Here's the Average Net Worth of 55-Year-Old Americans (How Do You Compare?)

Turning 55 isn't just another birthday; it's a pivotal financial checkpoint. You're so close to retirement that your investments, debt levels, and savings take on a much greater significance, yet there's still enough time to make substantial changes to your finances.

For many Americans, this means evaluating their net worth and comparing it to that of their peers. Your net worth, which is the sum of all your assets minus all your liabilities, is a great starting point for understanding your financial health.

Keep in mind that there is a significant difference between the average and median net worths for 55-year-olds, as well as the considerable variance that depends on market conditions.

According to the Federal Reserve, the average net worth of Americans aged 55-64 is $1.56 million; however, this number can be misleading for several reasons.

First, it's the entire age bracket, so once you hit 55, you're at the low end compared to individuals who are 64. Second, the average is skewed by the presence of high-earning multi-millionaires, making it an unfair comparison.

Examining the same Federal Reserve dataset, the median net worth of individuals in the 55–64 age bracket is $364,270. If you're near that number, it's a good sign.

If you're a bit off, there's no reason to be concerned, as you can adjust your spending and investment habits to increase that number during your final working years.

Bottom 25%: Typically, individuals in this group have little to no net worth or even negative net worth due to debt, with the upper end at around $84,977.

Middle 60%: Median net worth around $321,074, though this can vary based on geographic location and lifestyle.

Top 20%: Net worth often exceeds $1 million, with many high earners possessing significant retirement savings, home equity, and investment assets.

Most Americans have accumulated a variety of assets by the time they reach 55, such as:

Home equity: Owning your home represents the most significant portion of your net worth. Over one quarter of Americans' net worth comes from their primary residence.

• 401(k) and IRA balances: If you've been contributing the maximum amount to these accounts, you should have a substantial stockpile that continues to grow year after year.
• Investment accounts (stocks, mutual funds, ETFs, bonds): A diversified asset pool that grows with the market is critical to building long-term wealth.
• Cash savings: It's a good idea to have at least one year's worth of living expenses in your savings accounts. The last thing you want to do in your mid-50s is be forced to liquidate your investments or retirement accounts to cover your expenses.
• Vehicles and personal property: Your other properties and your cars also factor into your net worth, though your car is a depreciating asset in most cases.

On the other hand, many Americans in their mid-50s have accumulated debt that can erode their net worth. Common debts include:

• Mortgage: Any debt you have on your primary or secondary residences is a negative toward your net worth. It's best to keep track of your payments even as you get closer to paying it off.
• Credit card balances: Americans are awash in high-interest credit card debt, and it doesn't take much of it to tank your cash flow and net worth. Be very careful when paying for things with the card, and ensure you pay off the balance each month.
• Auto loans: Americans owe a staggering $1.642 trillion in auto loan debt, so choose your vehicle wisely and figure out a solid payment plan if you have to.
• Student loans, either personal or taken out for children: Many parents will take out loans to help pay for their child's education. Consider whether you need to do that and what type of payment plan you'll need to pay it down.
• Medical debt: As you get older, medical bills can pile up quickly. Make sure you're on a good insurance plan that covers a good portion of your procedures, and try to avoid visiting out-of-network doctors.

Despite progress, a significant difference in average net worth remains based on education level and ethnicity. Households with a college degree have a median net worth nearly 4 times higher than those with only a high school diploma.

The Federal Reserve reports median net worth for white households is around $284,100, compared to $62,100 for Hispanic households and $44,100 for Black households.

If your net worth isn't where you want it to be, there's still time to make meaningful improvements during the final decade of full-time work. Consider these actionable steps:

• Maximize retirement contributions: You can utilize catch-up contributions if you are behind in your retirement savings balance. The IRS allows up to $7,500 in yearly catch-up contributions to an IRA and $23,500 to specific retirement plans, such as a 401(k). Over a decade, that can add up significantly.
• Reduce high-interest debt: Figure out a debt payoff strategy that works for you, particularly on credit card balances. Paying high interest rates erodes your net worth and makes it more challenging to achieve a comfortable retirement.
• Downsize or relocate: As you age, your living situation might change. Living in that big house as an empty-nester might no longer make sense for you. Downsizing is a great option to reduce housing costs and unlock your home's equity.
• Explore passive income options: Consider other revenue-generating options, such as rental properties or dividend-paying investments. That way, you can have a monthly base of steady cash flow to budget around.
• Delay Social Security: It can be a real game changer to delay taking your full benefits until after the age of 69. According to the SSA, doing this can increase your monthly take-home pay by 24%.
• Consult a financial advisor: It is worth meeting with a professional who specializes in retirement to fine-tune your investment strategy as you enter your final working years.

Building wealth at 55 is about protecting what you've earned, reducing liabilities, and maximizing the years leading up to retirement. Take a look at what the median range is and figure out a plan to get there by the time you are ready to start taking Social Security.

There are plenty of smart money moves you can make as a senior that can have a significant impact on your financial health.