, we’ll review the data from the Federal Reserve’s 2022 Survey of Consumer Finances to better understand which financial products Americans choose to keep their assets and evaluate changes in preferences over time.

Let’s dig in!

If you’ve ever asked yourself, “where do millionaires keep their money?” look no further than the 90th percentile column. It’s clear that those with more net worth are more likely to hold money in investment vehicles than those with less wealth. Some of this is correlation rather than causation. If someone was born into generational wealth (or built wealth by pursuing a high-paying job, for instance) then they already had the funds to put in investments –they did not necessarily generate their wealth via investing. However, investing is still a way for people with more modest means to grow their net worth over time. In addition, just 4.6% of the top wealthiest 10% of Americans do not have wealth in their primary residence. Some may have traded in their equity for a maintenance-free renting lifestyle!

But since most of us are not millionaires (the median American family net worth was $192,700 in 2022), let’s take a look at what’s more typical. The majority have wealth in homeownership, even some in the lower 50% of net worth. In fact, homeownership is a primary driver of net worth in the United States. This can explain how more than 77% of people in the 25th – 49th percentile have unrealized capital gains, if their homes have gained value since they purchased. However, unrealized capital gains also applies to other assets like stocks, collectible items, or precious materials like gold or jewelry that have appreciated in value.

Comparing yourself to your peers based on income can be more helpful than net worth in some ways because your income can shift more easily and quickly than net worth, and the report shared more percentiles for a more relevant peer group.

After seeing the data, consider: Are you in line with the types of financial products your peers are using? Are your financial habits more alike with another income group?

As you do so, keep in mind that this is a national look, but the cost of living across the United States varies. Consider a dual income household in the 80th percentile in an expensive market like San Francisco. They would likely have less disposable income to put toward investment vehicles compared to a single person household in the same percentile living in Jackson, Mississippi. Just because others with similar income use something doesn’t mean it’s a perfect fit for your situation. This is merely meant to help you see what options are out there and what could be a fit for your financial situation. After all, who doesn’t love options?

Next, it’s helpful to consider how you stand with other people in your age group who have had the same amount of time to earn, save, invest, buy property, and make other financial moves. We’ll dig in by the type of financial product so the charts are more digestible to read!

A note on the data: the lowest age bracket is “less than 35” but that would encompass adults ranging from 18-34, which is not only a larger gap in number of years, but also arguably life stage. An 18-year-old is just beginning adulthood while a 34-year-old is almost twice as old and thus much more settled in, and it’s not really accurate to lump these people into one category. It would be interesting to break these out into more defined age ranges, but we’re working with that the report provided.

We can see clearly that ownership of primary residence increases with age.Homeownership typically requires both a substantial upfront cost and conventional advice says to buy when someone is ready to put down roots in an area for five or more years, which becomes more likely as we age. With real estate, the market forces also make a substantial impact on someone’s ability to buy.

Real estate shortages have made it harder for first-time homeowners to enter the market: the median first time buyer is 35 years old as of 2023 – and this is up from 31 in 2013. Notably, since the age ranges in this survey cut

off at 35, that could be contributing to the substantial difference in ownership rates in the youngest and second youngest age ranges. (We’ll all have to stay tuned for the next edition of this report to see the shifts!)

When it comes to other residential real estate, such as vacation homes or investment properties, it is much less common. It also mostly correlates with age with a slight downturn for those 75 and older. This group may have offloaded their investments or sold or passed down vacation homes, perhaps for a combination of personal preference or to tap into the equity to support their retirement.

As the chart shows, over time, savings bonds have gotten less popular. Analysts note that their yields are not as strong as other financial products that could generate a better return.

One of the key reasons why there are still bond holdouts: the tax benefits. Income from savings bonds (and other U.S. Treasury products) is not taxed at the state or local level. This can be helpful for people living on a fixed income especially in high-tax states. With EE and I bonds, bondholders get the interest all at once and can defer taxes, both occurring when the bond reaches maturity; some find this a convenient way to manage their wealth.

You likely know that decades ago, people typically funded their retirement from a pension, but pensions started becoming less common in the 1980s due to the 1978 Revenue Act, which ushered in employee-funded retirement accounts. Still, senior citizens may have some kind of pension setup because they started working before pensions were phased out, and thus have less of a need for their own retirement account.

Notably, people under 35 years old are the second least likely to have a retirement account. Young people are likely less inclined to have a retirement account for a few key reasons: lack of access, lack of disposable income to save, and a sense of feeling like they can start saving later.

Fortunately, access to retirement accounts has increased over time. The Bureau of Labor Statistics reported that as of 2023, 73% of civilian workers had access to retirement benefits as part of their employment, up from 69% a year prior. However, only 56% of workers participated. Unsurprisingly, the accessibility and participation rate of employer benefit retirement accounts also correlates with increased wages.