What You Need to Know
- Much of the U.S. population has been unable to meaningfully benefit from the boom in asset prices since 2000.
- The share of U.S. household wealth held by the top 10% is approaching two-thirds,
- Real pension entitlements per household increased slightly faster for Black and Hispanic households from 1989-2021 than for white ones.
Over the past three decades, American families in the bottom half of the wealth distribution have made little progress in accumulating assets and saving for retirement, according to the Economic Innovation Group’s analysis of the latest data from the Federal Reserve’s Distributional Financial Accounts, which merges data from the Survey of Consumer Finances and the Financial Accounts of the United States.
As a consequence, large segments of the U.S. population have been unable to meaningfully participate in and benefit from the boom in asset prices underway since 2000.
The EIG’s analysis showed that the bottom half’s share of national asset holdings fell from 7.2% in 1989 to 5.3% in 2021. Meanwhile, the share of household wealth held by the top 1% increased from 20.8% to 29%.
The share of all household wealth in the U.S. held by the top 10% is now approaching two-thirds, according to the analysis.
Lagging Growth in Retirement Wealth
Since 1989, the first year in the data series, pension entitlements have increased substantially for the top half of American households, and grown only modestly from a very small base for the bottom half.
Pension entitlements include assets in defined contribution retirement plans, the promises of defined benefit retirement plans and annuities.
The analysis showed that pension entitlements held by the top 1% grew by 720% in nominal terms between 1989 and 2021, compared with 470% growth for the bottom half.
The EIG noted, however, that these figures mask big disparities in wealth accumulation.
In dollar amounts, the top 10% added some $14 trillion to their total entitlements, while the bottom 50% added $716 billion — $11.4 trillion and $504 billion in real terms — 19.5 times as much.
In fact, the bottom half’s share of total national pension entitlements fell over the time period, from 4.3% in 1989 to 3% in 2021.