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Only 26% of US households have 'essential wealth,' Aspen finds
The Aspen Institute links essential wealth to both enough liquid savings to handle shocks and a net worth invested in appreciating assets.
A new report from the Aspen Institute's Financial Security Program says only 26% of U.S. households have reached what it calls "essential wealth," a level of financial security designed to help people weather emergencies, invest for the future, and retire comfortably, according to Yahoo Finance.
The report defines essential wealth as a combination of sufficient liquid savings and enough net worth in appreciating assets such as retirement accounts, home equity, or businesses. Researchers argue that income alone is not enough because wages typically cover current bills, while wealth is what provides future opportunities and financial flexibility.
Aspen's researchers say most households do not reach the benchmark by any age, including many approaching or in retirement. The report argues families should not wait to build wealth until other financial needs are fully met, saying wealth is necessary for everyone.
To qualify, households must meet both a savings threshold and a net worth threshold that vary by age. For example, the report says a typical household in its 20s would need about $40,000 in net worth and roughly six weeks of take-home pay in liquid savings.