Recent Changes in U.S. Family Finances: 

Evidence from the 2001 and 2004 Survey 

of Consumer Finances 

Brian K. Bucks, Arthur B. Kennickell, and Kevin B. 

Moore, of the Board’s Division of Research and 

Statistics, prepared this article with assistance from 

Gerhard Fries and A. Michael Neal. 

The Federal Reserve Board’s Survey of Consumer 

Finances for 2004 provides insights into changes in 

family income and net worth since the 2001 survey. 

The survey shows that, over the 2001–04 period, the 

median value of real (inflation-adjusted) family 

income before taxes continued to trend up, rising 

1.6 percent, whereas the mean value fell 2.3 percent. 

Patterns of change were mixed across demographic 

groups. These results stand in contrast to the strong 

and broad gains seen for the period between the 1998 

and 2001 surveys and to the smaller but similarly 

broad gains between the 1995 and 1998 surveys 

(figure 1). 

Much like median income, median real family net 

worth in the 2001−04 period increased 1.5 percent, 

but mean net worth rose 6.3 percent. The increase in 

wealth appears to have been clearest in the middle 

income group. Over many other demographic groups, 

the data show a complex pattern of mixed increases 

1. Change in median and mean incomes, 1995–2004 SCF 

0 

5 

10 

15 

20 

Percent 

1995–98 1998–2001 2001–04 

SOURCE: Federal Reserve Board, Survey of Consumer Finances. 

Median 

Mean 

2. Change in median and mean net worth, 1995–2004 SCF 

5 

10 

15 

20 

25 

30 

Percent 

1995–98 1998–2001 2001–04 

SOURCE: Federal Reserve Board, Survey of Consumer Finances. 

Median 

Mean 

and decreases in wealth; in some instances, median 

and mean values moved in opposite directions, a 

pattern that signals distributional changes within 

groups. In contrast, the growth in wealth between the 

1998 and 2001 surveys and between the 1995 and 

1998 surveys was stronger both in the mean and in 

the median, and the growth was shared by most 

demographic groups (figure 2). 

Three key shifts in the 2001–04 period underlie the 

changes in net worth. First, the strong appreciation of 

house values and a rise in the rate of homeownership 

produced a substantial gain in the value of holdings 

of residential real estate. Second, despite the general 

recovery of prices in equity markets since 2001, the 

direct and indirect ownership of stocks declined, as 

did the typical amount held. Third, the amount of 

debt relative to total assets increased markedly, and 

the largest part of that increase was attributable to 

debt secured by real estate. 

+ As debt rose over the period, families devoted _	 more of their incomes to servicing their debts, despite 

a general decline in interest rates. Also, the fraction 

of families with large required debt service payments 

relative to their incomes rose a small amount, and the 
A2 Federal Reserve Bulletin 2006 

fraction of families that had payments that were late 

sixty days or more in the year preceding the survey 

rose more substantially. These increases affected 

mainly the bottom 80 percent of the income 

distribution. 

This article reviews these and other changes in the 

financial condition of U.S. families between 2001 and 

2004.1 The discussion draws on data from the Federal 

Reserve Board’s Survey of Consumer Finances 

(SCF) for those years; it also uses evidence from 

earlier years of the survey to place the 2001–04 

changes in a broader context. 

ECONOMIC BACKGROUND 

The U.S. economy was in a mild recession through 

much of 2001, and real gross domestic product was 

flat for the year. However, this pause in the growth of 

real GDP was followed by some pickup in 2002 and 

sharper gains of 4.1 percent in 2003 and 3.8 percent 

in 2004. The unemployment rate, which had peaked 

at 6.5 percent in mid-2003, fell to 5.1 percent in 

2004. The rate of inflation, as measured by the consumer price index for all urban consumers (CPI), was 

moderate by historical standards over the 2001–04 

period; for 2004, it was 2.7 percent, nearly the same 

rate as for 2001. 

Developments in financial markets over the threeyear period were varied. The major stock market 

indexes declined before erasing most of the losses 

with an increase in 2004. Most interest rates had 

initially declined but began to rise by the end of 

2004. For example, the interest rate on a thirty-year 

fixed-rate mortgage averaged 6.82 percent in September 2001, when about half the interviews for the 2001 

SCF had been completed, and was 5.75 percent three 

years later. Lower interest rates also brought lower 

yields on liquid deposits, time deposits, and bonds; 

for example, the rate on a three-month certificate of 

deposit had dropped from an average of 3.69 percent 

for 2001 to slightly more than 1 percent in early 

2004, although the rate climbed to 2.45 percent by 

the end of the year. 

1. See box ‘‘The Data Used in This Article’’ for a general description of the data. The appendix to this article provides a summary of 

key technical aspects of the survey. For a detailed discussion of the 

1998 and 2001 surveys as well as references to earlier surveys, see 

Ana M. Aizcorbe, Arthur B. Kennickell, and Kevin B. Moore (2003), 

‘‘Recent Changes in U.S. Family Finances: Evidence from the 1998 

and 2001 Survey of Consumer Finances,’’ Federal Reserve Bulletin, 

vol. 89 (January), pp. 1–32. 

The national house price index produced by the 

Office of Federal Housing Enterprise Oversight 

increased nearly 27 percent from 2001 to 2004. Price 

increases varied sharply across the country; by area, 

the largest gains were in the New England, Middle 

Atlantic, and Pacific sections of the country—all 

more than 35 percent; average gains were considerably smaller in parts of the South. Homeownership 

rates continued a gradual climb. 

Other institutional factors also affected family 

finances. Tax cuts enacted by the Jobs and Growth 

Tax Relief Reconciliation Act of 2003 increased the 

child tax credit, provided some concessions for married couples, and expanded the proportion of taxpayers covered by the lowest tax-rate bracket. A major 

element of the 2003 tax act was the decrease in tax 

rates on capital gains coupled with the change to 

taxing dividends at the same rate as capital gains. The 

proportion of families that use the Internet as a source 

for financial services, tools, or information continued 

to grow; according to the SCF, it rose from 32.5 percent in 2001 to 46.5 percent in 2004. 

Several demographic shifts had important consequences for the structure of the population. The aging 

of the baby-boom population from 2001 to 2004 

drove a 2 percentage point increase in the share of the 

population aged 55 to 64. Overall population growth 

was about 3 percent, and, according to figures from 

the Bureau of the Census, 58 percent of the growth 

was due to net immigration. Also according to Census estimates, the number of households increased 

3.6 percent—a rate slower than the 5.5 percent pace 

in the 1998–2001 period—and the average number of 

people per household remained close to two and a 

half. 

INCOME 

The change in real before-tax family income between 

2001 and 2004 stands in strong contrast to the change 

for the preceding three-year period.2 Over the more 

2. To measure income, the interviewers request information on the 

family’s cash income, before taxes, for the full calendar year preceding the survey. The components of income in the SCF are wages; 

self-employment and business income; taxable and tax-exempt interest; dividends; realized capital gains; food stamps and other, related 

support programs provided by government; pensions and withdrawals 

from retirement accounts; Social Security; alimony and other support 

payments; and miscellaneous sources of income for all members of 

the primary economic unit in the household. 
The Data Used in This Article 

Data from the Survey of Consumer Finances (SCF) are the 

basis of the analysis presented in this article. The SCF is a 

triennial interview survey of U.S. families sponsored by the 

Board of Governors of the Federal Reserve System with the 

cooperation of the U.S. Department of the Treasury. Since 

1992, data for the SCF have been collected by NORC, a 

research organization at the University of Chicago, roughly 

between May and December of each survey year. 

The majority of statistics included in this article are 

related to characteristics of ‘‘families.’’ As used here, this 

term is more comparable to the U.S. Bureau of the Census 

definition of ‘‘households’’ than to its use of ‘‘families,’’ 

which excludes the possibility of one-person families. The 

appendix provides full definitions of ‘‘family’’ for the SCF 

and the associated family ‘‘head.’’ The survey collects information on families’ total income before taxes for the calendar year preceding the survey. But the bulk of the data cover 

the status of families as of the time of the interview, 

including detailed information on their balance sheets and 

use of financial services as well as on their pensions, labor 

force participation, and demographic characteristics. Except 

in a small number of instances (see the appendix for details), 

the survey questionnaire has changed in only minor ways 

since 1989, and every effort has been made to ensure the 

maximum degree of comparability of the data over time. 

The need to measure financial characteristics imposes 

special requirements on the sample design for the survey. 

The SCF is expected to provide reliable information both on 

attributes that are broadly distributed in the population 

(such as homeownership) and on those that are highly 

concentrated in a relatively small part of the population 

(such as closely held businesses). To address this requirement, the SCF employs a sample design, essentially 

unchanged since 1989, consisting of two parts: a standard, 

geographically based random sample and a special oversample of relatively wealthy families. Weights are used to 

combine information from the two samples to make estimates for the full population. In the 2004 survey, 4,522 

families were interviewed, and in the 2001 survey, 4,449 

were interviewed. 

This article draws principally upon the final data from the 

2004 and 2001 surveys. To provide a larger context, some 

information is also included from the final versions of 

earlier surveys.1 Differences between estimates from earlier 

surveys as reported here and as reported in earlier Federal 

1. Additional tabular information from the survey is available at 

www.federalreserve.gov/pubs/oss/oss2/scf2004home.html. These tables 

include data comparable to the figures shown in this article for all of the 

surveys from 1989 to 2004. For some assets and debts by demographic 

group, these tables report means as well as medians for each group. The 

estimates of the means, however, are more likely to be affected by sampling 

error than are the estimates of the medians. The tables also include some 

alternative versions of the tables in this article. 

Reserve Bulletin articles are attributable to additional statistical processing, correction of minor data errors, revisions 

to the survey weights, conceptual changes in the definitions 

of variables used in the articles, and adjustments for inflation. In this article, all dollar amounts from the SCF are 

adjusted to 2004 dollars using the ‘‘current methods’’ version of the consumer price index (CPI) for all urban 

consumers.2 

The principal detailed tables describing asset and debt 

holdings focus on the percent of various groups that have 

such items and the median holding for those that have 

them.3 This conditional median is chosen to give a sense of 

the ‘‘typical’’ holding. Generally, when one deals with data 

that exhibit very large values for a relatively small part of 

the population—as is the case for many of the items 

considered in this article—estimates of the median are 

often statistically less sensitive to such outliers than are 

estimates of the mean. 

One liability of using the median as a descriptive device 

is that medians are not ‘‘additive’’; that is, the sum of the 

medians of two items for a common population is not 

generally equal to the median of the sum (for example, 

median assets less median liabilities does not equal median 

net worth). In contrast, means for a common population are 

additive. Where a comparable median and mean are given, 

the growth of the mean relative to the median may usually 

be taken as indicative of change at the top of the distribution; for example, when the mean grows more rapidly than 

the median, it is typically taken to indicate that the values 

comprised by the top of the distribution rose more rapidly 

than those in the lower part of the distribution. 

To provide a measure of the significance of the developments discussed in this article, standard errors due to 

sampling and imputation for missing data are given for 

selected estimates. Space limits prevent the inclusion of the 

standard errors for all estimates. Although we do not 

directly address the statistical significance of the results, 

the article highlights findings that are significant or are 

interesting in a broader context. 

2. In an ongoing effort to improve accuracy, the Bureau of Labor Statistics has introduced several revisions to its CPI methodology. The currentmethods index attempts to extend these changes to earlier years to obtain a 

series as consistent as possible with current practices in the official CPI. For 

technical information about the construction of this index, see Kenneth J. 

Stewart and Stephen B. Reed (1999), ‘‘Consumer Price Index Research 

Series Using Current Methods, 1978–1998,’’ Monthly Labor Review, vol. 

122 (June), pp. 29–38. To adjust assets and liabilities to 2004 dollars, the 

earlier survey data were multiplied by the following amounts: for 1995, 

1.2311; for 1998, 1.1593; and for 2001, 1.0651. To adjust family income for 

the previous calendar year to 2004 dollars, the following factors were 

applied: for 1995, 1.2610; for 1998, 1.1757; for 2001, 1.0948; and for 2004, 

1.0269. 

3. The median of a distribution is defined as the value at which equal 

parts of the population considered have values larger or smaller. 

Recent Changes in U.S. Family Finances: Evidence from the 2001 and 2004 Survey of Consumer Finances A3 
A4 Federal Reserve Bulletin 2006 

1.	 Before-tax family income, percentage of families that saved, and distribution of families, by selected characteristics of 

families, 1995–2004 surveys 

Thousands of 2004 dollars except as noted 

Family 

characteristic 

1995 1998 

Income Percentage 

of 

families 

that saved 

Percentage 

of 

families 

Income Percentage 

of 

families 

that saved 

Percentage 

of 

Median Mean Median Mean families

All families ..................... 

Percentile of income 

Less than 20 .................... 

20–39.9 ......................... 

40–59.9 ......................... 

60–79.9 ......................... 

80–89.9 ......................... 

90–100 ......................... 

Age of head (years) 

Less than 35 .................... 

35–44 .......................... 

45–54 .......................... 

55–64 .......................... 

65–74 .......................... 

75 or more ...................... 

Education of head 

No high school diploma ......... 

High school diploma ............ 

Some college ................... 

College degree .................. 

Race or ethnicity of respondent 

White non-Hispanic ............. 

Nonwhite or Hispanic ........... 

Current work status of head 

Working for someone else ....... 

Self-employed .................. 

Retired ......................... 

Other not working ............... 

Region 

Northeast ....................... 

Midwest ........................ 

South ........................... 

West ............................ 

Housing status 

Owner .......................... 

Renter or other .................. 

Percentile of net worth 

Less than 25 .................... 

25–49.9 ......................... 

50–74.9 ......................... 

75–89.9 ......................... 

90–100 ......................... 

37.8 54.9 55.2 100 38.8 61.7 55.9 100 

(.9) (.9) (.9) (1.3) 

8.5 8.2 31.6 20.0 9.6 9.2 32.1 20.0 

21.7 21.6 43.4 20.0 23.5 23.4 45.5 20.0 

37.8 37.1 57.2 20.0 38.8 39.4 56.1 20.0 

56.1 57.0 66.8 20.0 61.8 63.0 67.9 20.0 

84.5 85.7 69.9 10.0 91.6 92.2 73.7 10.0 

138.6 215.8 84.2 10.0 151.5 254.5 82.0 10.0 

31.5 38.4 56.4 24.8 31.8 41.9 53.0 23.3 

47.2 60.0 54.3 23.0 48.8 69.6 57.3 23.3 

49.6 81.4 58.0 17.9 58.8 80.9 57.8 19.2 

41.6 66.4 58.0 12.5 44.7 83.2 61.1 12.8 

23.7 46.1 50.0 12.0 28.2 54.2 56.3 11.2 

19.7 32.7 51.7 9.8 19.4 33.9 48.6 10.2 

17.9 25.8 42.8 18.5 18.0 25.2 39.5 16.5 

32.1 43.0 50.6 31.7 33.9 42.9 53.7 31.9 

37.8 49.9 54.1 19.0 41.1 58.9 56.7 18.5 

56.3 87.9 68.2 30.7 63.7 99.3 65.6 33.2 

40.7 60.4 59.1 77.6 44.2 68.7 60.0 76.8 

24.4 36.0 41.7 22.4 27.0 38.5 42.3 23.2 

45.4 59.6 60.4 58.3 47.0 62.1 59.8 59.2 

46.7 98.5 63.4 10.3 61.1 126.8 61.1 11.3 

20.7 34.5 46.0 25.1 22.3 38.2 48.7 24.4 

13.9 22.2 30.8 6.4 13.5 25.2 33.3 5.1 

37.8 60.6 52.6 19.8 41.1 70.7 53.5 19.3 

38.6 56.0 59.2 23.9 38.2 56.8 58.3 23.6 

35.0 50.9 54.6 35.1 36.6 57.3 55.0 35.7 

39.1 55.2 54.0 21.2 42.0 66.2 56.9 21.3 

46.7 68.0 61.3 64.7 50.7 77.3 62.2 66.2 

22.7 30.9 44.0 35.3 23.5 31.0 43.4 33.8 

17.8 22.9 35.7 25.0 18.5 23.6 36.3 25.0 

35.3 38.6 51.4 25.0 35.3 39.3 50.3 25.0 

43.6 50.1 59.4 25.0 47.0 54.3 61.8 25.0 

52.6 65.0 68.8 15.0 65.8 78.4 71.9 15.0 

99.1 172.8 82.4 10.0 102.4 206.3 80.0 10.0 

Note: For questions on income, respondents were asked to base their 

answers on the calendar year preceding the interview. For questions on saving, respondents were asked to base their answers on the twelve months preceding the interview. For discussion of racial and ethnic designations, see the 

appendix. 

Percentage distributions may not sum to 100 because of rounding. Dollars 

have been converted to 2004 values with the current-methods consumer price 

recent period, median income rose 1.6 percent, while 

the mean fell 2.3 percent (table 1).3 Over the preced3. Over the 2001–04 period, estimates of inflation-adjusted household income for the previous year from the Current Population Survey 

(CPS) of the Bureau of the Census show a decline in both the median 

(1.5 percent) and the mean (2.6 percent). Typically, the SCF shows a 

higher level of mean income than does the CPS; for 2004, the SCF 

yields an estimate of $70,700, while the CPS yields an estimate of 

$62,200. This difference in mean levels is largely the result of the 

truncation of large values in the CPS data above a certain amount, 

which is done with the intent of minimizing the possibility that 

index for all urban consumers (see text box ‘‘The Data Used in This Article’’). 

See the appendix for details on standard errors (shown in parentheses below the 

first row of data for the means and medians here and in table 3) and for definitions of family and family head. 

ing three-year period, the median had increased 

9.5 percent, and the mean had increased 17.3 percent. 

respondents in that survey might be identifiable. As discussed in more 

detail in the appendix, the two surveys also differ in their definitions 

of the units of observation and in other aspects of their methodologies. 

The national income and product accounts (NIPA) provide aggregate 

information on the incomes of households. If NIPA estimates of 

personal income are adjusted for inflation and growth in the number of 

households over the 2001–04 period, they imply virtually no change 

in household income. 
Recent Changes in U.S. Family Finances: Evidence from the 2001 and 2004 Survey of Consumer Finances A5 

1.—Continued 

Thousands of 2004 dollars except as noted 

Family 

characteristic 

2001 2004 

Income Percentage 

of 

families 

that saved 

Percentage 

of 

families 

Income Percentage 

of 

families 

that saved 

Percentage 

of 

Median Mean Median Mean families

All families ..................... 

Percentile of income 

Less than 20 .................... 

20–39.9 ......................... 

40–59.9 ......................... 

60–79.9 ......................... 

80–89.9 ......................... 

90–100 ......................... 

Age of head (years) 

Less than 35 .................... 

35–44 .......................... 

45–54 .......................... 

55–64 .......................... 

65–74 .......................... 

75 or more ...................... 

Education of head 

No high school diploma ......... 

High school diploma ............ 

Some college ................... 

College degree .................. 

Race or ethnicity of respondent 

White non-Hispanic ............. 

Nonwhite or Hispanic ........... 

Current work status of head 

Working for someone else ....... 

Self-employed .................. 

Retired ......................... 

Other not working ............... 

Region 

Northeast ....................... 

Midwest ........................ 

South ........................... 

West ............................ 

Housing status 

Owner .......................... 

Renter or other .................. 

Percentile of net worth 

Less than 25 .................... 

25–49.9 ......................... 

50–74.9 ......................... 

75–89.9 ......................... 

90–100 ......................... 

42.5 72.4 59.2 100 43.2 70.7 56.1 100 

(.8) (2.0) (.8) (1.2) 

10.9 10.7 30.0 20.0 11.1 10.8 34.0 20.0 

26.0 25.7 53.4 20.0 25.7 26.1 43.5 20.0 

42.5 42.9 61.3 20.0 43.2 43.4 54.4 20.0 

69.0 69.4 72.0 20.0 68.1 69.1 69.3 20.0 

105.1 104.4 74.9 10.0 104.7 106.5 77.8 10.0 

180.6 322.4 84.3 10.0 184.8 302.1 80.6 10.0 

35.6 47.1 52.9 22.7 32.9 45.1 55.0 22.2 

54.7 82.1 62.3 22.3 49.8 73.8 58.0 20.6 

58.0 99.3 61.7 20.6 61.1 94.4 58.5 20.8 

48.2 92.6 62.0 13.2 54.4 100.3 58.5 15.2 

29.6 61.9 61.8 10.7 33.3 59.6 57.1 10.5 

23.8 39.1 55.5 10.4 23.7 40.9 45.7 10.7 

18.1 26.7 38.7 16.0 19.4 25.9 35.9 14.4 

36.1 47.7 56.7 31.7 35.6 44.8 54.0 30.6 

43.6 59.1 61.7 18.3 41.1 56.0 51.0 18.4 

72.3 124.2 70.0 34.0 73.0 117.5 68.3 36.6 

48.2 81.9 63.1 75.4 49.4 80.7 60.1 72.2 

27.4 43.3 47.4 24.6 29.8 44.9 45.6 27.8 

50.4 71.7 61.6 60.9 49.3 70.1 59.2 60.1 

67.4 147.3 70.4 11.7 66.7 141.5 68.7 11.8 

22.4 42.6 50.6 22.9 24.4 43.2 44.0 23.7 

17.6 38.8 42.3 4.5 20.5 37.4 44.9 4.4 

44.0 82.7 58.1 19.0 50.9 87.5 59.5 18.8 

46.7 68.9 63.0 23.0 45.2 67.4 59.9 22.9 

38.3 65.4 57.3 36.2 37.0 61.9 52.5 36.3 

43.4 78.9 59.5 21.8 46.2 74.5 55.2 22.0 

55.5 90.6 66.7 67.7 55.2 87.3 62.3 69.1 

26.3 34.3 43.6 32.3 24.6 33.7 42.3 30.9 

21.0 25.5 34.5 25.0 20.5 25.1 34.8 25.0 

37.2 42.3 54.3 25.0 37.0 42.2 53.6 25.0 

54.2 62.2 68.0 25.0 52.4 60.6 62.2 25.0 

74.6 83.9 77.7 15.0 77.0 87.8 72.4 15.0 

136.9 273.1 83.9 10.0 143.8 256.0 76.0 10.0 

The change over the 2001–04 period was strongly 

influenced by a 6.2 percent decline in the overall 

median amount of wages measured in the survey and 

a 3.6 percent decline in the mean (data not shown in 

the tables); wages represent the largest share of family income. Investment-related incomes also declined. 

Some patterns of income distribution hold generally across the years of SCF data shown in table 1. 

Across age classes, median and mean incomes show 

a life-cycle pattern, rising to a peak in the middle age 

groups and then declining for groups that are older 

and increasingly more likely to be retired. Income 

also shows a strong positive association with education; in particular, incomes for families headed by 

persons who have a college degree are substantially 

higher than for those with any lesser amount of 

schooling. Incomes of white non-Hispanic families 

are substantially higher than those of other families.4 

Families headed by self-employed workers consistently have the highest median and mean incomes of 

all work-status groups. Income is also higher for 

homeowners than for other families, and it is progressively higher for groups with greater net worth. 

Across the four regions of the country as defined by 

the Bureau of the Census, the ordering of median 

4. See the appendix for a discussion of racial and ethnic identification in the SCF. 
A6 Federal Reserve Bulletin 2006 

incomes over time has varied, but the means generally show higher values for the Northeast and the 

West than for the Midwest and the South. 

Income by Demographic Category 

Across the lowest 90 percent of the income distribution between 2001 and 2004, changes in median and 

mean incomes varied in direction, but all the changes 

were 2 percent or less in absolute value.5 For the top 

10 percent, changes in the median and mean were 

more substantial, but changes in the two statistics 

were in opposite directions; the median rose 2.3 percent, while the mean fell 6.3 percent. The decline in 

the mean for this group appears to be a result of a 

decline since 2001 in investment income, which tends 

to be concentrated among high-income families. The 

changes throughout the income distribution contrast 

with the broad and substantial gains in both median 

and mean incomes that had been seen over the preceding three-year period, when both measures had 

risen 10 percent or more for most groups. 

The income changes across almost all age groups 

were substantial. For the groups under age 45, both 

median and mean incomes dropped. For the remaining age groups, median incomes rose strongly except 

for the 75-or-older group, but the means rose only for 

the 55–64 group and the 75-or-older group. Over the 

preceding three-year period, median income had 

increased for most age groups, particularly for the 

oldest, while the mean rose for all groups but especially for the 45–54 group. 

Across education groups, median incomes rose 

only for families headed by persons with less than a 

high school diploma and for families headed by persons with a college degree; growth was particularly 

strong for the former group—7.2 percent—but that 

group still has the lowest median income of all education groups.6 Mean incomes declined for all educa5. Here are selected percentiles of the income distribution for the 

past four surveys, in 2004 dollars: 

Percentile 

of income 1995 1998 2001 2004 

20 ..................... 

40 ..................... 

60 ..................... 

80 ..................... 

90 ..................... 

15,100 

28,100 

45,600 

73,800 

101,100 

16,100 

30,600 

49,400 

79,100 

108,900 

17,900 

32,800 

54,700 

87,600 

126,600 

18,900 

33,900 

53,600 

89,300 

129,400 

6. Over the 2001−04 period, the share of families with a head with 

less than a high school diploma declined 1.6 percentage points, to 

14.4 percent. Compared with 2001, a larger share of the 2004 group 

was nonwhite or Hispanic, and the share younger than 45 increased 

slightly (data not shown in the tables). 

tion groups. In the preceding three-year period, mean 

incomes had increased markedly for all education 

groups except the some-college group, and median 

incomes had increased notably for all groups except 

the no-high-school-diploma group; the median had 

increased most strongly for the college-degree group. 

In the 2001–04 period, the median income of nonwhite or Hispanic families rose 8.8 percent, and the 

mean rose 3.7 percent. In contrast, the median for 

white non-Hispanic families rose 2.5 percent, and the 

mean declined 1.5 percent. However, both the median 

and the mean for nonwhites or Hispanics were about 

60 percent of the corresponding figures for nonHispanic whites in 2004. Between 1998 and 2001, 

the median income of nonwhite or Hispanic families 

had been about unchanged, while the median had 

increased 9.0 percent for other families; the mean had 

risen for both groups.7 

Of the work-status groups, only the retired group 

had an increase in both median and mean incomes 

between 2001 and 2004; the median rose 8.9 percent 

and the mean 1.4 percent.8 For the other-not-working 

group, the median rose 16.5 percent, and the mean 

declined 3.6 percent; since before the 1995 survey, 

this group has had the lowest measures of income of 

any of the work-status groups. For the other workstatus groups, both median and mean incomes fell 

from 2001 to 2004. Over the 1998–2001 period, 

median income had increased most for the selfemployed and the other-not-working groups; mean 

incomes were higher for all groups, especially the 

other-not-working group. 

By region, the only growth in both median and 

mean incomes between 2001 and 2004 was in the 

Northeast. In the West, only the median rose, and in 

the Midwest and South, median and mean incomes 

both fell. Over the 1998–2001 period, regional 

median income increased at the highest rate in the 

Midwest; growth in the mean was similar for all 

regions except the South, where it was somewhat 

lower. 

7. If the information on Hispanic or Latino ethnic identification is 

used in the classification of the 2004 results, the median income of 

nonwhites or Hispanics was $30,000, and the mean was $45,400; for 

other families, the median was $49,900, and the mean was $81,200. 

These figures differ only slightly from those given in table 1. 

8. To be included in the retired group, the family head must report 

being retired and not currently working at any job or report being out 

of the labor force and over the age of 65. The other-not-working group 

comprises family heads who are unemployed and those who are out of 

the labor force but who are neither retired nor over age 65; the 

composition of this group shifted from 2001 to 2004 to include more 

families with a head who had a college degree. In 2004, 62.1 percent 

of the group was unemployed, and the remainder was out of the labor 

force; in 2001, 52.5 percent of the group was unemployed (data not 

shown in the tables). 
Recent Changes in U.S. Family Finances: Evidence from the 2001 and 2004 Survey of Consumer Finances A7 

By housing status, median and mean incomes fell 

both for homeowners and for other families from 

2001 to 2004. The decline in the median for homeowners was only 0.5 percent, but the decline for other 

families was 6.5 percent. The fact that the median for 

these groups dropped while the overall median 

showed a gain may be explained, in part, by an influx 

of new homeowners, who tend, on the one hand, to 

have incomes lower than those of previously existing 

homeowners and, on the other hand, to have incomes 

higher than those of remaining renters. Over the 

preceding three-year period, median and mean 

incomes had risen both for homeowners and for 

others. 

By percentile of net worth, median income 

increased from 2001 to 2004 only for families above 

the 75th percentile of the wealth distribution; it fell or 

was little changed for other groups.9 Mean income 

rose only between the 75th and 90th percentiles of 

the wealth distribution. From 1998 to 2001, the two 

income measures had increased for all groups but 

particularly for the top decile. 

Saving 

Because saving out of current income is an important 

determinant of family net worth, the SCF asks 

respondents whether, over the preceding year, the 

family’s spending was less than, more than, or about 

equal to its income. Though only qualitative, the 

answers are a useful indicator of whether families are 

saving. Asking instead for a specific dollar amount 

would require much more time from respondents and 

would likely lower the rate of response to the survey. 

Overall, from 2001 to 2004 the proportion of families that reported that they had saved in the preceding 

year fell 3.1 percentage points, to 56.1 percent, 

although the proportion remained higher than in the 

1995 and 1998 surveys. Across most of the demographic groups over the recent three-year period, the 

predominant pattern is also one of a decline in the 

proportion of families that saved. In contrast, the 

2001 survey had predominantly shown increases 

from 1998. 

9. Here are selected percentiles of the distribution of net worth for 

the past four surveys, in 2004 dollars: 

Percentile 

of net worth 1995 1998 2001 2004 

25 ..................... 

50 ..................... 

75 ..................... 

90 ..................... 

12,300 

70,800 

197,800 

469,000 

11,500 

83,100 

242,100 

572,100 

13,500 

91,700 

301,100 

780,900 

13,300 

93,100 

328,500 

831,600 

2.	 Reasons respondents gave as most important for their 

families’ saving, distributed by type of reason, 

1995–2004 surveys 

Percent 

Reason 1995 1998 2001 2004 

Education ................... 

For the family .............. 

Buying own home ........... 

Purchases ................... 

Retirement .................. 

Liquidity .................... 

Investments ................. 

No particular reason ......... 

When asked for a reason, 

reported do not save .... 

Total ................... 

10.8 

2.7 

5.1 

12.8 

23.7 

33.0 

4.2 

.8 

6.8 

100 

11.0 

4.1 

4.4 

9.7 

33.0 

29.8 

2.0 

1.3 

4.9 

100 

10.9 

5.1 

4.2 

9.5 

32.1 

31.2 

1.0 

1.1 

4.9 

100 

11.6 

4.7 

5.0 

7.7 

34.7 

30.0 

1.5 

.7 

4.0 

100 

Note: See note to table 1 and text note 10. 

In contrast to the SCF measure, estimates of the 

personal saving rate from the national income and 

product accounts (NIPA) show no change on an 

annual basis from 2001 to 2004. However, the SCF 

and NIPA concepts of saving differ in some important ways. First, the underlying SCF question asks 

only whether the family’s spending has been less 

than, more than, or about the same as its income over 

the past year. Thus, fewer families may be saving, but 

those that are doing so may be saving more. Second, 

the NIPA measure of saving relies on definitions of 

income and consumption that may not be the same as 

those that respondents had in mind when answering 

the survey questions. For example, the NIPA measure 

of personal income includes payments employers 

make to their employees’ defined-benefit pension 

plans but not the payments made from such plans to 

families, whereas the SCF measure includes only the 

latter. The SCF measure also includes realized capital 

gains, whereas the NIPA measure excludes capital 

gains of all forms, realized and unrealized. 

A separate question in the survey asks about families’ more typical saving habits. In 2004, 7.0 percent 

of families reported that their spending usually 

exceeds their income; 16.1 percent reported that the 

two are usually about the same; 36.1 percent reported 

that they typically save income ‘‘left over’’ at the end 

of the year, income of one family member, or unusual 

additional income; and 40.8 percent reported that 

they save regularly (data not shown in the tables). 

These figures are not much changed over the last 

three surveys. 

The SCF also collects information on families’ 

most important motivations for saving (table 2).10 

10. Although families were asked to report their motives for saving 

regardless of whether they were currently saving, some families 

reported only that they do not save. The analysis here is confined to 

the first reason reported by families. 
A8 Federal Reserve Bulletin 2006 

3. Family net worth, by selected characteristics of families, 1995–2004 surveys 

Thousands of 2004 dollars 

Family 1995 1998 2001 2004 

characteristic Median Mean Median Mean Median Mean Median Mean 

All families ..................... 

Percentile of income 

Less than 20 .................... 

20–39.9 ......................... 

40–59.9 ......................... 

60–79.9 ......................... 

80–89.9 ......................... 

90–100 ......................... 

Age of head (years) 

Less than 35 .................... 

35–44 .......................... 

45–54 .......................... 

55–64 .......................... 

65–74 .......................... 

75 or more ...................... 

Education of head 

No high school diploma ......... 

High school diploma ............ 

Some college ................... 

College degree .................. 

Race or ethnicity of respondent 

White non-Hispanic ............. 

Nonwhite or Hispanic ........... 

Current work status of head 

Working for someone else ....... 

Self-employed .................. 

Retired ......................... 

Other not working ............... 

Region 

Northeast ....................... 

Midwest ........................ 

South ........................... 

West ............................ 

Housing status Owner .......................... 

Renter or other .................. 

Percentile of net worth 

Less than 25 .................... 

25–49.9 ......................... 

50–74.9 ......................... 

75–89.9 ......................... 90–100 ......................... 

70.8 

(2.4) 

7.4 

41.3 

57.1 

93.6 

157.7 

436.9 

14.8 

64.2 

116.8 

141.9 

136.6 

114.5 

27.9 

63.9 

57.6 

128.6 

94.3 

19.5 

60.3 

191.8 

99.9 

4.5 

102.0 

80.8 

54.2 

67.4 

128.1 

6.0 

1.2 

34.7 

117.1 

272.3 

836.7 

260.8 

(6.4) 

54.7 

97.4 

126.0 

198.5 

316.8 

1,338.0 

53.2 

176.8 

364.8 

471.1 

429.3 

317.9 

103.7 

163.7 

232.3 

473.7 

308.7 

94.9 

168.4 

862.8 

277.2 

70.1 

308.9 

244.7 

229.5 

286.1 

373.7 

53.8 

−.2 

37.6 

122.6 

293.6 

1,766.7 

83.1 327.5 

(3.2) (10.7) 

6.8 55.4 

38.4 111.5 

61.9 146.6 

130.2 238.3 

218.5 377.1 

524.4 1,793.9 

10.6 74.0 

73.5 227.6 

122.3 420.2 

148.2 617.0 

169.8 541.1 

145.6 360.3 

24.5 91.4 

62.7 182.9 

85.6 275.5 

169.7 612.3 

111.0 391.1 

19.3 116.5 

61.2 194.8 

288.0 1,071.3 

131.0 356.5 

4.1 85.8 

109.3 351.3 

93.1 288.5 

71.0 309.6 

71.1 379.1 

153.2 468.7 

4.9 50.4 

.6 −2.1 

37.9 41.6 

139.7 149.1 

357.7 372.6 

1,039.1 2,244.2 

91.7 421.5 

(3.3) (7.1) 

8.4 56.1 

39.6 121.8 

66.5 171.4 

150.7 311.3 

280.3 486.6 

887.9 2,406.7 

12.3 96.6 

82.6 276.4 

141.6 517.6 

193.3 775.4 

187.8 717.9 

161.2 496.2 

27.2 109.7 

61.8 192.5 

76.3 303.8 

227.2 845.7 

129.6 518.7 

19.1 123.8 

69.3 240.1 

375.2 1,340.6 

120.4 479.2 

9.5 191.7 

98.3 480.0 

111.3 361.6 

78.6 400.4 

93.3 468.8 

182.9 594.8 

5.1 58.5 

1.2 † 

43.4 47.0 

166.8 176.6 

458.2 478.6 

1,386.6 2,936.1 

93.1 448.2 

(4.3) (9.7) 

7.5 72.6 

34.3 122.0 

71.6 193.8 

160.0 342.8 

311.1 485.0 

924.1 2,534.4 

14.2 73.5 

69.4 299.2 

144.7 542.7 

248.7 843.8 

190.1 690.9 

163.1 528.1 

20.6 136.5 

68.7 196.8 

69.3 308.6 

226.1 851.3 

140.7 561.8 

24.8 153.1 

67.2 268.5 

335.6 1,423.2 

139.8 469.0 

11.8 162.3 

161.7 569.1 

115.0 436.1 

63.8 348.0 

94.8 523.7 

184.4 624.9 

4.0 54.1 

1.7 −1.4 

43.6 47.1 

170.7 185.4 

506.8 526.7 

1,430.1 3,114.2 

Note: See note to table 1. 

In 2004, the most frequently reported motive was 

retirement-related (34.7 percent of families), and the 

next most frequently reported was liquidity-related 

(30.0 percent of families), a response that is generally 

taken to be indicative of saving for precautionary 

reasons.11 At least since 1995, these have been the 

dominant reported reasons, but saving for retirement 

has increased notably in importance. The educationrelated motive also appears to be important; in 2004, 

11.6 percent of families reported it as their primary 

motive. The importance of saving for purchases has 

fallen over time. 

11. Liquidity-related reasons include ‘‘emergencies,’’ the possibilities of unemployment and illness, and the need for ready money. 

† Less than 0.05 ($50). 

NET WORTH 

From 2001 to 2004, real net worth (wealth)—the 

difference between families’ gross assets and their 

liabilities—rose, though the mean rose notably more 

strongly than the median (table 3). The median rose 

1.5 percent, while the mean rose 6.3 percent; the 

corresponding values for the period from 1998 to 

2001 were 10.3 percent and 28.7 percent.12 

12. The Federal Reserve’s flow of funds accounts provide an 

estimate of the total net worth of the household sector, which includes 

both households and nonprofit institutions. Between year-end 2001 

and year-end 2004, the flow of funds estimate of real net worth rose 

12.3 percent. Accounting for the 3.6 percent increase in the number of 

households over this period produces a change in net worth about 

2 percentage points higher than the SCF estimate of the increase in the 

mean. 
Recent Changes in U.S. Family Finances: Evidence from the 2001 and 2004 Survey of Consumer Finances A9 

By age group, median and mean net worth show a 

‘‘hump’’ pattern that generally has its peak in the 

55–64 age group. This pattern reflects both life-cycle 

saving behavior and growth in real wages over time. 

The median and mean values of wealth rise in tandem 

with income, a relationship reflecting both income 

earned from assets and a higher likelihood of saving 

among higher-income families. Wealth shows strong 

differentials across groups defined in terms of education, racial and ethnic background, work status, and 

housing status; these differentials generally mirror 

those for income, but the wealth differences are 

larger. 

Net Worth by Demographic Category 

Analysis by demographic group for the 2001–04 

period shows a complicated pattern of gains and 

losses in median and mean net worth, with changes in 

the median often opposing those in the mean. The 

patterns suggest correspondingly complex change in 

the underlying ownership and values of assets and 

debts and the distribution of wealth within demographic groups; to some degree, movements of families between groups may also explain some of the 

shifts in wealth. 

Median and mean net worth rose or held about 

steady for all percentile groups of the distribution of 

net worth except for families in the lowest 25 percent 

of the distribution of net worth. In that group, the 

median rose from $1,200 to $1,700, up from $600 in 

1998; the mean fell from near zero to negative 

$1,400, closer to its 1998 value of negative $2,100. 

For the rest of the net worth distribution, growth in 

the median and mean over the recent three-year 

period was notable for the groups above the 50th 

percentile and particularly so for those in the 75–89.9 

percentile group; the gains for the groups in the top 

half of the distribution continued a uniform pattern of 

gains at least back to 1995. 

Over the recent period, median net worth increased 

for all income groups above the 40th percentile and 

especially for the 80–89.9 percentile group, for which 

the median rose 11.0 percent; the mean for this group 

was little changed. The mean for the lowest quintile 

had the largest proportional increase—29.4 percent— 

but the rise appears to be due to an increase in the 

fraction of the group consisting of relatively wealthy 

families with incomes that are likely to have been 

temporarily low. The mean increased or held about 

steady for the other income groups, and it rose particularly for the 40–59.9 percentile group—a 

13.1 percent gain. Over the preceding years shown, 

median net worth rose for most income groups; the 

mean rose for all income groups, but the increases 

were strongest for the top two income quintiles. 

The survey shows some substantial movements of 

wealth by age group between 2001 and 2004. Median 

wealth rose most strongly—28.7 percent—for the 

55–64 age group, which had also experienced the 

largest median gain over the previous three-year 

period. The less-than-35 age group also saw a substantial gain in the median—15.4 percent—over the 

more recent period; at the same time, median wealth 

fell 16.0 percent for the 35–44 age group. Mean 

wealth rose for all age groups except for the lessthan-35 group and the 65–74 group. 

More than offsetting gains over the 1998 to 2001 

period, median net worth fell 24.3 percent from 2001 

to 2004 for families headed by persons with less than 

a high school diploma or equivalent; the median for 

the group with some college education also fell, by 

9.2 percent. The median rose only for families headed 

by persons with a high school diploma or equivalent. Mean wealth rose or held about steady for all 

education groups. For the no-high-school-diploma 

group, mean wealth rose 24.4 percent; given the large 

decline in the median for this group, this result suggests a shift in the distribution of net worth within the 

group. The college-degree group, which had experienced the largest gains in the preceding three-year 

period, saw little change in its median or mean 

wealth. 

The data show gains from 2001 to 2004 in median 

and mean wealth for white non-Hispanic families and 

for nonwhite or Hispanic families, but the gains for 

the latter were much larger in percentage terms.13 For 

white non-Hispanics, the median rose 8.6 percent, 

and the mean rose 8.3 percent; for nonwhites or 

Hispanics, the median rose 29.8 percent, and the 

mean rose 23.7 percent. However, as was the case 

with income, these measures of the wealth of nonwhites or Hispanics are far lower than those for other 

families, and the differences are even larger than 

those in the case of family income; in 2004, the 

median wealth of nonwhite or Hispanic families was 

only 17.6 percent of that for other families. In contrast to the whole group of nonwhite or Hispanic 

families, the subgroup of African American families 

saw virtually no change in their median net worth 

from 2001 ($20,300) to 2004 ($20,400), but their 

13. If the information on Hispanic or Latino ethnic identification is 

used in the classification of the 2004 results, the median net worth of 

nonwhites or Hispanics was $27,100, and the mean was $162,500; for 

other families, the median was $142,700, and the mean was $566,600. 

These figures are slightly higher than the corresponding values 

reported in table 3. 
A10 Federal Reserve Bulletin 2006 

mean net worth rose 37.1 percent, from $80,700 to 

$110,600 (data not shown in the tables). Over the 

1998–2001 period, the growth of wealth for nonwhites or Hispanics had substantially lagged that for 

other families. 

Among work-status groups, both of the groups in 

which the family head was currently working saw a 

decline in median wealth from 2001 to 2004, while 

the median rose substantially for the other groups. 

However, the means show the opposite pattern: gains 

for those working and losses for the other groups. 

Over the preceding three years, both median and 

mean wealth had risen for all work-status groups 

except for the retired group, which had seen a decline 

in its median wealth. 

Between 2001 and 2004, the mean and median 

wealth of families increased in all regions of the 

country except for the South, where the median 

declined 18.8 percent and the mean fell 13.1 percent. 

The most striking gain is the 64.5 percent rise in 

median wealth for the Northeast region, where it had 

declined in the 1998–2001 period. 

By housing status, the mean net worth of homeowners rose 5.1 percent from 2001 to 2004. The 

median for homeowners was little changed; for other 

families, the median fell 21.6 percent, and the mean 

fell 7.5 percent. This pattern is likely explained in 

part by the growth in homeownership over the period, 

as discussed later in this article. New homeowners 

tend to have less wealth than previously existing 

homeowners, having had less time to benefit from 

appreciation of home prices. At the same time, the 

wealth of the remaining renters will tend to be 

depressed by rising homeownership because the 

renter group will have fewer families with assets 

sufficient to initiate a home purchase. In the preceding three-year period, median and mean wealth had 

increased for both groups. 

ASSETS 

Movements in the dollar value of families’ financial 

assets (tables 4, 5, and 6) and nonfinancial assets 

(tables 7 and 8) are, by definition, a result of changes 

in valuation and in the patterns of ownership. The 

overall proportion of families with any asset rose 

1.2 percentage points, to 97.9 percent, in 2004 (first 

half of tables 8.A and 8.B, last column); this rise 

continues a trend, at work at least since 1995, that 

had been interrupted by a pause in 2001 (data not 

shown in the tables). The largest increases in the 

proportion holding any asset were in the following 

demographic groups: the lowest quintile of the 

income distribution, families headed by persons aged 

less than 35 and by those aged 65 or older, nonwhite 

or Hispanic families, families with a head who was 

not working, renters, and families in the bottom quartile of the wealth distribution. The 2001 ownership 

levels for other groups were already at or near 

100 percent. 

Over the recent three-year period, the median real 

value of assets among families having any asset rose 

10.3 percent, from $156,800 to $172,900 (second 

half of tables 8.A and 8.B, last column). That gain far 

exceeds the 1.5 percent rise in median net worth 

computed for all families regardless of whether they 

have assets. This divergence suggests that changes in 

debt holdings, which in some cases appear to have a 

direct connection to the increased assets of families, 

are a key factor. Median assets rose substantially for 

most demographic groups. However, declines were 

notable for almost all the groups that saw the largest 

increases in ownership levels—the lowest quintile of 

the income distribution, the youngest age group, nonwhite or Hispanic families, the other-not-working 

group, renters, and the lowest quartile of the wealth 

distribution. One particularly noteworthy increase in 

the median value of assets was in the 55–64 age 

group, which saw a rise of 45.7 percent. The prevailing impression from the preceding three years had 

been one of broad increases in the median. In the 

recent three-year period, mean assets rose 8.6 percent 

(second half of tables 8.A and 8.B, memo line). 

Financial Assets 

Financial assets as a share of total assets fell 6.3 percentage points from 2001 to 2004, to 35.7 percent 

(table 4, memo line); the decline is from a level in 

4.	 Value of financial assets of all families, distributed 

by type of asset, 1995–2004 surveys 

Percent 

Type of financial 

asset 1995 1998 2001 2004 

Transaction accounts .......... 

Certificates of deposit ......... 

Savings bonds ................ 

Bonds ........................ 

Stocks ........................ 

Pooled investment funds 

(excluding money market 

funds) .................... Retirement accounts ........... 

Cash value life insurance ...... 

Other managed assets ......... 

Other ......................... 

Total ..................... 

Memo

Financial assets as a 

share of total assets ....... 

13.9 

5.6 

1.3 

6.3 

15.6 

12.7 

28.1 

7.2 

5.9 

3.3 

100 

36.7 

11.4 

4.3 

.7 

4.3 

22.7 

12.4 

27.6 

6.4 

8.6 

1.7 

100 

40.7 

11.5 

3.1 

.7 

4.6 

21.7 

12.2 

28.4 

5.3 

10.6 

2.0 

100 

42.0 

13.2 

3.7 

.5 

5.3 

17.6 

14.7 

32.0 

3.0 

8.0 

2.1 

100 

35.7 

Note: For this and following tables, see text for definition of asset 

categories. Also see note to table 1. 
Recent Changes in U.S. Family Finances: Evidence from the 2001 and 2004 Survey of Consumer Finances A11 

5. Family holdings of financial assets, by selected characteristics of families and type of asset, 2001 and 2004 surveys 

A. 2001 Survey of Consumer Finances 

Family 

characteristic 

Transaction 

accounts 

Certificates of 

deposit 

Savings 

bonds Bonds Stocks 

Pooled 

investment 

funds 

Retirement 

accounts 

Cash 

value 

life 

insurance 

Other 

managed 

assets 

Other 

Any 

financial 

asset 

All families ..................... 

Percentile of income 

Less than 20 .................... 

20–39.9 ......................... 

40–59.9 ......................... 

60–79.9 ......................... 

80–89.9 ......................... 

90–100 ......................... 

Age of head (years) 

Less than 35 .................... 

35–44 .......................... 

45–54 .......................... 

55–64 .......................... 

65–74 .......................... 

75 or more ...................... 

Race or ethnicity of respondent 

White non-Hispanic ............. 

Nonwhite or Hispanic ........... 

Current work status of head 

Working for someone else ....... 

Self-employed .................. Retired ......................... 

Other not working ............... 

Housing status 

Owner .......................... 

Renter or other .................. 

Percentile of net worth 

Less than 25 .................... 

25–49.9 ......................... 

50–74.9 ......................... 

75–89.9 ......................... 

90–100 ......................... 

Percentage of families holding asset 

91.4 15.7 16.7 3.0 21.3 17.7 52.2 28.0 6.6 9.4 93.4 

71.6 10.0 3.8 * 3.8 3.6 13.2 13.8 2.2 6.2 75.5 

90.3 14.7 11.0 * 11.2 9.5 33.3 24.7 3.3 10.2 93.6 

96.6 17.4 14.1 1.5 16.4 15.7 52.8 25.6 5.4 9.9 98.3 

99.1 16.0 24.4 3.7 26.2 20.6 75.7 35.7 8.5 9.2 99.6 

99.7 18.3 30.3 3.9 37.0 29.0 83.7 38.6 10.7 10.8 99.8 

99.2 22.0 29.7 12.7 60.6 48.8 88.3 41.8 16.7 12.5 99.7 

87.1 6.3 12.7 * 17.4 11.5 45.1 15.0 2.1 10.5 89.7 

91.1 9.8 22.6 2.1 21.6 17.5 61.4 27.0 3.1 9.7 93.5 

92.7 15.2 21.0 2.8 22.0 20.2 63.4 31.1 6.4 8.5 94.7 

93.8 14.4 14.3 6.1 26.7 21.3 59.1 35.7 13.0 10.6 95.0 

93.8 29.7 11.3 3.9 20.5 19.9 44.0 36.7 11.8 8.5 94.6 

93.7 36.5 12.5 5.7 21.8 19.5 25.7 33.3 11.2 7.7 95.1 

95.3 18.5 19.5 3.8 24.7 21.0 57.1 29.9 8.2 9.4 96.7 

79.4 6.8 8.1 .4 11.0 7.4 37.4 22.0 1.8 9.6 83.2 

92.9 11.3 19.4 2.0 20.9 17.3 61.5 27.4 5.3 9.5 94.9 

95.9 18.7 16.6 6.1 29.8 22.9 58.9 34.6 6.9 12.4 97.6 

89.0 27.1 11.4 4.5 19.6 17.3 29.2 29.0 10.4 8.1 90.9 

72.2 7.8 7.5 * 13.3 10.9 26.8 12.9 5.6 6.5 74.2 

96.7 20.0 21.2 4.0 27.0 22.7 62.6 34.5 8.9 8.8 97.8 

80.3 6.7 7.2 .7 9.3 7.1 30.4 14.3 2.0 10.6 84.1 

73.7 1.8 4.3 * 5.0 2.5 18.9 6.9 * 8.1 78.0 

94.2 8.8 12.8 * 9.5 7.2 45.3 26.0 1.3 8.7 96.7 

98.2 23.2 23.6 * 20.3 17.5 63.2 34.6 6.2 8.7 98.9 

99.6 30.1 25.9 5.3 41.2 36.0 77.6 41.7 13.9 9.6 99.8 

99.6 26.9 26.3 18.4 64.3 54.8 87.4 48.6 26.4 16.2 100.0 

2001 that marked the high point observed in the 

survey. The relative shares of various financial assets 

also shifted. Declines in the percentage shares of 

direct holdings of publicly traded stocks, cash value 

life insurance, and ‘‘other managed assets’’ were 

approximately balanced by increases in the shares of 

retirement accounts, pooled investment funds, and 

transaction accounts.14 After showing a declining 

trend in earlier survey years, the share of certificates 

of deposit edged up. 

Overall, the ownership of any financial asset over 

the recent period edged up only 0.4 percentage point, 

to 93.8 percent (first half of tables 5.A and 5.B, last 

column). However, the recent data show some pronounced patterns of change for some demographic 

groups. By income, the largest changes in ownership 

were a rise for the lowest quintile and a fall for the 

second quintile; by age, notable increases appeared 

only for the groups of those 65 or older; and by work 

status, ownership rose for families headed by people 

14. The definitions of asset categories in table 4 are given below, in 

the sections of text devoted to them. 

who were not working and declined for other workstatus groups. Ownership also rose notably for renters 

and for nonwhite or Hispanic families. 

Paralleling the drop in the overall ratio of financial 

assets to total assets over the recent period, the 

median holding of financial assets for families having 

such assets fell 22.8 percent (second half of 

tables 5.A and 5.B, last column), while the mean fell 

6.9 percent (memo line). The change in the median 

more than offset the increase over the previous threeyear period. The picture is one of declines in the 

medians over the recent period for almost every 

demographic group; exceptions were the eighth 

income decile and the 55–64 age group. Mean holdings declined for every group (means of groups not 

shown in the tables). 

Transaction Accounts and Certificates of Deposit 

In 2004, 91.3 percent of families had some type 

of transaction account—a category comprising 

checking, savings, and money market deposit 
A12 Federal Reserve Bulletin 2006 

5.—Continued 

A. 2001 Survey of Consumer Finances—Continued 

Family 

characteristic 

Transaction 

accounts 

Certificates of 

deposit 

Savings 

bonds Bonds Stocks 

Pooled 

investment 

funds 

Retirement 

accounts 

Cash 

value 

life 

insurance 

Other 

managed 

assets 

Other 

Any 

financial 

asset 

Median value of holdings for families holding asset (thousands of 2004 dollars) 

All families ..................... 

Percentile of income 

Less than 20 .................... 

20–39.9 ......................... 

40–59.9 ......................... 

60–79.9 ......................... 

80–89.9 ......................... 

90–100 ......................... 

Age of head (years) 

Less than 35 .................... 

35–44 .......................... 

45–54 .......................... 

55–64 .......................... 

65–74 .......................... 

75 or more ...................... 

Race or ethnicity of respondent 

White non-Hispanic ............. 

Nonwhite or Hispanic ........... 

Current work status of head 

Working for someone else ....... 

Self-employed .................. Retired ......................... 

Other not working ............... 

Housing status 

Owner .......................... 

Renter or other .................. 

Percentile of net worth 

Less than 25 .................... 

25–49.9 ......................... 

50–74.9 ......................... 

75–89.9 ......................... 

90–100 ......................... 

Memo

Mean value of holdings for 

families holding asset ....... 

4.2 

.9 

1.9 

3.0 

5.5 

10.1 

27.7 

1.9 

3.6 

4.8 

5.9 

8.5 

7.8 

5.1 

1.8 

3.4 

8.5 

5.3 

1.9 

6.2 

1.3 

.7 

2.3 

5.9 

14.5 

38.3 

25.3 

16.0 

10.7 

14.9 

13.8 

16.0 

13.8 

26.6 

4.3 

6.4 

12.8 

20.2 

21.3 

26.6 

16.0 

9.6 

9.6 

17.0 

26.6 

42.6 

16.0 

10.7 

1.6 

5.3 

12.2 

21.3 

42.6 

39.9 

1.1 46.3 21.3 37.3 30.9 10.7 74.6 

1.1 * 8.0 22.4 4.8 3.8 25.8 

.6 * 10.7 25.6 8.5 6.6 38.3 

.5 10.7 8.5 25.6 14.5 7.5 74.6 

1.1 42.6 18.1 32.0 32.0 12.8 63.9 

1.1 53.3 21.3 29.8 58.6 10.7 74.6 

2.1 94.5 53.3 93.2 138.5 25.6 119.3 

.3 * 6.1 9.6 7.0 10.7 42.6 

1.1 14.5 16.0 18.6 30.4 9.6 53.3 

1.1 63.9 16.0 41.0 51.1 11.7 63.9 

2.7 63.9 42.6 63.9 58.6 10.7 58.6 

2.1 76.1 90.5 74.6 63.9 9.3 127.8 

3.2 37.3 63.9 74.6 49.0 7.5 106.5 

1.1 53.3 23.4 42.6 37.3 10.7 74.6 

.7 8.1 8.5 18.6 10.7 9.3 47.9 

1.1 27.7 11.7 21.3 26.0 10.1 58.6 

2.1 76.5 37.3 104.4 58.2 18.1 116.1 

4.3 53.3 63.9 74.6 57.5 9.6 106.5 

.3 * 8.5 42.6 21.3 10.7 41.5 

1.3 53.3 24.5 42.6 40.7 10.7 74.6 

.4 31.5 6.7 10.7 7.2 8.0 42.6 

.2 * 1.4 2.1 2.1 1.9 * .5 * 3.4 5.3 8.0 5.5 10.7 

1.2 * 8.8 16.0 32.0 9.6 23.4 

2.1 21.3 27.6 39.9 81.5 12.8 74.6 

2.1 95.9 129.9 149.1 202.4 32.0 213.0 

8.4 310.2 204.8 139.3 109.3 38.4 321.5 

4.3 

1.8 

3.2 

3.2 

3.2 

7.5 

16.0 

1.7 

2.1 

5.3 

10.7 

8.5 

19.2 

5.3 

1.6 

2.7 

12.8 

10.7 

2.1 

6.4 

2.1 

1.1 

2.4 

4.8 

10.7 

35.1 

41.9 

29.8 

2.1 

8.4 

18.2 

59.1 

103.4 

387.7 

6.6 

28.6 

48.0 

59.8 

54.7 

42.6 

41.3 

7.6 

25.7 

65.0 

34.4 

5.6 

53.5 

4.2 

1.4 

11.2 

56.5 

214.8 

753.5 

215.6 

Note: See note to table 1. 

accounts, money market mutual funds, and call 

accounts at brokerages. The ownership rate, essentially unchanged from 2001, was 90.6 in the 1998 

survey and notably lower before then. Families that 

did not have any type of transaction account in 2004 

were disproportionately likely to have low incomes, 

to be headed by a person younger than 35, to be 

nonwhite or Hispanic, to be headed by a person who 

was neither working nor retired, to be renters, or to 

have relatively low levels of wealth. Over the 

2001–04 period, ownership rose notably for families 

at the bottom of the income and wealth distributions, 

families headed by persons aged 75 or older, families 

with heads who were not working, nonwhites or 

Hispanics, and renters. 

Underlying the leveling off in the growth of ownership of transaction accounts in the recent three-year 

period was a larger shift in the types of account 

families used. The share of families with a checking 

account rose, and the shares of families with all other 

* Ten or fewer observations. 

types of transaction account declined, as shown in the 

following table: 

Type of 

transaction account 

Families holding 

2004 

(percent) 

Change, 2001−04 

(percentage points) 

Checking .............. 

Savings ............... 

Money market ......... 

Call ................... 

89.4 2.1 

47.1 −8.1 

21.1 −.6 

2.5 −.7 

Most of the change appears to reflect consolidation 

of multiple types of account into a checking account; 

for many such families, the relatively low interest 

rates on deposits may have been insufficient to compensate for the effort of managing multiple accounts. 

See box ‘‘Families without a Checking Account’’ for 

a discussion of reasons that some families do not 

have a checking account. 

Median holdings in transaction accounts for those 

who had such accounts fell 9.5 percent from 2001 to 
Recent Changes in U.S. Family Finances: Evidence from the 2001 and 2004 Survey of Consumer Finances A13 

5. Family holdings of financial assets, by selected characteristics of families and type of asset, 2001 and 2004 surveys—Continued 

B. 2004 Survey of Consumer Finances 

Family 

characteristic 

Transaction 

accounts 

Certificates of 

deposit 

Savings 

bonds Bonds Stocks 

Pooled 

investment 

funds 

Retirement 

accounts 

Cash 

value 

life 

insurance 

Other 

managed 

assets 

Other 

Any 

financial 

asset 

All families ..................... 

Percentile of income 

Less than 20 .................... 

20–39.9 ......................... 

40–59.9 ......................... 

60–79.9 ......................... 

80–89.9 ......................... 

90–100 ......................... 

Age of head (years) 

Less than 35 .................... 

35–44 .......................... 

45–54 .......................... 

55–64 .......................... 

65–74 .......................... 

75 or more ...................... 

Race or ethnicity of respondent 

White non-Hispanic ............. 

Nonwhite or Hispanic ........... 

Current work status of head 

Working for someone else ....... 

Self-employed .................. Retired ......................... 

Other not working ............... 

Housing status 

Owner .......................... 

Renter or other .................. 

Percentile of net worth 

Less than 25 .................... 

25–49.9 ......................... 

50–74.9 ......................... 

75–89.9 ......................... 

90–100 ......................... 

Percentage of families holding asset 

91.3 12.7 17.6 1.8 20.7 15.0 49.7 24.2 7.3 10.0 93.8 

75.5 5.0 6.2 * 5.1 3.6 10.1 14.0 3.1 7.1 80.1 

87.3 12.7 8.8 * 8.2 7.6 30.0 19.2 4.9 9.9 91.5 

95.9 11.8 15.4 * 16.3 12.7 53.4 24.2 7.9 9.3 98.5 

98.4 14.9 26.6 2.2 28.2 18.6 69.7 29.8 7.8 11.2 99.1 

99.1 16.3 32.3 2.8 35.8 26.2 81.9 29.5 12.1 11.4 99.8 

100.0 21.5 29.9 8.8 55.0 39.1 88.5 38.1 13.0 13.4 100.0 

86.4 5.6 15.3 * 13.3 8.3 40.2 11.0 2.9 11.6 90.1 

90.8 6.7 23.3 .6 18.5 12.3 55.9 20.1 3.7 10.0 93.6 

91.8 11.9 21.0 1.8 23.2 18.2 57.7 26.0 6.2 12.1 93.6 

93.2 18.1 15.2 3.3 29.1 20.6 62.9 32.1 9.4 7.2 95.2 

93.9 19.9 14.9 4.3 25.4 18.6 43.2 34.8 12.8 8.1 96.5 

96.4 25.7 11.0 3.0 18.4 16.6 29.2 34.0 16.7 8.1 97.6 

95.5 15.3 21.1 2.5 25.5 18.9 56.1 26.8 9.2 10.2 97.2 

80.6 6.0 8.5 * 8.0 5.0 32.9 17.4 2.1 9.4 85.0 

92.2 9.8 20.1 .8 19.6 13.5 57.1 21.8 5.4 9.5 94.5 

94.4 14.2 18.7 4.3 31.6 22.3 54.6 29.8 7.6 15.1 96.1 

90.4 20.2 11.4 3.5 19.0 16.2 32.9 29.7 12.8 8.4 93.6 

76.2 7.9 14.5 * 14.3 10.2 24.9 10.7 * 11.5 79.6 

96.0 15.9 21.2 2.6 25.8 19.2 60.2 30.1 9.6 9.6 97.5 

80.9 5.6 9.5 .2 9.1 5.7 26.2 11.0 2.0 10.9 85.5 

75.4 2.2 6.2 * 3.6 2.0 14.3 7.7 * 6.9 79.8 

92.0 6.5 13.2 * 9.3 7.2 43.1 19.3 2.3 9.5 96.1 

98.0 16.0 22.7 * 21.0 12.5 61.8 30.1 8.8 10.2 99.4 

99.7 24.2 28.5 3.2 39.1 32.4 77.6 36.7 15.6 11.2 100.0 

100.0 28.8 28.1 12.7 62.9 47.3 82.5 43.8 21.0 16.4 100.0 

2004, while the mean rose 7.1 percent. Across demographic groups, the patterns of change in the median 

are mainly a mixture of substantial increases and 

declines. Median balances fell for the lowest two 

income groups and the lowest three wealth groups 

but rose or held steady for the other income and 

wealth groups. Across age groups, the median 

increased only for the 55–64 group and fell or was 

unchanged for other families. By work status, median 

balances rose substantially for the self-employed 

group. Holdings declined for both of the racial and 

ethnic groups and for both of the housing-status 

groups. 

Certificates of deposit (CDs)—interest-bearing 

deposits with a set term—are traditionally viewed as 

a low-risk saving vehicle, and they are often used by 

people who desire a safe haven from the volatility of 

financial markets. Over the 2001–04 period, the 

attractiveness of CDs declined as the interest rates on 

them fell. The resulting 3.0 percentage point decline 

in ownership broke the slow upward movement seen 

since 1998. Over the more recent period, ownership 

declined among most demographic groups. At the 

same time, the overall real median value fell 6.3 percent. Across income groups, declines in the median 

were concentrated in the groups below the 60th percentile, whereas the medians for the higher-income 

groups increased; along with the fact that the overall 

mean holding rose 37.6 percent, this result suggests 

that the concentration of CD balances rose among the 

higher-income groups. The median value of CDs rose 

for all wealth groups except the third quartile. 

Savings Bonds and Other Bonds 

Savings bonds are owned disproportionately by families with incomes in the highest 40 percent of the 

distribution and by families in the top half of the 

distribution of net worth. Over the 2001–04 period, 

the ownership of savings bonds rose 0.9 percentage 

point overall, and it rose for most demographic 

groups; these gains partially offset declines in the 

preceding three-year period. Median holdings fell 

9.1 percent, and the mean fell 31.0 percent between 

2001 and 2004. 
A14 Federal Reserve Bulletin 2006 

5.—Continued 

B. 2004 Survey of Consumer Finances—Continued 

Family 

characteristic 

Transaction 

accounts 

Certificates of 

deposit 

Savings 

bonds Bonds Stocks 

Pooled 

investment 

funds 

Retirement 

accounts 

Cash 

value 

life 

insurance 

Other 

managed 

assets 

Other 

Any 

financial 

asset 

All families ..................... 

Percentile of income 

Less than 20 .................... 

20–39.9 ......................... 

40–59.9 ......................... 

60–79.9 ......................... 

80–89.9 ......................... 

90–100 ......................... 

Age of head (years) 

Less than 35 .................... 

35–44 .......................... 

45–54 .......................... 

55–64 .......................... 

65–74 .......................... 

75 or more ...................... 

Race or ethnicity of respondent 

White non-Hispanic ............. 

Nonwhite or Hispanic ........... 

Current work status of head 

Working for someone else ....... 

Self-employed .................. Retired ......................... 

Other not working ............... 

Housing status 

Owner .......................... 

Renter or other .................. 

Percentile of net worth 

Less than 25 .................... 

25–49.9 ......................... 

50–74.9 ......................... 

75–89.9 ......................... 

90–100 ......................... 

Memo

Mean value of holdings for 

families holding asset ....... 

Median value of holdings for families holding asset (thousands of 2004 dollars) 

3.8 15.0 1.0 65.0 15.0 40.4 35.2 6.0 45.0 4.0 23.0 

.6 10.0 .4 * 6.0 15.3 5.0 2.8 22.0 2.5 1.3 

1.5 14.0 .6 * 8.0 25.0 10.0 3.9 50.0 2.0 4.9 

3.0 10.0 .8 * 12.0 23.0 17.2 5.0 36.0 2.5 15.5 

6.6 18.0 1.0 80.0 10.0 25.5 32.0 7.0 35.0 4.0 48.5 

11.0 20.0 .8 26.7 15.0 33.5 70.0 10.0 50.0 5.0 108.2 

28.0 33.0 2.0 160.0 57.0 125.0 182.7 20.0 100.0 20.0 365.1 

1.8 4.0 .5 * 4.4 8.0 11.0 3.0 5.0 1.0 5.2 

3.0 10.0 .5 10.0 10.0 15.9 27.9 5.0 18.3 3.5 19.0 

4.8 11.0 1.0 30.0 14.5 50.0 55.5 8.0 43.0 5.0 38.6 

6.7 29.0 2.5 80.0 25.0 75.0 83.0 10.0 65.0 7.0 78.0 

5.5 20.0 3.0 40.0 42.0 60.0 80.0 8.0 60.0 10.0 36.1 

6.5 22.0 5.0 295.0 50.0 60.0 30.0 5.0 50.0 22.0 38.8 

5.0 16.0 1.0 80.0 18.0 45.0 41.0 7.0 45.0 5.0 36.0 

1.5 12.0 .6 * 5.3 18.0 16.0 5.0 40.0 2.5 5.0 

3.1 10.0 .7 25.0 10.0 25.0 30.0 5.4 50.0 3.0 20.5 

10.0 20.0 1.9 130.0 25.0 60.0 60.0 10.5 42.0 6.0 53.2 

4.2 25.0 3.0 90.0 45.0 75.0 47.0 5.0 45.0 10.0 26.5 

2.0 8.0 2.0 * 5.0 15.9 31.0 8.4 * 3.0 5.0 

6.0 20.0 1.0 65.0 20.0 50.0 46.0 7.0 45.0 6.0 47.9 

1.1 7.0 .7 130.0 4.5 10.0 11.0 3.0 42.0 2.0 3.0 

.5 2.0 .3 * 1.9 2.0 2.9 .8 * .7 1.0 

2.0 5.8 .5 * 3.5 7.4 11.8 4.0 9.4 2.0 9.9 

5.8 10.4 1.0 * 8.0 16.0 33.5 5.0 22.0 5.0 47.2 

15.8 31.0 2.0 25.0 20.0 50.0 95.7 10.0 50.0 7.0 203.0 

43.0 46.0 2.5 111.1 110.0 160.0 264.0 20.0 135.0 40.0 728.8 

27.1 54.9 5.8 547.0 160.3 184.0 121.3 23.1 207.0 39.5 200.7 

Note: See note to table 1. 

Other bond types tend to be very narrowly held, 

and the ownership rate, which had been flat since 

1995, fell to 1.8 percent in 2004, a drop of 1.2 percentage points from 2001.15 The underlying data in 

the survey suggest that, among families that owned 

bonds, the proportion that owned mortgage-backed 

bonds and corporate or foreign bonds rose in the 

recent period, while ownership of tax-exempt and 

other government bills and bonds fell somewhat. 

Ownership of any type of bond is notably concentrated among the highest tiers of the income and 

wealth distributions, and these groups saw comparatively large declines in ownership from 2001 to 2004. 

At the same time, the value of bonds for families 

15. ‘‘Other bonds’’ as reported in the survey are held directly and 

include corporate and mortgage-backed bonds; federal, state, and 

local government bonds; and foreign bonds. In the survey, financial 

assets held indirectly are those held in retirement accounts and in 

other managed assets. 

* Ten or fewer observations. 

that had them rose substantially; the median went up 

40.4 percent and the mean 76.3 percent. 

Publicly Traded Stock 

The direct ownership of publicly traded stocks is 

more widespread than the direct ownership of bonds, 

but, as with bonds, it is also concentrated among 

high-income and high-wealth families. The share of 

families with any such stock holdings declined 

0.6 percentage point from 2001 to 2004 after having 

risen steadily since the 1995 survey. Over demographic groups, the decline was most marked for the 

highest decile of the income distribution. 

Although the major stock price indexes had 

declined in 2001 to about the levels of 1998 and had 

recovered by the time of the 2004 survey, the median 

amount of directly held stock for families with such 

assets was 29.6 percent lower in 2004 than in 2001; 
Recent Changes in U.S. Family Finances: Evidence from the 2001 and 2004 Survey of Consumer Finances A15 

Families without a Checking Account 

Between 2001 and 2004, the proportion of families with 

any type of transaction account barely changed (table 5), 

while the share without a checking account fell 2.1 percentage points, from 12.7 percent to 10.6 percent (data not 

shown in the tables). The decline in the fraction of families 

without a checking account follows a longer trend; in 1992, 

the share was 16.6 percent.1 

Among families without a checking account in 2004, 

52.1 percent had held such an account in the past, 55.1 

percent had incomes in the lowest 20 percent of that distribution, 56.6 percent were headed by persons younger than 

45, and 61.0 percent were nonwhite or Hispanic. 

The SCF asked all families that did not have a checking 

account to give a reason for not having an account (see 

table). The most commonly reported reason—given by 27.9 

percent of families—was that the family did not write 

enough checks to make account ownership worthwhile. 

Another 14.4 percent said that they did not have enough 

money to make account ownership worthwhile, and 22.6 

percent said that they did not like dealing with banks. The 

pattern of the reported reasons differs only slightly from 

that in 2001. 

1. For the definition of ‘‘transaction account,’’ see the main text. For a 

discussion of the ways that lower-income families obtain checking and credit 

services and the effects that developments in electronic transactions may 

have on such families, see Jeanne M. Hogarth and Kevin H. O’Donnell 

(1999), ‘‘Banking Relationships of Lower-Income Families and the Governmental Trend toward Electronic Payments,’’ Federal Reserve Bulletin, vol. 85 

(July), pp. 459–73. 

When attention is further restricted to families that once 

had a checking account (data not shown in the table), the 

general pattern of responses is similar to that for all 

families without a checking account, but there were some 

notable changes over the period. For families that once 

had a checking account, the proportion reporting that they 

could not manage a checking account or did not like banks 

both rose from 2001. These increases are offset by 

decreases in the proportion reporting that they found service charges too high, did not write enough checks, had 

credit problems, or did not have enough money for an 

account to be worthwhile. 

Distribution of reasons cited by respondents for their 

families’ not having a checking account, by reason, 

1995–2004 surveys 

Percent 

Reason 1995 1998 2001 2004 

Do not write enough checks 

to make it worthwhile ..... 

Minimum balance is too high . . . 

Do not like dealing with banks . . 

Service charges are too high .... 

Cannot manage or balance 

a checking account ........ 

No bank has convenient hours 

or location ................ 

Do not have enough money ..... 

Credit problems ................ 

Do not need/want an account . . . 

Other ......................... 

Total ..................... 

25.3 

8.8 

18.6 

8.4 

8.0 

1.2 

20.0 

1.4 

4.9 

3.5 

100 

28.4 

8.6 

18.5 

11.0 

7.2 

1.2 

12.9 

2.7 

6.3 

3.1 

100 

28.6 

6.5 

22.6 

10.2 

6.6 

.4 

14.0 

3.6 

5.1 

2.4 

100 

27.9 

5.6 

22.6 

11.6 

6.8 

1.1 

14.4 

2.4 

5.2 

2.4 

100 

the mean was 21.7 percent lower. The declines in the 

median and mean were shared by most demographic 

groups (means for groups not shown in the tables); a 

notable exception was the increase in the median for 

the third income quintile, 41.2 percent. 

The great majority of families owned stock in only 

a small number of companies. In 2004, 34.6 percent 

had stock in only one company, 59.5 percent had 

stock in three or fewer companies, and 9.5 percent 

had stock in fifteen or more companies (data not 

shown in the tables). For 37.1 percent of stock owners, at least one of the companies was one that 

employed or had employed the family head or that 

person’s spouse or partner. The 2001 data show a 

similar pattern. 

Pooled Investment Funds 

From 2001 to 2004, direct ownership of pooled 

investment funds fell 2.7 percentage points, to 

15.0 percent of families.16 Typically, the pattern of 

ownership of pooled investment funds resembles that 

of stocks, but in contrast to the mixed changes in 

stock ownership over this period, ownership of 

pooled investment funds declined for almost every 

demographic group. Both the overall change and 

the changes for demographic groups break an earlier 

trend toward broadly increased ownership of this 

asset. Among families owning pooled investment 

funds, the survey indicates that ownership shifted 

over the recent period from funds largely invested in 

either stocks or government bonds toward funds dedicated to a balance between stocks and bonds of any 

type. For 2004, the survey for the first time provides 

separate information on a miscellaneous category of 

funds, which is composed of hedge funds, exchange16. Pooled investment funds in this article are taken to exclude 

money market mutual funds and indirectly held mutual funds and to 

include all other types of directly held pooled investment funds, such 

as traditional open-end and closed-end mutual funds, real estate investment trusts, and hedge funds. 
A16 Federal Reserve Bulletin 2006 

traded funds, and similar instruments; the survey 

estimates that 4.3 percent of families with pooled 

investment funds (0.7 percent of all families) had 

funds of this type (data not shown in the tables). 

Among families owning pooled investment funds, 

the value of holdings has continued an increase seen 

over the preceding decade; in the recent period, the 

median holding rose 8.3 percent, and the mean rose 

32.1 percent. Among the top quintile of the income 

distribution, where ownership is most prevalent, the 

median holding rose substantially over the recent 

period; holdings fell for the other income groups. At 

the same time, median holdings across wealth groups 

fell only for the lowest quartile. By age, holdings rose 

only for the 45–64 age groups. Median holdings rose 

for white non-Hispanic families and fell for other 

families. 

Retirement Accounts 

Ownership of tax-deferred retirement assets such 

as individual retirement accounts (IRAs) tends to 

increase with families’ income and net worth.17 For 

several reasons, ownership is also more likely among 

families headed by persons less than 65 years of age 

than among the older groups. First, even though 

retirement accounts have been in existence for about 

twenty years, they may not have become common 

until relatively late in the careers of people in the 

older groups. Second, beginning in the year that a 

person reaches age 591⁄2, funds held by that person in 

retirement accounts may be withdrawn without penalty, and some in the group may have done so. Third, 

families may have used funds from retirement 

17. Tax-deferred retirement accounts consist of IRAs, Keogh 

accounts, and certain employer-sponsored accounts. Employersponsored accounts consist of 401(k), 403(b), and thrift saving 

accounts from current or past jobs; other current job plans from which 

loans or withdrawals can be made; and accounts from past jobs from 

which the family expects to receive the account balance in the future. 

This definition of employer-sponsored plans is intended to confine the 

analysis to accounts that are portable across jobs and for which 

families will ultimately have the option to withdraw the balance. 

IRAs and Keoghs may be invested in virtually any asset, including 

stocks, bonds, pooled investment funds, options, and real estate. In 

principle, employer-sponsored plans may be invested in a similarly 

broad way, but, in practice, individuals’ choices for investment are 

often limited to a narrower set of assets. The 2004 SCF introduced 

a new sequence of questions to cover employer-sponsored pensions 

associated with the current jobs of the survey respondent and the 

spouse or partner of that person. The goal of this redesign was to 

better cope with the proliferation of complex plans and with the 

confusion many people appear to have about the exact types of their 

plans. Although the new sequence was designed to contain the earlier 

questions, it is still possible that the new context may have changed 

patterns of response for some types of respondent in ways not compatible with the earlier data. 

accounts accumulated from previous employment 

to purchase an annuity at retirement; annuities are 

treated in this article as a separate type of managed 

asset. 

From 2001 to 2004, the fraction of families with 

retirement accounts fell 2.5 percentage points; the 

drop offset most of the 3.3 percentage point increase 

of the preceding three years. In the recent period, 

more than 60 percent of families with some type of 

account plan had one associated with a current or 

past job, and nearly as many had an IRA or Keogh 

account; about one-fourth of families with retirement 

accounts had both types (data not shown in the 

tables). Over this time, ownership declined for nearly 

all groups; key exceptions were families with a 

retired head and families headed by persons aged 

55 to 64 or aged 75 or older. In the preceding three 

years, ownership had been up in almost every demographic group. 

In a continuation of the trend over the preceding 

decade, holdings in retirement accounts increased 

markedly in the 2001–04 period; for those having 

retirement accounts, the median rose 13.9 percent, 

and the mean rose 11.0 percent. Gains also appeared 

in the median holdings of most demographic groups 

over the recent period; one of the largest increases 

was among nonwhite or Hispanic families, a group 

for which ownership of such accounts declined substantially in 2004. The 75-or-older age group saw a 

sizable decline in its median. 

Although tax-deferred retirement assets are clearly 

an important element in retirement planning, families 

may hold a variety of other assets that are intended, at 

least in part, to finance retirement. Such other assets 

might also be used for contingencies as necessary. 

Similarly, a need for liquidity might drive a family to 

liquidate or borrow against a tax-deferred retirement 

asset, even if it will be assessed a penalty for doing 

so. 

Two common and often particularly important 

types of retirement plan are not included in the assets 

described in this section: Social Security (the federally funded Old-Age and Survivors’ Insurance program, or OASI) and employer-sponsored definedbenefit plans. OASI is well described elsewhere, and 

it covers the great majority of the population.18 The 

retirement income provided by defined-benefit plans 

is typically based on workers’ salaries and years of 

work with an employer, a group of employers, or a 

union. Unfortunately, income streams from OASI and 

18. For a detailed description of OASI, see Social Security Administration, ‘‘Online Social Security Handbook,’’ Publication 65-008, 

www.ssa.gov/OP_Home/handbook/ssa-hbk.htm. 
Recent Changes in U.S. Family Finances: Evidence from the 2001 and 2004 Survey of Consumer Finances A17 

defined-benefit plans cannot be translated directly 

into a current value because valuation depends 

critically on assumptions about future events and 

conditions—work decisions, earnings, inflation rates, 

discount rates, mortality, and so on—and no widely 

agreed-upon standards exist for making these 

assumptions.19 

However, the SCF does contain substantial information for family heads and their spouses or partners 

regarding their defined-benefit plans and plans with 

some type of account feature to which they have 

rights from a current or past job.20 In 2004, 57.5 percent of families had rights to some type of plan other 

than OASI through the current or past work of either 

the family head or that person’s spouse or partner, a 

level nearly the same as in 2001. Of this group of 

families, 57.4 percent had a plan that was a standard 

defined-benefit plan with an annuity payout scheme, 

62.8 percent had a plan with at least some account 

feature, and 20.1 percent had both types of plan (data 

not shown in the tables). 

In many pension plans with account features, contributions may be made by the employer, the worker, 

or both. In some cases, these contributions represent 

a substantial amount of saving, though workers may 

offset this saving by reducing their saving in other 

forms. An employer’s contributions also represent 

additional income for the worker. In 2004, 88.5 percent of families with account-type plans on a current 

job of either the family head or the spouse or partner 

of the family head had employers who made contributions to the plan, and 89.4 percent of families with 

such plans made contributions themselves (data not 

shown in the tables). The median annual contribution 

by employers who contributed to such accounts was 

$2,400, and the median contribution of families that 

contributed was $2,700. 

The eligibility of working heads of families to 

participate in any type of job-related pension fell 

from 57.2 percent in 2001 to 54.8 percent in 2004; it 

had risen 2.0 percentage points over the preceding 

19. For one possible calculation of net worth that includes the 

annuity value of defined-benefit pension benefits and OASI payments, 

see Arthur B. Kennickell and Annika E. Sundén (2005), ‘‘Pensions, 

Social Security, and the Distribution of Wealth,’’ Finance and Economics Discussion Series 1997-55 (Washington: Board of Governors 

of the Federal Reserve System, October), www.federalreserve.gov/ 

pubs/feds/1997/index.html. 

20. The definition of account plan here differs slightly from that 

used in computing the survey wealth measure, which includes account 

balances only if the family has the ability to make withdrawals from, 

or borrow against, the account. Here the only criterion used in 

classification is whether there is any account balance. For example, a 

defined-benefit plan with a portable cash option, which would allow 

the covered worker to receive a lump sum in lieu of regular payments 

in retirement, would be treated as an account plan here. 

three years (data not shown in the tables). Participation by eligible workers is usually voluntary. In 2004, 

84.1 percent of family heads who were eligible to 

participate elected to do so, down from 85.2 percent 

in 2001.21 The choice to participate appears to be 

related strongly to income. Of heads of families with 

incomes in the lowest 20 percent of the distribution in 

2004, 50.6 percent who were eligible declined to 

participate; in contrast, among heads of families with 

incomes in the highest 10 percent of the distribution, 

only 5.0 percent of eligible workers declined to 

participate. 

Cash Value Life Insurance 

Cash value life insurance combines an investment 

vehicle with insurance coverage in the form of a 

death benefit.22 Some cash value life insurance policies offer a high degree of choice in the way the 

policy payments are invested. Investment returns on 

such policies are typically shielded from taxation 

until the money is withdrawn; if the funds remain 

untapped until the policyholder dies, the beneficiary 

of the policy may receive, tax-free, the death benefit 

or the cash value, whichever is greater. In contrast, 

term insurance, the other popular type of life insurance, offers only a death benefit. One attraction of 

cash value policies for some people is that they 

promote regular saving funded through the required 

policy premium. 

Ownership of cash value insurance is broadly 

spread across demographic groups, with a tendency 

toward increasing rates among families with higher 

levels of income and wealth and those with older 

family heads. Ownership of cash value policies over 

the 2001–04 period continued a declining trend, 

decreasing 3.8 percentage points, to 24.2 percent of 

families. The decline was shared by nearly all the 

demographic groups. Over this time, the ownership 

of either cash value or term life insurance also fell— 

from 69.3 percent to 65.4 percent of families (data 

21. An analysis of the March CPS with a definition of family head 

that is closest to that in this article shows a similar trend in pension 

eligibility for employed family heads, but that trend is at a somewhat 

higher level than in the SCF. The CPS eligibility estimate for family 

heads with a job in the past year was 61.9 percent in 2001 and 

57.8 percent in 2004. Differences in the definition of the relevant 

employment may explain some of the difference in the levels in the 

two surveys. Unlike the SCF, the CPS shows a small increase in the 

uptake rate for such eligible workers—from 82.9 percent in 2001 to 

83.4 percent in 2004. 

22. The survey measures the value of such policies according to 

their current cash value, not their death benefit. The cash value is 

included as an asset in this article only when there was a nonzero cash 

value at the time of the interview. 
A18 Federal Reserve Bulletin 2006 

not shown in the tables). Of those families with some 

type of life insurance, the proportion with term policies rose, while the proportion with cash value policies fell; these changes follow earlier trends in the 

survey. 

After rising fairly strongly over the period from 

1992 to 2001, the median value of cash value insurance for families that had any fell 43.9 percent 

between 2001 and 2004, and the mean fell 39.8 percent. The median showed sizable declines in every 

demographic group shown. Percentage declines were 

most notable among families in the bottom quartile of 

the wealth distribution, among younger families, and 

among renters. 

Other Managed Assets 

Ownership of other managed assets—personal annuities and trusts with an equity interest and managed 

investment accounts—is concentrated among families with higher levels of income and wealth and 

among families headed by persons who are aged 55 

or older or who are retired.23 Ownership of these 

assets rose 0.7 percentage point between 2001 and 

2004 after a similarly small increase over the previous three years. Across demographic groups, changes 

in ownership were mixed; ownership increased 

most—5.5 percent—for the oldest age group, and 

it decreased most—5.4 percent—for the highest 

wealth group. Of families having such accounts in 

2004, 26.3 percent had only a trust or managed 

investment account, 68.9 percent had only an annuity, and 4.9 percent had both (data not shown in the 

tables). 

23. The survey encourages respondents who have trusts or managed investment accounts that are held in relatively common investments to report the components. Of the 4.2 percent of families that 

reported having any kind of trust or managed investment account in 

2004, 45.1 percent of them reported at least one of the component 

assets separately. Of families that detailed the components in 2004, 

87.2 percent reported some type of financial asset, 11.0 percent 

reported a primary residence, 13.4 percent reported other real estate, 

3.6 percent reported a business, and 2.7 percent reported another type 

of asset (data not shown in the tables). Comparable figures are not 

available for 2001. 

In this article, the trust or managed investment accounts included in 

other managed assets are those in which families have an equity 

interest and for which component parts were not separately reported. 

Typically, such accounts are those in which the ownership is complicated or the management is undertaken by a professional. In 2004, 

79.0 percent of families with trusts or managed investment accounts 

had an equity interest in those accounts. Annuities may be those in 

which the family has an equity interest in the asset or in which there is 

an entitlement only to a stream of income. The wealth figures in this 

article include only the annuities in which there is an equity interest. 

In 2004, 7.2 percent of families reported having any type of annuity, 

and of these families, 81.8 percent reported having an equity interest. 

Between 2001 and 2004, the median value of other 

managed assets fell 39.7 percent, and the mean fell 

35.6 percent. During the preceding three-year period, 

the median had more than doubled. Over the recent 

period, median holdings declined for almost all 

demographic groups. The declines reflect substantial 

reductions both in annuities and in trusts or managed 

investment accounts. For families with an equity 

interest in an annuity, the median holding fell 

30.6 percent, to $37,000, in 2004; for families with a 

trust or managed investment account as defined in 

this article, the median holding fell 37.4 percent, to 

$100,000 (data not shown in the tables). 

As noted in the discussion of retirement accounts, 

some families use settlements from retirement 

accounts to purchase an annuity. In 2004, 26.7 percent of families with annuities had done so (data not 

shown in the tables). Of these families, 91.6 percent 

had an equity interest in their annuities. 

Other Financial Assets 

For other financial assets—a heterogeneous category 

including oil and gas leases, futures contracts, royalties, proceeds from lawsuits or estates in settlement, 

and loans made to others—ownership rose 0.6 percentage point between 2001 and 2004, to 10.0 percent. Ownership of such assets tends to be more 

common among higher income and wealth groups, 

younger age groups, and families headed by a person 

who is self-employed. Changes in ownership across 

demographic groups were generally positive, while 

the median holding for those who had such assets fell 

7.0 percent, to $4,000. 

Some publicly traded companies offer stock 

options to their employees as a form of compensation.24 Although stock options, when executed, may 

represent an appreciable part of a family’s net worth, 

the survey does not specifically ask for the value of 

these options.25 Instead, the survey asks whether the 

family head or that person’s spouse or partner had 

been given stock options by an employer during the 

preceding year. In 2004, 9.3 percent of families 

reported having received stock options, a share 

2.1 percentage points below the level in 2001 (data 

not shown in the tables). 

24. See David Lebow, Louise Sheiner, Larry Slifman, and Martha 

Starr-McCluer (1999), ‘‘Recent Trends in Compensation Practices,’’ 

Finance and Economics Discussion Series 1999-32 (Washington: 

Board of Governors of the Federal Reserve System, July). 

25. Because such options are typically not publicly traded or their 

execution is otherwise constrained, their value is uncertain until the 

exercise date; until then, meaningful valuation would require complex 

assumptions about the future behavior of stock prices. 
Recent Changes in U.S. Family Finances: Evidence from the 2001 and 2004 Survey of Consumer Finances A19 

6.	 Direct and indirect family holdings of stock, by selected characteristics of families, 1995–2004 surveys 

Percent except as noted 

Family 

characteristic 

Families with holdings 

Median value among families 

with holdings 

(thousands of 2004 dollars) 

Total stock holdings as a share 

of total financial assets 

1995 1998 2001 2004 1995 1998 2001 2004 1995 1998 2001 2004 

All families ............. 

Percentile of income 

Less than 20 ............ 

20–39.9 ................. 

40–59.9 ................. 

60–79.9 ................. 

80–89.9 ................. 

90–100 ................. 

Age of head (years) 

Less than 35 ............ 

35–44 .................. 

45–54 .................. 

55–64 .................. 

65–74 .................. 

75 or more .............. 

Housing status 

Owner .................. 

Renter or other .......... 

40.4 

6.5 

24.7 

41.5 

54.3 

69.7 

80.0 

36.6 

46.4 

48.9 

40.0 

34.4 

27.9 

48.8 

25.0 

48.9 51.9 

10.0 12.4 

30.8 33.5 

50.2 52.1 

69.3 75.7 

77.9 82.0 

90.4 89.6 

40.8 48.9 

56.7 59.5 

58.6 59.2 

55.9 57.1 

42.7 39.2 

29.4 34.2 

59.8 62.0 

27.5 30.7 

48.6 

11.7 

28.8 

49.2 

66.5 

82.5 

91.0 

38.8 

52.3 

54.4 

61.6 

45.8 

34.8 

59.1 

25.1 

18.0 29.0 36.7 24.3 

4.6 5.8 7.4 7.0 

7.8 11.6 8.0 8.8 

7.7 13.9 16.0 11.6 

15.6 22.0 30.4 20.0 

30.8 52.2 68.8 34.6 

73.9 156.5 263.8 169.9 

6.3 8.1 7.5 5.2 

12.3 23.2 29.3 12.7 

31.9 44.1 53.3 30.6 

38.2 54.5 86.5 59.5 

41.9 64.9 159.8 75.0 

24.6 69.6 127.8 85.9 

22.2 39.4 53.3 34.4 

7.9 8.7 7.5 6.7 

40.1 54.0 56.0 47.4 

14.2 20.4 36.9 31.3 

26.7 29.8 34.9 29.6 

28.5 38.1 46.5 41.0 

35.6 45.8 51.7 37.5 

41.3 50.4 57.4 43.2 

45.7 62.5 60.5 53.6 

27.2 44.9 52.5 30.0 

39.5 55.0 57.3 47.7 

43.1 55.7 59.1 46.8 

44.5 58.4 56.2 51.1 

35.8 51.3 55.2 51.1 

39.8 48.7 51.4 39.1 

41.1 55.1 56.7 48.0 

32.4 40.5 46.2 35.5 

Note: Indirect holdings are those in retirement accounts and other managed assets. See also note to table 1. 

Direct and Indirect Holdings of Publicly Traded 

Stocks 

Families may hold stocks in publicly traded companies directly or indirectly, and information about each 

of these forms of ownership is collected separately 

in the SCF. When direct and indirect forms are 

combined, the 2004 data show a break in a trend of 

increasing stock ownership dating to before the 1995 

survey (table 6). Between 2001 and 2004, the fraction 

of families holding any such stock fell 3.3 percentage 

points, to 48.6 percent, a level apparently last reached 

some time between the 1995 and 1998 surveys. Much 

like ownership of directly held stock, ownership of 

direct and indirect holdings is more common among 

higher-income groups and among families headed 

by persons aged 35 to 64. Over the recent three-year 

period, ownership declined for all income groups 

except the top two deciles and for the age groups 

55 or older. 

At the same time, the overall median value of 

direct and indirect stock holdings dropped 33.8 percent. The decline was shared by all the demographic 

groups shown except for families in the second quintile of the income distribution, a group with a rate 

of ownership that is much below the average. As a 

proportion of financial assets, holdings declined 

8.6 percentage points overall and also fell substantially for every demographic group shown. 

Among families that held stocks in 2004, 78.2 percent held them through a tax-deferred retirement 

account, 42.5 percent through direct holdings of 

stocks, 29.4 percent through direct holdings of pooled 

investment funds, and 9.7 percent through a managed 

investment account or an equity interest in an annuity 

or trust (data not shown in the tables); 44.0 percent 

had ownership through more than one such means. 

Regarding the distribution of the amount of directly 

and indirectly held equities, 30.8 percent was held 

in tax-deferred retirement accounts, 37.1 percent as 

directly held stocks, 24.1 percent as directly held 

pooled investment funds, and 8.0 percent as other 

managed assets. 

Nonfinancial Assets 

By definition, a rise in nonfinancial assets as a share 

of total assets must exactly offset the 6.3 percentage 

7.	 Value of nonfinancial assets of all families, distributed 

by type of asset, 1995–2004 surveys 

Percent 

Type of asset 1995 1998 2001 2004 

Vehicles ...................... 

Primary residence ............. 

Other residential property ...... 

Equity in nonresidential 

property .................. 

Business equity ............... 

Other ......................... 

Total ..................... 

Memo

Nonfinancial assets as a 

share of total assets ....... 

7.1 

47.5 

8.0 

7.9 

27.2 

2.3 

100 

63.3 

6.5 

47.0 

8.5 

7.7 

28.5 

1.7 

100 

59.3 

5.9 

46.9 

8.1 

8.2 

29.3 

1.6 

100 

58.0 

5.1 

50.3 

9.9 

7.3 

25.9 

1.5 

100 

64.3 

Note: See note to table 1 and text note 26. 
A20 Federal Reserve Bulletin 2006 

8.	 Family holdings of nonfinancial assets and of any asset, by selected characteristics of families and type of asset, 2001 and 

2004 surveys 

A.	 2001 Survey of Consumer Finances 

Family 

characteristic Vehicles Primary residence 

Other 

residential 

property 

Equity in 

nonresidential 

property 

Business 

equity Other 

Any 

nonfinancial 

asset 

Any 

asset 

All families ..................... 

Percentile of income 

Less than 20 .................... 20–39.9 ......................... 

40–59.9 ......................... 

60–79.9 ......................... 

80–89.9 ......................... 

90–100 ......................... 

Age of head (years) 

Less than 35 .................... 

35–44 .......................... 

45–54 .......................... 55–64 .......................... 

65–74 .......................... 

75 or more ...................... 

Race or ethnicity of respondent 

White non-Hispanic ............. 

Nonwhite or Hispanic ........... 

Current work status of head 

Working for someone else ....... 

Self-employed .................. 

Retired ......................... 

Other not working ............... 

Housing status 

Owner .......................... 

Renter or other .................. 

Percentile of net worth 

Less than 25 .................... 

25–49.9 ......................... 

50–74.9 ......................... 75–89.9 ......................... 

90–100 ......................... 

Percentage of families holding asset 

84.8 67.7 11.3 8.2 11.9 7.5 90.7 96.7 

56.8 40.6 3.1 2.8 2.5 2.9 67.7 85.6 

86.7 57.3 5.4 6.7 7.1 5.8 93.1 98.3 

91.6 66.0 7.9 6.7 8.8 6.2 95.6 99.8 

94.8 81.8 14.2 7.0 12.0 8.7 97.8 100.0 

95.4 90.9 19.7 12.1 18.7 9.4 99.4 100.0 

92.8 94.4 32.8 23.9 39.0 17.9 99.5 100.0 

78.8 39.9 3.4 2.8 7.0 6.8 83.0 93.2 

88.9 67.8 9.2 7.4 14.2 7.8 93.2 97.4 

90.5 76.2 14.7 10.0 17.1 7.2 95.2 98.1 

90.7 83.2 18.3 12.3 15.6 7.9 95.4 98.4 

81.3 82.5 13.7 12.9 11.7 9.7 91.6 97.1 

73.9 76.2 15.2 8.3 2.4 5.8 86.4 97.8 

89.2 74.3 13.0 9.6 13.9 8.9 94.7 99.0 

71.4 47.3 6.3 3.9 5.5 3.1 78.4 89.8 

88.5 64.7 10.0 6.7 6.1 7.3 92.5 97.8 

88.6 80.3 19.5 17.9 60.8 14.0 97.1 98.6 

77.1 73.8 12.0 8.2 3.3 5.3 86.7 95.8 

63.8 43.6 4.9 3.8 5.8 * 70.3 82.2 

92.2 100.0 14.9 10.9 15.5 8.7 100.0 100.0 

69.3 . . . 3.9 2.5 4.2 4.9 71.3 89.9 

64.8 14.3 * * 1.2 3.0 68.2 87.0 

86.8 69.6 4.5 3.6 4.0 5.0 96.3 100.0 

94.1 91.4 12.7 8.0 11.5 6.6 98.7 100.0 

93.1 95.1 19.5 15.3 22.4 10.2 99.6 100.0 

94.1 95.8 39.0 30.0 42.8 22.7 99.7 100.0 

point drop in the share of financial assets from 2001 

to 2004 discussed earlier in this article (table 4). The 

changes in these shares may have been driven by 

changes in portfolio choices, portfolio valuation, or 

both. Over the six most recent surveys, the 2001 

estimate of the value of nonfinancial assets as a 

share of total assets, 58.0 percent, appears to be the 

low point; the 2004 level, 64.3 percent, is about the 

same as the level seen in the 1995 survey (table 7). 

Over the recent three-year period, the value of primary residences as a share of nonfinancial assets 

increased 3.4 percentage points, to 50.3 percent, the 

largest share ever recorded in the survey. The share 

of other residential property also rose. The largest 

offsetting decline was in the share of business equity, 

which fell 3.4 percentage points. Smaller declines 

were seen in the shares of the remaining nonfinancial 

assets. 

In 2004, the level of ownership of nonfinancial 

assets was 92.5 percent, 1.8 percentage points higher 

than in 2001 (first half of tables 8.A and 8.B, next-tolast column). Across most of the demographic groups 

shown, the 2004 rate was about 90 percent or more— 

exceptions were the lowest income and wealth 

groups, nonwhite or Hispanic families, families 

headed by persons who were neither working nor 

retired, and renters. Over the 2001–04 period, ownership rose most for the lowest income and wealth 

groups, the youngest and the two oldest age groups, 

nonwhite or Hispanic families, renters, and families 

headed by persons who were neither working nor 

retired. The only substantial declines in ownership 

were seen by the 55–64 age group and the second 

quintile of the income distribution. 

Over the recent period, the median holding of 

nonfinancial assets for families having any such 

assets rose 22.2 percent, and the mean rose 19.5 percent. Across demographic groups, substantial gains 

far outnumbered declines in the median. Over this 

time, the median fell only for some groups that saw 

gains in ownership; this result suggests that the fall 

in the median may have been driven, at least in part, 

by the influx of new owners with relatively small 

holdings. 
Recent Changes in U.S. Family Finances: Evidence from the 2001 and 2004 Survey of Consumer Finances A21 

8.—Continued 

A. 2001 Survey of Consumer Finances—Continued 

Family 

characteristic Vehicles Primary residence 

Other 

residential 

property 

Equity in 

nonresidential 

property 

Business 

equity Other 

Any 

nonfinancial 

asset 

Any 

asset 

All families ..................... 

Percentile of income 

Less than 20 .................... 20–39.9 ......................... 

40–59.9 ......................... 

60–79.9 ......................... 

80–89.9 ......................... 

90–100 ......................... 

Age of head (years) 

Less than 35 .................... 

35–44 .......................... 

45–54 .......................... 55–64 .......................... 

65–74 .......................... 

75 or more ...................... 

Race or ethnicity of respondent 

White non-Hispanic ............. 

Nonwhite or Hispanic ........... 

Current work status of head 

Working for someone else ....... 

Self-employed .................. 

Retired ......................... 

Other not working ............... 

Housing status 

Owner .......................... 

Renter or other .................. 

Percentile of net worth 

Less than 25 .................... 

25–49.9 ......................... 

50–74.9 ......................... 75–89.9 ......................... 

90–100 ......................... 

Memo

Mean value of holdings for 

families holding asset ....... 

Median value of holdings for families holding asset (thousands of 2004 dollars) 

14.4 131.0 85.2 52.7 106.5 12.8 120.9 156.8 

5.7 69.2 26.6 34.6 60.0 6.4 36.5 24.4 

8.9 85.2 79.9 32.0 37.3 6.4 60.7 71.5 

13.4 101.2 53.3 32.0 65.7 10.7 98.2 122.5 

18.7 138.5 74.6 53.3 66.6 10.7 161.5 245.0 

24.2 186.4 66.6 49.0 106.5 21.3 239.2 401.6 

31.9 319.5 213.0 155.8 285.7 53.3 510.8 1,075.1 

12.1 101.2 79.9 35.5 53.3 10.7 31.7 41.4 

15.8 133.1 79.9 42.1 106.5 9.6 125.5 167.9 

16.7 143.8 69.2 60.3 108.6 11.7 150.8 225.7 

16.1 138.5 85.2 83.6 106.5 32.0 157.5 241.1 

14.5 137.4 154.4 53.3 106.5 21.3 158.9 228.6 

9.4 118.2 85.2 29.8 544.2 12.8 130.6 180.6 

15.6 138.5 85.2 53.3 106.5 16.0 141.4 197.7 

10.6 99.1 63.9 32.0 53.3 4.8 62.8 61.3 

14.6 127.8 74.6 42.1 53.3 10.7 108.6 137.4 

20.5 213.0 159.8 109.1 140.9 32.0 356.8 467.8 

10.7 106.5 90.5 61.8 69.8 21.3 111.9 148.5 

10.9 106.5 117.2 35.1 117.2 * 80.6 45.9 

17.2 131.0 85.2 53.3 114.7 16.0 167.2 255.8 

8.1 . . . 63.9 34.6 37.3 6.4 9.4 14.2 

6.7 52.7 * * 10.7 4.3 8.8 8.7 

12.5 74.6 25.6 9.6 16.0 10.7 66.7 79.9 

16.2 127.8 53.3 26.6 53.3 10.7 154.3 229.7 

20.2 213.0 85.2 55.7 127.8 19.2 300.1 541.6 

30.7 372.8 223.7 225.5 532.6 42.6 758.9 1,531.7 

19.5 192.6 198.4 277.2 687.5 60.2 306.6 495.6 

Note: See notes to table 7. * Ten or fewer observations. . . . Not applicable. 

Vehicles 

Vehicles continue to be the most commonly held 

nonfinancial asset.26 Over the recent three-year 

period, the share of families that owned some type of 

vehicle rose 1.5 percentage points, to 86.3 percent. 

Ownership rose for most demographic groups but 

particularly for families in the lowest income and 

wealth groups, families headed by persons aged 65 to 

74, and nonwhite or Hispanic families. 

The median market value of vehicles for those who 

owned at least one declined 1.4 percent from 2001 to 

26. The definition of vehicles here is a broad one that includes cars, 

vans, sport-utility vehicles, trucks, motor homes, recreational vehicles, motorcycles, boats, airplanes, and helicopters. Of families owning any type of vehicle in 2004, 99.8 percent had a car, van, sportutility vehicle, motorcycle, or truck. The remaining types of vehicle 

were held by 13.3 percent of families. 

2004, while the mean rose 3.1 percent.27 The median 

value of vehicle holdings fell notably for the lowest 

two income and wealth groups, the two oldest and the 

youngest age groups, nonwhite or Hispanic families, 

renters, and families having a head who was retired; 

for most other families, the median rose. Continuing 

a trend, the share of the total value of owned vehicles 

attributable to sport-utility vehicles rose over the 

recent period from 14.0 percent to 19.1 percent (data 

not shown in the tables). 

Some families have vehicles that they lease or that 

are provided to them by an employer for personal 

27. Survey respondents are asked to provide the year, make, and 

model of each of their cars, vans, sport-utility vehicles, and trucks. 

This information is used to obtain market prices from data collected 

by the National Automobile Dealers Association and a variety of other 

sources. For other types of vehicle, the respondent is asked to provide 

a best estimate of the current value. 
A22 Federal Reserve Bulletin 2006 

8.	 Family holdings of nonfinancial assets and of any asset, by selected characteristics of families and type of asset, 

2001 and 2004 surveys—Continued 

B.	 2004 Survey of Consumer Finances 

Family 

characteristic Vehicles Primary residence 

Other 

residential 

property 

Equity in 

nonresidential 

property 

Business 

equity Other 

Any 

nonfinancial 

asset 

Any 

asset 

All families ..................... 

Percentile of income 

Less than 20 .................... 20–39.9 ......................... 

40–59.9 ......................... 

60–79.9 ......................... 

80–89.9 ......................... 

90–100 ......................... 

Age of head (years) 

Less than 35 .................... 

35–44 .......................... 

45–54 .......................... 55–64 .......................... 

65–74 .......................... 

75 or more ...................... 

Race or ethnicity of respondent 

White non-Hispanic ............. 

Nonwhite or Hispanic ........... 

Current work status of head 

Working for someone else ....... 

Self-employed .................. 

Retired ......................... 

Other not working ............... 

Housing status 

Owner .......................... 

Renter or other .................. 

Percentile of net worth 

Less than 25 .................... 

25–49.9 ......................... 

50–74.9 ......................... 75–89.9 ......................... 

90–100 ......................... 

Percentage of families holding asset 

86.3 69.1 12.5 8.3 11.5 7.8 92.5 97.9 

65.0 40.3 3.6 2.7 3.7 3.9 76.4 92.2 

85.3 57.0 6.9 3.8 6.7 4.4 92.0 97.8 

91.6 71.5 10.0 7.6 9.5 7.5 96.7 99.8 

95.3 83.1 14.0 10.6 12.0 10.4 98.4 100.0 

95.9 91.8 19.3 12.8 16.0 8.3 99.1 99.8 

93.1 94.7 37.2 20.8 34.7 16.7 99.3 100.0 

82.9 41.6 5.1 3.3 6.9 5.5 88.6 96.5 

89.4 68.3 9.4 6.4 13.9 6.0 93.0 97.7 

88.8 77.3 16.3 11.4 15.7 9.7 94.7 98.3 

88.6 79.1 19.5 12.8 15.8 9.2 92.6 97.5 

89.1 81.3 19.9 10.6 8.0 9.0 95.6 99.5 

76.9 85.2 9.7 7.7 5.3 8.5 92.5 99.6 

90.3 76.1 14.0 9.2 13.6 9.3 95.8 99.3 

76.1 50.8 8.9 5.8 5.9 3.8 84.0 94.4 

89.7 66.5 10.4 6.8 5.8 7.1 93.8 98.4 

91.2 79.1 25.8 18.7 58.1 12.9 97.5 99.1 

79.0 75.8 12.8 7.9 3.5 7.1 89.8 97.7 

66.9 40.0 5.4 * 6.9 6.4 76.3 89.6 

92.3 100.0 15.7 11.0 14.7 9.2 100.0 100.0 

73.0 . . . 5.4 2.4 4.3 4.6 75.9 93.3 

69.8 15.2 * * * 2.9 73.7 91.7 

89.2 71.2 4.9 4.1 5.6 5.4 97.5 100.0 

92.0 93.4 12.7 8.3 11.2 7.8 99.0 100.0 

95.2 96.2 23.1 15.1 19.9 12.3 99.8 100.0 

93.1 96.9 45.6 28.8 40.8 18.8 99.9 100.0 

use. The share of families having a vehicle from any 

source rose 1.3 percentage points over the recent 

period, to 89.2 percent (data not shown in the tables). 

The small difference between this rate and the ownership rate for personally owned vehicles belies a larger 

change in the rates of holding for leased and 

employer-provided vehicles. The proportion of families with a leased vehicle fell from 5.8 percent to 

4.0 percent, while that with an employer-provided 

vehicle fell from 9.1 percent to 7.7 percent. 

Primary Residence and Other Residential Real 

Estate 

The homeownership rate over the 2001−04 period 

continued its upward trend, rising 1.4 percentage 

points, to 69.1 percent.28 In 2004, groups that had a 

28. This measure of primary residences comprises mobile homes 

and their sites, the parts of farms and ranches not used for a farming or 

ranching business, condominiums, cooperatives, townhouses, other 

single-family homes, and other permanent dwellings. 

rate less than the overall rate included nonwhite or 

Hispanic families, families whose head was neither 

working nor retired, families with relatively low 

income or wealth, and families headed by persons 

aged less than 35. Over the three-year period, ownership rose most for families in the middle of the 

income and wealth distributions, for families headed 

by persons aged 75 or older, and for nonwhite or 

Hispanic families; the rate fell notably for the 55–64 

age group and for the self-employed and the othernot-working work-status groups. Despite the aboveaverage rise in ownership for nonwhite or Hispanic 

families, their ownership rate remained well below 

that for other families. 

As would be expected from the large increase in 

both the share of total assets attributable to nonfinancial assets and the share of nonfinancial assets attributable to primary residences, the median and mean 

values of the primary residences of homeowners rose 

sharply over the recent period; overall, the median 

rose 22.1 percent, and the mean rose 28.1 percent. 

Because housing wealth is typically the largest com­
Recent Changes in U.S. Family Finances: Evidence from the 2001 and 2004 Survey of Consumer Finances A23 

8.—Continued 

B. 2004 Survey of Consumer Finances—Continued 

Family 

characteristic Vehicles Primary residence 

Other 

residential 

property 

Equity in 

nonresidential 

property 

Business 

equity Other 

Any 

nonfinancial 

asset 

Any 

asset 

All families ..................... 

Percentile of income 

Less than 20 .................... 20–39.9 ......................... 

40–59.9 ......................... 

60–79.9 ......................... 

80–89.9 ......................... 

90–100 ......................... 

Age of head (years) 

Less than 35 .................... 

35–44 .......................... 

45–54 .......................... 55–64 .......................... 

65–74 .......................... 

75 or more ...................... 

Race or ethnicity of respondent 

White non-Hispanic ............. 

Nonwhite or Hispanic ........... 

Current work status of head 

Working for someone else ....... 

Self-employed .................. 

Retired ......................... 

Other not working ............... 

Housing status 

Owner .......................... 

Renter or other .................. 

Percentile of net worth 

Less than 25 .................... 

25–49.9 ......................... 

50–74.9 ......................... 75–89.9 ......................... 

90–100 ......................... 

Memo

Mean value of holdings for 

families holding asset ....... 

Median value of holdings for families holding asset (thousands of 2004 dollars) 

14.2 160.0 100.0 60.0 100.0 15.0 147.8 172.9 

4.5 70.0 33.0 11.0 30.0 4.5 22.4 17.0 

7.9 100.0 65.0 30.0 30.0 7.5 71.1 78.3 

13.1 135.0 55.0 36.0 62.5 10.0 131.2 154.4 

19.8 175.0 100.0 47.0 150.0 10.0 197.2 289.4 

25.8 225.0 98.0 60.0 100.0 17.5 281.8 458.5 

33.0 450.0 268.3 189.0 350.0 50.0 651.2 1,157.7 

11.3 135.0 82.5 55.0 50.0 5.0 32.3 39.2 

15.6 160.0 80.0 42.2 100.0 10.0 151.3 173.4 

18.8 170.0 90.0 43.0 144.0 20.0 184.5 234.9 

18.6 200.0 135.0 75.0 190.9 25.0 226.3 351.2 

12.4 150.0 80.0 78.0 100.0 30.0 161.1 233.2 

8.4 125.0 150.0 85.8 80.3 11.0 137.1 185.2 

15.7 165.0 105.0 66.0 135.0 16.5 164.8 224.5 

9.8 130.0 80.0 30.0 66.7 10.0 64.1 59.6 

14.9 160.0 88.0 40.0 50.0 10.0 141.9 161.2 

21.9 248.0 141.5 125.0 174.0 30.0 335.4 468.3 

10.1 130.0 100.0 60.0 120.0 25.0 131.7 165.6 

10.7 130.0 86.0 * 25.0 20.0 60.0 30.3 

17.5 160.0 100.0 62.0 122.8 17.5 201.6 289.9 

7.2 . . . 80.0 56.0 50.0 8.0 8.4 12.2 

5.6 65.0 * * * 3.0 7.4 7.7 

11.9 85.0 25.6 14.9 17.5 6.0 72.4 84.5 

17.4 159.3 65.0 25.0 55.0 10.0 188.1 257.3 

22.6 250.0 100.0 73.9 150.0 25.0 360.8 600.2 

30.6 450.0 325.0 250.0 527.4 80.0 907.7 1,572.6 

20.1 246.8 267.3 298.1 765.5 66.6 366.3 538.4 

Note: See notes to table 7. * Ten or fewer observations. . . . Not applicable. 

ponent of families’ fungible wealth, the large percentage gains in the median and mean produced large 

dollar gains: $29,000 for the median and $54,200 for 

the mean. Homeowners in all demographic groups 

saw gains in the median, most of them substantial. 

One of the largest increases was the 31.2 percent rise 

in the median value of primary residences for nonwhite or Hispanic families; in contrast, the median 

for other families rose 19.1 percent. 

In 2004, 12.5 percent of families owned some form 

of residential real estate besides a primary residence 

(second homes, time shares, one- to four-family 

rental properties, and other types of residential property), a level up 1.2 percentage points from the figure 

in 2001 but approximately the same as the 1998 

estimate. Ownership is much more common among 

the highest income and wealth groups, among the age 

groups between 45 and 74, and among families 

headed by self-employed persons. As was the case 

with primary residences, the median and mean values 

for owners increased sharply over the recent period; 

the median rose 17.4 percent and the mean 34.7 percent. Most of the demographic groups saw substantial gains in the median; only a few saw declines, but 

where they occurred they tended to be substantial. 

Net Equity in Nonresidential Real Estate 

The ownership of nonresidential real estate was about 

unchanged at 8.3 percent of families in 2004.29 Ownership follows approximately the same relative distribution over demographic groups as does the owner29. Nonresidential real estate comprises the following types of 

property unless it is owned through a business: commercial property, 

rental property with five or more units, farm and ranch land, undeveloped land, and all other types of nonresidential real estate. 
A24 Federal Reserve Bulletin 2006 

ship of other residential real estate. Changes in 

ownership during the recent period were mixed 

across demographic groups. Among the income 

groups with substantial ownership in 2001, the key 

changes were a decline in ownership among the 

highest decile and an increase among the fourth quintile. Overall, the median value of such property for 

owners rose 13.9 percent, and the mean rose 7.5 percent. Among income groups, the largest gains in the 

median were in the top two deciles, which also had 

the highest rates of ownership; declines in the median 

appeared for all other income groups except the third 

quintile. 

Net Equity in Privately Held Businesses 

The share of families that owned a privately held 

business interest edged down 0.4 percentage point 

during the recent period, to 11.5 percent.30 The proportion has changed little over the past several surveys. Ownership of this type of asset tends to increase 

with income and wealth and to be the highest for 

families headed by persons aged between 45 and 64; 

over the recent three-year period, declines in ownership were largely concentrated in the highest income 

and wealth groups. Continuing a pattern seen in the 

preceding three years, ownership also declined 

among families with a head who was selfemployed.31 

The median holding of business equity for those 

having any declined 6.1 percent, while the mean 

increased 11.3 percent. These changes follow a jump 

of 53.0 percent in the median and 21.8 percent in the 

mean between the 1998 and 2001 surveys. Across 

income groups over the recent three-year period, 

gains in the median were seen in the top decile and 

the fourth quintile. Growth rates in median holdings 

were similar across racial or ethnic groups; however, 

the median level for nonwhites or Hispanics remained 

roughly half that of other families with business 

assets. 

30. The forms of business in this category are sole proprietorships, 

limited partnerships, other types of partnership, subchapter S corporations and other types of corporation that are not publicly traded, 

limited liability companies, and other types of private business. If the 

family surveyed lived on a farm or ranch that was used at least in part 

for agricultural business, the value of that part net of the corresponding share of associated debts is included with other business assets. 

31. In the survey, self-employment status and business ownership 

are independently determined. Among the 11.5 percent of families 

with a business in 2004, 69.9 percent had a family head or the spouse 

or partner of the head who was self-employed; among the 15.0 percent 

of families in which either the head or the spouse or partner of the 

head was self-employed, 53.5 percent owned a business (data not 

shown in the tables). 

The SCF classifies privately owned business interests into those in which the family has an active 

management role and those in which it does not. Of 

families having any business interests in 2004, 

92.8 percent had an active role and 12.3 percent had a 

passive role; 5.1 percent had interests in which they 

had each type of role (data not shown in the tables). 

In terms of assets, the actively managed interests 

accounted for 89.1 percent of total privately owned 

business interests. The median number of actively 

managed businesses was 1. The businesses reported 

in the survey were a mixture of very small businesses 

with moderate values and substantially more valuable 

businesses. 

Families with more than one business are asked to 

report which business is most important; that business is designated as the primary one.32 The vast 

majority of primary businesses operated in an industry other than manufacturing; the most common organizational form of those businesses was sole proprietorship, and the median number of employees was 2. 

However, primary actively managed businesses with 

more than two employees accounted for 83.7 percent 

of the value of all such businesses, and the largest 

share of value (40.6 percent) was attributable to 

businesses organized as subchapter S corporations. 

Other Nonfinancial Assets 

Ownership of the remaining nonfinancial assets (tangible items including artwork, jewelry, precious metals, antiques, hobby equipment, and collectibles) 

increased marginally in the recent period, to 7.8 percent. Among wealth groups, the notable change was a 

decline of 3.9 percentage points in ownership in the 

highest wealth group; this change entirely offset a 

gain for the group over the previous three years. For 

families having such assets, the median value 

rose 17.2 percent over the recent period, and the 

mean rose 10.6 percent. Across wealth groups, 

median holdings rose substantially in the top two 

wealth groups and declined among the rest. 

Unrealized Capital Gains 

Changes in the values of assets such as stock, real 

estate, and businesses are a key determinant of 

changes in families’ net worth. Unrealized gains are 

32. For families with only one business, that business is, by default, 

considered the primary one. In 2004, the primary actively managed 

business accounted for 78.7 percent of the value of all actively 

managed businesses. 
Recent Changes in U.S. Family Finances: Evidence from the 2001 and 2004 Survey of Consumer Finances A25 

9. Family holdings of unrealized capital gains, by selected characteristics of families, 1995–2004 surveys 

Thousands of 2004 dollars 

Family 1995 1998 2001 2004 

characteristic Median Mean Median Mean Median Mean Median Mean 

All families ................. 

Percentile of income 

Less than 20 ................ 

20–39.9 ..................... 

40–59.9 ..................... 

60–79.9 ..................... 

80–89.9 ..................... 

90–100 ..................... 

Age of head (years) 

Less than 35 ................ 

35–44 ...................... 

45–54 ...................... 

55–64 ...................... 

65–74 ...................... 

75 or more .................. 

6.8 

† 

.4 

4.6 

16.4 

33.2 

80.0 

† 

4.9 

22.9 

34.0 

36.9 

40.2 

83.3 

19.1 

31.2 

40.4 

56.9 

85.5 

452.6 

11.8 

44.7 

117.7 

169.5 

145.3 

106.0 

12.5 

† 

2.1 

10.4 

23.4 

39.6 

112.5 

† 

8.2 

25.9 

40.8 

53.9 

41.7 

111.9 

20.9 

34.0 

51.1 

76.3 

110.5 

643.7 

17.9 

73.4 

146.0 

216.8 

190.2 

131.8 

16.0 

† 

1.5 

10.1 

29.8 

58.6 

170.4 

† 

11.7 

29.8 

43.6 

51.1 

53.3 

138.2 

18.6 

44.0 

49.1 

91.8 

151.0 

824.1 

30.3 

99.0 

164.5 

237.2 

254.9 

159.8 

23.0 

† 

3.0 

21.0 

46.7 

70.0 

221.9 

† 

19.4 

39.0 

58.0 

50.0 

58.1 

161.7 

31.1 

52.1 

74.3 

120.3 

155.5 

905.8 

28.1 

119.6 

205.4 

286.7 

231.4 

189.0 

Note: See note to table 1. † Less than 0.05 ($50). 

increases or decreases in the value of assets that are 

yet to be sold. To obtain information on this part of 

net worth, the survey asks about changes in value 

from the time of purchase for certain key assets— 

publicly traded stocks, pooled investment funds, the 

primary residence, other real estate, and the current 

tax basis of businesses.33 The median unrealized capital gain in these assets over the 2001–04 period 

moved up 43.8 percent, and the mean moved up 

17.0 percent (table 9); during the 1998–2001 period, 

the median had risen 28.0 percent, and the mean had 

risen 23.5 percent. The recent gains predominantly 

accrued to the middle income groups and to age 

groups other than the youngest and the 65–74 groups. 

The rise in unrealized gains reflects strong appreciation of residential real estate over the period as well 

as the relative illiquidity of real estate and businesses. 

Of the total amount of unrealized capital gains in 

2004, 44.6 percent was due to appreciation of primary residences; the comparable figure for 2001 had 

been 35.6 percent (data not shown in the tables). In 

2004, unrealized gains measured in the SCF 

accounted for 30.7 percent of the assets of all families; the median share of such gains relative to assets 

over all families was 11.2 percent. 

LIABILITIES 

Liabilities and assets increased substantially from 

2001 to 2004, but the rise in liabilities was more 

rapid overall. Over this time, the principal changes in 

33. The survey does not collect information on capital gains on 

every asset for which such gains are possible. Most notably, it does 

not collect such information for retirement accounts. 

10.	 Amount of debt of all families, distributed 

by type of debt, 1995–2004 surveys 

Percent 

Type of debt 1995 1998 2001 2004 

Secured by residential property 

Primary residence ............. 

Other ......................... 

Lines of credit not secured by 

residential property ......... 

Installment loans ................ 

Credit card balances ............. 

Other ........................... 

Total ....................... 

Memo

Debt as a percentage 

of total assets .............. 

73.1 

7.6 

.6 

12.0 

3.9 

2.9 

100 

14.6 

71.4 

7.5 

.3 

13.1 

3.9 

3.7 

100 

14.2 

75.2 

6.2 

.5 

12.3 

3.4 

2.3 

100 

12.1 

75.2 

8.5 

.7 

11.0 

3.0 

1.6 

100 

15.0 

Note: See note to table 1 and text note 38. 

different types of debt as a share of total debt were an 

increase in the share of loans for other residential 

property and a decrease in the share of installment 

loans (table 10). The largest share of total debt was 

debt secured by the primary residence, the amount of 

which kept pace with the increase in total debt. 

Because liabilities increased faster than assets, the 

ratio of the overall sum of family debts to the sum of 

their assets (the leverage ratio) rose 2.9 percentage 

points, from 12.1 percent to 15.0 percent (table 10, 

memo line).34 This increase follows a 2.1 percentage 

point decrease over the preceding three years. If the 

calculation is restricted to families that had debt, the 

leverage ratio was 19.9 percent in 2004, an increase 

of 3.4 percentage points from 2001 (data not shown 

in the tables). 

34. Data from the flow of funds accounts show that the leverage 

ratio for the household sector increased from 16.3 percent in 2001 to 

18.1 percent in 2004. 
A26 Federal Reserve Bulletin 2006 

11. Family holdings of debt, by selected characteristics of families and type of debt, 2001 and 2004 surveys 

A. 2001 Survey of Consumer Finances 

Family 

characteristic 

Secured by residential 

property 

Lines of 

credit not 

secured by 

residential 

property 

Installment 

loans 

Credit 

card 

balances 

Other Any 

debt Primary 

residence Other 

All families ....................... 

Percentile of income 

Less than 20 ...................... 

20–39.9 ........................... 

40–59.9 ........................... 

60–79.9 ........................... 

80–89.9 ........................... 

90–100 ........................... 

Age of head (years) 

Less than 35 ...................... 

35–44 ............................ 

45–54 ............................ 55–64 ............................ 

65–74 ............................ 

75 or more ........................ 

Race or ethnicity of respondent 

White non-Hispanic ............... 

Nonwhite or Hispanic ............. 

Current work status of head 

Working for someone else ......... 

Self-employed .................... 

Retired ........................... 

Other not working ................. 

Housing status 

Owner ............................ 

Renter or other .................... 

Percentile of net worth 

Less than 25 ...................... 

25–49.9 ........................... 

50–74.9 ........................... 

75–89.9 ........................... 

90–100 ........................... 

Percentage of families holding debt 

44.6 4.6 1.5 45.2 44.4 7.2 75.1 

13.8 * 1.3 25.5 30.3 5.9 49.3 

27.0 1.8 1.5 43.2 44.5 5.6 70.2 

44.4 3.2 1.5 51.9 52.8 7.7 82.1 

61.8 5.3 1.5 56.7 52.6 7.7 85.6 

76.9 10.3 2.6 55.7 50.3 9.3 91.4 

75.4 14.2 1.4 41.2 33.1 8.8 85.3 

35.7 2.7 1.7 63.8 49.6 8.8 82.7 

59.6 4.9 1.7 57.1 54.1 8.0 88.6 

59.8 6.4 1.5 45.9 50.4 7.4 84.6 

49.0 7.4 3.1 39.3 41.6 7.4 75.4 

32.0 3.4 * 21.1 30.0 5.0 56.8 

9.5 2.0 * 9.5 18.4 3.6 29.2 

47.6 5.3 1.7 45.4 43.3 7.4 75.8 

35.6 2.4 1.2 44.4 47.6 6.5 73.0 

52.5 5.3 1.4 57.0 53.2 8.2 86.5 

59.1 7.3 3.5 39.8 42.8 8.1 81.7 

19.6 1.9 * 17.2 24.0 4.4 44.2 

28.1 * * 41.5 32.3 6.1 61.9 

66.0 5.8 1.0 45.5 44.4 6.9 79.9 

. . . 2.0 2.8 44.5 44.3 7.8 65.0 

11.2 * 2.4 48.9 45.5 8.3 68.7 

49.4 2.0 1.3 51.0 55.1 7.2 80.8 

59.1 5.4 * 48.2 44.6 7.1 78.0 

61.1 7.8 * 37.2 38.9 4.9 74.8 

55.5 14.2 2.1 25.6 22.4 8.2 70.2 

Holdings of Debt 

The share of families with any type of debt climbed 

1.3 percentage points during 2001–04, to 76.4 percent (first half of tables 11.A and 11.B, last column); 

the share had risen 1.0 percentage point over the 

preceding three years. Borrowing is less prevalent 

among families in the lowest income and wealth 

groups and in age groups 65 or older. Over the 

2001–04 period, the prevalence of borrowing 

declined for renters, the youngest age group, and the 

lowest quartile of the wealth distribution and 

increased or held about steady for the other groups. 

The largest increase was the 11.1 percentage point 

rise for families headed by persons aged 75 or older. 

The overall median and mean values of total outstanding debt for families that had any each rose 

33.9 percent from 2001 to 2004; from 1998 to 2001, 

median debt had increased 9.5 percent and the mean 

5.2 percent. Across demographic groups, median debt 

tends to rise with income and wealth and to rise and 

then decline with age. The decline among older age 

groups is driven in large part by the paying off of 

mortgages on primary residences. Over the recent 

three-year period, the median amount of outstanding 

debt rose for all groups except for families headed by 

persons who were neither working nor retired. The 

increases in the median were particularly notable for 

families headed by persons aged 65 or older, but their 

median remained much below the overall median. 

Mortgages and Other Borrowing on the Primary 

Residence 

Continuing an earlier trend of increases, the proportion of families with debt secured by the primary 

residence (hereafter, home-secured debt) rose 3.3 percentage points, to 47.9 percent (the share of homeowners with such debt in 2004 was 69.3 percent).35 

35. Home-secured debt consists of first-lien and junior-lien mortgages and home equity lines of credit secured by the primary residence. For purposes of this article, first- and junior-lien mortgages 
Recent Changes in U.S. Family Finances: Evidence from the 2001 and 2004 Survey of Consumer Finances A27 

11.—Continued 

A. 2001 Survey of Consumer Finances—Continued 

Family 

characteristic 

Secured by residential 

property 

Lines of 

credit not 

secured by 

residential 

property 

Installment 

loans 

Credit 

card 

balances 

Other Any 

debt Primary 

residence Other 

All families ....................... 

Percentile of income 

Less than 20 ...................... 

20–39.9 ........................... 

40–59.9 ........................... 

60–79.9 ........................... 

80–89.9 ........................... 

90–100 ........................... 

Age of head (years) 

Less than 35 ...................... 

35–44 ............................ 

45–54 ............................ 55–64 ............................ 

65–74 ............................ 

75 or more ........................ 

Race or ethnicity of respondent 

White non-Hispanic ............... 

Nonwhite or Hispanic ............. 

Current work status of head 

Working for someone else ......... 

Self-employed .................... 

Retired ........................... 

Other not working ................. 

Housing status 

Owner ............................ 

Renter or other .................... 

Percentile of net worth 

Less than 25 ...................... 

25–49.9 ........................... 

50–74.9 ........................... 

75–89.9 ........................... 

90–100 ........................... 

Memo

Mean value of holdings for 

families holding debt type ..... 

Median value of holdings for families holding debt (thousands of 2004 dollars) 

74.6 42.6 4.2 10.3 2.0 3.2 41.3 

29.8 * .6 4.9 1.1 1.1 5.5 

42.6 32.0 1.1 7.0 1.3 3.2 12.2 

59.8 41.3 .7 10.3 2.1 2.1 31.0 

80.5 44.7 4.3 12.7 2.4 3.2 66.4 

96.9 33.2 8.3 15.4 4.0 4.3 103.1 

142.7 83.1 10.7 14.3 3.0 22.4 155.9 

82.0 55.4 .5 10.2 2.1 2.1 26.5 

85.2 52.2 .7 11.8 2.1 3.3 65.5 

79.9 35.7 5.7 10.3 2.4 5.3 57.8 

58.6 41.3 21.8 9.5 2.0 5.3 36.9 

41.5 82.0 * 7.5 1.0 2.7 14.0 

47.7 44.7 * 6.2 .8 2.7 5.3 

79.9 42.6 4.3 10.7 2.1 3.9 47.7 

63.9 42.6 .7 8.8 1.6 2.1 21.3 

78.8 39.9 3.2 10.6 2.1 2.2 45.3 

106.5 93.2 16.0 10.8 2.7 12.7 82.9 

33.6 46.6 * 7.4 .9 3.5 10.4 

76.7 * * 10.4 2.1 2.7 36.0 

74.6 42.6 16.0 11.2 2.2 4.3 73.9 

. . . 40.0 1.1 7.5 1.3 2.1 6.4 

60.7 * .6 8.8 1.7 2.1 9.3 

60.2 21.3 1.9 10.0 2.0 1.3 41.0 

73.5 50.1 * 10.7 2.1 4.3 63.9 

91.6 32.0 * 12.5 2.2 7.5 85.2 

143.8 83.1 21.8 12.1 2.1 32.0 130.7 

97.7 78.9 19.2 15.9 4.4 18.8 77.2 

Note: See note to table 10. * Ten or fewer observations. . . . Not applicable. 

In 2004, 45.0 percent (42.3 percent in 2001) of families had a first-lien mortgage, 4.2 percent (5.8 percent 

in 2001) had a junior-lien mortgage, and 8.6 percent 

(4.8 percent in 2001) had a home equity line of credit 

with a current balance (data not shown in the tables). 

Of the types of debt considered in this article, homesecured debt had the largest change in overall prevalence. The use of such debt tends to rise with income. 

Across wealth groups, it is more nearly equal for 

groups above the bottom quartile; however, homeowners in the lowest wealth group in 2004 had the 

highest rate of such borrowing, 81.6 percent. Over 

age groups, the rate of borrowing peaks among famiconsist only of closed-end loans, that is, loans typically with a 

one-time extension of credit and a prearranged payment size and 

frequency. As a type of open-end credit, home equity lines typically 

allow credit extensions at the borrower’s discretion subject to a 

prearranged limit and allow repayments at the borrower’s discretion 

subject to a prearranged minimum size and frequency. 

lies in the 45–54 group and declines sharply among 

older age groups, a pattern also seen in earlier years. 

Over the recent period, the prevalence of homesecured debt increased for nearly every demographic 

group. 

Overall, the median amount of home-secured debt 

rose 27.3 percent from 2001 to 2004, and the mean 

rose 27.0 percent; the median had increased 3.8 percent over the preceding three years, and the mean had 

increased 8.4 percent. In the recent period, median 

borrowing rose substantially for every group but one. 

It declined for the 75-or-older age group even as the 

group had an unusually large increase in the fraction 

of families having such debt. This result indicates 

that the decline in the median was driven by a rise in 

the number of smaller home-secured loans. Overall, 

in 2004, 91.3 percent (92.4 percent in 2001) of total 

home-secured debt was owed on first-lien mortgages, 

3.0 percent (4.4 percent in 2001) was owed on junior­
A28 Federal Reserve Bulletin 2006 

11. Family holdings of debt, by selected characteristics of families and type of debt, 2001 and 2004 surveys—Continued 

B. 2004 Survey of Consumer Finances 

Family 

Secured by residential 

property 

Lines of 

credit not 

secured by 

residential 

property 

Installment 

loans 

Credit 

card 

balances 

Other Any 

characteristic debt Primary 

residence Other 

Percentage of families holding debt 

All families ....................... 

Percentile of income 

Less than 20 ...................... 

20–39.9 ........................... 

40–59.9 ........................... 

60–79.9 ........................... 

80–89.9 ........................... 

90–100 ........................... 

Age of head (years) 

Less than 35 ...................... 

35–44 ............................ 

45–54 ............................ 55–64 ............................ 

65–74 ............................ 

75 or more ........................ 

Race or ethnicity of respondent 

White non-Hispanic ............... 

Nonwhite or Hispanic ............. 

Current work status of head 

Working for someone else ......... 

Self-employed .................... 

Retired ........................... 

Other not working ................. 

Housing status 

Owner ............................ 

Renter or other .................... 

Percentile of net worth 

Less than 25 ...................... 

25–49.9 ........................... 

50–74.9 ........................... 

75–89.9 ........................... 

90–100 ........................... 

47.9 4.0 

15.9 * 

29.5 1.5 

51.7 2.6 

65.8 4.1 

76.8 7.5 

76.2 15.4 

37.7 2.1 

62.8 4.0 

64.6 6.3 

51.0 5.9 

32.1 3.2 

18.7 1.5 

51.9 4.4 

37.4 3.0 

56.1 4.1 

59.5 10.2 

24.6 1.2 

30.3 * 

69.4 5.1 

. . . 1.7 

12.4 * 

52.8 1.4 

66.1 4.5 

61.6 5.7 

58.4 16.6 

1.6 46.0 46.2 

* 26.9 28.8 

1.5 39.9 42.9 

1.8 52.4 55.1 

1.8 57.8 56.0 

2.6 60.0 57.6 

2.5 45.7 38.5 

2.2 59.4 47.5 

1.5 55.7 58.8 

2.9 50.2 54.0 .7 42.8 42.1 

.4 27.5 31.9 

* 13.9 23.6 

1.7 47.0 46.0 

1.1 43.2 46.7 

1.9 55.7 54.9 

3.0 43.5 44.3 

* 22.8 25.9 

* 45.6 41.0 

1.3 46.6 48.8 

2.1 44.6 40.4 

1.3 47.5 40.3 

1.7 52.4 57.9 

1.9 49.1 52.8 

1.3 40.2 40.5 

1.4 27.2 23.5 

7.6 

4.6 

5.8 

8.0 

8.3 

12.3 

10.6 

6.2 

11.3 

9.4 

8.4 

4.0 

2.5 

7.8 

7.3 

9.8 

5.8 

3.9 

* 

7.7 

7.3 

6.2 

9.4 

7.0 

7.1 

9.1 

76.4 

52.6 

69.8 

84.0 

86.6 

92.0 

86.3 

79.8 

88.6 

88.4 

76.3 

58.8 

40.3 

78.0 

72.5 

86.1 

81.5 

50.7 

70.4 

82.3 

63.4 

64.9 

83.8 

83.2 

74.6 

72.7 

lien mortgages, and 5.7 percent (3.2 percent in 2001) 

was owed on home equity lines of credit (data not 

shown in the tables). 

The rising values of primary residences over the 

2001−04 period outpaced the increases in homesecured debt and thus raised the typical amount of 

home equity held by families. Median home equity 

among those with home-secured debt rose from 

$61,900 to $70,000 over the period, a 13.1 percent 

increase (data not shown in the tables).36 Among 

those with such debt, the median ratio of homesecured debt to the value of the primary residence 

held steady at 56.0 percent, down from 58.8 percent 

in 1998. Over the recent three-year period, an SCFbased estimate of the aggregate ratio of home-secured 

debt to home values for all homeowners rose 1.4 percentage points, to 34.9 percent. 

By eliminating the deductibility of interest payments on most loans other than those on primary and 

36. Among all homeowners in 2004, median home equity was 

$86,000; in 2001 it had been $74,600. 

secondary residences, the Tax Reform Act of 1986 

created an incentive for homeowners with a need 

for additional liquid funds to borrow against their 

home equity. Over the 2001–04 period, some families 

may have felt an important additional incentive from 

low mortgage interest rates, rapidly appreciating 

home values, and technological changes that reduced 

the time and cost of mortgage refinancing. Such 

borrowing against home equity may take the form 

of refinancing an existing first-lien mortgage for more 

than the outstanding balance, obtaining a juniorlien mortgage, or accessing a home equity line of 

credit. 

The survey provides detailed information on all 

these options for home equity borrowing. In 2004, 

44.9 percent of homeowners with a first-lien mortgage had refinanced their current first-lien mortgage 

in the preceding three years (20.8 percent in 2001), 

and 34.0 percent of such refinancers had borrowed 

money beyond the amount refinanced (35.2 percent 

in 2001); the median amount of additional equity 

extracted by those who had done so was $20,000 
Recent Changes in U.S. Family Finances: Evidence from the 2001 and 2004 Survey of Consumer Finances A29 

11.—Continued 

B. 2004 Survey of Consumer Finances—Continued 

Family 

characteristic 

Secured by residential 

property 

Lines of 

credit not 

secured by 

residential 

property 

Installment 

loans 

Credit 

card 

balances 

Other Any 

debt Primary 

residence Other 

All families ....................... 

Percentile of income 

Less than 20 ...................... 

20–39.9 ........................... 

40–59.9 ........................... 

60–79.9 ........................... 

80–89.9 ........................... 

90–100 ........................... 

Age of head (years) 

Less than 35 ...................... 

35–44 ............................ 

45–54 ............................ 55–64 ............................ 

65–74 ............................ 

75 or more ........................ 

Race or ethnicity of respondent 

White non-Hispanic ............... 

Nonwhite or Hispanic ............. 

Current work status of head 

Working for someone else ......... 

Self-employed .................... 

Retired ........................... 

Other not working ................. 

Housing status 

Owner ............................ 

Renter or other .................... 

Percentile of net worth 

Less than 25 ...................... 

25–49.9 ........................... 

50–74.9 ........................... 

75–89.9 ........................... 

90–100 ........................... 

Memo

Mean value of holdings for 

families holding debt type ..... 

Median value of holdings for families holding debt (thousands of 2004 dollars) 

95.0 87.0 3.0 11.5 2.2 4.0 55.3 

37.0 * * 5.6 1.0 2.0 7.0 

53.3 32.5 .3 8.0 1.9 2.7 16.1 

78.0 66.0 1.0 10.8 2.2 2.3 44.7 

97.0 62.0 7.0 13.9 3.0 3.5 93.4 

133.0 78.0 14.0 15.1 2.7 5.0 136.0 

185.0 159.0 40.0 18.0 4.0 9.4 209.0 

107.0 62.5 1.0 11.9 1.5 3.0 33.6 

110.0 75.0 1.9 12.0 2.5 4.0 87.2 

97.0 87.0 7.0 12.0 2.9 4.0 83.2 

83.0 108.8 14.0 12.9 2.2 5.5 48.0 

51.0 100.0 4.0 8.3 2.2 5.0 25.0 

31.0 39.0 * 6.7 1.0 2.0 15.4 

98.0 87.0 4.0 12.4 2.5 4.0 69.5 

83.0 66.0 .4 9.6 1.6 3.0 30.5 

100.0 83.0 4.0 12.0 2.3 3.5 71.8 

119.8 100.0 2.2 15.4 2.7 7.0 93.4 

42.0 79.0 * 7.3 1.4 3.0 15.4 

78.0 * * 7.5 2.5 * 21.1 

95.0 90.0 8.0 12.9 2.5 4.0 95.8 

. . . 83.0 .5 8.7 1.5 3.0 7.8 

71.0 * .3 10.5 1.8 4.0 11.4 

75.0 26.3 1.0 9.3 2.0 2.0 44.2 

97.0 47.0 8.0 13.3 2.5 4.0 90.1 

115.0 99.0 22.0 12.9 3.0 5.0 110.7 

186.1 148.0 50.0 17.5 3.0 20.0 190.8 

124.1 166.7 36.6 18.8 5.1 17.1 103.4 

Note: See note to table 10. * Ten or fewer observations. . . . Not applicable. 

(data not shown in the tables).37 Junior-lien mortgages not used to finance a home purchase were used 

by 4.7 percent of homeowners in 2004 (7.2 percent in 

2001), and the median amount owed on such loans 

for those having one was $16,000 ($20,200 in 2001). 

The proportion of homeowners with home equity 

lines of credit in 2004 was 17.8 percent (11.2 percent 

in 2001), and the proportion borrowing against such 

lines was 12.4 percent (7.1 percent in 2001); the 

median balance for those borrowing against such 

lines was $22,000 ($16,000 in 2001). For 2004, the 

major uses of extracted equity were for home 

improvement and debt consolidation. Home improvement accounted for 45.0 percent of the outstanding 

37. Of those with a first-lien mortgage in 2004, 56.7 percent are 

recorded in the survey as having refinanced it at least once (42.8 percent in 2001); 35.0 percent of these refinancers extracted equity in the 

most recent instance (36.2 percent in 2001), and the median amount 

extracted was $20,000 (data not shown in the tables). 

balances attributable to equity extraction, and debt 

consolidation accounted for 31.0 percent (data not 

shown in the tables). 

With house prices rising over the past three years, 

much discussion has centered on how families have 

managed to finance the purchase of a new home. 

Interest rates are a key determinant of the size of the 

regular payment that families must make to service 

their mortgages. The median rate on the stock of 

outstanding first-lien mortgages on primary residences was 5.90 percent in 2004 (the mean was 6.19) 

and 7.25 percent in 2001 (the mean was 7.59). Some 

families select a mortgage with a variable interest 

rate, typically because such loans have a lower initial 

rate than a fixed-rate loan. In 2004, 15.0 percent of 

homeowners with a first-lien mortgage on the primary residence had an interest rate on their loan that 

could vary; the comparable figure for 2001 was 

11.4 percent. 
A30 Federal Reserve Bulletin 2006 

Another key determinant of mortgage payments is 

the length of time over which the loan must be 

repaid. Mortgages with an initial term of thirty years 

or longer accounted for 57.5 percent of fixed-term 

first-lien mortgages on the primary residence in 2004, 

and those with a term of fifteen years or less 

accounted for 32.9 percent; in 2001, 62.9 percent had 

a term of thirty years or more, and 28.6 percent had a 

term of fifteen years or less. Some purchasers take 

out mortgages that do not require them to pay back 

the entire principal over the contract period of the 

loan; in such cases, a payment of any remaining 

principal is required at the end of the loan term. In 

2004, 4.1 percent of first-lien mortgages on primary 

residences had such a loan feature; in 2001, the 

comparable figure had been 2.1 percent. 

Borrowing on Other Residential Real Estate 

From 2001 to 2004, the proportion of families that 

owned other residential property rose, but the proportion with outstanding loans on such properties 

declined 0.6 percentage point, to 4.0 percent. Only 

about one-third of owners in 2004 also had a mortgage on the property. As with the ownership of 

such property, the associated borrowing is most 

prevalent among families with relatively high income 

or wealth. Use of such borrowing declined for most 

demographic groups over the three-year period. But 

as would be expected from the increased share of 

total debt attributable to this type of borrowing, the 

amount outstanding rose substantially. Both the 

median and the mean amounts owed more than 

doubled. Median and mean amounts also rose 

substantially among families with mortgages on 

other residential real estate in most demographic 

groups. 

Borrowing on Other Lines of Credit 

Only 3.3 percent of families had an available line of 

credit other than a home equity line in 2004 (data 

not shown in the tables).38 Even fewer families— 

1.6 percent—had a balance on such a line, a proportion virtually unchanged from 2001. The median 

amount outstanding on these lines fell 28.6 percent 

over this three-year period, while the mean rose 

90.6 percent. 

38. In this article, borrowing on lines of credit excludes borrowing 

on credit cards. 

Installment Borrowing 

Installment borrowing is about as common as homesecured borrowing.39 In 2004, 46.0 percent of families had installment debt, an increase of 0.8 percentage point over 2001. Although the use of installment 

borrowing has increased in each of the past two 

survey intervals, the overall rate of use is comparable 

to the levels seen in the 1992 and 1995 surveys. The 

use of installment borrowing is broadly distributed 

across demographic groups, with notably lower use 

only in the lowest income group, the highest wealth 

group, and families headed by retired persons or 

persons aged 65 or older. From 2001 to 2004, the 

median amount owed on installment loans rose 

11.7 percent, and the mean rose 18.2 percent. Most of 

the demographic groups shared in the overall increase 

in the median. The majority of installment borrowing 

is related to the purchase of a vehicle (data not shown 

in the tables); in 2004, such borrowing accounted for 

55.5 percent of the total amount owed (54.8 percent 

in 2001). The second-largest use of installment borrowing is for education-related expenses. Balances 

on loans for this purpose in 2004 made up 26.0 percent of total installment debt; the comparable figure 

for 2001 had been 22.2 percent. 

Credit Card Balances 

As with installment borrowing, the carrying of credit 

card balances is widespread but notably lower among 

the highest and lowest income groups, the highest 

wealth group, and families headed by persons who 

are aged 65 or older or are retired.40 From 2001 to 

2004, the proportion of families carrying a balance 

rose 1.8 percentage points, to 46.2 percent. The preceding three years had seen a much smaller increase 

in use. The recent increase was shared by most demographic groups; the proportion carrying a balance 

declined for the lowest two income groups, the lowest wealth group, the youngest age group, nonwhite 

or Hispanic families, and renters. 

39. The term ‘‘installment borrowing’’ in this article describes 

closed-end consumer loans, that is, those that typically have fixed 

payments and a fixed term. Examples are automobile loans, student 

loans, and loans for furniture, appliances, and other durable goods. 

40. In this article, credit card balances consist of balances on 

bank-type cards (such as Visa, MasterCard, and Discover, and Optima 

and other American Express cards that routinely allow carrying a 

balance), store cards or charge accounts, gasoline company cards, 

so-called travel and entertainment cards (such as American Express 

cards that do not routinely allow carrying a balance and Diners Club), 

other credit cards, and revolving store accounts that are not tied to a 

credit card. Balances exclude purchases made after the most recent 

bill was paid. 
Recent Changes in U.S. Family Finances: Evidence from the 2001 and 2004 Survey of Consumer Finances A31 

Overall, the median balance for those carrying a 

balance rose 10.0 percent, to $2,200; the mean rose 

15.9 percent, to $5,100. Over the preceding three 

years, the median had been little changed, but the 

mean had fallen 8.3 percent. In the recent period, the 

median balance rose strongly for most demographic 

groups; but borrowing declined notably for the lowest and next-to-highest income groups and for the 

youngest age group. 

Many families with credit cards do not carry balances.41 Of the 74.9 percent of families with credit 

cards in 2004, only 58.0 percent had a balance at the 

time of the interview; in 2001, 76.2 percent had 

cards, and 55.4 percent of these families had an 

outstanding balance on them (data not shown in the 

tables). The proportion of cardholders who had a 

bank-type card was unchanged over this three-year 

period, whereas the proportion of cardholders having 

most other card types declined, as shown in the 

following table: 

Type of 

credit card 

Cardholders holding 

2004 

(percent) 

Change 2001−04 

(percentage points) 

Bank .......................... 

Store .......................... 

Gasoline ...................... 

Travel and entertainment ....... 

Miscellaneous ................. 

95.4 .0 

58.4 −1.0 

17.3 −3.8 

10.0 −3.8 

2.6 .2 

The declines in card ownership probably reflect, at 

least in part, a rise during the period in the issuance 

of bank-type cards under the brand names of stores 

and gasoline companies and in the issuance of new 

types of American Express card that routinely allow 

carrying a balance. 

As the most widely held type of card, bankcards 

hold particular importance in any examination of 

family finances. Indeed, balances on such cards 

accounted for 84.9 percent of outstanding credit card 

balances in 2004, up from 82.1 percent in 2001. As 

reflected in the overall movement for credit cards 

from 2001 to 2004, the proportion of bankcard holders who had a balance went up 2.5 percentage points, 

to 56.2 percent; the proportion of bankcard holders 

who reported that they usually pay their balances in 

full was about unchanged in 2004 at 55.7 percent. For 

the month preceding the interview, the median charge 

41. The remaining discussion of credit cards excludes revolving 

store accounts that are not tied to a credit card. In 2004, 6.0 percent 

(5.5 percent in 2001) of families had such an account, the median 

outstanding balance for families that had a balance was $700 ($600 in 

2001), and the total of such balances accounted for 4.3 percent 

(5.2 percent in 2001) of the total of balances on credit cards and such 

store accounts (data not shown in the tables). 

on all bank-type cards held by the family rose slightly 

over the recent three-year period, from $210 in 2001 

to $250 in 2004. For families having any bank-type 

cards, the median number of such cards remained at 

2; the median credit limit on all such cards rose 

26.2 percent, to $13,500; and the median interest rate 

on the card with the largest balance (or on the newest 

card, if there were no outstanding balances) fell 

3.5 percentage points, to 11.50 percent. 

Other Debt 

From 2001 to 2004, the proportion of families that 

held other types of debt edged up 0.4 percent, to 

7.6 percent.42 In 2004, 0.5 percent of families had a 

margin loan, 3.5 percent had a loan against a pension 

from a current job of the family head or that person’s 

spouse or partner, 1.6 percent had a loan against a 

cash value life insurance policy, and 2.7 percent had 

another miscellaneous type of loan (data not shown 

in the tables). 

The use of other debt is spread broadly across 

demographic groups, but rates of use are notably 

lower for families headed by those who are 65 years 

of age or older and by those who are retired. Across 

income groups, use of such debt fell from 2001 to 

2004 only for the lowest group. The median amount 

owed by families with this type of debt rose 25.0 percent, to $4,000, between 2001 and 2004; over the 

same time, the mean fell 9.0 percent. In 2004, 

50.4 percent of the total amount of this type of debt 

was attributable to margin loans, 21.2 percent to 

loans against a pension from a current job of the 

family head or that person’s spouse or partner, 

9.8 percent to loans against cash value life insurance 

policies, and the remaining 18.7 percent to miscellaneous loans (data not shown in the tables). 

Reasons for Borrowing 

The SCF provides information on the reasons that 

families borrow money (table 12). One subtle problem with the use of these data is that, even though 

money is borrowed for a particular purpose, it may be 

employed to offset some other use of funds. For 

example, a family may have sufficient funds to purchase a home without using a mortgage but may 

42. The ‘‘other debt’’ category comprises loans on cash value life 

insurance policies, loans against pension accounts, borrowing on 

margin accounts, and a miscellaneous category largely comprising 

personal loans not explicitly categorized elsewhere. 
A32 Federal Reserve Bulletin 2006 

12. Amount of debt of all families, distributed by purpose 13. Amount of debt of all families, distributed 

of debt, 1995–2004 surveys by type of lending institution, 1995–2004 surveys 

Percent Percent 

Purpose of debt 1995 1998 2001 2004 

Primary residence 

Purchase ..................... 

Improvement ................. 

Other residential property ........ Investments excluding real estate . 

Vehicles ........................ 

Goods and services .............. 

Education ....................... Unclassifiable loans against 

pension accounts ........... 

Other ........................... Total ......................... 

70.3 

2.0 

8.2 

1.0 

7.6 

5.7 

2.7 

.2 

2.2 

100 

67.9 

2.1 

7.8 

3.3 

7.6 

6.3 

3.5 

† 

1.5 

100 

70.9 

2.0 

6.5 

2.8 

7.8 

5.8 

3.1 

† 

1.1 

100 

70.2 

1.9 

9.5 

2.2 

6.7 

6.0 

3.0 

† 

.6 

100 

Note: See note to table 7. 

† Less than 0.05 percent. 

Type of institution 1995 1998 2001 2004 

Commercial bank ............... 

Thrift institution1 ................ 

Credit union .................... 

Finance or loan company ........ 

Brokerage ....................... Mortgage or real estate lender . . . 

Individual lender ................ 

Other nonfinancial ............... Government ..................... 

Credit card issuer ............... 

Pension ......................... 

Other ........................... 

Total ....................... 

34.9 

10.8 

4.5 

3.2 

1.9 

32.8 

5.0 

.8 

1.2 

3.9 

.2 

.7 

100 

32.8 

9.7 

4.3 

4.1 

3.8 

35.6 

3.3 

1.3 

.6 

3.9 

.4 

.3 

100 

34.1 

6.1 

5.5 

4.3 

3.1 

38.0 

2.0 

1.4 

1.1 

3.7 

.3 

.5 

100 

35.1 

7.3 

3.6 

4.1 

2.5 

39.4 

1.7 

2.0 

.7 

3.0 

.3 

.2 

100 

Note: See note to table 1. 

1. Savings and loan association or savings bank. 

instead choose to finance the purchase to free existing 

funds for another purpose. Thus, trends in the data 

can only suggest the underlying use of funds by 

families. 

Although the survey information on use is substantial, it is not exhaustive. Most importantly, for the 

case of credit cards it was deemed impractical to ask 

about the purposes of borrowing that might well be 

heterogeneous for individual families. For the analysis here, all credit card debt is included in the category ‘‘goods and services.’’ The surveys before 2004 

lack information on the use of funds borrowed 

through a first-lien mortgage; therefore, for purposes 

of this calculation, all funds owed on a first-lien 

mortgage on a primary residence are assumed to have 

been used for the purchase of the home, even when 

the homeowner has refinanced and extracted equity. 

The great majority of family debt is attributable to 

the purchase of a primary residence; from 2001 to 

2004, the share of debt for this purpose declined a 

fraction of a percentage point. Borrowing for residential real estate other than a primary residence, the 

second-largest purpose for borrowing, rose notably. 

The share of borrowing for vehicles, the third-largest 

share, fell 1.1 percentage points. The shares of borrowing for other purposes held about steady. 

Choice of Lenders 

The survey provides information on the types of 

lender to which families owe money at the time of 

the interview (table 13). The share of total family 

debt held by thrift institutions—savings and loan 

institutions and savings banks—rose 1.2 percentage 

points from 2001 to 2004, reversing a previous trend; 

the 1.4 percentage point increase in the share for real 

estate or mortgage lenders continued an earlier pattern. The share for commercial banks moved up 

1.0 percentage point, while the share for credit unions 

fell 1.9 percentage points. Other smaller changes 

accounted for the rest of the pattern of changes in 

2004. 

In some cases, loans may have been held at the 

time of the interviews by institutions other than the 

ones that originally made the loans. Resale of loans is 

particularly important for mortgage debt. According 

to the 2004 survey, 41.5 percent of the first-lien 

mortgages on primary residences were held by lenders other than the ones that made the original loans, a 

figure only slightly changed from 2001.43 In dollarweighted terms, the results are similar; mortgages 

with non-originating lenders account for 43.3 percent 

of the outstanding balances on first-lien mortgages 

for primary residences in 2004 (data not shown in the 

tables). 

Debt Burden 

The ability of individual families to service their 

loans is a function of two factors: the level of their 

loan payments and the income and assets they have 

available to meet those payments. In planning their 

borrowing, families make assumptions about their 

future ability to repay their loans. Problems may 

occur when events turn out to be contrary to those 

assumptions. If such misjudgments are sufficiently 

large and prevalent, a broad pattern of default, 

43. Mortgages and other loans may also be serviced by an institution other than the current lender, and some respondents may mistakenly report their loan as having been sold even though it is simply 

being serviced by an institution other than the current lender. Because 

a loan can also be sold without changing the servicer, some borrowers 

may mistakenly report that their loan has not been sold. 
Recent Changes in U.S. Family Finances: Evidence from the 2001 and 2004 Survey of Consumer Finances A33 

restraint in spending, and financial distress in the 

wider economy might ensue. 

From the third quarter of 2001 to the same period 

in 2004, inflation-adjusted aggregate household debt 

reported in the Federal Reserve’s flow of funds 

accounts increased 26.3 percent.44 At the same time, 

income was relatively flat, and interest rates tended to 

be lower at the end of the period. The typical contract 

periods of various types of loan appear to have been 

largely unchanged, but borrowers may have substituted longer-term home-secured debt for other debts 

that typically have shorter contract periods. Thus, 

whether the growth in debt translated into a change in 

families’ ability to service their debts is not clear 

a priori. The net consequences of these movements 

on the ratio of payments to income can only be 

assessed by looking at how these factors vary 

together over families. 

The Federal Reserve staff has constructed an 

aggregate-level debt service ratio, defined as an estimate of total scheduled loan payments (interest plus 

minimum repayments of principal) for all households, divided by disposable personal income. From 

the third quarter of 2001 to the same period in 2004, 

the aggregate-level measure edged up about 0.4 percentage point, to 13.2 percent.45 

The survey data may be used to construct a similar 

estimate of the debt-burden ratio and to construct 

such an estimate for various demographic groups 

(table 14).46 The SCF-based estimate is the ratio of 

44. See http://www.federalreserve.gov/releases/Z1/Current/. 

45. Data on this measure, the ‘‘debt service ratio,’’ and a description of the series are available at www.federalreserve.gov/releases/ 

housedebt/default.htm. See Karen Dynan, Kathleen Johnson, and 

Karen Pence (2003), ‘‘Recent Changes to a Measure of U.S. Household Debt Service,’’ Federal Reserve Bulletin, vol. 89 (October), 

pp. 451–60. 

46. The survey measure of payments relative to income may differ 

from the aggregate-level measure for several reasons. First, the debt 

payments included in each measure are different. The aggregate-level 

measure includes only debts originated by depositories, finance companies, and other financial institutions, whereas the survey includes, in 

principle, debts from all sources. 

Second, the aggregate-level measure uses a NIPA estimate of 

disposable personal income for the period concurrent with the estimated payments as the denominator of the ratio, whereas the survey 

measure uses total before-tax income reported by survey families for 

the preceding year; the differences in these two income measures are 

complex. 

Third, the payments in the aggregate-level measure are estimated 

using a formula that entails complex assumptions about minimum 

payments and the distribution of loan terms at any given time; the 

survey measure of payments is directly asked of the survey respondents but may also include payments of taxes and insurance on real 

estate loans. 

Fourth, because the survey measures of payments and income are 

based on the responses of a sample of respondents, they may be 

affected both by sampling error and by various types of response error. 

As mentioned earlier in this article, the survey income measure tracks 

the most comparable measure of income in the Census Bureau’s 

total debt payments for all families to total family 

income of all families. From 2001 to 2004, the SCFbased estimate rose more than the aggregate-level 

measure, increasing 1.5 percentage points, to 

14.4 percent; in the previous three-year period, the 

SCF measure had declined while the aggregate-level 

measure had risen. If total payments and incomes are 

computed from the survey data using only families 

with debt payments, the results for the recent period 

show a slightly larger increase, from 16.0 percent in 

2001 to 17.7 percent in 2004; if the ratio is computed 

using only families with home-secured debt, the data 

show a rise from 18.2 percent in 2001 to 20.1 percent 

in 2004 (data not shown in the tables). 

The ability to look at the distribution of payments 

relative to income at the level of families potentially 

offers insights that are not available from any of the 

aggregate-level figures. In particular, the survey 

allows a detailed look at the spectrum of payments 

relative to income across all families with debts. 

Over the recent period, the median of the ratios for 

individual families that had any debt rose 1.3 percentage points, to 18.0 percent, in 2004; the increase 

reversed a 1.2 percentage point decline in the ratio 

over the preceding three years. The median also rose 

at least slightly in the recent period for all demographic groups shown except for the 65–74 age group 

and renters, for which groups the ratio fell slightly.

47 

A limitation of the median ratio is that it may not 

be indicative of distress because it reflects the situation of only a typical family. Unless errors of judgment by both families and lenders are pervasive, one 

would not expect to see signs of financial distress at 

the median. Thus, a more compelling indicator of 

distress is the proportion of families with unusually 

large total payments relative to their incomes. From 

2001 to 2004, the proportion of debtors with payments exceeding 40 percent of their income edged up 

0.4 percentage point, to 12.2 percent; in the preceding three years, the proportion had fallen 1.8 percentage points. The survey shows an interesting pattern 

of increases and decreases in the proportion of families with debt that had relatively high payments 

across demographic groups in the recent three-year 

period. The share fell for families in the lowest and 

the two highest income and wealth groups and for 

Current Population Survey. Over the 2001–04 period, however, the 

SCF shows more growth in the aggregate level of debt than the 

Federal Reserve’s flow of funds accounts; timing and conceptual 

differences may explain some of the difference. Finally, the survey 

measure excludes debt payments of household members who are not 

members of the family unit analyzed in this article. 

47. The median of the ratio for families with home-secured debt in 

2004 was 24.2 percent, up from 22.2 percent in 2001 (data not shown 

in the tables). 
A34 Federal Reserve Bulletin 2006 

14.	 Ratio of debt payments to family income (aggregate and median), share of debtor families with ratio greater than 40 

percent, and share of debtors with any payment past due sixty days or more, 1995–2004 surveys 

Percent 

Family 

characteristic 

Aggregate Median for debtors 

1995 1998 2001 2004 1995 1998 2001 2004 

All families ..................... 

Percentile of income 

Less than 20 .................... 

20–39.9 ......................... 

40–59.9 ......................... 60–79.9 ......................... 

80–89.9 ......................... 

90–100 ......................... 

Age of head (years) 

Less than 35 .................... 

35–44 .......................... 

45–54 .......................... 

55–64 .......................... 

65–74 .......................... 

75 or more ...................... 

Percentile of net worth 

Less than 25 .................... 

25–49.9 ......................... 

50–74.9 ......................... 

75–89.9 ......................... 

90–100 ......................... 

Housing status 

Owner .......................... 

Renter or other .................. 

14.1 14.9 12.9 14.4 16.2 17.9 16.7 18.0 

19.1 18.7 16.1 18.2 13.3 18.8 19.2 19.7 

17.0 16.5 15.8 16.7 17.5 17.5 16.7 17.4 

15.6 18.6 17.1 19.4 15.7 19.4 17.6 19.5 

17.9 19.1 16.8 18.5 18.9 19.5 18.1 20.6 

16.6 16.8 17.0 17.3 16.8 17.8 17.3 18.1 

9.5 10.3 8.1 9.3 12.6 13.7 11.2 12.7 

17.8 17.2 17.2 17.8 16.8 16.9 17.7 18.0 

17.2 17.7 15.1 18.2 18.3 20.0 17.8 20.6 

15.1 16.3 12.8 15.3 16.6 17.9 17.4 18.4 

11.8 13.4 10.9 11.5 14.2 17.6 14.3 15.8 

7.2 8.8 9.2 8.7 12.3 13.2 16.0 15.6 

2.5 4.1 3.9 7.1 2.9 8.1 8.0 12.8 

13.4 15.0 13.4 13.0 11.7 13.6 11.5 13.0 

18.5 20.1 18.0 19.5 19.0 20.0 20.1 21.2 

18.0 18.3 16.8 20.6 19.3 20.2 18.3 21.4 

14.0 14.8 15.4 15.1 15.3 17.8 16.8 17.9 

9.0 10.2 7.5 8.5 12.7 14.0 11.2 12.6 

15.6 16.2 13.9 15.6 20.1 21.2 20.0 21.5 

7.9 8.2 7.4 7.2 8.1 8.5 8.3 8.2 

Note: The aggregate measure is the ratio of total debt payments to total 

income for all families. The median is the median of the distribution of ratios 

calculated for individual families with debt. Also see note to table 1. 

families headed by persons older than 55; it rose for 

the middle of the income and wealth distributions and 

for younger families. Both for homeowners and for 

renters, the proportion with high payments was only 

slightly changed.48 

Other commonly used indicators of debtrepayment problems are aggregate delinquency rates, 

that is, the number of delinquent accounts or the 

percentage of total balances on which payments are 

late. The measures based on numbers of delinquent 

accounts tend to show increases or small declines 

over the recent three-year period, while the measures 

based on dollar volumes show a decline.49 

A related measure is collected in the SCF. Families 

that have any debt at the time of their interview are 

48. Of families with home-secured debt, the proportion that had 

total payments of more than 40 percent of their income was 17.1 percent in 2004, a figure virtually unchanged from that in 2001 (data not 

shown in the tables). 

49. Several measures of credit delinquency are commonly used. 

Data from the Call Report and Moody’s Investors Service are based 

on dollar volumes of delinquent loans. Those data suggest that delinquencies generally declined between 2001 and 2004 on credit cards, 

on closed-end consumer credit, and on mortgages. Over the same 

period, however, data from the American Bankers Association on 

numbers of delinquent accounts show a smaller decline in delinquencies for closed-end consumer loans, little change for mortgages, and 

an increase for credit cards. 

asked whether they have been behind in any of their 

payments in the preceding year. This measure differs 

conceptually from the aggregate delinquency rates in 

that the survey counts multiple occasions of late 

payments as one, counts families instead of balances 

or accounts, and includes all types of loan; because it 

counts individual families, not their balances, it is 

closer in spirit to aggregate measures based on the 

numbers of delinquent accounts than to those based 

on the amounts of delinquent balances. Over the 

2001–04 period, the survey shows an increase of 

1.9 percentage points in the proportion of debtors 

who were sixty or more days late with their payments 

on any of their loans in the preceding year, to 8.9 percent. This measure showed increases for all the 

demographic groups except for the highest two 

income groups, for the third quartile and highest 

decile of the wealth distribution, and for families 

headed by persons aged 55–64.50 Some of the largest 

increases were seen by groups that had more modest 

or even negative changes in the other survey-based 

measures of debt burden. 

50. For families with home-secured debt, the result is very similar 

to that for homeowners overall. The proportion with payments late 

sixty days or more in 2004 was 5.7 percent, up from 4.5 percent in 

2001 (data not shown in the tables). 
Recent Changes in U.S. Family Finances: Evidence from the 2001 and 2004 Survey of Consumer Finances A35 

14.—Continued 

Percent 

Family 

characteristic 

Debtors with ratio greater than 40 percent Debtors with any payment past due sixty days or more 

1995 1998 2001 2004 1995 1998 2001 2004 

All families ..................... 

Percentile of income 

Less than 20 .................... 

20–39.9 ......................... 

40–59.9 ......................... 

60–79.9 ......................... 

80–89.9 ......................... 

90–100 ......................... 

Age of head (years) 

Less than 35 .................... 

35–44 .......................... 

45–54 .......................... 

55–64 .......................... 

65–74 .......................... 

75 or more ...................... 

Percentile of net worth 

Less than 25 .................... 

25–49.9 ......................... 

50–74.9 ......................... 

75–89.9 ......................... 

90–100 ......................... 

Housing status 

Owner .......................... 

Renter or other .................. 

11.7 13.6 11.8 12.2 

27.5 29.9 29.3 27.0 

18.0 18.3 16.6 18.6 

9.9 15.8 12.3 13.7 

7.7 9.8 6.5 7.1 

4.7 3.5 3.5 2.4 

2.3 2.8 2.0 1.8 

12.1 12.8 12.0 12.8 

9.9 12.5 10.1 12.6 

12.3 12.9 11.6 13.1 

15.1 14.0 12.3 10.2 

11.3 18.1 14.7 11.6 

7.4 21.4 14.6 10.7 

10.1 13.0 11.6 10.6 

12.9 15.9 14.1 15.8 

12.7 13.0 11.3 12.8 

9.9 12.2 10.7 9.6 

11.6 12.4 8.5 7.6 

14.3 16.5 14.7 14.9 

5.8 6.4 4.2 4.4 

7.1 8.1 7.0 8.9 

10.2 12.9 13.4 15.9 

10.1 12.3 11.7 13.8 

8.7 10.0 7.9 10.4 

6.6 5.9 4.0 7.1 

2.8 3.9 2.6 2.3 

1.0 1.6 1.3 .3 

8.7 11.1 11.9 13.7 

7.7 8.4 5.9 11.7 

7.4 7.4 6.2 7.6 

3.2 7.5 7.1 4.2 

5.3 3.1 1.5 3.4 

5.4 1.1 .8 3.9 

14.5 16.1 17.7 22.9 

8.2 9.8 7.2 11.0 

4.4 5.5 3.6 3.2 

2.4 1.0 .7 1.1 

.7 2.4 .3 .1 

5.1 6.1 4.3 5.6 

11.5 12.8 14.0 18.6 

SUMMARY 

Data from the SCF show that despite small changes 

in real family income over the 2001–04 period—an 

increase of 1.6 percent in the median and a decline of 

2.3 percent in the mean—families overall still saw 

some increase in their net worth. The median value of 

net worth rose 1.5 percent, while the mean rose 

more—6.3 percent. However, the measured gains in 

wealth in the 2001–04 period pale in comparison 

with the much larger increase of the preceding three 

years; from 1998 to 2001, median net worth rose 

10.3 percent and the mean 28.7 percent. In the more 

recent period, median wealth declined for families in 

the bottom 40 percent of the income distribution and 

rose for those higher in the distribution; in contrast, 

mean net worth rose or held about steady for all 

income groups. 

In the three years after the 2001 survey, interest 

rates moved generally lower; indexes of equity market performance trended generally downward over 

the early part of the period but made up the losses 

with gains in 2004; and residential real estate appreciated strongly. Against this backdrop, the overall share 

of financial assets in families’ portfolios, as defined 

in this article, declined despite substantial gains in 

holdings for some groups. Of particular note, the 

share of families that held stocks either directly or 

indirectly through an account-type retirement plan or 

another type of managed asset account fell to about 

49 percent in 2004 after having reached an SCF high 

of almost 52 percent in 2001. 

Logically balancing the decline in the share of 

financial assets in families’ portfolios was the rise in 

the share of their nonfinancial assets. The most 

important factor in this rise was residential real estate. 

The homeownership rate went up 1.4 percentage 

points, and the ownership rate for other residential 

real estate (including both second homes and investment properties) went up 1.2 percentage points. At 

the same time, the value of real estate increased 

dramatically in many areas. 

Overall, asset ownership and debt use increased in 

both prevalence and amount. The net effect was an 

increase in the proportion of families’ assets offset by 

debts—from about 12 percent in 2001 to 15 percent 

in 2004. The most important factor in the increase 

was a rise in the amount of debt associated with 

residential real estate. The amount of other types of 

debt also rose. 

Even with interest rates lower in 2004 than in 

2001, the SCF data show a moderate increase in 

measures of debt burden. The period saw increases in 

the proportion of families that had been delinquent 

with their payments in the year preceding the survey 

and in the median ratio of loan payments to family 

income. The increase in delinquencies was somewhat 

less broadly spread across demographic groups than 
A36 Federal Reserve Bulletin 2006 

was the increase in the median ratio. At the same 

time, the proportion of families with high values of 

the ratio was only marginally higher. 

APPENDIX: SURVEY PROCEDURES AND 

STATISTICAL MEASURES 

Detailed documentation of the SCF methodology is 

available elsewhere.51 The 2004 data used here are 

derived from the final internal version of the survey 

information. Data from this survey, suitably altered to 

protect the privacy of respondents, along with additional tabulations of data from the surveys beginning 

with 1989, will be available in February 2006 on the 

Federal Reserve’s website at www.federalreserve.gov/ 

pubs/oss/oss2/scf2004home.html. Links to the data 

used in this article for earlier periods are available on 

that site. Results reported in this article for earlier 

surveys may differ from the results reported in earlier 

articles because of additional statistical processing, 

correction of data errors, revisions to the survey 

weights, conceptual changes in the definitions of 

variables used in the articles, and adjustments for 

inflation. 

As a part of the general reconciliations required for 

this article, the survey data were compared with 

many external estimates, a few of which are mentioned in the text. Generally, the survey estimates 

correspond fairly well to external estimates. One 

particularly important comparison is between the 

SCF and the Federal Reserve’s flow of funds 

accounts for the household sector. This comparison 

suggests that when the definitions of the variables in 

the two sources can be adjusted to a common conceptual basis, the estimates of totals in the two systems 

tend to be close. The data series in the SCF and in the 

flow of funds accounts usually show very similar 

growth rates.52 In general, the data from the SCF can 

be compared with those of other surveys only in 

terms of the medians because of the special design of 

the SCF sample. 

51. See Arthur B. Kennickell (2000), ‘‘Wealth Measurement in the 

Survey of Consumer Finances: Methodology and Directions for Future 

Research’’ (Washington: Board of Governors of the Federal Reserve 

System, May); Arthur B. Kennickell (2001), ‘‘Modeling Wealth with 

Multiple Observations of Income: Redesign of the Sample for the 

2001 Survey of Consumer Finances’’ (Washington: Board of Governors of the Federal Reserve System, October), www.federalreserve.gov/ 

pubs/oss/oss2/method.html; and references cited in these papers. 

52. For details on how these comparisons are structured and the 

results of comparisons for earlier surveys, see Rochelle L. 

Antoniewicz (2000), ‘‘A Comparison of Flow of Funds Accounts and 

the Survey of Consumer Finances’’ (Washington: Board of Governors 

of the Federal Reserve System, October), www.federalreserve.gov/ 

pubs/oss/oss2/method.html. 

Definition of ‘‘Family’’ in the SCF 

The definition of ‘‘family’’ used throughout this 

article differs from that typically used in other government studies. In the SCF, a household unit is 

divided into a ‘‘primary economic unit’’ (PEU)— 

the family—and everyone else in the household. 

The PEU is intended to be the economically dominant single individual or couple (whether married 

or living together as partners) and all other persons 

in the household who are financially interdependent with that economically dominant person or 

couple. 

This report also designates a head of the PEU, not 

to convey a judgment about how an individual family 

is structured but as a means of organizing the data 

consistently. If a couple is economically dominant in 

the PEU, the head is the male in a mixed-sex couple 

and the older person in a same-sex couple. If a single 

individual is economically dominant, that person is 

designated as the family head in this report. 

Racial and Ethnic Identification 

In this article, the race and ethnicity of a family in the 

SCF are classified according to the self-identification 

of that family’s original respondent to the SCF interview. The questions underlying the method of classification used in the survey were changed in both 1998 

and 2004. Starting in 1998, SCF respondents were 

allowed to report more than one racial identification; 

in surveys before then, only one response was 

recorded. For maximum comparability with earlier 

data, respondents reporting multiple racial identifications were asked to report their strongest racial 

identification. 

Beginning with the 2004 survey, the question on 

racial identification is preceded by a question on 

whether respondents consider themselves to be Hispanic or Latino in culture or origin; previously, such 

ethnic identification was captured only to the extent 

that it was reported as a response to the question on 

racial identification. The sequence of these two questions in the 2004 SCF is similar to that in the CPS. 

When families in the March 2004 CPS are classified 

in the way most compatible with the SCF, the proportion of Hispanic families is 10.5 percent; the 2004 

SCF estimate is 11.2 percent. Differences in these 

proportions are attributable to sampling error and 

possibly to differences in the wording and context of 

the questions. 

For greater comparability with the earlier SCF 

data, the data reported in this article ignore the infor­
Recent Changes in U.S. Family Finances: Evidence from the 2001 and 2004 Survey of Consumer Finances A37 

mation on ethnic identification available in 2004, but 

respondents reporting multiple racial identifications 

in the surveys starting with 1998 are classified as 

‘‘nonwhite or Hispanic.’’ For the 1995 survey, only 

the single recorded response to the racial classification question is used to classify families. In the 2004 

SCF, 2.3 percent of respondents reported more than 

one racial identification, up from 1.5 percent in 2001. 

Of those who responded affirmatively to the question 

on Hispanic or Latino identification in 2004, 85.7 percent also reported ‘‘Hispanic or Latino’’ as one of 

their racial identifications, and 82.1 percent reported 

it as their primary racial identification. Because the 

question on Hispanic or Latino ethnicity precedes the 

one on racial identification in the 2004 survey, the 

answer to the second of these two questions may 

have been influenced by the answer to the first.53 

The Sampling Techniques 

The survey is expected to provide a core set of data 

on family income, assets, and liabilities. The major 

aspects of the sample design that address this requirement have been constant since 1989. The SCF combines two techniques for random sampling. First, a 

standard multistage area-probability sample (a geographically based random sample) is selected to provide good coverage of characteristics, such as homeownership, that are broadly distributed in the 

population. 

Second, a supplemental sample is selected to disproportionately include wealthy families, which hold 

a relatively large share of such thinly held assets as 

noncorporate businesses and tax-exempt bonds. 

Called the ‘‘list sample,’’ this group is drawn from a 

list of statistical records derived from tax returns. 

These records are used under strict rules governing 

confidentiality, the rights of potential respondents to 

refuse participation in the survey, and the types of 

information that can be made available. Individuals 

listed by Forbes magazine as being among the 

wealthiest 400 people in the United States are 

excluded from sampling. 

Of the 4,522 interviews completed for the 2004 

SCF, 3,007 were from the area-probability sample, 

and 1,515 were from the list sample; the figures for 

2001 are 2,917 from the area-probability sample and 

1,532 from the list sample. The 2004 survey repre53. For a review of the effects of various approaches to measuring 

race and ethnicity, see Clyde Tucker, Ruth McKay, Brian Kojetin, 

Roderick Harrison, Manuel de la Puente, Linda Stinson, and Ed 

Robinson (1996), ‘‘Testing Methods of Collecting Racial and Ethnic 

sents 112.1 million families, and the 2001 survey 

represents 106.5 million families.54 

The Interviews 

The survey questionnaire has changed in only minor 

ways since 1989, except in a small number of 

instances in which the structure was altered to accommodate changes in financial behaviors, in types of 

financial arrangements available to families, and in 

regulations covering data collection. In the 2004 survey, the most important changes were made in the 

way data are collected on pensions associated with 

current jobs and in the way information is solicited 

about the racial and ethnic identification of families. 

In these cases and in all earlier ones, every effort has 

been made to ensure the maximum degree of comparability of the data over time. Except where noted in 

the article, the data are highly comparable over time. 

The generosity of families in giving their time for 

interviews has been crucial to the SCF. In the 2004 

SCF, the median interview length was about eighty 

minutes. However, in some particularly complicated 

cases, the amount of time needed was substantially 

more than two hours. The role of the interviewers in 

this effort is also critical. Without their dedication 

and perseverance, the survey would not be possible. 

The SCF interviews were conducted largely 

between the months of May and December in each 

survey year by NORC, a social science and survey 

research organization at the University of Chicago. 

The majority of interviews were obtained in person, 

although interviewers were allowed to conduct telephone interviews if that was more convenient for the 

respondent. In the surveys beginning with 1995, each 

interviewer used a program running on a laptop computer to administer the survey and collect the data. 

The use of computer-assisted personal interviewing has the great advantage of enforcing systematic 

collection of data across all cases. The computer 

Information: Results of the Current Population Survey Supplement on 

Race and Ethnicity,’’ BLS Statistical Notes 40, CPS Publications 

(Washington: Bureau of Labor Statistics, June), www.bls.census.gov/ 

cps/racethn/1995/stat40rp.htm. 

54. In the development of weights for the SCF, population estimates of the Bureau of the Census are a key input. After the data for 

the 2001 SCF were processed, the Bureau of the Census altered its 

population estimates in a way that increases the number of family 

units relevant for the 2001 SCF to 108.2 million. Pending a more 

detailed investigation into the change in the population estimate, the 

2001 SCF estimates reported in this article are calculated with weights 

based on the original, lower Census population figure. The use of a 

different number of families does not affect the median and mean 

estimates reported in this article. The 1998 survey represents 102.6 

million families, and the 1995 survey represents 99.0 million families. 
A38 Federal Reserve Bulletin 2006 

program developed to collect the data for the SCF 

was tailored to allow the collection of partial information in the form of ranges whenever a respondent 

either did not know or did not want to reveal an exact 

dollar figure. 

The response rate in the area-probability sample is 

more than double that in the list sample. In both 2001 

and 2004, about 70 percent of households selected 

for the area-probability sample actually completed 

interviews. The overall response rate in the list 

sample was about 30 percent; in the part of the list 

sample likely containing the wealthiest families, the 

response rate was only about 10 percent. 

Weighting 

To provide a measure of the frequency with which 

families similar to the sample families could be 

expected to be found in the population of all families, 

an analysis weight is computed for each case accounting both for the systematic properties of the sample 

design and for differential patterns of nonresponse. 

The SCF response rates are low by the standards of 

other major government surveys, and analysis of the 

data confirms that the tendency to refuse participation 

is highly correlated with net worth. However, unlike 

other surveys, which also almost certainly have differential nonresponse by wealthy households, the 

SCF has the means to adjust for such nonresponse. A 

major part of SCF research is devoted to the evaluation of nonresponse and adjustments for nonresponse 

in the analysis weights of the survey.

55 

Sources of Error 

Errors may be introduced into survey results at many 

stages. Sampling error—the variability expected in 

55. The weights used in this article are adjusted for differential 

rates of nonresponse across racial and ethnic groups by homeownership status. See Arthur B. Kennickell (1999), ‘‘Revisions of the 

SCF Weighting Methodology: Accounting for Race/Ethnicity and 

Homeownership’’ (Washington: Board of Governors of the Federal 

Reserve System, December), www.federalreserve.gov/pubs/oss/oss2/ 

method.html. 

estimates based on a sample instead of a census—is a 

particularly important source of error. Such error can 

be reduced either by increasing the size of a sample 

or, as is done in the SCF, by designing the sample to 

reduce important sources of variability. Sampling 

error can be estimated, and for this article we use 

replication methods to do so. 

Replication methods draw samples, called replicates, from the set of actual respondents in a way that 

incorporates the important dimensions of the original 

sample design. In the SCF, weights were computed 

for all the cases in each of the replicates.56 For each 

statistic for which standard errors are reported in this 

article, the weighted statistic is estimated using the 

replicate samples, and a measure of the variability of 

these estimates is combined with a measure of the 

variability due to imputation for missing data to yield 

the standard error. 

Other errors include those that interviewers may 

introduce by failing to follow the survey protocol or 

misunderstanding a respondent’s answers. SCF interviewers are given lengthy, project-specific training to 

minimize such problems. Respondents may introduce 

error by interpreting a question in a sense different 

from that intended by the survey. For the SCF, extensive pretesting of questions and thorough review of 

the data tend to reduce this source of error. 

Nonresponse—either complete nonresponse to the 

survey or nonresponse to selected items within the 

survey—may be another important source of error. 

As noted in more detail above, the SCF uses weighting to adjust for differential nonresponse to the survey. To address missing information on individual 

questions within the interview, the SCF uses statistical methods to impute missing data; the technique 

makes multiple estimates of missing data to allow for 

an estimate of the uncertainty attributable to this type 

of nonresponse. 

56. See Arthur B. Kennickell (2000), ‘‘Revisions to the Variance 

Estimation Procedure for the SCF’’ (Washington: Board of Governors 

of the Federal Reserve System, October), www.federalreserve.gov/ 

pubs/oss/oss2/method.html.