June 2012

Vol 98, No 2

Changes in U.S. Family Finances from 2007 to

2010: Evidence from the Survey of Consumer

Finances

Jesse Bricker, Arthur B. Kennickell, Kevin B. Moore, and John Sabelhaus, of the Board's

Division of Research and Statistics, prepared this article with assistance from Samuel

Ackerman, Robert Argento, Gerhard Fries, and Richard A. Windle.

The Federal Reserve Board’s Survey of Consumer Finances (SCF) for 2010 provides

insights into changes in family income and net worth since the 2007 survey.1 The survey

shows that, over the 2007–10 period, the median value of real (inflation-adjusted) family

income before taxes fell 7.7 percent; median income had also fallen slightly in the preceding

three-year period (figure 1). The decline in median income was widespread across demographic groups, with only a few groups experiencing stable or rising incomes. Most noticeably, median incomes moved higher for retirees and other nonworking families. The decline

in median income was most pronounced among more highly educated families, families

headed by persons aged less than 55, and families living in the South and West regions.

Real mean income fell even more than median income in the recent period, by 11.1 percent

across all families. The decline in mean income was even more widespread than the decline

in median income, with virtually all demographic groups experiencing a decline between

2007 and 2010; the decline in the mean was most pronounced in the top 10 percent of the

income distribution and for higher education or wealth groups. Over the preceding three

years, mean income had risen, especially for high-net-worth families and families headed by

a person who was self-employed.

The decreases in family income over the 2007−10 period were substantially smaller than the

declines in both median and mean net worth; overall, median net worth fell 38.8 percent,

and the mean fell 14.7 percent (figure 2). Median net worth fell for most groups between

2007 and 2010, and the decline in the median was almost always larger than the decline in

the mean. The exceptions to this pattern in the medians and means are seen in the highest 10 percent of the distributions of income and net worth, where changes in the median

were relatively muted. Although declines in the values of financial assets or business were

important factors for some families, the decreases in median net worth appear to have been

driven most strongly by a broad collapse in house prices.2 This collapse is reflected in the

1 For a detailed discussion of the 2004 and 2007 surveys as well as references to earlier surveys, see Brian K.

Bucks, Arthur B. Kennickell, Traci L. Mach, and Kevin B. Moore (2009), “Changes in U.S. Family Finances

from 2004 to 2007: Evidence from the Survey of Consumer Finances,” Federal Reserve Bulletin, vol. 95, pp.

A1–A55, www.federalreserve.gov/pubs/bulletin/default.htm. Information about changes in family finances

between 2007 and 2009 based on a re-interview of 2007 SCF families can be found in Jesse Bricker, Brian

Bucks, Arthur Kennickell, Traci Mach, and Kevin Moore (2011), “Surveying the Aftermath of the Storm:

Changes in Family Finances from 2007 to 2009,” Finance and Economics Discussion Series 2011-17 (Washington: Board of Governors of the Federal Reserve System, March), www.federalreserve.gov/pubs/feds/2011/201117

/index.html

2

If primary residences and the associated mortgage debt are excluded, the median of families’ net worth is

reduced from $126,400 to $42,300 in 2007 and from $77,300 to $29,800 in 2010. Although the adjusted wealth

measure declined proportionately by only a somewhat smaller amount than the unadjusted measure—29.7 percent—the amount of the change is, obviously, much smaller; median adjusted wealth declined $12,600, while

the unadjusted measure fell $49,100.
patterns of change in net worth

across demographic groups to

varying degrees, depending on the

rate of homeownership and the

proportion of assets invested

in housing. The decline in median

net worth was especially large for

families in groups where housing

was a larger share of assets, such as

families headed by someone 35 to

44 years old (median net worth fell

54.4 percent) and families in the

West region (median net worth fell

55.3 percent).

A substantial part of the declines

observed in net worth over the

2007–10 period can be associated

with decreases in the level of unrealized capital gains on families’

assets. The share of total assets of

all families attributable to unrealized capital gains from real estate, businesses, stocks, or

mutual funds fell 11.6 percentage points, to 24.5 percent in 2010. Although the overall level

of debt owed by families was basically unchanged, debt as a percentage of assets rose

because the value of the underlying assets (especially housing) decreased faster.

With overall median and mean debt basically unchanged or falling less than income, measures of debt payments relative to income might have been expected to increase. In fact,

total payments relative to total income increased only slightly, and the median of payments

relative to income among families with debt fell after having risen between 2004 and 2007.

The share of families with high

payments relative to their incomes

also fell after rising substantially

between 2001 and 2007.

This article reviews these and other

changes in the financial condition

of U.S. families between 2007 and

2010.3 The discussion draws on

data from the Federal Reserve

Board’s SCF for those years; it also

uses evidence from other years of

the survey and a special panel SCF

conducted from 2007 to 2009 to

place the 2007–10 changes in a

broader context.

3

See box 1, “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. See also Bucks, Kennickell, Mach, and Moore,

“Changes in U.S. Family Finances from 2004 to 2007,” and Bricker, Bucks, Kennickell, Mach, and Moore,

“Surveying the Aftermath of the Storm.”

Figure 1. Change in median and mean incomes,

2001–10 SCF

Median

Mean

10.0

5.0

.0

–5.0

–10.0

–15.0

2001–04 2004–07 2007–10

Note: Changes are based on inflation-adjusted dollars.

Source: Federal Reserve Board, Survey of Consumer Finances.

Figure 2. Change in median and mean net worth,

2001–10 SCF

2001–04 2004–07 2007–10

Median

Mean

10.0

.0

–10.0

30.0

20.0

–20.0

–30.0

–40.0

–50.0

Note: Changes are based on inflation-adjusted dollars.

Source: Federal Reserve Board, Survey of Consumer Finances.

2 Federal Reserve Bulletin | June 2012
Box 1. 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 normally 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 with the U.S. Census Bureau definition of

“households” than with 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 and the

text for details), the survey questionnaire has changed in only minor ways relevant to this

article 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

2010 survey, 6,492 families were interviewed, and in the 2007 survey, 4,421 were

interviewed.

This article draws principally upon the final data from the 2010 and 2007 surveys. To provide a larger context, some information is also included from the final versions of earlier

surveys, as well as a panel interview in 2009 with respondents to the 2007 survey.1 Differences between estimates from earlier surveys as reported here and as reported in earlier

Federal 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 2010 dollars using the “current methods” version of

the consumer price index for all urban consumers (CPI-U-RS). The appendix provides

additional detail on the adjustments.

The principal detailed tables describing asset and debt holdings focus on the percentage

of various groups that have such items and the median holding for those who have them.2

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 the same 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 gain or loss of the mean relative to the

median may usually be taken as indicative of the relative change at the top of the distribution; for example, when the mean decreases more rapidly than the median, it is typically

taken to indicate that the values in the top of the distribution fell more than those in the

lower part of the distribution.

continued on next page

Changes in U.S. Family Finances from 2007 to 2010 3
Economic Background

Families’ finances are affected by both their own decisions and the state of the broader

economy. Over the 2007–10 period, the U.S. economy experienced its most substantial

downturn since the Great Depression. Real gross domestic product (GDP) fell nearly

5.1 percent between the third quarter of 2007 and the second quarter of 2009, the official

period of recession as determined by the National Bureau of Economic Research. During

the same period, the unemployment rate rose from 5.0 percent to 9.5 percent, the highest

level since 1983. Recovery from the so-called Great Recession has also been particularly

slow; real GDP did not return to pre-recession levels until the third quarter of 2011. The

unemployment rate continued to rise through the third quarter of 2009 and remained over

9.4 percent during 2010. The rate of inflation, as measured by the consumer price index for

all urban consumers (CPI-U-RS), decreased somewhat over the period from an annual

average of 2.8 percent in 2007 to 1.6 percent in 2010.

Financial markets moved dramatically over the three-year period. Major stock market

indexes fell nearly 50 percent between September 2007 and March 2009, but about one-half

of the losses in indexes such as the Dow Jones industrial average, the Standard & Poor’s

500, and the Wilshire 5000 had been recouped by September 2010. Interest rates on new

consumer loans generally fell; for example, the interest rate on a new 30-year fixed-rate

mortgage averaged 6.38 percent in September 2007, when about one-half of the interviews

for the 2007 survey had been completed, and the average rate was 4.35 percent three years

later in September 2010. Yields fell dramatically on liquid deposits, time deposits, and

bonds; for example, the rate on a three-month certificate of deposit (CD) fell from an average of 5.46 percent in September 2007 to 0.28 percent in September 2010.

Housing was of greater importance than financial assets for the wealth position of most

families. The national purchase-only LoanPerformance Home Price Index produced by

First American CoreLogic fell 22.4 percent between September 2007 and September 2010,

by which point house prices were fully 27.5 percent below the peak achieved in April 2006.

The decline in house prices was most rapid in the states where the boom had been greatest.

For example, California, Nevada, Arizona, and Florida saw declines of 40 to 50 percent,

while Iowa saw a decline of only about 1 percent. Homeownership rates fell over the

period, in part because some families found it impossible to continue to afford their homes.

By 2010, the homeownership rate was back down to a level last seen in the 2001 SCF,

although that was still higher than in any previous SCF since at least 1989.

The Congress and the President responded to the economic situation with several legislative

measures, some of which had an immediate effect on family finances, and some of which

were intended to help prevent future crises. For example, in order to boost family after-tax

incomes, the 2001 and 2003 income tax reductions originally scheduled to expire in 2010

were extended. In addition, employee payroll taxes earmarked for Social Security were

reduced. In another move aimed at offsetting the decline in economic activity, the Troubled

Box 1—continued

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.

1 Additional information about the survey is available at www.federalreserve.gov/econresdata/scf/scf_2010.htm.

2

The median of a distribution is defined as the value at which equal parts of the population considered have values

larger or smaller.

4 Federal Reserve Bulletin | June 2012
Asset Relief Program allowed government infusion of equity into stressed financial institutions. Lawmakers also responded to the economic crisis by attempting to curtail practices

that disproportionately affected vulnerable consumers, practices that some argued had contributed to the crisis. Most notably, the Dodd–Frank Wall Street Reform and Consumer

Protection Act, passed in July 2010, contained prohibitions on certain lending practices

and created the Consumer Financial Protection Bureau.

Several demographic shifts had important consequences for the structure of the population. The aging of the baby-boom population from 2007 to 2010 drove an 11.0 percent

increase in the population aged 55 to 64. Overall population growth was about 2.7 percent,

and, according to figures from the U.S. Census Bureau, 21.5 percent of that growth was

due to net immigration. Also according to Census Bureau estimates, the number of households increased 1.2 percent—below the 2.3 percent rate of household formation between

2004 and 2007. With the population growing more rapidly than household formation, the

average number of persons per household rose slightly from 2.59 people in 2007 to 2.63 in

2010.

The vast majority of interviews for the 2010 SCF were completed in 2010, but some were

completed in early 2011. Thus, the survey data are largely unaffected by changes in economic activity since 2011—in particular, the rise in the market price of corporate equities,

the relative stabilization of house prices, and the start of a decline in the unemployment

rate.

Income

The change in real before-tax family income between 2007 and 2010 diverged sharply from

the patterns seen in recent surveys.4 Both median and mean income fell sharply, though the

drop in the median (7.7 percent) was smaller than the drop in the mean (11.1 percent)

(table 1).5 Over the preceding three-year period, the median had been basically unchanged,

and the mean had risen 8.5 percent. The changes for both periods stand in stark contrast to

a pattern of substantial increases in both the median and the mean dating to the early

1990s.

Underlying the recent change was a shift in the composition of income between 2007 and

2010 (table 2). The share of family income attributable to realized capital gains fell from

6.7 percent in 2007 to only 0.9 percent in 2010; income from businesses, farms, and selfemployment accounted for only 12.2 percent of income in 2010, down from 13.6 percent in

4 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.

5 Over the 2007–10 period, estimates of inflation-adjusted household income for the previous year from the Current Population Survey (CPS) of the Census Bureau show a decrease in both the median (negative 2.2 percent)

and the mean (negative 3.6 percent); both of these changes are smaller in absolute terms than the corresponding declines in the SCF. The medians for 2010 are similar in the SCF ($45,800) and the CPS ($50,600). Typically, the SCF shows a higher level of mean income than does the CPS; for 2010, the SCF yields an estimate of

$78,500, while the CPS yields an estimate of $69,100. As discussed in more detail in the appendix, the two

surveys differ in their definitions of the units of observation and in other aspects of their methodologies. Most

relevant here is the fact that a CPS household can contain more people than a corresponding SCF family. If the

SCF measure is expanded to include the income of household members not included in the SCF definition of

a family, the median falls 5.6 percent over the period (from $51,700 in 2007 to $48,800 in 2010), and the mean

falls 10.8 percent (from $90,800 in 2007 to $81,000 in 2010). The substantial difference in mean levels is likely

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 participants in that survey might be identifiable.

Changes in U.S. Family Finances from 2007 to 2010 5
2007. Offsetting these declines in shares, the share of income from wages and salaries rose

3.6 percentage points; that of Social Security, pension, or other retirement income rose

2.4 percentage points; and that of transfers or other income rose 1.3 percentage points. The

share of income from interest or dividends was little changed. The decline in the share of

capital gains was largest among the wealthiest 10 percent of families. As shown in the table,

wage income tends to be a smaller factor for the highest wealth group.

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

table 1.6 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

6 Tabular information from the survey beyond that presented in this article is available at www.federalreserve.gov/

econresdata/scf/scf_2010.htm. This information includes versions of all of the numbered tables in this article,

for all of the surveys from 1989 to 2010 where the underlying information is available. Mean values for the

demographic groups reported in this article are also provided. The estimates of the means, however, are more

likely to be affected by sampling error than are the estimates of the medians. In addition, some alternative versions of the tables in this article are given. For those who wish to make further alternative calculations, this

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

selected characteristics of families, 2001–10 surveys

Thousands of 2010 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 families

Median Mean Median Mean

All families 48.9 83.3 59.2 100.0 49.8 81.4 56.1 100.0

(1.0) (2.4) (1.0) (1.4)

Percentile of income

Less than 20 12.6 12.3 30.0 20.0 12.8 12.4 34.0 20.0

20–39.9 29.9 29.6 53.4 20.0 29.5 30.0 43.3 20.0

40–59.9 48.9 49.4 61.3 20.0 49.8 50.0 54.5 20.0

60–79.9 79.4 79.9 72.0 20.0 78.5 79.6 69.3 20.0

80–89.9 120.9 120.2 74.9 10.0 120.5 122.6 77.8 10.0

90–100 207.8 371.0 84.3 10.0 212.7 347.7 80.6 10.0

Age of head (years)

Less than 35 40.9 54.2 52.9 22.7 37.8 51.9 55.0 22.2

35–44 63.0 94.5 62.3 22.3 57.5 85.0 58.0 20.6

45–54 66.8 114.2 61.7 20.6 70.3 108.6 58.5 20.8

55–64 55.4 106.5 62.0 13.2 62.6 115.5 58.5 15.2

65–74 34.0 71.3 61.8 10.7 38.4 68.7 57.1 10.5

75 or more 27.4 45.0 55.5 10.4 27.3 47.1 45.7 10.7

Family structure

Single with child(ren) 27.7 36.0 45.2 11.4 29.5 37.7 39.8 12.1

Single, no child, age less

than 55 35.3 49.4 55.8 15.1 33.3 45.2 52.8 15.3

Single, no child, age 55

or more 20.8 39.9 49.5 13.2 24.5 39.2 45.9 14.6

Couple with child(ren) 76.5 115.0 61.9 31.1 75.6 113.9 61.7 31.7

Couple, no child 63.0 105.3 68.1 29.2 67.4 107.0 64.4 26.3

Education of head

No high school diploma 20.8 30.8 38.7 16.0 22.3 29.8 35.9 14.4

High school diploma 41.6 54.9 56.7 31.7 41.1 51.5 54.0 30.6

Some college 50.1 68.0 61.7 18.3 47.3 64.5 51.0 18.4

College degree 83.1 142.9 70.0 34.0 84.4 135.3 68.3 36.6

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 12 months preceding the interview.

Percentage distributions may not sum to 100 because of rounding. Dollars have been converted to 2010 values with the current-methods

consumer price index for all urban consumers (see the 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 4) and for definitions of family and family head.

6 Federal Reserve Bulletin | June 2012
more likely to be retired. Couples (families in which the family head was either married or

living with a partner) tend to have higher incomes than single persons, in part because

couples have more potential wage earners. Income also shows a strong positive association

with education; in particular, incomes for families headed by a person who has a college

degree tend to be 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.7 Families headed by a self-employed worker consistently have the highest median and

mean incomes of all work-status groups. Families headed by a person in a managerial or

professional occupation have higher incomes than families in the three remaining occupation categories. Income is also higher for homeowners than for other families, and it is progressively higher for groups with greater net worth.8 Across the four regions of the country

as defined by the Census Bureau, the ordering of median incomes over time has varied, but

website provides a variety of data files as well as access to online tabulation software that may be used to create

customized tables based on the variables analyzed in this article.

7

See the appendix for a discussion of racial and ethnic identification in the SCF.

8

In this article, a family is treated as a homeowner if at least one person in the family owns at least some part of

the family’s primary residence.

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

selected characteristics of families, 2001–10 surveys—continued

Thousands of 2010 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 families

Median Mean Median Mean

Race or ethnicity of respondent

White non-Hispanic 55.4 94.3 63.1 75.4 56.9 92.9 60.1 72.2

Nonwhite or Hispanic 31.5 49.9 47.4 24.6 34.3 51.7 45.6 27.8

Current work status of head

Working for someone else 57.9 82.5 61.6 60.9 56.7 80.7 59.2 60.1

Self-employed 77.6 169.5 70.4 11.7 76.8 162.9 68.7 11.8

Retired 25.7 49.0 50.5 23.0 28.1 49.7 44.0 23.7

Other not working 20.4 44.9 42.7 4.5 23.6 43.0 44.9 4.4

Current occupation of head

Managerial or professional 87.2 153.4 72.4 27.1 88.9 147.6 67.7 28.3

Technical, sales, or

services 44.1 65.3 58.2 23.7 43.1 61.1 55.4 22.1

Other occupation 50.4 60.0 56.6 21.8 52.0 58.3 57.3 21.6

Retired or other not

working 25.4 48.3 49.2 27.4 27.4 48.7 44.1 28.1

Region

Northeast 50.6 95.2 58.1 19.0 58.5 100.7 59.5 18.8

Midwest 53.8 79.3 63.0 23.0 52.0 77.7 59.9 22.9

South 44.1 75.2 57.3 36.2 42.5 71.3 52.5 36.3

West 49.9 90.7 59.5 21.8 53.2 85.8 55.2 22.0

Urbanicity

Metropolitan statistical

area (MSA) 50.4 88.7 59.7 86.2 53.2 88.5 56.9 82.9

Non-MSA 37.0 50.2 56.3 13.8 34.4 47.2 52.3 17.1

Housing status

Owner 63.8 104.3 66.7 67.7 63.5 100.6 62.3 69.1

Renter or other 30.2 39.5 43.6 32.3 28.4 38.8 42.3 30.9

Percentile of net worth

Less than 25 24.1 29.4 34.5 25.0 23.6 28.8 34.7 25.0

25–49.9 42.8 48.5 54.2 25.0 42.5 48.5 53.7 25.0

50–74.9 62.6 72.2 68.2 25.0 60.3 69.8 62.1 25.0

75–89.9 85.3 96.3 77.4 15.0 88.6 101.2 72.6 15.0

90–100 155.0 313.8 84.1 10.0 165.4 294.6 76.0 10.0

Changes in U.S. Family Finances from 2007 to 2010 7
the means generally show higher values for the Northeast and the West than for the Midwest and the South. Finally, families living in metropolitan statistical areas (MSAs), which

are relatively urban areas, have higher median and mean incomes than those living in rural

areas.9

Income by Demographic Category

Across the income distribution between 2007 and 2010, only the lowest quintile did not

experience a substantial reduction in median income; the median for that group rose

$500.10 For other groups, the median decreased between 5.3 percent and 8.9 percent

between 2007 and 2010. Similarly, for all income groups except the lowest quintile, the

direction of changes in mean income was uniformly negative, with decreases ranging from

a 5.8 percent drop for the second-highest decile to a 16.2 percent drop for the top decile.

The disproportion between changes in median and mean incomes for the top decile (a

5.3 percent drop in the median, compared with a 16.2 percent decline in the mean) estab9 For the Office of Management and Budget’s definition of MSAs, see www.whitehouse.gov/omb/bulletins/

fy2008/b08-01.pdf.

10 Selected percentiles of the income distribution for the past four surveys are provided in the appendix, along

with definitions of selected subgroups of the distribution.

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

selected characteristics of families, 2001–10 surveys––continued

Thousands of 2010 dollars except as noted

Family characteristic

2007 2010

Income Percentage

of families

that saved

Percentage

of families

Income Percentage

of families

that saved

Percentage

of families

Median Mean Median Mean

All families 49.6 88.3 56.4 100.0 45.8 78.5 52.0 100.0

(.8) (1.4) (.6) (1.2)

Percentile of income

Less than 20 12.9 12.9 33.7 20.0 13.4 12.9 32.3 20.0

20–39.9 30.1 29.7 45.0 20.0 28.1 27.9 43.4 20.0

40–59.9 49.6 49.5 57.8 20.0 45.8 46.3 49.8 20.0

60–79.9 78.7 80.2 66.8 20.0 71.7 73.6 60.1 20.0

80–89.9 119.5 121.6 72.9 10.0 112.8 114.6 67.7 10.0

90–100 216.8 416.6 84.8 10.0 205.3 349.0 80.9 10.0

Age of head (years)

Less than 35 39.2 54.2 58.9 21.6 35.1 47.7 54.6 21.0

35–44 59.3 87.7 56.4 19.6 53.9 81.0 47.6 18.2

45–54 67.2 117.8 55.8 20.8 61.0 102.2 51.8 21.1

55–64 57.2 116.5 58.4 16.8 55.1 105.8 51.4 17.5

65–74 40.8 96.8 56.7 10.5 42.7 75.8 53.6 11.5

75 or more 23.9 47.9 49.4 10.6 29.1 46.1 54.1 10.7

Family structure

Single with child(ren) 30.2 44.1 41.6 12.2 29.5 39.4 38.2 12.0

Single, no child, age less

than 55 35.5 49.4 54.9 14.0 30.5 42.4 49.8 14.7

Single, no child, age 55

or more 25.8 38.4 48.5 14.9 24.2 39.6 45.4 15.2

Couple with child(ren) 74.6 118.4 60.1 31.8 67.7 109.4 52.8 31.6

Couple, no child 64.6 120.5 64.0 27.1 61.8 101.7 62.2 26.5

Education of head

No high school diploma 23.2 32.8 41.6 13.5 23.0 33.7 36.9 12.0

High school diploma 38.5 53.6 51.1 32.9 36.6 48.1 47.4 32.2

Some college 47.8 71.3 53.6 18.4 42.9 58.7 49.5 18.6

College degree 81.9 150.7 68.6 35.3 73.8 128.9 62.0 37.3

8 Federal Reserve Bulletin | June 2012
lishes a theme that is repeated for income changes for many other groups considered in this

article. Often, such a difference between the changes in a median and a mean is taken to

indicate relative compression of higher values in the distribution.

The decline in mean incomes in the top decile between 2007 and 2010 stands in stark contrast to the generally steady pattern of rising mean incomes at the top of the income distribution over the past two decades. Indeed, the only other decreases in mean income

observed for the top decile occurred in the periods 1989 to 1992 and 2001 to 2004, when the

recovery from earlier recessions was affecting families broadly.

Every age group less than 55 saw decreases in median income of between 9.1 and 10.5 percent, while families headed by a person between 65 and 74 or 75 or more saw increases at

the median. In contrast to the changes at the medians, the means fell for all age groups but

especially for the 65-to-74 age group (a decline of 21.7 percent). In almost every age group,

the decline in the mean was greater than the decline in the median.

By family structure, median incomes declined over the 2007–10 period for all groups, but

most notably (negative 14.1 percent) for childless single families (those headed by a person

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

selected characteristics of families, 2001–10 surveys––continued

Thousands of 2010 dollars except as noted

Family characteristic

2007 2010

Income Percentage

of families

that saved

Percentage

of families

Income Percentage

of families

that saved

Percentage

of families

Median Mean Median Mean

Race or ethnicity of respondent

White non-Hispanic 54.3 101.6 58.8 70.7 52.9 90.1 55.8 67.5

Nonwhite or Hispanic 38.6 56.2 50.8 29.3 34.6 54.4 44.0 32.5

Current work status of head

Working for someone else 59.3 87.1 60.3 59.9 55.9 84.2 55.2 56.9

Self-employed 79.3 201.0 62.8 10.5 64.5 149.9 55.1 11.4

Retired 25.9 53.5 46.6 25.0 29.1 44.4 47.3 24.9

Other not working 21.3 37.1 45.3 4.6 23.9 36.3 37.0 6.8

Current occupation of head

Managerial or professional 89.4 163.6 70.2 27.5 81.3 148.7 62.9 27.7

Technical, sales, or

services 46.3 70.8 55.6 21.8 42.0 59.5 49.0 21.7

Other occupation 51.7 60.7 53.6 21.1 50.0 57.3 51.1 18.8

Retired or other not

working 24.9 51.0 46.4 29.6 27.4 42.7 45.1 31.7

Region

Northeast 53.9 105.2 53.5 18.3 53.7 99.2 50.8 18.3

Midwest 46.3 78.5 58.2 22.9 46.5 70.9 57.2 22.4

South 45.0 83.1 56.9 36.7 40.7 71.5 49.8 37.1

West 54.4 92.9 56.3 22.1 48.8 80.8 51.4 22.2

Urbanicity

Metropolitan statistical

area (MSA) 52.8 95.6 57.0 82.9 48.8 84.8 51.7 82.7

Non-MSA 37.8 52.6 54.0 17.1 36.7 48.2 53.3 17.3

Housing status

Owner 64.6 110.7 60.9 68.6 59.6 98.3 56.5 67.3

Renter or other 29.1 39.3 46.7 31.4 26.1 37.9 42.7 32.7

Percentile of net worth

Less than 25 24.6 30.5 40.5 25.0 23.7 32.6 32.2 25.0

25–49.9 43.1 48.7 52.8 25.0 37.9 45.5 48.4 25.0

50–74.9 59.5 69.8 59.1 25.0 54.9 63.3 56.8 25.0

75–89.9 86.2 97.4 68.9 15.0 74.5 89.0 66.9 15.0

90–100 165.5 364.2 80.4 10.0 163.2 297.9 76.1 10.0

Changes in U.S. Family Finances from 2007 to 2010 9
who was neither married nor living with a partner) headed by a person aged less than 55;

median income fell the least (2.3 percent) for single families with children. Mean income

also fell for most types of families, except childless single families headed by a person aged

55 or older, for whom it rose 3.1 percent. Mean income of childless couples fell the most of

all families, when grouped by family structure (15.6 percent).

In 2010, both median and mean incomes rose substantially with educational attainment,

with incomes among the group holding a college degree being more than three times as

high as among those with less than a high school diploma, and at least twice as high as

among those with only a high school diploma. Between 2007 and 2010, however, the

decreases in incomes were much larger for the higher education groups, and mean income

actually rose for the no-high-school-diploma group (albeit from the much lower starting

point). This pattern of change reversed the relatively faster growth of mean income for

higher-educated families that had occurred between 2004 and 2007.

Over the 2007–10 period, the median income for white non-Hispanic families fell 2.6 percent, and the mean fell 11.3 percent. In contrast, the median for nonwhite or Hispanic

families fell 10.4 percent, while the mean fell 3.2 percent. However, both the median and

the mean values for nonwhites or Hispanics in both years were substantially lower than the

corresponding figures for non-Hispanic whites. Since 1998, the total gain in median income

for nonwhite or Hispanic families was 11.3 percent, whereas it was 3.9 percent for other

families; the gain in the mean over this period was larger for both groups—22.8 percent for

nonwhite or Hispanic families and 14.1 percent for other families.11

Median income fell 5.7 percent from 2007 to 2010 for families headed by a person who was

working for someone else, but it fell much more (18.7 percent) for those who were self-employed; the median rose 12.4 percent for the retired group and 12.2 percent for the other11 As noted in the appendix, the questions underlying the definition of race or ethnicity changed incrementally in

earlier surveys. When restrictions are placed on the definition of the variable for racial and ethnic classification

used in the tables in the article to make the series more comparable over a longer period, the estimates change

only slightly.

Table 2. Amount of before-tax family income, distributed by income sources, by percentile of net worth,

2007 and 2010 surveys

Percent

Income source

Percentile of net worth

All families

Less than 25 25–49.9 50–74.9 75–89.9 90–100

2007 Survey of Consumer Finances

Wages 79.9 80.0 77.7 72.3 46.2 64.5

Interest or dividends .1 .3 .7 1.9 7.8 3.7

Business, farm, self-employment 1.8 5.3 6.9 7.9 24.7 13.6

Capital gains .1 .4 1.3 2.9 14.4 6.7

Social Security or retirement 9.5 10.9 11.8 14.2 6.2 9.6

Transfers or other 8.6 3.2 1.6 .8 .7 1.9

Total 100 100 100 100 100 100

2010 Survey of Consumer Finances

Wages 75.9 80.7 76.3 69.7 55.8 68.1

Interest or dividends .1 .1 .4 1.6 8.7 3.6

Business, farm, self-employment 3.5 4.6 4.8 7.2 23.9 12.2

Capital gains .1 .2 .1 –.2 2.3 .9

Social Security or retirement 9.4 9.6 15.9 20.1 7.8 12.0

Transfers or other 11.1 4.7 2.5 1.7 1.5 3.2

Total 100 100 100 100 100 100

10 Federal Reserve Bulletin | June 2012
not-working group.12 The mean over this period fell for all groups, especially for the selfemployed group (a decrease of 25.4 percent) and the retired group (a decrease of

17.0 percent). Over the previous three years, median incomes had fallen for the retired and

the other-not-working groups but had risen for the two worker groups.

Across occupation groups, median income fell most in proportional terms (9.3 percent) for

families headed by a person working in a technical, sales, or service job. Although the percentage drop for families headed by a person in a managerial or professional position was

only slightly smaller (9.1 percent), the dollar amount of their decline was much larger

because their 2007 median income was much higher. For the other-occupation group, a

group that predominantly comprises workers in traditional blue-collar occupations,

the median fell only 3.3 percent. Consistent with evidence for age or current-work-status

groups, median income for families headed by retirees increased 10.0 percent. In contrast,

mean income decreased for all occupation groups, but especially for the technical, sales, or

service occupation groups, for whom the mean fell 16.0 percent, and for the retired and

other-not-working group, for whom the mean fell 16.3 percent.

By region, median family incomes in the Northeast and the Midwest were little changed

between 2007 and 2010, while the medians in the West and the South decreased substantially. Those changes in medians stand in contrast to what occurred during the period from

2004 to 2007, when median incomes fell in the Northeast and Midwest but increased in the

West and South. These income changes by region mirror the regional pattern of home price

changes across the two time periods. During the final years of the housing boom, which

disproportionately affected the West and South, median incomes were rising in those

regions but falling elsewhere. During the subsequent housing bust, which also disproportionately affected those areas, median incomes were falling there but rising elsewhere. Mean

incomes declined across all four regions between 2007 and 2010, though the changes were

largest for the South and West.

In the recent three-year period, families living in an MSA saw a 7.6 percent decline in

median income, while those living in other, less urbanized areas saw a decrease of 2.9 percent. Mean income also fell for both types of area—by 11.3 percent for families living in an

MSA and by 8.4 percent for those living in other areas.

By housing status, median and mean incomes fell from 2007 to 2010 both for homeowners

and for other families. The percentage decrease in median income for homeowners (7.7 percent) matched the percentage decrease in the overall family median reported earlier

(7.7 percent), while the decrease for renter and other families (10.3 percent) was greater.

Mean income declined for both groups, but particularly for homeowners—11.2 percent for

homeowners, versus 3.6 percent for other families. As noted later in this article, homeownership continued the decline that began between the 2004 and 2007 surveys after rising for

several years prior to that.13

12 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 are neither retired nor over age

65; the composition of this group shifted slightly from 2007 to 2010 to include fewer families headed by a person who had a college degree, continuing a trend between 2004 and 2007. In 2010, 70.0 percent of the othernot-working group was unemployed, and the remainder was out of the labor force; in 2007, 66.6 percent of the

group was unemployed (data not shown in the tables).

13 See box 2, “Cross-Sectional Data and Changes in Group Composition over Time,” for a discussion of the

potential effects of changes in the composition of groups on the interpretation of changes in median and mean

values for the groups.

Changes in U.S. Family Finances from 2007 to 2010 11
Box 2. Cross-Sectional Data and Changes in Group

Composition over Time

A cross-sectional survey of the sort discussed in this article describes the state of a

sample of families at a given point in time. Thus, when comparison is made of changes for

groups of people in families in such surveys over time, it is important to consider the

degree to which interpretation of the data may be a function of changes in membership in

those groups over time. Some classifications, such as ones based on race or ethnicity,

may be fixed characteristics of individuals, but the overall populations of such groups may

still change over time through births or deaths, through immigration or emigration, or in

other ways. Some classifications, including those based on age, may change in a way that

is mostly predictable. But other classifications—for example, ones based on economic

characteristics such as income or wealth—may vary over time for substantial fractions of

families.

Gathering data on the same set of families over time in a panel survey is an alternative way

to understand changes for groups of families determined as of a baseline period. To

address the effects on families of the period of financial turmoil between 2007 and 2009,

the Federal Reserve undertook a survey in 2009 that was intended to re-interview the panel

of families that had participated in the 2007 Survey of Consumer Finances (SCF) for which

the family head or that person’s spouse or partner was still alive and still living in the United

States. This panel survey provides detailed information on changes in a wide variety of

characteristics of families over this two-year period.1 Although the panel survey can only

be used to look at the first two years of the period covered by the cross-sectional surveys

reported in detail in this article, it can provide a useful indication of the degree to which the

movement of families across groups was important for the interpretation of the changes

observed between the 2007 and 2010 cross-sectional SCFs.

Family income is one item for which variation over time might be expected, particularly

over a period of severe recession. The panel data make it possible to track the movement

of families across income groups between 2007 and 2009 (table A). The data show substantial movement across income groups during the two-year period.2

For example,

69.4 percent of families with incomes in the bottom quintile of the distribution in 2009 also

had incomes in the bottom quintile in 2007 (indicated by the bold font along the diagonal).

The remaining fraction of families in the lowest income group in 2009 had experienced

higher incomes in 2007; in 2007, 19.1 percent were in the second quintile group, 6.7 percent were in the third quintile group, 3.0 percent were in the fourth quintile group, and

1.9 percent were in the highest quintile group.

Table A. Movement of families across the income distribution between 2007 and 2009

Percentile of income in 2007

Percentile of income in 2009

Less than 20 20–39.9 40–59.9 60–79.9 80–100

Less than 20 69.4 22.0 5.4 2.1 1.1

20–39.9 19.1 48.9 23.5 6.5 2.0

40–59.9 6.7 21.4 45.1 22.9 4.0

60–79.9 3.0 6.5 22.4 50.3 17.8

80–100 1.9 1.2 3.5 18.3 75.1

All 100 100 100 100 100

Note: Figures in bold along the diagonal show the fraction of families in the given 2007 quintile group that were in the same quintile group in

2009.

The movements of families across income groups in two years was more substantial for

the three central percentile groups than for families with incomes in the two extreme

groups, in part because families in one of the extreme groups could move in only one

direction. Among families in the second, third, and fourth income quintile groups in 2009,

only about half had been in the same group in 2007. The income group with the highest

persistence of membership across the two years was the top quintile; among families in

2009 whose income was high enough to be in the top quintile, 75.1 percent had also had

incomes in the top quintile in 2007.

continued on next page

12 Federal Reserve Bulletin | June 2012
Box 2—continued

Tracking changes, such as these shifts in income, for a given population over time is interesting in its own right, but that information may also have important implications for interpreting changes in a given measure, including mean net worth, for groups defined using

cross-sectional data. When there is a rearrangement of families across such groups over

time and estimates for the groups are affected by that change in composition, the estimates are said to reflect “composition effects.” In light of the large economic shifts in the

overall economy during the time covered by the cross-sectional surveys discussed in this

body of this article, movements of families across some categories may be particularly

important.

One such example is the effect of changes in the composition of the lowest income decile

from 2007 to 2009 on estimates of the group median of net worth for 2009. The panel data

make it possible to decompose this effect directly, by looking at the 2009 medians of the

members of this group, but with the families separated based on their 2007 income group

(table B). The overall median net worth for the lowest income quintile in 2009 was $10,000.

Among families in the lowest quintile group in 2009, those who were also in the group in

2007 had median net worth in 2009 of $4,500, those who were in the second quintile group

in 2007 had median net worth in 2009 of $19,200, those who were in the third quintile

group in 2007 had median net worth in 2009 of $32,000, and those in the two higher quintile groups in 2007 had progressively higher median net worth in 2009—up to $740,500 for

the top quintile group. The second and third of these groups constituted over one-fourth of

the lowest 2009 quintile group. The median net worth of families exiting the lowest income

quintile between 2007 and 2009 was $13,300 (data not shown in the tables). The higher

medians of the families entering this group between 2007 and 2009 helped push up the

overall median net worth of the group for 2009.

Table B. Net worth of families in the lowest income quintile in 2009, sorted by their

income ranking in 2007

Percentile of income in 2007 Median net worth

Less than 20 4,500

20–39.9 19,200

40–59.9 32,000

60–79.9 166,700

80–100 740,500

All 10,000

Of course, the 2007 income group in this example may also have incorporated composition effects relative to some other point of reference. If the movement of families across

income groups over time took place according to a constant pattern, the 2007 and 2009

cross-sectional estimates might have comparable composition. Given the nature of the

recession over this period and the evidence on unusual income presented in the body of

the article, that possibility seems unlikely.

Composition effects may vary across categories, outcomes of interest, and time periods.

For example, consider a very narrowly held asset or liability whose ownership is dominated

by families whose income is usually relatively high, as tends to be the case for directly held

stocks. The median value for directly held stocks in a given income quintile might be sensitive to the fraction of families in that income quintile whose usual income was different

from their current income. If, as in the 2009 panel interview, there was a substantial fraction

of families in the lowest quintile group whose income was usually much higher, those families might bring with them ownership rates and values for stock holdings that were generally higher than those for families whose incomes are usually low. The 2010 SCF crosssectional data indicate that ownership rates or median values for some narrowly held

financial assets for lower-income families seem to have risen between 2007 and 2010. In

light of the available evidence, a more likely explanation seems to be that some such

changes in ownership or median values were substantially affected by the sorts of compositional effects described here.

continued on next page

Changes in U.S. Family Finances from 2007 to 2010 13
By percentile of net worth, median income fell for every group, with the smallest decline

occurring for the top 10 percent of wealth holders, for whom income fell 1.4 percent. The

decline in median income was also relatively small for the lowest quartile, for which the

median fell 3.7 percent; the median declined most for the middle income groups (12.1 percent for the second quartile, 7.7 percent for the third quartile, and 13.6 percent for the

group between the 75th and 90th percentiles).14 The pattern of changes in the mean by net

worth group was somewhat different, with mean income in the bottom quartile rising

6.9 percent and the mean income in the top decile falling 18.2 percent. This differential pattern may be attributable in part to composition effects. For example, some families with

incomes sufficient to support a relatively large home mortgage may have lost enough of

their home equity over the three-year period for them to have been pushed into the lowest

wealth group, where their incomes would be relatively large.

Income Variability

For a given family, income at a particular time may not be indicative of its “usual” income.

Unemployment, a bonus, a capital loss or gain, or other factors may cause income to deviate temporarily from the usual amount. Although the SCF is normally a cross-sectional

survey, it does provide some information on income variability. In 2010, 25.3 percent of

families reported that their income for the preceding year was unusually low, whereas only

14.4 percent of families had reported unusually low income in 2007. In contrast, only

6.0 percent of families reported that their income was unusually high, down from 9.2 percent in 2007 (data not shown in the tables). For those reporting unusual income in either

direction, the median deviation of actual income from the usual amount was negative

27.4 percent of the normal level; the same statistic was negative 22.0 percent in 2007.

Although a family’s income may vary, such variability may be a well-recognized part of its

financial planning. The SCF data over the recent three-year period show some increase in

the families’ uncertainty about their future income. In 2010, 35.1 percent of families

reported that they did not have a good idea of what their income would be for the next

year, and 29.0 percent reported that they do not usually have a good idea of their next

year’s income. The corresponding figures for 2007 were lower, at 31.4 percent and 27.2 percent, respectively.

14 Selected percentiles of the distribution of net worth for the past four surveys are provided in the appendix.

Box 2—continued

1 See Jesse Bricker, Brian Bucks, Arthur Kennickell, Traci Mach, and Kevin Moore (2011), “Surveying the Aftermath

of the Storm: Changes in Family Finances from 2007 to 2009,” Finance and Economics Discussion Series 2011-17

(Washington: Board of Governors of the Federal Reserve System, March), www.federalreserve.gov/pubs/feds/2011

/201117/201117pap.pdf; and Arthur B. Kennickell (2012), “Tossed and Turned: Wealth Dynamics of U.S.

Households 2007–2009,” Finance and Economics Discussion Series 2011-51 (Washington: Board of Governors of

the Federal Reserve System, January; paper dated November 7, 2011), www.federalreserve.gov/pubs/feds/2011/

201151/201151pap.pdf.

2

The table shows equal-sized percentile groups, the highest of which comprises two percentile groups used in the

analysis presented in the article. Of the families with incomes in the 80th-to-90th percentiles of the distribution in

2009, 49.0 percent were in the same group in 2007, 38.3 percent were in one of the bottom four groups shown in

the table, and 12.6 percent had incomes between the 90th and 100th percentiles. Of the families with incomes in

the 90th-to-100th percentiles of the distribution in 2009, 71.4 percent were in the same group in 2007, 11.4 percent

were in one of the bottom four groups shown in the table, and 17.2 percent had incomes between the 80th and

90th percentiles.

14 Federal Reserve Bulletin | June 2012
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 2007 to 2010, the proportion of families that reported that they had saved in

the preceding year fell substantially, from 56.4 percent to 52.0 percent. That decrease

pushed the fraction of families reporting saving to the lowest level since the SCF began collecting such information in 1992. The general pattern of changes across demographic

groups in the recent three-year period is also one of decline, as retirees were the only group

reporting an increase in the fraction that saved.

Estimates of the personal saving rate from the national income and product accounts

(NIPA) show an annual saving rate of 5.3 percent between 2008 and 2010, up substantially

from the 2.2 percent rate over the 2005–07 period. This divergence in trend arose in part

because 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, while the fraction of families saving may be smaller, those who are doing so may be saving a relatively large amount;

those who are spending more than their incomes may be spending a relatively small

amount. 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

such gains.

A separate question in the survey asks about families’ more typical saving habits. In 2010,

6.0 percent of families reported that their spending usually exceeds their income; 19.6 percent reported that the two are usually about the same; 34.8 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 39.6 percent reported that they save regularly (data not

shown in the tables). These estimates show a small decrease between 2007 and 2010 in

the share of families who reported regular saving, but in general, the fact that these figures

are not much changed over the past several surveys suggests that economic conditions over

this period had only modest effects on the longer-run saving plans of families.

The SCF also collects information on families’ most important motivations for saving

(table 3).15 In 2010, the most frequently reported motive was liquidity related (35.2 percent

of families), a response that is generally taken to be indicative of saving for precautionary

reasons, and the next most frequently reported response was retirement related (30.1 percent of families).16 At least since 1998, these two responses have been most frequently

reported, but saving for retirement was marginally more likely to be reported than saving

15 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.

16 Liquidity-related reasons include “emergencies,” the possibilities of unemployment and illness, and the need for

ready money.

Changes in U.S. Family Finances from 2007 to 2010 15
for liquidity, until the 2010 survey. Education-related motives also appear to be important,

but less so than in 2007; in 2010, 8.2 percent of families reported it as their primary motive,

down only slightly from 2007 but down 3.4 percentage points since 2004. The frequency of

reporting saving for purchases rose 1.5 percentage points from 2007 to 2010 to a level

3.8 percentage points above that in 2004.

The survey asks families to estimate the amount of savings they need for emergencies and

other unexpected contingencies, a measure of desired savings for precautionary purposes.17

The desired amount increases with income, but as shown by the following table, the

amount is a similar percentage of usual income across levels of such income:

Table 3.1

Family

characteristic

Median of desired

precautionary saving

(2010 dollars)

Median of ratio

of desired amount

to usual income (percent)

All families 5,000 10.8

Percentile of usual income

Less than 20 2,000 14.1

20–39.9 4,000 12.3

40–59.9 5,000 9.8

60–79.9 10,000 10.2

80–89.9 10,000 8.9

90–100 30,000 12.1

Overall, the amount of such desired savings was little changed from 2007, but it rose overall

and for most income groups as a percentage of usual income, largely because usual income

fell over the recent three-year period (data not shown in the tables).

Net Worth

From 2007 to 2010, inflation-adjusted net worth (wealth)—the difference between families’

gross assets and their liabilities—fell dramatically in terms of both the median and the

17 For an extended analysis of desired precautionary savings as measured in the SCF, see Arthur B. Kennickell

and Annamaria Lusardi (2004), “Disentangling the Importance of the Precautionary Saving Motive,” NBER

Working Paper Series 10888 (Cambridge, Mass.: National Bureau of Economic Research, November).

Table 3. Reasons respondents gave as most important for their families' saving, distributed by type of

reason, 2001–10 surveys

Percent

Type of reason 2001 2004 2007 2010

Education 10.9 11.6 8.4 8.2

For the family 5.1 4.7 5.5 5.7

Buying own home 4.2 5.0 4.2 3.2

Purchases 9.5 7.7 10.0 11.5

Retirement 32.1 34.7 34.0 30.1

Liquidity 31.2 30.0 32.0 35.2

Investments 1.0 1.5 1.6 1.2

No particular reason 1.1 .7 1.1 1.4

When asked for a reason, reported do

not save 4.9 4.0 3.3 3.5

Total 100 100 100 100

Note: See note to table 1 and text note 15.

16 Federal Reserve Bulletin | June 2012
mean (table 4). The median fell 38.8 percent, and the mean fell 14.7 percent. The two preceding surveys showed substantial increases in both median and mean net worth. The corresponding values for the period from 2004 to 2007 were increases of 17.9 percent and

13.1 percent. And, for the period 2001 to 2004, there were smaller increases (1.0 percent

and 6.2 percent). Mean net worth fell to about the level in the 2001 survey, and median net

worth was close to levels not seen since the 1992 survey (data not shown in the tables).

Although the overall measures of change in wealth from the 2007 and 2010 cross-sectional

surveys are negative, evidence from the 2007–09 SCF panel survey suggests that there was

substantial heterogeneity in wealth changes across families; in that panel, families variously

showed large gains in wealth as well as losses, though there was a preponderance of

losses.18

Movements in the dollar value of families’ net worth are, by definition, a result of changes

in investment, valuation, and patterns of ownership of financial assets (tables 5, 6, and

7) and nonfinancial assets (tables 8, 9, and 10), as well as decisions about acquiring or paying down debt (tables 11 through 17). A variety of financial decisions underlie these

18 See Bricker, Bucks, Kennickell, Mach, and Moore, “Surveying the Aftermath of the Storm.”

Table 4. Family net worth, by selected characteristics of families, 2001–10 surveys

Thousands of 2010 dollars

Family characteristic

2001 2004 2007 2010

Median Mean Median Mean Median Mean Median Mean

All families 106.1 487.0 107.2 517.1 126.4 584.6 77.3 498.8

(3.7) (8.2) (4.9) (11.2) (5.7) (9.7) (2.8) (12.7)

Percentile of income

Less than 20 9.6 64.7 8.6 83.6 8.5 110.3 6.2 116.8

20–39.9 45.9 141.2 38.8 139.8 39.6 141.3 25.6 127.9

40–59.9 78.0 199.4 82.8 224.0 92.3 220.6 65.9 199.0

60–79.9 176.8 360.7 184.0 392.9 215.7 393.9 128.6 293.9

80–89.9 322.4 560.3 360.9 563.7 373.2 638.1 286.6 567.2

90–100 1,021.5 2,777.1 1,069.7 2,925.2 1,172.3 3,474.7 1,194.3 2,944.1

Age of head (years)

Less than 35 14.3 111.2 16.3 84.6 12.4 111.1 9.3 65.3

35–44 95.1 318.6 79.9 345.2 92.4 341.9 42.1 217.4

45–54 164.9 595.9 167.1 625.8 193.7 694.6 117.9 573.1

55–64 227.2 898.6 290.0 976.4 266.2 986.7 179.4 880.5

65–74 217.8 831.4 218.8 795.1 250.8 1,064.1 206.7 848.3

75 or more 190.3 574.8 187.7 607.7 223.7 668.8 216.8 677.8

Family structure

Single with child(ren) 16.2 117.4 24.0 149.9 24.4 187.4 15.5 143.7

Single, no child, age less

than 55 24.0 185.5 24.2 179.8 26.3 217.2 14.6 117.5

Single, no child, age 55

or more 111.9 355.8 134.0 405.8 150.7 408.9 102.0 391.6

Couple with child(ren) 139.3 540.1 140.6 580.5 147.5 629.1 86.7 555.7

Couple, no child 217.1 790.1 240.2 868.2 236.2 998.6 205.7 864.8

Education of head

No high school diploma 31.3 127.5 23.7 157.1 34.8 149.7 16.1 110.7

High school diploma 71.1 222.0 79.1 227.2 84.3 263.8 56.7 218.1

Some college 89.8 352.1 79.8 355.7 88.8 384.5 50.9 272.2

College degree 262.2 976.6 260.2 982.3 298.6 1,154.5 195.2 977.7

Race or ethnicity of respondent

White non-Hispanic 150.4 599.0 162.2 648.3 179.4 727.4 130.6 654.5

Nonwhite or Hispanic 22.0 144.1 28.5 176.2 29.7 240.3 20.4 175.9

Note: See note to table 1.

Changes in U.S. Family Finances from 2007 to 2010 17
changes. Box 3, “Shopping for Financial Services,” provides a discussion of the intensity of

families’ decisionmaking efforts and their sources of financial information.

By age group, median and mean values of family net worth generally increase with age,

though there are some signs of decrease among older age groups. This pattern reflects both

life-cycle saving behavior and a historical pattern of long-run growth in inflation-adjusted

wages. 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 substantial saving

among higher-income families. Wealth shows strong differentials across groups defined in

terms of family structure, education, racial or ethnic background, work status, occupation,

housing status, and the urbanicity and region of residence; these differentials generally mirror those for income, but the wealth differences tend to be larger.

Net Worth by Demographic Category

Analysis by demographic group for the 2007–10 period shows a pattern of substantial

losses in median and mean net worth for most groups, but a small number of groups experienced gains. Most groups saw declines in the median that far exceeded declines in the

mean.

Table 4. Family net worth, by selected characteristics of families, 2001–10 surveys—continued

Thousands of 2010 dollars

Family characteristic

2001 2004 2007 2010

Median Mean Median Mean Median Mean Median Mean

Current work status of head

Working for someone else 79.7 276.9 77.4 310.7 98.5 369.1 55.2 298.8

Self-employed 431.7 1,546.5 402.2 1,639.9 407.3 2,057.4 285.6 1,743.6

Retired 141.0 556.4 160.9 539.8 169.9 569.1 151.1 485.3

Other not working 9.4 218.4 13.6 186.7 6.0 130.1 11.9 137.5

Current occupation of head

Managerial or professional 242.1 942.4 227.3 995.6 258.8 1,174.8 167.3 1,047.0

Technical, sales, or

services 57.3 244.7 51.7 284.8 77.0 325.8 32.6 219.1

Other occupation 58.9 167.1 65.0 169.8 68.4 201.3 46.6 162.8

Retired or other not

working 118.2 501.4 127.9 485.0 135.6 500.6 93.5 410.4

Region

Northeast 114.3 556.3 186.1 655.0 167.1 684.6 119.9 615.2

Midwest 130.3 418.3 132.4 503.8 112.7 491.2 68.4 399.8

South 90.4 461.4 73.4 401.0 102.0 525.9 68.3 440.8

West 109.0 541.8 109.3 605.3 164.1 695.4 73.4 599.9

Urbanicity

Metropolitan statistical

area (MSA) 108.0 525.0 120.1 582.0 138.8 652.6 78.4 553.6

Non-MSA 98.0 250.1 68.2 203.5 82.0 253.9 74.5 236.1

Housing status

Owner 211.5 687.2 212.6 720.9 246.0 817.6 174.5 713.4

Renter or other 5.9 67.7 4.6 62.3 5.4 74.7 5.1 57.2

Percentile of net worth

Less than 25 1.4 .1 2.0 –1.6 1.3 –2.3 † –12.8

25–49.9 50.1 54.4 50.2 54.2 56.8 60.9 32.2 35.6

50–74.9 193.6 204.9 196.7 213.7 230.8 238.6 157.2 168.9

75–89.9 528.0 553.5 586.7 608.4 601.2 616.7 482.7 527.9

90–100 1,602.6 3,390.0 1,645.5 3,591.1 1,991.9 4,176.9 1,864.1 3,716.5

† Less than 0.05 ($50).

18 Federal Reserve Bulletin | June 2012
Box 3. Shopping for Financial Services

As a normal part of their financial lives, families must make a variety of decisions to select

particular investments for any savings they may have, as well as to select the forms and

terms of credit they may use. To the extent that families devote more or less attention to

such activities or that they are better or worse informed, the wealth of otherwise comparable families may differ substantially over time.

The Survey of Consumer Finances (SCF) contains a self-assessment of families’ intensity

of shopping for borrowing or investing services. In 2010, 53.0 percent of families reported

that they undertake a moderate amount of shopping for borrowing, and 54.7 percent

reported that they undertake a moderate amount of shopping for investing (table A).1 Only

26.2 percent of families reported shopping a great deal for loan terms, and only 23.3 percent reported shopping a great deal for the best terms on investments. These figures are

little changed from 2007 (data not shown in the tables). Even though the survey questions

are intended to elicit a description of behavior in general, the behavior reported could still

be more reflective of the short-term needs for such services and consequently the immediate need for shopping. When broken out by categories of net worth, the patterns in 2010

are similar for all groups for loan shopping (data not shown in the tables). For investment

shopping, the data show a more pronounced gradient toward more-intensive shopping by

families with higher levels of wealth.

Table A. Intensity of shopping for borrowing or investing, 2010

Percent

Intensity of shopping

Type of service

Borrowing Investing

Almost none 20.8 21.9

Moderate amount 53.0 54.7

A great deal 26.2 23.3

More families turn to friends, family members, or associates for financial information than

to any other source of information on borrowing or investing (table B). This result suggests

that there may be important feedback effects in financial outcomes; that is, families who

know relatively well-informed people may obtain better services. Sellers of financial services—bankers, brokers, and so on—and the Internet are either the second or third most

frequently cited sources of information for borrowing or investing. The Internet was

reported by 41.7 percent of families as a source of information on borrowing and by

33.0 percent as a source of information on investing. When viewed across categories of

net worth, the data show similar patterns of use of sources of information by all groups

(data not shown in the tables).

Table B. Information used for decisions about borrowing or investing, 2010

Percent

Source

Type of service

Borrowing Investing

Calling around 27.0 15.7

Magazines, newspapers, and other media 14.5 14.4

Material in the mail 28.3 19.0

Internet 41.7 33.0

Friends, relatives, associates 43.9 40.8

Bankers, brokers, and other sellers of financial services 39.5 39.1

Lawyers, accountants, and other financial advisors 19.5 31.1

Does not borrow or invest 14.6 11.7

Note: Figures sum to more than 100 because of reporting of multiple sources.

In addition to serving as a source of information, the Internet can also be a medium for

obtaining financial services. In 2010, 58.5 percent of families reported using the Internet to

continued on next page

Changes in U.S. Family Finances from 2007 to 2010 19
Median net worth fell for all percentile groups of the distribution of net worth, with the

largest decreases in proportional terms being for the groups below the 75th percentile

of the net worth distribution. From 2007 to 2010, the median for the lowest quartile of net

worth fell from $1,300 to zero—a 100 percent decline; at the same time, the mean for the

group fell from negative $2,300 to negative $12,800. For the second and third quartiles, the

median and mean declines in net worth were smaller but still sizable; for example, median

net worth for the second quartile fell 43.3 percent. Median and mean net worth did not fall

quite as much for the higher net worth groups. For the 75th-to-90th percentile group, the

median fell 19.7 percent while the mean fell 14.4 percent. For the wealthiest decile, the

11.0 percent decline in the mean exceeded the 6.4 percent decline in the median for that

group; as was discussed earlier in the case of family income, this pattern of the changes in

the median and mean suggests that there was some compression of higher values in the

wealth distribution.

Over the recent three-year period, median net worth decreased for all income groups except

the top decile, for which it was basically unchanged; mean net worth fell substantially for all

of the groups except the lowest quintile, for which mean wealth rose 5.9 percent. The broad

middle of the income distribution (the groups between the 20th and 90th percentiles) saw

consistently large drops in median net worth between 2007 and 2010, with much smaller

drops in mean net worth within those income groups. In contrast to the stability of the

Box 3—continued

access at least some type of service at one of the financial institutions they used (data not

shown in the tables). If accessing information and using services are combined, the Internet played a part in the financial life of 67.4 percent of all families (table C). This figure is up

sharply from 59.7 percent in 2007 and 46.5 percent in 2004 (data not shown in the tables).

The proportion of such users rises strongly over net worth groups: Among the least

wealthy 25 percent of families, 60.3 percent made such use of the Internet, whereas the

figure was 84.4 percent for the wealthiest 10 percent (data not shown in the tables). More

striking is the variation over age groups. Among families headed by a person younger than

age 35, 80.0 percent reported using the Internet for financial information or services,

whereas the figure for families with a head aged 75 or older was only 25.8 percent. These

figures are both up substantially from their respective values in 2007—71.9 percent and

16.4 percent (data not shown in tables). If the relatively greater expression of such behavior

by younger families persists as they age, and if succeeding cohorts follow their example,

Internet-based financial services may become even more important in the future.2

Table C. Use of the Internet for financial information or financial services, by age of head, 2010

Percent

Family characteristic Percentage of families

All families 67.4

Age of head (years)

Less than 35 80.0

35–44 77.2

45–54 74.6

55–64 69.0

65–74 51.7

75 or more 25.8

1

The underlying question allows the survey respondent to shade the intermediate response toward a greater or

lesser amount of shopping. About one-third of the respondents choose to do so, and of those, somewhat more

than one-half shaded their response toward a greater degree of shopping.

2

For a discussion of the definition of local banking markets, see Dean F. Amel, Arthur B. Kennickell, and Kevin B.

Moore (2008), “Banking Market Definition: Evidence from the Survey of Consumer Finances,” Finance and

Economics Discussion Series 2008-35 (Washington: Board of Governors of the Federal Reserve System, August;

paper dated July 7), www.federalreserve.gov/pubs/feds/2008/200835/200835pap.pdf.

20 Federal Reserve Bulletin | June 2012
median for the top decile, the mean for that group was down 15.3 percent over the recent

three-year period.

The opposing pattern of a 27.1 percent decline in median net worth for the lowest income

quintile and a 5.9 percent increase in the mean for the group differs from the patterns seen

for the other groups. To some extent, this finding reflects composition effects. Box 2,

“Cross-Sectional Data and Changes in Group Composition over Time” provides an

example of how income-related composition affects median net worth across income

groups.

The survey shows substantial declines in median and mean net worth by age group between

2007 and 2010, with the exception that mean net worth rose modestly (1.3 percent) for the

75-or-more age group. The 35-to-44 age group saw a 54.4 percent decline in median net

worth during the most recent three-year period, and the mean for that age group fell

36.4 percent. The wealth decreases for the less-than-35 age group were also large; the

median fell 25.0 percent while the mean fell 41.2 percent. The declines in median and mean

net worth for middle-aged families (the 45-to-54 and 55-to-64 age groups) were also large.

By family structure, single families headed by a person younger than 55 with no children

and couples with children (who also tend to be relatively young) had the largest drops in

wealth from 2007 to 2010 in median net worth—declines of 44.5 percent and 41.2 percent,

respectively. Single families with children and families headed by a single person who was

aged 55 or older and without children also experienced large decreases in median net

worth—36.5 percent and 32.3 percent, respectively. Mean net worth fell for all family structure groups as well, though the extent of the decreases ranged from 4.2 percent (childless

families headed by a single person aged 55 or older) to 45.9 percent (other childless families

headed by a single person).

From 2007 to 2010, median and mean net worth decreased for all education groups. Mirroring the pattern for all families, each of the four education groups experienced a very

large decline in the median (ranging from a drop of 53.7 percent for the no-high-school-diploma group to a drop of 32.7 percent for the high-school-educated group) and smaller

declines in the mean (ranging from 29.2 percent for the some-college group to a drop of

15.3 percent for the college-educated group). The patterns of changes in medians and

means across education groups are similar to those for the income groups, largely because

income and education are strongly correlated.

The data show losses from 2007 to 2010 in median and mean wealth for both categories of

race or ethnicity. Declines in the median were roughly the same for white non-Hispanic

families (27.2 percent) and for nonwhite or Hispanic families (31.3 percent).19

However, the decline in the mean was much smaller for white non-Hispanic families—

10.0 percent—than the decline for nonwhite or Hispanic families—26.8 percent. Among

nonwhite or Hispanic families, the subgroup of African American families saw a decline of

13.3 percent in their median net worth from 2007 ($17,900) to 2010 ($15,500), and their

mean net worth fell 30.4 percent, from $140,800 to $98,000; over the 2004–07 period, the

median for the group had fallen 23.9 percent, while the mean had risen 10.6 percent (data

not shown in the tables).

19 If the additional information on Hispanic or Latino ethnic identification available in the SCF is used in the

classification of the 2010 results, the median net worth of nonwhites or Hispanics was $22,200, and the mean

was $183,600; for other families, the median was $131,900, and the mean was $658,500. These figures are all

slightly higher than the corresponding values reported in table 4 for the larger group of nonwhite or Hispanic

families.

Changes in U.S. Family Finances from 2007 to 2010 21
From 2007 to 2010, median and mean net worth fell among all work-status groups except

one. The exception was families headed by persons who were not working, for reasons

other than retirement (the other-not-working group), which showed increases in both measures (albeit from relatively low starting points); in both years, the group had the lowest levels of both median and mean net worth of all work-status groups. The dollar amounts of

decreases in median and mean net worth for the self-employed group were far larger than

those for the other groups that experienced losses over the period; in percentage terms,

however, the decreases for this group in both median and mean wealth were well below the

rates of decline for families headed by a person working for someone else.

Median and mean net worth decreased for all occupation groups in the recent three-year

period, but they did so most markedly for families headed by a worker in a technical, sales,

or service occupation, for whom median net worth fell 57.7 percent and mean net worth fell

32.8 percent. Wealth losses were substantial for every other occupation group as well, however, with median declines ranging from 35.4 percent (managerial and professional group)

to 31.0 percent (retired group), and mean declines ranging from 19.1 (other-occupation

group) to 10.9 percent (managerial and professional group).

Between 2007 and 2010, median net worth fell dramatically for families living in all regions

of the country, but especially for those living in the West—a 55.3 percent decline. This pattern reflects the effect of the collapse of housing values in several parts of the West region.

Median wealth in every other region fell 28.2 percent or more. As with the overall population and most other demographic groups discussed earlier, the decline in mean net worth

within every region was smaller than the drop in the median. In the South and Midwest

regions, the percentage decline in the median was about twice as large as the percentage decline in the mean, but in percentage terms, the median for the West fell four times as

much as the mean.

By urbanicity of the place of residence, in the recent three-year period, median net worth

fell much more dramatically in MSA areas than in non-MSA areas, but the declines in the

means were more similar. The decline in median net worth in MSA areas was large enough

to erase most of the widening gap that had developed since 1998, in large part due to a

run-up in house values. Mean net worth remained much higher in MSA areas than in nonMSA areas in 2010.

As might be expected from the previous discussion on the role of the decline in housing values in explaining median and mean wealth losses across various demographic groups, there

are large differences in net worth changes by housing status. Median net worth for homeowners fell 29.1 percent between 2007 and 2010, while the mean fell 12.7 percent. The

decline in median net worth for non-homeowners (hereafter, renters) was only 5.6 percent,

though the decline in the mean was much larger at 23.4 percent. Renters have much lower

median and mean net worth than homeowners in any survey year, so the dollar value of

wealth losses for the renter group tended to be much smaller; for example, the median net

worth of renters fell $300 over the three-year period, in contrast with $71,500 for

homeowners.

Assets

At 97.4 percent in 2010, the overall proportion of families with any asset was barely

changed from 2007 (first half of tables 9.A and 9.B, last column). Overall, this figure has

declined 0.3 percentage point since 2007 (data not shown in the tables). Across demographic groups, the pattern of changes in the recent three-year period is mostly one of

small increases or decreases. Noticeable exceptions are declines for the following groups:

22 Federal Reserve Bulletin | June 2012
the second quintile of the income distribution (0.9 percentage point), families headed by a

person aged less than 35 (1.6 percentage points) or between 65 and 74 (1.3 percentage

points), families headed by a person with a high school diploma (1.2 percentage points),

and families in the bottom quartile of the net worth distribution (1.2 percentage points).

For many groups, the figure remained at or near 100 percent.

From 2007 to 2010, median assets for families having any assets fell 19.3 percent, from

$232,100 to $187,200 (second half of tables 9.A and 9.B, last column), and the mean fell

12.8 percent, from $702,100 to $612,300 (memo line). The percentage change in median

assets between 2007 and 2010 is only about half the percentage change in median net worth

reported in table 4, in part for reasons related to housing. Because houses are frequently

mortgaged, net equity in homes tends to be smaller than the asset value of the home itself;

consequently, a given change in housing values will tend to have an amplified proportional

effect on net worth changes relative to the change in value as a proportion of gross assets.

Across net worth groups, the percentage changes in median assets and net worth were most

similar for families in the highest or lowest quartiles of the distribution of net worth. For

the wealthier groups, housing tends to be a smaller share of net worth, and it is less likely to

be mortgages than is the case for the middle wealth groups. For the least wealthy group,

homeownership is much less common than for other groups. The divergence between fluctuations in median asset change and median net worth change is largest for the middle two

quartiles, whose net worth tends to be dominated by housing. A similar effect shows up

across income groups, as middle-income families experienced smaller declines in median

assets than in median net worth, in part because they are more likely to be leveraged homeowners whose assets are dominated by housing. Across other demographic groups such as

age, race or ethnicity, and education, the percentage declines in median assets are generally

about half the percentage decline in median net worth. Not unexpectedly, such divergence

of changes in wealth and assets was largest for homeowners, whose median assets fell

18.0 percent, well below their decline in median net worth of 29.1 percent; for renters, in

contrast, median assets fell 11.3 percent, which is greater than their 5.6 percent decline in

median net worth.

Financial Assets

Although median and mean financial assets declined from 2007 to 2010, financial assets as

a share of total assets rose 3.9 percentage points to 37.9 percent (table 5, memo line); this

movement reverses a decline in this share from a level in 2001 that marked the high point

observed in the survey since at least 1989. The share of financial assets in total assets had

fallen 8.2 percentage points between 2001 and 2007. The relative shares of various financial

assets also shifted. The decline in the percentage share of directly held stock was mostly offset by increases in the shares of transaction and retirement accounts.20 The share of financial assets held in retirement accounts has nearly doubled since 1989, and as of 2010, it

stood at 38.1 percent of families’ financial assets (data not shown in the tables).

Across the groups considered, the 94.0 percent rate of ownership of any financial asset in

2010 was almost unchanged over the recent three-year period (first half of tables 6.A and

6.B, last column). Changes in ownership rates were also generally small across demographic

groups, though there are a few exceptions. By age, families in the less-than-35 group saw a

2.1 percentage point increase in their financial asset ownership rate, while those in the

55-to-64 group saw a 2.0 percentage point decline; by family structure, ownership increased

20 The definitions of asset categories in table 5 are given later in the article, in the sections of text devoted to those

categories.

Changes in U.S. Family Finances from 2007 to 2010 23
Table 5. Value of financial assets of all families, distributed by type of asset, 2001–10 surveys

Percent

Type of financial asset 2001 2004 2007 2010

Transaction accounts 11.4 13.1 10.9 13.3

Certificates of deposit 3.1 3.7 4.0 3.9

Savings bonds .7 .5 .4 .3

Bonds 4.5 5.3 4.1 4.4

Stocks 21.5 17.5 17.8 14.0

Pooled investment funds (excluding money

market funds) 12.1 14.6 15.8 15.0

Retirement accounts 29.0 32.4 35.1 38.1

Cash value life insurance 5.3 2.9 3.2 2.5

Other managed assets 10.5 7.9 6.5 6.2

Other 1.9 2.1 2.1 2.3

Total 100 100 100 100

MEMO

Financial assets as a share of total assets 42.2 35.8 34.0 37.9

Note: For this and following tables, see text for definition of asset categories. Also see note to table 1.

Table 6. Family holdings of financial assets, by selected characteristics of families and type of asset,

2007 and 2010 surveys

A. 2007 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

Percentage of families holding asset

All families 92.1 16.1 14.9 1.6 17.9 11.4 53.0 23.0 5.8 9.3 93.9

Percentile of income

Less than 20 74.9 9.4 3.6 * 5.5 3.4 10.8 12.8 2.7 6.6 79.1

20–39.9 90.1 12.7 8.4 * 7.8 4.6 35.8 16.4 4.7 8.7 93.2

40–59.9 96.3 15.5 15.2 * 14.0 7.1 55.6 21.6 5.4 10.2 97.2

60–79.9 99.3 19.3 20.9 1.4 23.2 14.6 74.3 29.4 5.7 8.4 99.7

80–89.9 100.0 19.9 26.2 1.8 30.5 18.9 86.9 30.6 7.6 9.7 100.0

90–100 100.0 27.7 26.1 8.9 47.5 35.5 89.6 38.9 13.6 15.3 100.0

Age of head (years)

Less than 35 87.3 6.7 13.7 * 13.7 5.3 42.1 11.4 * 10.0 89.2

35–44 91.2 9.0 16.8 .7 17.0 11.6 57.8 17.5 2.2 9.4 93.1

45–54 91.7 14.3 19.0 1.1 18.6 12.6 65.4 22.3 5.1 10.5 93.3

55–64 96.4 20.5 16.2 2.1 21.3 14.3 61.2 35.2 7.7 9.2 97.8

65–74 94.6 24.2 10.3 4.2 19.1 14.6 51.7 34.4 13.2 9.4 96.1

75 or more 95.3 37.0 7.9 3.5 20.2 13.2 30.0 27.6 14.0 5.3 97.4

Family structure

Single with

child(ren) 81.1 9.0 10.9 * 7.1 6.8 35.0 21.4 2.4 11.5 84.6

Single, no child,

age less than 55 87.4 9.9 9.4 * 18.0 8.9 46.7 10.2 2.0 11.6 90.0

Single, no child,

age 55 or more 94.6 24.0 9.6 2.1 13.5 10.8 36.7 22.0 11.2 7.9 96.2

Couple with

child(ren) 94.3 12.5 24.0 1.2 18.9 12.0 62.1 23.6 4.4 8.6 95.1

Couple, no child 95.7 22.5 11.6 2.9 24.1 14.4 62.6 30.2 8.1 8.7 97.3

Education of head

No high school

diploma 75.7 9.5 3.4 * 3.9 2.2 21.6 12.6 1.7 7.1 79.7

High school

diploma 90.9 14.1 11.5 .6 9.3 5.8 43.3 22.6 4.2 8.2 93.3

Some college 93.9 14.1 16.4 1.2 17.4 8.9 53.0 23.4 6.6 10.0 95.6

College degree 98.7 21.6 21.6 3.3 31.5 21.4 73.9 27.2 8.5 10.8 98.9

24 Federal Reserve Bulletin | June 2012
4.3 percentage points for single families with children but declined 2.7 percentage points for

childless single families headed by someone 55 or older; and by work status, ownership fell

1.6 percentage points for families headed by a person who was self-employed. Ownership

increased for nonwhite or Hispanic families and for white non-Hispanic families. The share

of homeowners with financial assets fell 0.4 percentage points, but the ownership rate for

renters rose 1.8 percentage points.

Although the overall ratio of financial assets to total assets rose over the recent period, that

increase is attributable to the relatively larger declines in the value of nonfinancial assets;

the median holding of financial assets for families having such assets fell 28.8 percent, while

the mean fell 3.3 percent. The recent change in the median erased the gains experienced in

the previous three-year period (2004 to 2007) and left median financial assets at their lowest

level since the 1995 survey (data not shown in the tables). The decline in median financial

asset holdings was widespread across demographic groups, with gains observed for families

headed by someone 75 or older, the top 10 percent of families ranked by income, and the

top 10 percent of families ranked by net worth.

Table 6. Family holdings of financial assets, by selected characteristics of families and type of asset,

2007 and 2010 surveys—continued

A. 2007 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

Race or ethnicity of respondent

White non-Hispanic 95.5 19.4 17.8 2.1 21.4 13.7 58.5 25.3 7.3 9.7 96.8

Nonwhite or

Hispanic 83.9 8.2 7.8 .4 9.4 5.8 39.5 17.6 2.3 8.3 86.7

Current work status of head

Working for

someone else 92.6 13.2 17.0 .9 17.8 10.4 62.7 20.3 3.7 9.2 94.2

Self-employed 96.9 15.0 15.9 4.2 24.3 21.4 55.4 32.1 6.9 14.8 98.0

Retired 91.6 25.7 10.2 2.3 16.4 11.3 34.2 27.3 11.2 7.0 93.7

Other not working 78.6 5.6 10.7 * 12.8 * 22.4 14.6 * 10.4 81.3

Current occupation of head

Managerial or

professional 98.3 18.2 21.1 3.1 28.7 19.7 74.9 24.9 6.7 11.0 98.7

Technical, sales, or

services 91.9 11.5 15.0 .4 14.9 8.8 54.9 21.3 4.0 9.1 94.1

Other occupation 87.9 9.2 13.1 * 9.9 5.4 51.3 19.0 1.1 9.8 90.2

Retired or other not

working 89.5 22.5 10.3 2.0 15.8 9.9 32.3 25.3 9.8 7.5 91.8

Region

Northeast 91.3 18.1 18.9 2.0 21.4 15.5 53.7 23.5 6.4 5.4 92.5

Midwest 93.6 16.8 16.0 1.2 17.9 10.6 58.1 26.6 6.7 9.3 95.4

South 91.3 15.1 12.0 1.7 15.4 9.7 49.3 23.4 5.2 8.5 93.5

West 92.7 15.5 15.0 1.6 19.2 11.5 53.1 18.3 5.5 13.9 93.9

Urbanicity

Metropolitan

statistical area

(MSA) 92.8 16.2 15.1 1.8 19.4 12.1 55.1 22.2 5.9 9.5 94.3

Non-MSA 88.7 15.9 13.8 .8 10.9 7.7 42.5 26.8 5.5 8.5 91.8

Housing status

Owner 97.3 20.0 18.2 2.2 22.4 15.0 63.7 28.9 7.5 9.4 98.4

Renter or other 80.8 7.7 7.5 .4 8.1 3.5 29.6 10.1 2.1 9.1 84.0

Percentile of net worth

Less than 25 76.3 2.5 4.8 * 4.3 * 19.7 7.8 * 7.4 79.6

25–49.9 93.6 9.9 12.3 * 10.2 3.6 48.6 19.7 1.9 8.9 96.4

50–74.9 98.6 19.4 17.6 * 17.2 10.4 63.1 28.5 6.2 8.6 99.5

75–89.9 100.0 32.5 25.9 * 31.7 22.8 77.5 32.3 11.1 9.4 100.0

90–100 100.0 32.9 23.2 11.7 52.4 42.2 84.8 41.7 20.6 16.6 100.0

Changes in U.S. Family Finances from 2007 to 2010 25
Transaction Accounts and Certificates of Deposit

In 2010, 92.5 percent of families had some type of transaction account—a category comprising checking, savings, and money market deposit accounts; money market mutual

funds; and call or cash accounts at brokerages. The increase of 0.4 percentage point in ownership since 2007 continued the general upward trend seen in recent surveys; the ownership

rate is now 1.9 percentage points higher than in 1998 (data not shown in the tables). Families that did not have any type of transaction account in 2010 were disproportionately likely

to have incomes in the lowest income quintile, to be headed by a person younger than age

35, to be nonwhite or Hispanic, to be headed by a person who was neither working nor

retired, to be renters, or to have net worth in the lowest quartile. See box 4 “Decisions about

Checking Accounts” for a discussion of the reasons families do or do not have a checking

account. Over the 2007–10 period, transaction account ownership rose noticeably—between 2.2 and 4.1 percentage points—for single families with children, families headed by a

person in the other-not-working work-status group, and families in the bottom quartile of

the net worth distribution.

Table 6. Family holdings of financial assets, by selected characteristics of families and type of asset,

2007 and 2010 surveys––continued

A. 2007 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 2010 dollars)

All families 4.2 21.0 1.0 83.8 17.8 58.7 47.1 8.4 73.3 6.3 30.2

Percentile of income

Less than 20 .8 18.9 .5 * 4.0 31.4 6.3 2.6 104.8 1.6 1.8

20–39.9 1.7 18.9 1.0 * 10.5 31.4 12.6 5.2 90.1 3.1 7.3

40–59.9 2.9 17.8 .7 * 5.8 39.3 25.1 5.4 61.8 4.2 19.9

60–79.9 6.3 11.5 1.0 19.9 14.7 36.7 50.3 10.4 54.5 10.5 62.9

80–89.9 13.5 21.0 2.1 84.9 15.7 48.2 94.7 9.4 31.4 10.5 138.0

90–100 38.4 44.0 2.6 261.9 78.6 188.6 214.8 29.4 94.3 47.1 423.8

Age of head (years)

Less than 35 2.5 5.2 .7 * 3.1 18.9 10.0 2.9 * 1.6 7.1

35–44 3.6 5.2 1.0 10.2 15.7 23.6 38.8 8.7 25.1 8.4 27.2

45–54 5.2 15.7 1.0 209.5 19.4 52.4 66.0 10.5 47.1 6.3 56.9

55–64 5.4 24.1 2.0 95.1 25.1 117.3 104.8 10.5 61.8 21.0 77.2

65–74 8.1 24.4 1.0 52.4 39.8 90.1 80.7 10.5 73.3 10.5 71.3

75 or more 6.4 31.4 21.0 104.8 41.9 78.6 36.7 5.2 104.8 15.7 43.5

Family structure

Single with

child(ren) 1.7 7.9 1.0 * 10.5 48.2 17.8 4.0 21.0 4.2 6.3

Single, no child,

age less than 55 2.6 6.3 1.6 * 4.0 16.8 25.4 5.8 62.9 3.1 13.3

Single, no child,

age 55 or more 2.9 29.3 4.2 52.4 26.2 80.7 48.8 5.2 104.8 3.8 28.3

Couple with

child(ren) 4.8 10.5 1.0 84.9 15.7 52.4 49.5 9.9 36.7 5.2 31.3

Couple, no child 7.9 27.2 1.6 83.8 26.2 65.5 69.1 10.5 54.5 15.7 73.8

Education of head

No high school

diploma 1.3 14.7 1.0 * 2.8 67.1 15.7 2.6 31.4 1.6 3.1

High school

diploma 2.6 16.8 1.0 48.7 10.5 31.4 29.9 5.4 83.8 5.2 14.9

Some college 2.9 18.9 1.0 52.4 6.3 26.2 33.5 8.4 54.5 4.2 21.0

College degree 10.5 26.2 1.2 104.8 26.2 78.6 78.6 13.6 78.6 10.5 101.0

Note: See note to table 1.

* Ten or fewer observations.

26 Federal Reserve Bulletin | June 2012
The slight overall expansion in ownership of transaction accounts in the recent three-year

period is reflected in the mostly offsetting changes in the types of transaction account held

by families. Ownership of checking and savings accounts rose, while ownership of money

market accounts declined and that of call accounts was basically unchanged, as shown in

table 6.1:

Table 6. Family holdings of financial assets, by selected characteristics of families and type of asset,

2007 and 2010 surveys––continued

A. 2007 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

Race or ethnicity of respondent

White non-Hispanic 5.3 21.0 1.0 100.4 19.9 67.1 55.5 9.4 73.3 10.1 47.2

Nonwhite or

Hispanic 2.1 10.5 1.0 24.2 8.4 31.4 26.2 5.2 31.4 3.1 9.4

Current work status of head

Working for

someone else 4.0 10.5 1.0 49.1 11.0 44.0 42.1 7.9 28.5 5.2 30.2

Self-employed 10.4 26.2 1.0 157.2 62.9 83.8 95.3 25.1 83.8 16.8 56.7

Retired 4.2 31.4 2.6 83.3 30.1 81.9 52.4 5.8 104.8 10.5 31.3

Other not working 1.0 15.7 2.1 * 6.5 * 21.8 2.3 * 3.1 3.9

Current occupation of head

Managerial or

professional 9.2 15.7 1.0 83.8 21.0 78.6 75.4 13.6 61.8 10.5 82.1

Technical, sales, or

services 3.1 15.7 1.0 129.1 12.6 41.9 31.4 9.4 10.5 5.2 18.4

Other occupation 2.6 10.5 .7 * 4.2 18.9 25.3 5.2 21.0 5.2 14.6

Retired or other not

working 3.5 31.4 2.1 100.4 26.2 81.9 47.1 5.2 104.8 5.8 24.8

Region

Northeast 5.3 21.0 1.0 120.1 18.7 52.4 60.1 9.4 76.5 10.5 46.4

Midwest 3.9 12.6 1.0 51.6 14.7 39.3 38.3 7.3 70.2 6.3 32.7

South 3.7 21.0 1.3 104.8 18.7 73.3 41.9 8.4 83.8 4.2 22.0

West 4.5 24.1 1.0 62.9 18.9 61.6 47.7 10.4 62.9 6.3 30.5

Urbanicity

Metropolitan

statistical area

(MSA) 4.7 21.0 1.0 104.8 19.9 62.9 50.0 9.4 73.3 8.4 34.2

Non-MSA 2.6 10.5 1.3 52.4 11.5 35.6 35.3 5.2 47.1 2.5 16.8

Housing status

Owner 6.5 21.0 1.0 104.8 21.0 62.9 59.7 10.4 73.3 10.5 57.7

Renter or other 1.3 10.5 .7 15.7 5.8 41.9 10.5 2.1 56.6 2.1 4.0

Percentile of net worth

Less than 25 .7 2.1 .5 * 1.1 * 3.1 1.3 * 1.3 1.5

25–49.9 2.1 7.3 .7 * 3.1 9.4 15.7 3.1 14.5 3.1 14.0

50–74.9 6.3 15.7 1.3 * 6.3 26.2 52.4 6.8 52.4 10.5 63.6

75–89.9 16.2 26.2 2.1 * 21.0 52.4 125.7 15.7 83.8 21.0 226.6

90–100 48.7 52.4 3.7 173.8 131.0 276.6 333.2 31.4 165.5 52.4 809.9

MEMO

Mean value of

holdings for

families holding

asset 27.7 58.3 6.9 601.7 231.7 324.4 154.7 32.7 260.7 52.7 248.8

Changes in U.S. Family Finances from 2007 to 2010 27
Table 6.1

Type of transaction account

All families

2010

(percent)

Change, 2007–10

(percentage points)

Checking 90.4 .7

Savings 50.5 3.4

Money market 17.2 –3.7

Call 2.0 –.1

The savings account category includes a relatively small number of tax-preferred accounts

such as medical or health savings accounts and Coverdell or 529 education accounts.21

Ownership of any of these types of tax-preferred accounts decreased from 3.8 percent in

2007 to 2.9 percent in 2010 (data not shown in the tables). In both of the two years,

21 Coverdell savings accounts, formerly known as education individual retirement accounts, and 529 saving plans

are tax-preferred plans that parents or others may use to save for educational expenses.

Table 6. Family holdings of financial assets, by selected characteristics of families and type of asset,

2007 and 2010 surveys––continued

B. 2010 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

Percentage of families holding asset

All families 92.5 12.2 12.0 1.6 15.1 8.7 50.4 19.7 5.7 8.0 94.0

Percentile of income

Less than 20 76.2 5.7 3.6 .1 3.8 2.1 11.2 10.7 1.7 7.0 79.2

20–39.9 91.1 11.1 6.0 * 6.0 3.5 30.5 17.2 4.2 6.7 93.6

40–59.9 96.4 11.7 10.8 * 11.7 5.8 52.8 19.5 5.5 9.6 97.8

60–79.9 98.9 15.8 16.0 1.3 17.3 8.8 69.7 22.8 6.9 7.3 99.6

80–89.9 99.8 12.1 23.0 2.0 25.7 14.6 85.7 25.8 7.8 8.5 100.0

90–100 99.9 21.5 24.4 8.3 47.8 32.1 90.1 30.9 12.3 10.3 100.0

Age of head (years)

Less than 35 89.0 5.7 10.0 * 10.1 3.6 41.1 9.6 .9 9.0 91.3

35–44 90.6 5.7 11.6 .4 12.1 7.7 52.2 12.3 2.0 8.4 92.7

45–54 92.5 10.0 15.0 1.4 16.0 9.6 60.0 19.8 4.5 7.7 94.2

55–64 94.2 14.6 14.3 2.4 19.5 11.3 59.8 25.7 7.7 8.9 95.8

65–74 95.8 20.6 9.1 3.4 16.1 11.1 49.0 28.4 11.4 7.5 96.2

75 or more 96.4 27.2 10.1 3.6 20.1 11.9 32.8 32.4 14.1 5.0 96.4

Family structure

Single with

child(ren) 84.9 6.7 6.3 * 6.9 3.0 34.0 11.1 3.3 8.3 88.9

Single, no child,

age less than 55 88.3 6.0 6.3 * 10.7 5.0 40.2 9.8 1.5 11.3 90.6

Single, no child,

age 55 or more 92.8 20.1 7.0 2.5 11.9 9.5 33.7 23.5 9.9 7.7 93.5

Couple with

child(ren) 94.3 10.4 18.9 1.2 17.0 9.1 60.1 18.9 3.9 7.6 95.7

Couple, no child 95.9 15.8 12.4 2.9 20.9 12.4 61.6 27.9 8.8 6.7 96.6

Education of head

No high school

diploma 77.4 6.0 2.7 * 2.2 * 17.1 11.9 3.1 5.3 80.8

High school

diploma 90.0 10.8 9.1 .2 8.1 3.2 40.6 19.8 4.2 7.2 92.7

Some college 94.6 11.8 11.7 1.0 11.3 5.4 48.6 17.3 5.5 7.6 95.0

College degree 98.4 15.6 17.7 3.6 27.2 17.6 70.5 23.3 7.9 9.8 98.9

28 Federal Reserve Bulletin | June 2012
529 plans accounted for about 80 percent of the number of these tax-preferred savings

accounts, up from 71 percent in 2004.

Median holdings in transaction accounts for those who had such accounts fell 16.7 percent

from 2007 to 2010, while the mean rose 17.0 percent. The decline in median transaction

account balances was widely observed across demographic groups, but there were noticeable exceptions for childless single families headed by someone aged 55 or older, families

headed by individuals who reported their current work status as retired, families in the

75-or-older age group, and families in the highest decile of the net worth distribution.

Indeed, within the highest decile of net worth, median transaction balances rose from

$48,700 to $60,800, an increase of 24.8 percent. The increase in the already substantial

holdings of highly liquid and secure transaction account balances among this group of

wealthy families is a key to understanding the rise in the overall mean transaction account

balances while the overall median fell.

Table 6. Family holdings of financial assets, by selected characteristics of families and type of asset,

2007 and 2010 surveys––continued

B. 2010 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

Race or ethnicity of respondent

White non-Hispanic 96.5 15.0 14.8 2.3 18.6 11.6 58.1 22.6 7.3 8.2 97.3

Nonwhite or

Hispanic 84.3 6.5 6.3 .2 7.9 2.6 34.4 13.7 2.3 7.6 87.2

Current work status of head

Working for

someone else 93.6 9.0 13.7 1.0 13.8 8.1 59.6 17.1 3.6 7.7 95.2

Self-employed 94.8 15.7 12.9 3.5 24.5 14.9 54.7 25.9 8.3 11.1 96.4

Retired 91.7 20.1 9.6 2.6 15.4 8.9 34.4 25.5 10.4 7.3 92.9

Other not working 82.7 3.9 5.8 * 9.5 2.8 24.6 10.2 * 8.3 85.0

Current occupation of head

Managerial or

professional 98.2 14.1 17.3 2.6 24.3 16.0 73.5 21.6 6.8 10.2 99.2

Technical, sales, or

services 91.7 7.4 11.0 .8 10.8 5.8 47.7 17.3 2.8 7.5 93.8

Other occupation 89.6 7.5 11.0 * 8.3 3.1 50.0 15.6 2.4 6.2 91.6

Retired or other not

working 89.7 16.6 8.8 2.1 14.1 7.6 32.3 22.2 8.5 7.5 91.2

Region

Northeast 91.2 12.4 16.9 2.0 16.5 11.7 54.4 20.6 6.1 7.1 93.0

Midwest 94.2 13.5 13.5 .8 13.8 7.2 54.6 23.3 6.1 7.3 95.5

South 91.1 11.4 9.8 1.5 13.1 7.2 45.9 19.3 5.1 7.2 92.9

West 94.2 12.0 10.1 2.3 18.7 10.4 50.5 16.1 6.0 10.8 95.4

Urbanicity

Metropolitan

statistical area

(MSA) 92.8 12.1 12.7 1.8 16.6 9.6 52.2 19.3 6.0 8.1 94.2

Non-MSA 91.2 12.6 8.8 .8 7.9 4.5 41.9 21.9 3.9 7.5 93.1

Housing status

Owner 97.4 15.6 15.0 2.3 19.6 11.4 61.7 24.0 7.6 7.6 98.0

Renter or other 82.4 5.2 5.8 .3 6.0 3.1 27.1 10.9 1.8 8.7 85.8

Percentile of net worth

Less than 25 78.5 1.4 4.8 * 2.9 * 19.8 7.3 * 5.9 81.7

25–49.9 94.2 5.3 7.0 * 5.6 2.1 42.7 14.2 1.9 8.5 96.1

50–74.9 98.0 14.8 14.2 * 14.0 6.1 58.6 24.1 4.6 7.2 98.7

75–89.9 99.0 27.0 21.6 2.0 26.8 15.5 75.8 30.8 13.1 8.0 99.4

90–100 99.9 27.7 22.8 12.0 54.9 41.8 87.8 36.8 19.3 13.7 100.0

Changes in U.S. Family Finances from 2007 to 2010 29
Certificates of deposit—interest-bearing deposits with a set term—are traditionally viewed

as a low-risk saving vehicle, and they are often used by persons who desire a safe haven

from the volatility of financial markets. Over the 2007–10 period, the attractiveness of CDs

was subjected to competing forces, two of which seem particularly powerful. Increased

volatility in stock and bond markets made CDs more attractive relative to those investments as a haven from risk, but the convergence of yields on all relatively safe assets at a

level near zero implied that the advantage CDs typically hold over transaction accounts

was greatly reduced. The net result of these and other factors is that CD ownership fell

3.9 percentage points between 2007 and 2010, and the median balance held in CDs among

those owning them fell 4.8 percent; at the same time, the mean holdings rose 24.5 percent.

The decline in ownership rates was widespread, with the self-employed being the only

demographic group to show an increase in the ownership rate. However, the growth in

median balances across demographic groups was more diverse; notable increases in median

balances were observed for the highest decile of the net worth distribution, families in the

Midwest region, families headed by a person who was self-employed, families with incomes

Table 6. Family holdings of financial assets, by selected characteristics of families and type of asset,

2007 and 2010 surveys––continued

B. 2010 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 2010 dollars)

All families 3.5 20.0 1.0 137.0 20.0 80.0 44.0 7.3 70.0 5.0 21.5

Percentile of income

Less than 20 .7 15.0 .5 20.0 20.0 38.0 8.0 3.1 38.0 2.3 1.1

20–39.9 1.5 15.0 .5 * 8.0 38.1 11.0 4.2 45.0 2.7 5.2

40–59.9 2.8 18.0 1.0 * 5.6 50.0 22.8 5.0 60.0 5.0 17.1

60–79.9 5.3 16.0 .7 30.0 13.0 50.0 37.0 7.5 33.0 7.0 39.5

80–89.9 11.1 29.0 .8 141.0 14.0 65.5 88.0 10.0 82.0 10.0 120.2

90–100 35.0 34.0 2.0 297.2 60.0 200.0 277.0 30.0 150.0 28.0 550.8

Age of head (years)

Less than 35 2.1 5.2 .5 * 5.4 8.5 10.5 2.1 9.0 2.0 5.5

35–44 2.5 7.0 .9 10.0 10.0 41.0 31.2 5.0 10.0 2.7 14.5

45–54 3.5 16.0 .8 150.0 30.0 110.0 60.0 10.0 50.0 7.0 33.7

55–64 5.0 20.0 1.2 250.0 35.0 110.0 100.0 9.3 65.0 11.0 55.8

65–74 5.7 25.0 4.0 100.0 48.0 115.0 100.0 10.0 95.0 15.0 45.2

75 or more 7.2 32.2 1.0 141.0 45.0 120.0 54.0 7.0 82.0 16.0 43.8

Family structure

Single with

child(ren) 1.0 6.0 1.3 * 15.0 28.0 17.8 2.0 30.0 8.0 4.8

Single, no child,

age less than 55 2.0 6.7 .5 * 7.9 21.0 20.5 5.0 15.0 2.0 7.9

Single, no child,

age 55 or more 3.9 20.0 1.7 120.0 37.5 120.0 46.0 4.0 70.0 10.0 22.1

Couple with

child(ren) 3.8 14.0 .8 129.0 15.0 75.0 44.1 8.0 50.0 5.0 25.1

Couple, no child 7.1 30.0 1.2 175.0 33.0 90.0 77.4 11.6 90.0 9.0 57.2

Education of head

No high school

diploma .8 40.0 .5 * 2.7 * 16.3 4.5 50.0 1.3 1.6

High school

diploma 2.0 20.0 .6 49.8 9.5 62.0 25.0 5.2 35.0 3.6 10.3

Some college 2.5 12.0 .8 40.0 9.9 35.0 27.0 6.0 60.0 5.0 14.1

College degree 9.3 20.0 1.0 150.0 32.0 101.0 76.3 12.0 95.0 10.0 75.7

Note: See note to table 1.

* Ten or fewer observations.

30 Federal Reserve Bulletin | June 2012
between the 40th and 90th percentiles of the income distribution, and families headed by a

person who did not have any college education.

Savings Bonds and Other Bonds

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

income distribution and by families in the top half of the distribution of net worth. Over

the 2007–10 period, the ownership of savings bonds declined 2.9 percentage points to

12.0 percent overall, and it fell for virtually all demographic groups. The drop in ownership

between 2007 and 2010 continued a general downward trend observed in the SCF for some

time; in 1998, 19.3 percent of families owned savings bonds (data not shown in the tables).

Median holdings were unchanged over the recent three-year period, but the mean fell

11.6 percent.

Table 6. Family holdings of financial assets, by selected characteristics of families and type of asset,

2007 and 2010 surveys––continued

B. 2010 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

Race or ethnicity of respondent

White non-Hispanic 5.0 20.0 1.0 142.0 25.0 91.0 54.0 8.0 73.0 7.5 37.1

Nonwhite or

Hispanic 1.6 13.0 1.0 5.0 10.0 50.0 25.0 5.0 25.0 3.0 6.0

Current work status of head

Working for

someone else 3.3 10.0 .6 100.0 12.5 50.0 35.6 6.0 31.7 3.0 20.9

Self-employed 7.5 30.0 1.3 257.4 50.0 103.6 85.0 19.0 89.0 10.0 50.5

Retired 4.5 30.0 2.0 140.0 35.0 120.0 66.7 7.3 75.0 10.0 29.1

Other not working 1.0 10.0 1.0 * 11.0 120.0 19.3 5.0 * 3.5 2.8

Current occupation of head

Managerial or

professional 8.5 15.0 1.0 170.0 30.0 100.0 73.1 10.0 84.0 9.0 64.5

Technical, sales, or

services 2.1 12.0 1.0 36.4 10.0 54.9 25.0 5.0 25.0 2.5 10.6

Other occupation 2.2 10.0 .5 * 5.6 9.0 25.3 6.0 17.8 2.8 11.7

Retired or other not

working 3.0 29.0 1.5 141.0 30.0 120.0 56.5 7.0 73.0 7.0 15.9

Region

Northeast 4.5 15.0 1.0 104.0 25.0 110.0 60.0 10.0 38.0 6.5 33.4

Midwest 3.4 17.0 .5 300.0 11.0 52.0 40.0 5.6 80.0 3.0 23.5

South 3.0 20.0 1.0 200.0 20.0 87.5 37.2 7.0 85.0 5.0 16.6

West 4.0 20.0 1.0 100.0 30.0 75.0 45.0 9.0 40.0 8.0 20.3

Urbanicity

Metropolitan

statistical area

(MSA) 3.9 19.0 1.0 142.6 23.4 91.0 49.6 8.0 70.0 5.0 23.9

Non-MSA 2.5 20.0 .5 53.1 10.0 40.0 28.8 5.0 70.0 4.0 13.3

Housing status

Owner 5.8 20.0 1.0 129.0 26.5 100.0 59.3 8.5 75.0 8.0 45.8

Renter or other 1.0 10.0 .6 164.0 5.6 20.0 10.0 4.0 16.0 3.0 3.0

Percentile of net worth

Less than 25 .6 1.5 .2 * 1.0 * 5.0 1.5 * 1.0 1.1

25–49.9 1.7 5.5 .5 * 2.5 5.0 12.0 3.1 10.0 3.0 7.8

50–74.9 5.2 15.0 .6 * 7.0 20.5 42.0 5.8 30.0 5.0 45.2

75–89.9 14.5 25.0 1.4 50.0 25.0 60.0 133.0 13.7 70.0 10.0 201.0

90–100 60.8 65.0 3.0 220.0 110.0 245.0 413.0 30.0 150.0 70.0 888.0

MEMO

Mean value of

holdings for

families holding

asset 32.4 72.6 6.1 615.0 209.7 388.6 171.2 28.4 247.9 63.9 240.6

Changes in U.S. Family Finances from 2007 to 2010 31
Box 4. Decisions about Checking Accounts

Between 2007 and 2010, the proportion of families with any type of transaction account

edged up (table 6 in the main text), while the share without a checking account fell 0.7 percentage point, from 10.3 percent to 9.6 percent (data not shown in the tables). The decline

in the fraction of families without a checking account follows a longer trend; in 1989, the

share was 18.7 percent.1

Among families without a checking account in 2010, 55.5 percent had held such an

account in the past, 59.1 percent had incomes in the lowest quintile of that distribution,

50.9 percent were headed by a person younger than age 45, and 66.0 percent were nonwhite or Hispanic. The Survey of Consumer Finances (SCF) asked all families that did not

have a checking account to give a reason for not having an account (table A). The most

commonly reported reason—given by 27.8 percent of such families—was that the family

did not like dealing with banks; the percentage citing this reason has risen steadily since

1989. Another 20.3 percent did not write enough checks to make account ownership

worthwhile; this reason had been the most frequently reported one in each of the years

before 2007. Another 10.6 percent of families said that service charges were too high. The

SCF showed a decrease in the fraction of families reporting credit problems as a reason—from 6.6 percent in 2007 to 4.2 percent in 2010; this reason had risen substantially

through 2007 from previous years.

Table A. Distribution of reasons cited by respondents for their families' not having a checking

account, by reason, 2001–10 surveys

Percent

Reason 2001 2004 2007 2010

Do not write enough checks to make it

worthwhile 28.5 27.9 18.7 20.3

Minimum balance is too high 6.5 5.6 7.6 7.4

Do not like dealing with banks 22.6 22.6 25.2 27.8

Service charges are too high 10.2 11.6 12.3 10.6

Cannot manage or balance a checking

account 6.6 6.8 3.9 4.7

Do not have enough money 14.0 14.4 10.4 10.3

Credit problems 3.6 * 6.6 4.2

Do not need/want an account 5.1 5.2 8.9 7.3

Other 2.8 3.5 6.4 7.4

Total 100 100 100 100

* Ten or fewer observations in any of the types of income.

When attention is further restricted to families that once had a checking account (data not

shown in the tables), the general pattern of responses is similar to that for all families without a checking account, but some differences are evident. For families that once had a

checking account, the proportion reporting they do not have enough money, do not write

enough checks, or do not need or want an account rose in 2010. These increases were offset by decreases in the proportion reporting they have credit problems, dislike dealing with

banks, or cannot manage or balance a checking account.

The SCF asked all families with a checking account to give the most important reason they

chose the financial institution for their main checking account (table B). In 2010, 46.0 percent of families chose the institution for their main checking account for reasons related to

the location of the offices of the institution.2 Another 16.6 percent placed the most importance on the ability to obtain many services at one place, and 14.2 percent singled out the

importance of obtaining the lowest fees or minimum balance requirements. Absence of risk

was of primary importance for only a relatively small fraction of families. Over the 2007–10

period, the most noticeable changes in these responses were decreases in the fraction of

families citing reasons related to a personal relationship with the bank or a connection

through work or school. Overall, the fractions of families reporting each reason changed

little from 2007.

continued on next page

32 Federal Reserve Bulletin | June 2012
Other bond types tend to be very narrowly held, and the ownership rate was unchanged

from 2007 at 1.6 percent in 2010.22 As shown in the following table, the proportion of families that owned tax-exempt bonds or corporate or foreign bonds increased slightly in the

recent period, while ownership of other types of bonds declined slightly:

Table 6.2

Type of bond

All families

2010

(percent)

Change, 2007–10

(percentage points)

Government .3 –.1

Tax exempt 1.2 .2

Mortgage backed .2 –.1

Corporate or foreign .5 .1

Ownership of any type of bond other than savings bonds is concentrated among the highest tiers of the income and wealth distributions, and these groups saw little change in

ownership from 2007 to 2010. The median value of holdings of such bonds for families

that had them rose 63.5 percent over this period, while the mean rose 2.2 percent.

22 “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 this article, financial assets held indirectly are

those held in tax-preferred retirement accounts or managed accounts such as trusts or annuities.

Box 4—continued

Table B. Distribution of reasons cited by respondents as the most important reason for choosing

institution for their main checking account, 2001–10 surveys

Percent

Reason 2001 2004 2007 2010

Location of their offices 42.8 45.4 45.9 46.0

Had the lowest fees/minimum balance

requirement 16.6 16.3 13.7 14.2

Able to obtain many services at one place 16.4 15.3 16.2 16.6

Recommended; friend/family has account

there 4.7 3.9 4.2 4.0

Personal relationship; they know me; family

member works there 4.0 3.5 4.2 3.3

Connection through work or school 2.0 3.5 3.3 2.1

Always done business there; banked there a

long time; other business there 2.4 2.9 3.0 2.4

Offered safety and absence of risk 2.2 1.9 2.9 3.6

Other convenience; payroll deduction/direct

deposit 1.3 1.2 .5 .7

Other 7.5 6.1 6.1 7.1

Total 100 100 100 100

1

For the definition of “transaction account,” see the main text. For a more extensive discussion of the ways that

families obtain checking and credit services, see Jeanne M. Hogarth, Christoslav E. Anguelov, and Jinhook Lee

(2005), “Who Has a Bank Account? Exploring Changes over Time, 1989–2001,” Journal of Family and Economic

Issues, vol. 26 (Spring), pp. 7–30.

2

For a discussion of the definition of local banking markets, see Dean F. Amel, Arthur B. Kennickell, and Kevin B.

Moore (2008), “Banking Market Definition: Evidence from the Survey of Consumer Finances,” Finance and

Economics Discussion Series 2008-35 (Washington: Board of Governors of the Federal Reserve System, August;

paper dated July 7), www.federalreserve.gov/pubs/feds/2008/200835/200835pap.pdf.

Changes in U.S. Family Finances from 2007 to 2010 33
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 highwealth families. The overall share of families with any such stock holdings declined 2.8 percentage points from 2007 to 2010, to 15.1 percent, thereby continuing a decrease observed

since direct stock ownership peaked in the 2001 SCF at 21.3 percent (data not shown in the

tables). Across demographic groups, declines in ownership were more common than

increases, with the noticeable exception of families in the top decile of net worth, for whom

ownership rose 2.5 percentage points. Ownership also rose slightly for families in the top

decile of income (by 0.3 percentage point) and for families headed by a person who was

self-employed (by 0.2 percentage point).

Although the major stock price indexes decreased about 25 percent over the 2007–10

period, the median amount of directly held stock for families with such assets rose

12.4 percent, and the mean fell only 9.5 percent. The seeming contradiction between the

movement in the indexes and the movement in the median and mean may be explained, in

part, by the exit of holders of smaller amounts of stocks.

The wide variation in changes observed across demographic groups reflects changes in

ownership rates as well as changes in the composition of some of the demographic groups

noted earlier. One noticeable such instance is the group of families included in the lowest

20 percent of the income distribution in each year. The direct stock ownership rate for this

group fell from 5.5 percent in 2007 to 3.8 percent in 2010, while median holdings for direct

stock owners within the group rose from $4,000 in 2007 to $20,000 in 2010, a level that

exceeded that for all but the highest income quintile group. An important part of the

change in the median for the lowest income group may be explained by a change in the

composition of the group to include a larger-than-usual fraction of families with relatively

high net worth.

The great majority of families with directly held stock owned stock in only a small number

of companies. As shown in the following table, over the three-year period, there were signs

of increased diversification as the share of families owning stock in only one company

decreased:

Table 6.3

Number of

directly-held stocks

Families with directly-held stocks

2010

(percent)

Change, 2007–10

(percentage points)

1 29.2 –7.2

2 to 9 53.0 5.4

10 or more 17.8 1.8

For 35.5 percent of stockowners in 2010, at least one of the companies in which they

owned stock was one that employed, or had employed, the family head or that person’s

spouse or partner (data not shown in the tables). Direct ownership of stock in a foreign company was less common; only 15.3 percent of stockholders had this type of stock.

34 Federal Reserve Bulletin | June 2012
Pooled Investment Funds

Directly held pooled investment funds are among the least commonly held of the types of

financial assets shown in table 6.23 As was the case for directly held stocks, from 2007 to

2010, direct ownership of pooled investment funds fell—a decline of 2.7 percentage points,

to 8.7 percent of families in 2010. Ownership of pooled investment funds dropped for

almost every demographic group over the three-year period, though the decrease was very

slight for the top decile of the net worth distribution. The ownership declines at both the

overall level and the level of the demographic groups continue a pattern observed since

2001, when overall ownership of pooled investment funds was at 17.7 percent (data not

shown in the tables).

The survey also collects information on the different types of pooled investment funds

owned by families. Ownership shifted over the recent period away from stock funds and

toward “other bond” funds (largely corporate bonds); the residual “other” category, which

consists almost entirely of hedge funds and exchange-traded funds, also increased, as

shown in the following table:

Table 6.4

Type of pooled

investment fund

All families

2010

(percent)

Change, 2007–10

(percentage points)

Stock 7.7 –2.6

Tax-free bond 1.9 –.1

Government bond 1.0 –.2

Other bond 1.4 .4

Combination 1.4 .1

Other .9 .4

Among families owning pooled investment funds, the value of holdings has continued an

increase seen over the preceding decade; in the recent three-year period, the median holding

rose 36.3 percent, and the mean rose 19.8 percent. Median and mean values increased

across almost every demographic group, evidence that the decrease in ownership may have

been concentrated among families with relatively small account balances (data not shown

in the tables).

Retirement Accounts

Ownership of tax-deferred retirement assets such as personally established individual retirement accounts (IRAs) or job-based 401(k) accounts tends to increase with families’ income

and net worth.24 For several reasons, ownership is also more likely among families headed

by a person less than 65 years of age than among the older groups. First, even though

23 In this article, pooled investment funds exclude money market mutual funds and indirectly held mutual funds

and 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.

24 Tax-deferred retirement accounts consist of IRAs, Keogh accounts, and certain employer-sponsored accounts.

Employer-sponsored accounts consist of 401(k), 403(b), and thrift savings 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.

Usually, such accounts 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, a person’s choices for investment are sometimes limited to a narrower set of assets.

Changes in U.S. Family Finances from 2007 to 2010 35
retirement accounts have been increasingly prevalent in the past 30 years, they may not

have become available until relatively late in the careers of many persons 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 two oldest age groups may have already done so. Third, families may have used funds from retirement accounts accumulated from previous employment to purchase an annuity at retirement; annuities are treated in the SCF as a separate type of managed asset.

From 2007 to 2010, the fraction of families with retirement accounts fell 2.6 percentage

points to 50.4 percent; the decrease offset most of the 3.1 percentage point increase over

the preceding three years. The overall rate of retirement account ownership has varied

around 50 percent for about the past decade. In the recent three-year period, the fraction of

families that had some type of account plan associated with a current or past job or that

held an IRA or Keogh account decreased, and the fraction that had at least one account of

each type declined as well, as shown in the following table:

Table 6.5

Type of retirement account

All families

2010

(percent)

Change, 2007–10

(percentage points)

Account plan from current or past job 35.1 –2.9

Individual retirement account or Keogh 28.1 –2.5

MEMO

Both types 12.6 –2.1

Over the 2007–10 period, ownership of retirement accounts decreased for nearly all of the

groups considered here. The most noticeable declines in ownership were among families in

the middle-income, middle-wealth, and middle-age groups; for those groups, retirement

accounts had been growing in importance as a supplement to Social Security and other

types of retirement income, and the decrease in ownership in the past three years may represent a setback in retirement preparedness. Across employment and occupation categories,

the largest changes were the 3.1 percentage point drop in retirement account ownership

among families whose head was working for someone else and the 7.2 percentage point

drop for the technical, sales, or services occupation group.

In a reversal of a trend over the preceding decade, median holdings in retirement accounts

decreased in the 2007–10 period; for families having such accounts, the median fell 6.6 percent. Mean balances continued to grow, however, at a rate of 10.7 percent over the threeyear period. The patterns of changes in median account balances across demographic

groups were mixed, but as with ownership rates, families in the middle-income, middlewealth, and middle-age groups saw decreases in median account balances, while retirees

and those with higher incomes and higher net worth saw noticeable increases.25

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.

25 In addition, the 2009 panel interview with the 2007 SCF respondents indicated that some families in the age

range for which a penalty is assessed for withdrawals from such accounts had closed their retirement accounts

during the two-year period. Of the 55.8 percent of families headed by someone younger than age 58 that owned

retirement accounts in 2007, 10.8 percent of the group reported not having such an account in 2009 (data not

shown in the tables).

36 Federal Reserve Bulletin | June 2012
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 plans are not included

in the assets described in this section: Social Security (the federally funded Old-Age and

Survivors’ Insurance program (OASI)) and employer-sponsored defined-benefit plans.

OASI is well described elsewhere, and it covers the great majority of the population.26 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,

future income streams from OASI and 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.27

However, the SCF does contain substantial information for family heads and their spouse

or partner regarding any defined-benefit plans or other types of plans with some kind of

account feature to which they have rights from a current or past job.28 In 2010, 55.1 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, below the 57.7 percent

level in 2007. For this group of families, the fraction with a standard defined-benefit plan

with an annuity payout scheme increased slightly over the recent period, while the fraction

with a plan with at least some account feature and the fraction that had both types of plans

decreased, as shown in the following table:

Table 6.6

Type of pension plan

Families with any pension plan

2010

(percent)

Change, 2007–10

(percentage points)

Defined benefit 56.4 .6

Account plan 63.6 –2.2

MEMO

Both types 20.0 –1.6

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 2010, 85.4 percent of families with an account plan on a current job of either the family head or that person’s spouse or partner had an employer that made contributions to the plan, a decline of

1.8 percentage points from 2007. In 2010, 91.9 percent of families with such plans made

contributions themselves, an increase of 0.5 percentage point from 2007. The median

annual contribution by employers who contributed to such accounts was $2,300 in 2010,

26 For a detailed description of OASI, see Social Security Administration, “Online Social Security Handbook:

Your Basic Guide to the Social Security Programs,” Publication 65-008, www.ssa.gov/OP_Home/handbook/ssahbk.htm.

27 For one possible calculation of net worth that includes the annuity value of payments from defined-benefit pensions and OASI, see Arthur B. Kennickell and Annika E. Sundén (1997), “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.

28 The definition of account plan used 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 any account balance exists. 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.

Changes in U.S. Family Finances from 2007 to 2010 37
and the median contribution by families who contributed was $3,000; both amounts were

little changed from 2007 levels (data not shown in the tables).

The eligibility of working heads of families to participate in any type of job-related pension fell from 55.9 percent in 2007 to 52.9 percent in 2010; it had risen 1.1 percentage points

over the preceding three years (data not shown in the tables). Participation by eligible

workers is usually voluntary. In 2010, 84.3 percent of family heads who were eligible to participate elected to do so, up slightly from 83.8 percent in 2007.29 The choice to participate

appears to be related strongly to income. In 2010, the fraction of eligible family heads

declining to participate was progressively lower at higher income levels, and this general

pattern was not substantially altered from 2007, as shown by the following table:

Table 6.7

Percentile of income

Families headed by a person who was eligible for a work-related

retirement plan on a current job and who declined to participate

2010

(percent)

Change, 2007–10

(percentage points)

Less than 20 54.6 .3

20–39.9 26.8 –1.3

40–59.9 17.0 –1.5

60–79.9 14.3 3.8

80–89.9 7.7 –3.2

90–100 5.5 –1.0

Cash Value Life Insurance

Cash value life insurance combines an investment vehicle with insurance coverage in the

form of a death benefit.30 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. 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 life insurance is broadly spread across demographic groups, with a

tendency toward increasing rates among families with higher levels of income and net

worth and those with older family heads. The change in ownership of cash value policies

over the 2007–10 period continued a declining trend, decreasing 3.3 percentage points, to

19.7 percent of families in 2010. The decline was shared by virtually all demographic

groups; the only group with a noticeable increase in ownership is families headed by someone aged 75 or older. Over the three-year period, ownership of any type of life insurance,

cash value or term, also fell—from 64.9 percent in 2007 to 62.6 percent in 2010 (data not

shown in the tables). Of those families with some type of life insurance, the proportion

29 An analysis of the March Current Population Survey (CPS) with a definition of family head that is closest to

that in this article does not show the same magnitude of decline in pension eligibility for employed family

heads, but the levels are generally similar to those seen in the SCF. The CPS eligibility estimate for family heads

with a job in the past year was 53.9 percent in 2007 and 53.5 percent in 2010. Differences in the definition of

employment may explain some of the difference between the two surveys. Like the SCF, the CPS shows a small

increase in the uptake rate for eligible workers—from 83.3 percent in 2007 to 83.6 percent in 2010.

30 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 the cash value at the time of the interview was

nonzero.

38 Federal Reserve Bulletin | June 2012
with term policies was about unchanged, while the proportion with cash value policies fell;

these changes are similar to trends observed in the earlier surveys.

After rising over the previous three-year period, the median value of cash value life insurance for families that had any such insurance fell 13.1 percent between 2007 and 2010, and

the mean fell 13.1 percent. The median showed a mix of increases and decreases across

demographic groups, although it declined considerably for younger families, single families

with children, families headed by a person who was self-employed or working for someone

else, and families headed by someone working in a technical, sales, or service occupation.

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 a person who is aged 55 or older or who

is retired.31 Ownership of these assets was little changed between 2007 and 2010, following

a more substantial decrease over the previous three years. Changes in ownership rates

across demographic groups were mixed in the recent three-year period, with the vast majority of 2010 values within 2 percentage points of the corresponding 2007 values. Across all

families, the fraction with an annuity was nearly unchanged over the period, and the fraction with a trust or managed investment account edged down, as shown in the following

table:

Table 6.8

Type of other managed asset

All families

2010

(percent)

Change, 2007–10

(percentage points)

Annuity 4.5 .1

Trust or managed investment account 1.3 –.3

MEMO

Both types .2 –.1

Between 2007 and 2010, the median value of other managed assets for families that had

such assets decreased 4.5 percent, offsetting some of the substantial increase in the preceding three-year period. Over the more recent period, the corresponding mean value fell

4.9 percent. Changes in median holdings varied greatly across demographic groups—for

example, increasing substantially in the top two income groups, but falling by more

than 60 percent in the group of families headed by someone aged 35 to 44. For families

with an equity interest in an annuity, the median holding increased 14.5 percent, to $60,000

31 Annuities may be those in which the family has an equity interest in the asset or in which the family possesses

an entitlement only to a stream of income. The wealth figures in this article include only the annuities in which

the family has an equity interest. In 2010, 5.9 percent of families reported having any type of annuity, and of

these families, 77.3 percent reported having an equity interest. The trusts 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 2010, 88.6 percent of families with trusts or managed

investment accounts had an equity interest in such an account.

The survey encourages respondents who have trusts or managed investment accounts that are held in relatively

common investments to report the components separately. Of the 3.9 percent of families that reported having

any kind of trust or managed investment account in 2010, 59.3 percent of them reported at least one of the

component assets separately. Of families that detailed the components in 2010, 89.2 percent reported some type

of financial asset, 11.5 percent reported a primary residence, 17.0 percent reported other real estate, 5.0 percent

reported a business, and 2.0 percent reported another type of asset (data not shown in the tables). The fraction

of these families reporting the primary residence as a component of a trust decreased 7.4 percentage points

between 2007 and 2010, and the fraction reporting a business decreased 10.3 percentage points.

Changes in U.S. Family Finances from 2007 to 2010 39
in 2010; for families with a trust or managed investment account as defined in this article,

the median holding fell 13.3 percent, to $109,000 (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 2010, 35.0 percent of families with annuities

had done so (data not shown in the tables). Of these families, 73.7 percent had an equity

interest in their annuities.

Other Financial Assets

Ownership of 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—fell 1.3 percentage points between 2007 and 2010, to 8.0 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 or retired. Ownership

across demographic groups generally declined over this period, while the median holding

for those who had such assets decreased 20.6 percent, to $5,000.

Holdings may be grouped into four categories: cash, which includes money owed to families by other persons; future proceeds, which include amounts to be received from a lawsuit,

estate, or other type of settlement; employment and business-related items, which include

deferred compensation, royalties, futures contracts, and derivatives; and other. As shown in

the following table, the proportion of families holding various types of other financial

assets remained fairly constant over the three-year period, with cash being by far the most

frequently held component:

Table 6.9

Type of other financial asset

All families

2010

(percent)

Change, 2007–10

(percentage points)

Cash 6.8 –1.3

Future proceeds .8 –.1

Business items .4 †

Other .2 .2

† Less than 0.05 percent.

Some publicly traded companies offer stock options to their employees as a form of compensation.32 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.33

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 2010, 6.2 percent of

families reported having received stock options, a decline of 2.1 percentage points below

the level in 2007; this decrease continues a downward trend since the peak of 11.4 percent

recorded in the SCF in 2001 (data not shown in the tables).

32 See Jeffrey L. Schildkraut (2004), “Stock Options: National Compensation Survey Update” (Washington:

Bureau of Labor Statistics, September), www.bls.gov/opub/cwc/cm20040628yb01p1.htm.

33 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.

40 Federal Reserve Bulletin | June 2012
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 2010 data show a decline in stock ownership to levels

not seen in the SCF since the late 1990s (table 7). Between 2007 and 2010, the fraction of

families holding any such stock fell 3.3 percentage points to 49.9 percent, a level well below

the 2007 peak. Much like ownership of directly held stock, ownership of direct and indirect

equity holdings is more common among higher-income groups and among families headed

by a person aged 35 to 64. Over the recent three-year period, ownership decreased for all

income groups. Across age groups, ownership fell the most—7.5 percentage points—for

families headed by persons aged 65 to 74; for other age groups, the declines were much

more modest, and for some, ownership rates were basically unchanged or rose slightly.

The overall median value of direct and indirect stock holdings dropped 18.3 percent

between 2007 and 2010. Changes in the median value across demographic groups were generally negative, with the exception of the highest income decile and families headed by a

person aged less than 35 or by a person aged 65 or older. As a proportion of financial

assets, holdings fell from 54.0 percent in 2007 to 47.0 percent in 2010. The lowest income

quintile is the only demographic group that saw an increase in the share of financial assets

held in stocks, rising from 39.2 percent in 2007 to 40.5 percent in 2010.

Among families that held equity, either directly or indirectly in 2010, ownership through a

tax-deferred retirement account was most common, followed by direct holdings of stocks,

direct holdings of pooled investment funds, and managed investment accounts or an equity

interest in a trust or annuity. Over the 2007–10 period, ownership of equity holdings

through tax-deferred accounts rose, while both direct ownership of equity and ownership

through pooled investment funds fell. Ownership of equity through a trust or annuity was

Table 7. Direct and indirect family holdings of stock, by selected characteristics of families, 2001–10

surveys

Percent except as noted

Family

characteristic

Families having stock holdings, direct or

indirect

Median value among families with

holdings (thousands of 2010 dollars)

Stock holdings as share of group's

financial assets

2001 2004 2007 2010 2001 2004 2007 2010 2001 2004 2007 2010

All families 52.3 50.3 53.2 49.9 42.3 37.7 35.5 29.0 56.0 51.4 54.0 47.0

Percentile of income

Less than 20 12.9 11.7 14.3 12.5 9.2 8.6 6.3 5.3 37.4 32.0 39.2 40.5

20–39.9 34.3 29.8 36.5 30.5 9.2 11.5 8.7 7.1 35.6 30.9 34.6 31.3

40–59.9 52.6 51.9 52.9 51.7 18.4 16.9 18.3 12.0 46.8 43.4 39.5 37.5

60–79.9 75.9 69.9 73.3 68.1 35.5 30.6 35.2 22.3 52.0 41.9 53.1 41.6

80–89.9 82.1 83.9 86.3 82.6 79.2 65.0 66.1 57.9 57.3 48.9 50.5 44.4

90–100 89.7 92.7 91.5 90.6 305.2 235.8 234.7 267.5 60.4 57.6 58.3 50.9

Age of head (years)

Less than 35 49.1 40.8 41.6 39.8 8.6 9.2 6.8 7.0 52.5 40.4 45.6 39.3

35–44 59.7 54.5 55.9 50.1 33.7 23.0 25.7 19.8 57.2 53.7 54.7 50.5

45–54 59.4 56.6 63.1 58.0 61.3 57.5 47.1 37.8 59.2 53.8 54.5 48.6

55–64 57.4 63.2 60.8 59.7 98.6 80.5 81.7 56.0 56.0 55.2 55.6 48.3

65–74 40.0 46.9 53.1 45.6 184.2 80.5 58.1 78.1 55.4 51.5 55.6 44.2

75 or more 35.7 34.8 40.2 42.0 134.8 98.8 47.1 55.0 51.8 39.3 48.2 44.6

Housing status

Owner 62.5 61.0 64.6 61.3 61.3 51.8 41.9 39.9 56.7 52.0 54.5 47.5

Renter or other 31.0 26.5 28.1 26.3 8.6 10.1 8.2 6.0 46.1 39.3 46.2 37.3

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

Changes in U.S. Family Finances from 2007 to 2010 41
basically unchanged. The fraction of equity owners with multiple types also declined, as

shown in the following table:

Table 7.1

Type of direct

or indirect equity

Families with equity

2010

(percent)

Change, 2007–10

(percentage points)

Tax-deferred account 85.9 .9

Directly held stock 30.3 –3.4

Directly held pooled investment fund 16.6 –3.7

Managed investment account, or equity interest in a trust or annuity 8.1 .3

MEMO

Multiple types 32.8 –3.6

The distribution of amounts of holdings over these types of equities shows a different pattern. Of the total amount of equity, 42.3 percent was held in tax-deferred retirement

accounts, 30.9 percent as directly held stocks, 20.4 percent as directly held pooled investment funds, and 6.4 percent as other managed assets (data not shown in the tables).

Nonfinancial Assets

By definition, a decrease in nonfinancial assets as a share of total assets from 2007 to 2010

must exactly offset the 3.9 percentage point rise in the share of financial assets from 2007 to

2010 that was discussed earlier in this article (table 5). In any given survey, the changes in

these shares are driven by spending decisions, changes in portfolio choices, portfolio valuation, or all three. Between 2007 and 2010, the largest drivers were declines in house values

and business equity.

Over the 2007 to 2010 period, housing as a share of total nonfinancial assets fell 0.6 percentage point, while business equity as a share of total nonfinancial assets fell 1.5 percentage points (table 8). However, housing is a much larger share of total nonfinancial assets

than business equity in any given year, so the two asset types account for roughly the same

share of the overall decline in the ratio of nonfinancial to total assets. That is, of the

3.9 percentage point decrease in the overall share of nonfinancial assets, housing and business equity each accounted for approximately 2.2 percentage points. Other residential property contributed slightly to the decline (0.2 percentage point). These drops in asset shares

Table 8. Value of nonfinancial assets of all families, distributed by type of asset, 2001–10 surveys

Percent

Type of nonfinancial asset 2001 2004 2007 2010

Vehicles1

5.9 5.1 4.4 5.2

Primary residence 46.9 50.3 48.0 47.4

Other residential property 8.1 9.9 10.7 11.2

Equity in nonresidential property 8.2 7.3 5.8 6.7

Business equity 29.3 25.9 29.7 28.2

Other 1.6 1.5 1.3 1.3

Total 100 100 100 100

MEMO

Nonfinancial assets as a share of total assets 57.8 64.2 66.0 62.1

Note: See note to table 1.

1

For definition, see text note 34.

42 Federal Reserve Bulletin | June 2012
were offset by a 0.8 percentage point increase in the share of vehicles and a 0.9 percentage

point increase in the share of nonresidential property.

In 2010, the level of ownership of nonfinancial assets was 91.3 percent of families, 0.7 percentage point lower than in 2007 (first half of tables 9.A and 9.B, next-to-last column).

Across most of the demographic groups shown, the 2010 ownership rate was 80 percent or

more; exceptions were the lowest income and wealth groups, families headed by a person

who was neither working nor retired, and renters. Over the 2007–10 period, ownership fell

most for the less-than-35 age group, childless single families headed by someone younger

than age 55, nonwhite or Hispanic families, families living in the South or the West, and

families in the lowest quartile of the net worth distribution.

Over the recent period, the median holdings of nonfinancial assets for families having any

such assets fell 16.8 percent, and the mean fell 17.6 percent. Across demographic groups,

substantial declines in the medians far outnumbered increases. The largest drops in the

median value occurred for the lowest quintile of the income distribution; families headed

by someone with less than a high school diploma; families headed by someone working in

technical, sales, or service occupations; and families in the second quartile of the net worth

distribution. Median holdings inched up for a few demographic groups whose total nonfinancial holdings tend to be relatively low and that are generally not dominated by housing

or business assets.

Table 9. Family holdings of nonfinancial assets and of any asset, by selected characteristics of families

and type of asset, 2007 and 2010 surveys

A. 2007 Survey of Consumer Finances

Family characteristic Vehicles Primary

residence

Other

residential

property

Equity in

nonresidential

property

Business

equity Other

Any

nonfinancial

asset

Any asset

Percentage of families holding asset

All families 87.0 68.6 13.8 8.1 13.6 7.2 92.0 97.7

Percentile of income

Less than 20 64.4 41.4 5.4 2.5 3.3 3.9 73.5 89.8

20–39.9 85.9 55.2 6.5 3.9 5.3 5.7 91.2 98.9

40–59.9 94.3 69.3 9.9 7.5 10.6 7.4 97.2 100.0

60–79.9 95.4 83.9 15.4 9.4 18.1 7.2 98.5 100.0

80–89.9 95.6 92.6 21.0 13.6 20.0 9.0 99.6 100.0

90–100 94.8 94.3 42.2 21.0 40.9 14.1 99.7 100.0

Age of head (years)

Less than 35 85.4 40.6 5.6 3.2 8.0 5.8 88.2 97.1

35–44 87.5 66.1 12.0 7.5 18.2 5.5 91.3 96.9

45–54 90.3 77.3 15.7 9.5 17.2 8.7 95.0 97.6

55–64 92.2 81.0 20.9 11.5 18.1 8.5 95.6 99.1

65–74 90.6 85.5 18.9 12.3 11.2 9.1 94.5 98.4

75 or more 71.5 77.0 13.4 6.8 4.5 5.8 87.3 98.1

Family structure

Single with child(ren) 77.3 48.9 7.4 4.3 7.5 5.4 85.0 93.8

Single, no child, age less

than 55 78.4 43.4 6.2 3.2 8.8 7.6 83.6 94.8

Single, no child, age 55

or more 73.7 67.5 12.1 7.1 3.6 5.9 85.0 97.6

Couple with child(ren) 94.9 78.1 15.5 9.8 18.5 6.3 97.4 99.2

Couple, no child 94.0 80.1 19.4 10.9 18.4 9.3 97.0 99.4

Education of head

No high school diploma 73.7 52.8 5.8 2.6 5.9 2.2 80.9 91.7

High school diploma 87.5 68.9 10.0 7.3 9.5 5.1 92.2 97.7

Some college 86.7 62.3 13.2 6.5 12.7 7.0 91.0 98.6

College degree 91.9 77.8 20.6 11.9 20.7 11.0 96.6 99.6

Changes in U.S. Family Finances from 2007 to 2010 43
Vehicles

Vehicles continue to be the most commonly held nonfinancial asset.34 From 2007 to 2010,

the share of families that owned some type of vehicle edged down 0.3 percentage point to

86.7 percent. Trends in ownership rates over the recent three years were mixed across most

demographic groups. Across age groups, ownership decreased for the less-than-35 and

55-to-74 age groups while rising for the 75-or-more age category. Vehicle ownership

decreased for single families without children headed by someone younger than age 55;

families headed by a person with a high school degree, some college, or a college degree;

families headed by a person who was working for someone else, self-employed, or included

in any occupation group except retired; nonwhite or Hispanic families; families living in the

South or the West; and renters.

34 The definition of vehicles in this article 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 2010, 99.8 percent had a car, van, sport utility vehicle, motorcycle, or truck. The remaining types

of vehicles were held by 14.4 percent of families.

Table 9. Family holdings of nonfinancial assets and of any asset, by selected characteristics of families

and type of asset, 2007 and 2010 surveys—continued

A. 2007 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

Race or ethnicity of respondent

White non-Hispanic 89.6 75.6 15.3 9.0 15.8 8.3 94.6 98.9

Nonwhite or Hispanic 80.9 51.9 10.0 5.9 8.2 4.3 85.8 94.9

Current work status of head

Working for someone else 91.3 67.2 11.9 7.0 7.7 7.1 94.4 98.7

Self-employed 90.6 82.4 26.5 17.3 74.9 11.0 97.6 99.7

Retired 78.6 72.9 14.6 7.7 3.8 5.4 87.2 96.1

Other not working 69.3 33.1 3.8 4.7 3.7 8.2 74.8 90.0

Current occupation of head

Managerial or professional 93.1 78.2 20.7 10.8 25.4 9.9 97.2 99.8

Technical, sales, or

services 87.4 61.5 10.2 7.3 10.8 7.7 91.6 97.8

Other occupation 92.6 66.3 9.6 6.7 14.7 4.9 95.2 98.5

Retired or other not

working 77.1 66.7 12.9 7.2 3.8 5.8 85.2 95.2

Region

Northeast 75.4 66.1 13.3 5.6 9.1 5.5 84.2 94.6

Midwest 89.5 71.3 13.7 8.4 15.4 6.4 93.4 98.4

South 89.2 70.1 11.3 8.8 12.6 7.2 93.8 98.5

West 90.5 65.4 18.3 8.7 16.9 9.3 94.1 98.4

Urbanicity

Metropolitan statistical

area (MSA) 86.2 68.1 14.2 7.6 13.9 7.6 91.5 97.7

Non-MSA 90.9 71.1 11.7 10.7 11.8 5.1 94.3 97.9

Housing status

Owner 93.8 100.0 17.5 10.8 17.5 8.0 100.0 100.0

Renter or other 72.3 * 5.6 2.1 5.0 5.3 74.5 92.8

Percentile of net worth

Less than 25 69.5 13.7 * * 2.3 2.4 71.6 91.0

25–49.9 91.2 72.2 7.1 3.7 7.5 6.4 97.7 100.0

50–74.9 93.3 92.8 11.9 7.6 13.4 7.8 99.5 100.0

75–89.9 94.5 95.2 26.4 16.5 19.6 7.3 99.0 100.0

90–100 93.6 96.8 47.5 27.2 48.3 19.0 99.6 100.0

44 Federal Reserve Bulletin | June 2012
Given the slowdown in purchases of new cars during the period between 2007 and 2010

noted earlier and the consequent aging of families’ holdings of vehicles, it is not surprising

that the median market value of vehicles for those who owned at least one vehicle declined

5.6 percent from 2007 to 2010, and the mean declined 4.3 percent.35 Indeed, the median

value of vehicle holdings was flat or rising only for higher-income or higher-wealth groups,

families headed by someone aged 65 or older, and families in the other-not-working workstatus group. The largest declines in the median were observed for the third and fourth

quintiles of income, the lowest three quartiles of wealth, and families headed by someone

younger than 55 years of age. Continuing a trend, the share of the total value of owned

vehicles attributable to sport utility vehicles rose over the recent period from 21.5 percent to

23.8 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 use. The share of families having a vehicle from any source fell 0.7 percentage

point over the recent period, to 88.9 percent (data not shown in the tables). The small dif35 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 vehicles, the respondent is asked

to provide a best estimate of the current value.

Table 9. Family holdings of nonfinancial assets and of any asset, by selected characteristics of families

and type of asset, 2007 and 2010 surveys––continued

A. 2007 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

Median value of holdings for families holding asset (thousands of 2010 dollars)

All families 16.2 209.5 154.0 78.6 96.6 14.7 185.9 232.1

Percentile of income

Less than 20 5.9 104.8 62.9 68.1 52.4 3.1 41.9 24.6

20–39.9 9.6 125.7 60.2 62.9 20.4 6.3 80.9 89.0

40–59.9 15.3 157.2 104.8 41.9 32.2 10.5 145.6 192.2

60–79.9 21.4 225.3 125.7 74.4 57.8 15.7 258.0 359.8

80–89.9 26.6 314.3 183.3 75.4 75.5 21.0 377.3 593.6

90–100 35.5 523.8 340.5 183.3 397.6 78.6 838.0 1,423.2

Age of head (years)

Less than 35 14.0 183.3 89.1 52.4 36.7 8.7 32.3 40.7

35–44 18.3 214.8 157.2 52.4 61.8 10.5 191.3 232.9

45–54 19.6 241.0 157.2 83.8 80.5 15.7 235.6 320.6

55–64 18.2 220.0 164.5 94.3 104.8 21.0 244.2 365.1

65–74 15.3 209.5 157.2 78.6 314.3 21.0 222.3 317.8

75 or more 9.8 157.2 104.8 115.2 235.7 26.2 164.5 229.8

Family structure

Single with child(ren) 9.0 157.2 52.4 45.1 52.4 10.5 85.2 74.4

Single, no child, age less

than 55 10.3 162.4 157.2 52.4 34.0 8.7 56.6 61.5

Single, no child, age 55

or more 8.0 151.9 83.8 78.6 261.9 10.5 141.4 191.5

Couple with child(ren) 22.6 251.4 157.2 68.1 94.3 15.7 249.3 312.1

Couple, no child 20.2 220.0 188.6 104.8 104.8 24.6 240.7 342.4

Education of head

No high school diploma 10.9 128.4 68.1 131.0 61.8 13.8 88.4 67.7

High school diploma 13.9 157.2 79.6 52.4 94.3 7.6 144.2 169.6

Some college 15.2 201.2 104.8 55.3 47.1 13.6 164.8 195.2

College degree 20.8 293.4 209.5 94.3 104.8 23.0 303.2 456.5

Note: See note to table 1.

Changes in U.S. Family Finances from 2007 to 2010 45
ference 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 5.2 percent in 2007 to 3.0 percent in 2010,

while that of families with an employer-provided vehicle fell less dramatically, from 6.8 percent to 6.4 percent over the recent period.

Primary Residence and Other Residential Real Estate

The homeownership rate fell 1.3 percentage points over the 2007−10 period, to 67.3 percent.36 Homeownership had fallen in the previous three-year period as well after reaching a

peak of 69.1 percent of families in 2004. The 2010 homeownership rate is roughly the same

36 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. The 2007 and 2010 SCF estimates of homeownership differ only marginally

Table 9. Family holdings of nonfinancial assets and of any asset, by selected characteristics of families

and type of asset, 2007 and 2010 surveys––continued

A. 2007 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

Race or ethnicity of respondent

White non-Hispanic 17.9 209.5 143.0 78.6 104.8 15.7 213.8 285.2

Nonwhite or Hispanic 12.5 188.6 183.3 65.7 52.4 8.4 106.8 93.5

Current work status of head

Working for someone else 17.8 209.5 125.7 55.3 21.0 10.5 175.1 223.5

Self-employed 23.2 314.3 314.3 159.8 110.0 52.4 476.7 569.8

Retired 11.9 162.4 104.8 78.6 157.2 13.8 163.4 213.2

Other not working 7.2 167.6 136.7 51.1 98.1 2.6 30.7 29.1

Current occupation of head

Managerial or professional 21.2 282.9 209.5 110.0 118.8 21.0 292.2 431.0

Technical, sales, or

services 15.1 209.5 131.0 89.1 26.2 15.7 162.4 195.9

Other occupation 17.5 165.4 94.3 38.8 61.8 10.5 142.0 165.1

Retired or other not

working 10.9 162.4 104.8 78.6 157.2 13.1 154.5 186.0

Region

Northeast 15.1 288.1 199.1 117.3 104.8 21.0 261.9 304.2

Midwest 15.2 162.4 115.2 55.3 104.8 10.5 165.0 214.5

South 16.3 167.6 125.7 74.9 62.9 15.7 152.7 189.6

West 17.9 314.3 225.3 94.3 99.5 14.7 263.5 308.5

Urbanicity

Metropolitan statistical

area (MSA) 16.6 230.5 157.2 86.4 98.1 14.1 203.2 255.7

Non-MSA 15.1 120.5 99.5 52.4 94.3 23.0 124.2 156.3

Housing status

Owner 19.3 209.5 157.2 83.8 104.8 21.0 265.6 361.4

Renter or other 9.0 * 89.1 39.8 34.6 5.6 10.6 14.2

Percentile of net worth

Less than 25 7.2 89.2 * * .5 1.4 9.0 8.5

25–49.9 13.7 104.8 31.4 26.2 12.0 7.9 100.4 113.4

50–74.9 18.3 209.5 62.9 41.9 52.4 13.6 240.8 319.3

75–89.9 22.9 330.0 153.0 86.4 104.8 31.4 460.1 721.6

90–100 32.8 588.6 419.1 279.4 639.1 71.2 1,215.3 2,211.1

MEMO

Mean value of holdings for

families holding asset 23.1 316.9 352.3 324.2 991.4 84.6 492.0 702.1

* Ten or fewer observations.

46 Federal Reserve Bulletin | June 2012
as it was in 2001, which was 3.0 percentage points higher than the rate in1995 (data not

shown in the tables).

In 2010, groups that had an ownership rate less than the overall rate included nonwhite or

Hispanic families; families with relatively low income or wealth; families living in the

Northeast or the West; single families; and families headed by a person who was working

for someone else, who was neither working nor retired, who was aged less than 45, or who

had less than a college degree. Over the three-year period, homeownership fell most for the

lowest quintile of the income distribution; families in the second quartile of the net worth

distribution; families headed by a person who was self-employed or working in a technical,

sales, or service job; and families headed by a high school graduate. Across geographic

regions, the decline in ownership was most pronounced in the South and West regions but

also fell in the Northeast; in contrast, the Midwest saw a 2.0 percentage point increase in

homeownership.

Housing wealth represents a large component of total family wealth; in 2010, primary residences accounted for 29.5 percent of total family assets. Over the 2007–10 period,

this percentage declined 2.2 percentage points overall. The relative importance of housing

in the total asset portfolio varies substantially over the income distribution, with housing

from those of the Current Population Survey (CPS) for a comparable specification of household; the CPS

shows an identical decline in the homeownership rate.

Table 9. Family holdings of nonfinancial assets and of any asset, by selected characteristics of families

and type of asset, 2007 and 2010 surveys––continued

B. 2010 Survey of Consumer Finances

Family characteristic Vehicles Primary

residence

Other

residential

property

Equity in

nonresidential

property

Business

equity Other

Any

nonfinancial

asset

Any asset

Percentage of families holding asset

All families 86.7 67.3 14.4 7.7 13.3 7.0 91.3 97.4

Percentile of income

Less than 20 64.9 37.2 4.4 3.9 5.1 2.7 72.0 89.9

20–39.9 85.4 55.9 7.4 5.2 6.6 4.4 90.7 98.0

40–59.9 91.8 71.1 11.6 6.3 10.6 7.3 96.0 99.5

60–79.9 95.4 80.7 16.0 7.9 15.5 9.3 98.6 99.9

80–89.9 96.4 90.6 22.8 11.4 19.3 10.8 99.4 100.0

90–100 95.7 92.4 42.1 18.8 37.6 12.3 99.4 100.0

Age of head (years)

Less than 35 79.4 37.5 4.5 2.3 8.4 6.1 82.8 95.5

35–44 88.9 63.8 9.7 3.9 11.2 4.2 92.7 97.4

45–54 91.0 75.2 17.0 7.5 16.8 6.7 94.7 98.3

55–64 90.3 78.1 22.1 12.6 19.6 9.6 94.4 98.3

65–74 86.5 82.6 22.8 11.0 15.8 11.0 92.6 97.1

75 or more 83.4 81.9 14.6 13.4 6.0 6.0 93.0 98.7

Family structure

Single with child(ren) 79.1 52.0 6.2 4.0 5.2 3.9 84.5 94.6

Single, no child, age less

than 55 74.6 40.2 6.3 2.4 7.4 5.7 80.7 95.3

Single, no child, age 55

or more 76.3 66.7 11.8 8.2 6.6 8.0 86.8 96.6

Couple with child(ren) 94.8 75.6 15.5 7.1 17.0 5.9 97.0 99.0

Couple, no child 93.2 79.7 22.6 12.8 19.5 10.0 96.3 98.5

Education of head

No high school diploma 76.2 54.3 5.0 3.3 5.2 1.3 82.2 92.5

High school diploma 85.8 64.7 10.0 6.9 10.9 5.5 90.5 96.5

Some college 85.4 61.5 11.7 6.4 11.2 7.6 89.6 98.2

College degree 91.5 76.6 22.4 10.4 18.9 9.9 95.9 99.5

Changes in U.S. Family Finances from 2007 to 2010 47
generally constituting a progressively smaller share of assets with increasing levels of

income, as shown in the following table:

Table 9.1

Family characteristic

House value as a percentage of all assets in group

2010

(percent)

Change, 2007–10

(percentage points)

All families 29.5 –2.2

Percentile of income

Less than 20 35.6 –11.5

20–39.9 50.6 –1.2

40–59.9 44.8 –3.5

60–79.9 42.7 –2.5

80–89.9 37.5 –6.9

90–100 19.2 –.6

The median and mean values of the primary residences of homeowners fell between 2007

and 2010; overall, the median decreased 18.9 percent, and the mean fell 17.6 percent.

These percentage losses in the median and mean translated into large dollar losses:

Table 9. Family holdings of nonfinancial assets and of any asset, by selected characteristics of families

and type of asset, 2007 and 2010 surveys––continued

B. 2010 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

Race or ethnicity of respondent

White non-Hispanic 90.9 75.3 16.5 9.4 15.6 8.8 94.9 99.1

Nonwhite or Hispanic 78.1 50.6 9.9 4.2 8.3 3.3 84.0 94.1

Current work status of head

Working for someone else 89.9 64.8 11.9 5.5 6.6 6.4 92.8 98.3

Self-employed 88.5 78.4 28.3 17.5 71.1 12.0 96.4 98.8

Retired 82.4 74.6 15.0 9.6 4.5 6.8 89.2 96.3

Other not working 72.8 42.9 8.7 2.8 4.1 4.8 78.6 92.5

Current occupation of head

Managerial or professional 91.0 76.1 22.9 10.7 25.9 9.6 95.7 99.7

Technical, sales, or

services 86.7 56.0 9.7 5.1 9.6 5.1 90.1 97.7

Other occupation 91.1 66.6 8.4 5.6 13.8 6.6 93.8 97.1

Retired or other not

working 80.3 67.8 13.7 8.1 4.4 6.3 86.9 95.5

Region

Northeast 78.5 65.0 15.3 5.9 11.1 5.5 85.6 95.1

Midwest 90.1 73.3 11.0 7.6 13.0 5.8 93.8 98.0

South 87.5 67.6 14.1 9.4 12.5 6.6 92.1 97.5

West 88.8 62.5 17.4 6.4 16.6 10.2 92.4 98.7

Urbanicity

Metropolitan statistical

area (MSA) 86.0 65.9 14.9 7.2 13.4 6.9 90.6 97.4

Non-MSA 90.2 73.9 11.9 10.1 12.3 7.8 95.0 97.8

Housing status

Owner 93.9 100.0 19.1 10.5 17.0 8.4 100.0 100.0

Renter or other 71.9 * 4.6 1.9 5.5 4.2 73.6 92.2

Percentile of net worth

Less than 25 67.4 21.8 2.8 .8 2.9 2.5 69.7 89.8

25–49.9 91.6 61.3 4.6 2.1 6.1 4.9 96.8 100.0

50–74.9 93.2 90.1 13.1 7.8 12.9 7.3 99.2 100.0

75–89.9 94.3 95.3 27.1 14.9 20.8 9.2 99.6 100.0

90–100 95.2 97.1 51.7 27.9 46.6 19.7 99.9 100.0

48 Federal Reserve Bulletin | June 2012
$39,500 for the median and $55,700 for the mean. Homeowners in virtually all demographic groups saw losses in the median, and most of those losses were substantial; the one

exception was the lowest quartile of the net worth distribution, where homeownership

jumped 8.1 percentage points and the median home value increased 31.2 percent, most

likely reflecting a compositional shift within that lowest wealth group. Otherwise, substantial decreases in median housing values were widespread.

In 2010, 14.4 percent of families owned some form of residential real estate other than a

primary residence (second homes, time-shares, one- to four-family rental properties, and

other types of residential properties), a level that is up 0.6 percentage point from the corresponding figure in 2007 and up 1.9 percentage points since 2004 (data not shown in the

tables).37 Although the survey does not ask directly about ownership of second homes,

such homes should largely be captured as residential properties that are owned 100 percent

by the family and for which no rent was collected; in 2010, 5.8 percent of families had at

least one such property, down 0.3 percentage point from 2007 but still 1.2 percentage points

higher than in 2004.

37 This measure of residential real estate also includes outstanding balances on loans that the family may have

made to finance the sale of properties they previously owned, which are still owed to the family.

Table 9. Family holdings of nonfinancial assets and of any asset, by selected characteristics of families

and type of asset, 2007 and 2010 surveys––continued

B. 2010 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

Median value of holdings for families holding asset (thousands of 2010 dollars)

All families 15.3 170.0 120.0 65.0 78.7 15.0 154.6 187.2

Percentile of income

Less than 20 5.8 89.0 82.0 36.0 25.0 5.3 23.6 15.2

20–39.9 9.3 110.0 70.0 60.0 25.3 5.0 73.5 75.4

40–59.9 13.8 135.0 82.0 60.0 44.7 10.0 131.2 159.8

60–79.9 20.1 175.0 71.0 50.0 50.0 13.0 198.3 267.0

80–89.9 27.9 250.0 120.0 58.0 82.4 22.0 311.1 448.4

90–100 35.8 475.0 320.0 200.0 455.0 35.0 756.4 1,486.7

Age of head (years)

Less than 35 12.4 140.0 72.0 24.0 30.0 5.0 34.2 35.7

35–44 16.5 170.0 75.0 50.0 50.0 10.0 142.8 156.3

45–54 18.4 200.0 103.5 50.0 80.0 15.0 191.4 248.4

55–64 17.8 185.0 165.0 102.0 100.0 20.0 206.6 286.6

65–74 16.0 165.0 125.0 60.0 100.0 28.1 199.8 281.7

75 or more 10.6 150.0 125.0 65.0 220.9 26.0 168.2 237.7

Family structure

Single with child(ren) 9.7 134.0 100.0 50.0 20.0 15.0 79.0 70.0

Single, no child, age less

than 55 9.6 135.2 70.0 75.0 43.0 7.0 56.9 50.1

Single, no child, age 55

or more 7.5 130.0 151.0 50.0 80.3 15.0 115.5 143.9

Couple with child(ren) 21.3 190.0 120.0 60.0 75.0 12.0 193.4 233.9

Couple, no child 20.3 180.0 120.0 75.0 109.0 20.0 209.0 306.7

Education of head

No high school diploma 9.7 95.0 75.0 30.0 27.8 5.0 59.0 47.8

High school diploma 13.3 130.0 62.5 58.0 64.1 8.0 122.2 138.4

Some college 14.5 150.0 65.0 35.0 110.0 14.4 136.2 150.1

College degree 19.5 250.0 190.0 100.0 88.0 20.0 251.5 352.6

Note: See note to table 1.

Changes in U.S. Family Finances from 2007 to 2010 49
Ownership of other residential real estate is more common among the highest income and

wealth groups; the age groups between 45 and 74; or families headed by a self-employed

person, a person working in a management or professional occupation, or a person who

was a college graduate. Over the recent three-year period, the median and mean values of

other residential real estate decreased roughly in line with the median and mean values of

primary residences over the recent period; the median for those having such real estate fell

22.1 percent, and the mean fell 18.0 percent. Most of the demographic groups saw substantial declines in the median; exceptions were generally groups where ownership of other

residential real estate is low, including the first and second quintiles of income groups,

families headed by someone with less than a high school degree, and families that rented

their primary residence.

Table 9. Family holdings of nonfinancial assets and of any asset, by selected characteristics of families

and type of asset, 2007 and 2010 surveys––continued

B. 2010 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

Race or ethnicity of respondent

White non-Hispanic 16.7 175.0 140.0 75.0 97.2 15.0 183.6 238.9

Nonwhite or Hispanic 12.3 139.0 70.0 50.0 43.0 10.0 86.0 76.8

Current work status of head

Working for someone else 16.3 170.0 96.0 50.0 25.0 10.0 142.7 165.7

Self-employed 21.7 270.0 250.0 132.0 100.0 30.0 370.0 440.2

Retired 11.7 150.0 100.0 62.5 125.5 25.0 155.9 198.0

Other not working 10.7 135.0 60.0 46.6 37.6 10.0 56.7 41.0

Current occupation of head

Managerial or professional 20.8 250.0 200.0 100.0 102.0 23.0 260.0 347.5

Technical, sales, or

services 12.7 153.0 70.0 50.0 27.0 8.0 107.6 115.5

Other occupation 17.2 130.0 57.0 50.0 51.5 8.0 125.0 147.2

Retired or other not

working 11.5 150.0 98.0 62.0 81.6 22.0 139.9 163.3

Region

Northeast 16.2 260.0 154.0 65.0 70.0 30.0 220.4 260.0

Midwest 13.6 135.0 86.5 70.0 100.0 10.0 142.1 174.9

South 15.4 141.7 100.0 50.0 80.3 15.0 134.3 153.1

West 16.3 230.0 170.0 159.4 52.8 15.0 189.1 216.8

Urbanicity

Metropolitan statistical

area (MSA) 15.5 181.0 135.0 70.0 73.6 15.0 168.0 200.0

Non-MSA 14.4 100.0 75.0 60.0 104.5 12.5 111.6 140.1

Housing status

Owner 18.8 170.0 120.0 70.0 95.0 20.0 217.0 296.2

Renter or other 8.5 * 120.0 22.5 25.0 5.3 9.7 12.6

Percentile of net worth

Less than 25 6.9 117.0 60.0 3.0 1.2 5.0 9.4 7.4

25–49.9 11.7 95.5 25.0 10.0 11.6 5.0 60.0 69.1

50–74.9 17.7 150.0 48.0 30.0 40.0 13.0 181.6 240.3

75–89.9 22.7 250.0 120.0 65.0 125.0 20.6 360.7 583.8

90–100 32.7 531.5 350.0 250.0 600.0 50.0 1,114.3 2,082.8

MEMO

Mean value of holdings for

families holding asset 22.1 261.2 288.9 321.6 788.3 66.5 405.5 612.3

* Ten or fewer observations.

50 Federal Reserve Bulletin | June 2012
Net Equity in Nonresidential Real Estate

The ownership of nonresidential real estate fell slightly, to 7.7 percent of families in 2010.38

Ownership follows approximately the same relative distribution across demographic groups

as does the ownership of other residential real estate. Changes in ownership during the

recent period were mixed across demographic groups. Ownership fell most for families in

the age groups between 35 and 54; couples with children; families headed by someone

working in a technical, sales, or service occupation; and families living in the West region.

Overall, the median value of such property for owners fell 17.3 percent, and the mean fell

0.8 percent. Particularly large swings in the median value were seen for groups with belowaverage ownership rates, suggesting that these changes are likely to be due at least in part to

sampling variability.

Net Equity in Privately Held Businesses

The share of families that owned a privately held business interest edged down 0.3 percentage point during the recent period, to 13.3 percent in 2010.39 The proportion has changed

little over the past several surveys. Ownership of this type of asset tends to increase with

income, wealth, and education and to be the highest for families headed by a person who is

aged 45 to 64, who is married or living with a partner, or who has a college degree. Business

ownership is about three times as prevalent among homeowners as renters; it is generally

lowest in the Northeast and highest in the West. Over the recent three-year period, changes

in ownership varied across demographic groups, with relatively large declines observed for

families headed by someone 35 to 44 years of age, higher-income families, and families living in the Midwest region. Ownership also fell among families headed by a person who was

self-employed, from 74.9 percent in 2007 to 71.1 percent in 2010.

As noted earlier, equity in privately held businesses makes up a large portion of families’

total nonfinancial assets. Over the recent period, privately held business assets as a share of

nonfinancial assets fell 2.1 percentage points. Across income-distribution groups, the share

of nonfinancial assets attributable to business equity has a U-shape, with the largest shares

at the top and bottom of the income distribution, as shown in the following table:

38 Nonresidential real estate comprises the following types of properties unless they are 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. Most often, nonresidential real estate properties are functionally more

like a business than a residential property. They may have several owners, they are typically worth a considerable amount, and they often carry large mortgages, which appear to be paid from the revenues from the property, not the family’s other income. As in the case of privately owned businesses, the value of the property in

this analysis is taken to be the net value.

39 The forms of business in this category are sole proprietorships, limited partnerships, other types of partnerships, subchapter S corporations and other types of corporations that are not publicly traded, limited liability

companies, and other types of private businesses. 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.

In the survey, self-employment status and business ownership are independently determined. Among the

13.3 percent of families with a business in 2010, 71.5 percent had a family head or the spouse or partner of the

head who was self-employed; among the 13.3 percent of families in which either the head or the spouse or partner of the head was self-employed, 71.2 percent owned a business (data not shown in the tables).

Changes in U.S. Family Finances from 2007 to 2010 51
Table 9.2

Family characteristic

Net equity in business as a percentage of all assets

2010

(percent)

Change, 2007–10

(percentage points)

All families 17.5 –2.1

Percentile of income

Less than 20 19.5 .7

20–39.9 7.6 3.3

40–59.9 7.3 –1.8

60–79.9 7.9 1.1

80–89.9 8.1 –3.3

90–100 24.6 –3.4

The median holding of business equity for those having any such equity declined 18.5 percent, while the mean decreased 20.5 percent. The mean value in 2010 is 4.1 percent above its

level in 2004, and the median is 8.8 percent lower than it was in 2004 (data not shown in the

tables). In general, median business equity increases across income, age, and net worth

groups, and the medians for white non-Hispanic families and homeowners are substantially

higher than for the complementary groups. Over the recent three-year period, large

increases in median net equity in businesses were observed in the second, third, and fifth

income quintiles; the bottom wealth quartile; and the South region. There were large

declines in median holdings for families in the lowest income quintile and in the West and

Northeast regions.

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 2010, 94.0 percent had an active role, and 10.1 percent had a non-active role;

4.1 percent had interests of both types (data not shown in the tables). In terms of

assets, actively managed interests accounted for 87.5 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

businesses with substantially greater values.

The SCF attempts to collect information about items owned or owed by a family’s business

interests separately from items owned or owed directly by the family. But, in practice, the

balance sheet of a business that is actively managed by a family is not always separate from

that of the family itself.40 Families often use personal assets as collateral or guarantees for

loans for the businesses, or they loan personal funds to their businesses. In 2010, 18.2 percent of families with actively managed businesses reported using personal assets as collateral, which is up slightly from 17.8 percent in 2007; at the same time, 15.2 percent of families reported lending the business money, which is down from 17.5 percent in 2007 (data not

shown in the tables).

Families with more than one actively managed business are asked to report which business

is most important; that business is designated as the primary one.41 In 2010, 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

40 Technically, in a sole proprietorship, there is no legal distinction between the balance sheet of the business and

that of its owner.

41 For families with only one business, that business is, by default, considered the primary one. In 2010, primary

actively managed businesses accounted for 76.3 percent of the value of all actively managed businesses.

52 Federal Reserve Bulletin | June 2012
employees accounted for 79.5 percent of the value of all such businesses, and the largest

shares of value were attributable to businesses organized as subchapter S corporations or

limited liability companies, each of which accounted for approximately 30 percent.

These patterns are also typical of those observed in the earlier surveys (data not shown in

the tables).

Other Nonfinancial Assets

In 2010, ownership of the remaining nonfinancial assets (tangible items including substantial holdings of artwork, jewelry, precious metals, antiques, hobby equipment, and collectibles) was not very widespread and decreased marginally compared with the level in the

previous survey period, to 7.0 percent. Among other nonfinancial assets, the most commonly held items are antiques and other collectibles, which were reported by only 3.0 percent of families in 2010. The composition of other nonfinancial assets changed little from

2007 to 2010, as shown in the following table:

Table 9.3

Type of other nonfinancial asset

All families

2010

(percent)

Change, 2007–10

(percentage points)

Gold, silver, or jewelry 2.3 .2

Antiques, collectibles 3.0 –.5

Art objects 1.6 –.2

Other 1.4 .5

Groups most likely to hold other nonfinancial assets generally include families in the top

two deciles of the income distribution, families headed by a college graduate, homeowners,

and families in the top quartile of the net worth distribution. Minor changes in holdings

were evident across all of the demographic groups. For families having such assets, the

median value rose 2.0 percent over the recent period, and the mean fell 21.4 percent. Across

income and wealth categories, median holdings generally fell for families in middle and top

groups.

Unrealized Capital Gains

Changes in the values of assets such as stock, real estate, and businesses that families own

are often a key determinant of changes in their net worth. Unrealized gains are net changes

in the value of assets that are yet to be sold; such “gains” may be positive or negative. 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, and other real estate. In addition, it asks about the tax cost

basis of any business holdings, and this figure, along with the current value, may be used as

a credible indicator of unrealized gains.42 Among families with any unrealized capital gain,

the median value of that gain fell 52.7 percent over the 2007–10 period, and the mean fell

39.1 percent (table 10). These declines pushed unrealized capital gains as a share of total

family assets down to 24.5 percent, well below the peak of 36.1 percent observed in 2007.

The decrease in median and mean unrealized gains was universal across the types of families and assets considered here. The median of unrealized gains on real estate fell 50.5 percent, the median on business assets declined 23.7 percent, and the median of unrealized

42 The survey does not collect information on capital gains on every asset for which such gains are possible. Most

important, it does not collect such information for retirement accounts.

Changes in U.S. Family Finances from 2007 to 2010 53
gains on the financial assets covered in this measure fell 91.9 percent, to $300 in 2010; the

mean of unrealized gains in real estate fell 40.6 percent, the mean on business assets

declined 33.2 percent, and the mean of unrealized gains on financial assets fell 52.9 percent.

Some families saw losses on the value of their assets sufficient to eliminate any prior gains.

Among all families in 2010, 15.1 percent reported a net loss on their primary residence or

other real estate, meaning the value they reported for the property in 2010 was below what

they reported having paid for it, regardless of when they made the purchase. That rate is

nearly triple the 5.5 percent of families reporting a capital loss on their primary residence in

2007 and more than triple the 4.3 percent of families in 2004 (data not shown in the tables).

Liabilities

The composition of family debt shifted between 2007 and 2010. Debt secured by a primary

residence remained the largest component of overall family debt, but its share slipped

0.6 percentage point between the most recent surveys (table 11).43 This decline in mortgage

debt was reinforced by a 0.3 percentage point decrease in the fraction of debt secured by

43 The SCF measure of liabilities excludes debt owed by businesses owned by the family and debt owed on nonresidential real estate; in this article, such debt is netted against the corresponding assets.

Table 10. Family holdings of unrealized capital gains on selected assets as a share of total assets, by

selected characteristics of families, 2001–10 surveys

Percent except as noted

Family

characteristic

2001 2004 2007 2010

Real

estate

BusinessFinancial All Real

estate

BusinessFinancial All Real

estate

BusinessFinancial All Real

estate

BusinessFinancial All

All families 15.4 11.6 2.3 29.3 19.3 10.9 1.1 31.2 19.3 14.2 2.6 36.1 12.8 10.6 1.1 24.5

Percentile of income

Less than 20 26.7 2.0 –.1 28.6 29.4 7.7 –.6 36.5 30.6 10.6 1.4 42.7 22.8 8.5 .3 31.6

20–39.9 27.2 3.9 –.3 30.9 28.8 5.9 .3 35.0 31.6 3.2 .3 35.1 23.7 4.3 –.2 27.8

40–59.9 18.9 3.9 .2 22.9 25.9 3.0 .5 29.4 24.7 5.6 .8 31.1 18.5 3.8 .2 22.4

60–79.9 17.3 5.2 1.7 24.3 23.4 4.0 .5 27.9 23.4 3.8 1.6 28.9 14.2 3.8 † 17.9

80–89.9 15.9 7.8 1.8 25.5 19.7 4.4 .8 24.9 23.9 8.8 .9 33.6 13.8 4.9 –.2 18.5

90–100 12.3 16.9 3.3 32.5 15.1 16.6 1.6 33.2 14.5 20.8 3.9 39.1 9.3 15.6 2.1 27.0

Age of head (years)

Less than 35 8.2 10.7 2.1 20.9 13.4 7.5 –.4 20.4 12.6 14.6 1.0 28.2 2.6 9.6 –1.3 10.9

35–44 12.7 14.8 .2 27.7 16.8 11.9 1.4 30.2 16.2 12.3 .4 29.0 5.9 9.4 .6 15.8

45–54 13.1 12.6 2.0 27.7 16.6 13.4 1.1 31.1 18.6 15.5 2.1 36.2 9.7 13.7 1.0 24.5

55–64 14.8 12.4 2.0 29.2 19.8 11.8 † 31.5 18.0 15.3 3.2 36.5 13.3 10.8 1.4 25.5

65–74 21.2 10.3 3.5 35.0 22.0 8.8 2.1 32.9 21.1 13.8 4.0 38.8 15.2 10.3 .8 26.3

75 or more 21.9 5.1 5.2 32.2 27.5 5.5 2.4 35.3 29.6 11.0 4.1 44.7 23.8 6.0 2.6 32.5

MEMO

Percent of

families with

any such

gains 67.2 11.6 27.6 72.1 68.8 11.1 25.1 73.0 69.0 11.5 21.7 72.4 66.7 11.3 17.3 70.2

Median for

those with

any such

gains 47.3 62.5 .6 49.0 63.9 51.8 .8 62.1 74.4 52.4 3.7 78.6 36.8 40.0 .3 37.2

Mean for

those with

any such

gains 126.9 555.7 46.0 224.9 170.4 594.7 25.4 259.7 192.4 843.5 83.1 342.8 114.3 563.8 39.1 208.7

Note: See note to table 1.

† Less than 0.05 percent.

54 Federal Reserve Bulletin | June 2012
residential property other than the primary residence. The share of outstanding credit card

balances also decreased 0.6 percentage point over the three-year period. Offsetting these

relative declines in mortgage and credit card debt were increases in the share of liabilities

accounted for by nonmortgage lines of credit and other installment loans.

The overall value of families’ liabilities decreased between 2007 and 2010, but the rate of

decline was less than the corresponding rate for families’ assets. Accordingly, the ratio of

the sum of the debt of all families to the sum of their assets—the leverage ratio—rose from

14.8 percent in 2007 to 16.4 percent in 2010 (table 12). The leverage ratio for the subset of

families that had any debt rose at a faster pace, from 19.4 percent in 2007 to 22.0 percent in

2010 (data not shown in the tables).

The overall leverage ratio differs considerably across types of family groups. It rises and

then falls across income groups. By comparison, the ratio declines with age, a result consistent with the expected life-cycle patterns of asset and debt accumulation. These general patterns in the leverage ratios among groups hold across survey years, and the proportional

increase in leverage ratios in the most recent period was fairly uniform across income and

age groups.

Holdings of Debt

The share of families with any type of debt decreased 2.1 percentage points to 74.9 percent

over the 2007–10 period (first half of tables 13.A and 13.B, last column), reversing an

increase that had taken place since 2001. In any given survey year, borrowing is less prevalent among childless single families headed by a person aged 55 or older and families

headed by a person who is retired or is aged 75 or older. Families in the lowest income,

wealth, and education groups—which tend to have fewer economic resources—are also less

likely to have any debt. Across income groups, borrowing rates peak among families above

the median. By net worth group, debt ownership also peaks among families in the third

quartile. Families in the highest three income groups, couples with children, and families

headed by a person employed in a managerial or professional position have comparatively

high rates of debt ownership.

With few exceptions, the fraction of families with any debt fell broadly across demographic

groups. By age groups, debt ownership fell for those in the less than 35, 45-to-54, and

55-to-64 age groups but rose for the 75-or-older group. Debt ownership fell for most

income groups, but the lowest quintile saw an increase of 0.8 percentage point. Similarly,

debt ownership rose 0.4 percentage point for the lowest wealth quartile. The percentage of

families with debt decreased just 0.9 percentage point for white non-Hispanic families but

Table 11. Amount of debt of all families, distributed by type of debt, 2001–10 surveys

Percent

Type of debt 2001 2004 2007 2010

Secured by residential property

Primary residence 75.2 75.2 74.7 74.1

Other 6.2 8.5 10.1 9.8

Lines of credit not secured by residential

property .5 .7 .4 1.0

Installment loans 12.3 11.0 10.2 11.1

Credit card balances 3.4 3.0 3.5 2.9

Other 2.3 1.6 1.1 1.1

Total 100 100 100 100

Note: See note to table 1.

Changes in U.S. Family Finances from 2007 to 2010 55
fell 4.7 percentage points for nonwhite or Hispanic families. Families headed by a self-employed person saw a decrease in debt ownership of 4.8 percentage points, whereas the fraction fell more modestly or increased among families in the complementary work-status

categories.

The overall median and mean values of outstanding debt for families that had any such

debt were little changed between 2007 and 2010; the median rose 0.1 percent, while the

mean fell 1.1 percent. Median debt tends to rise with income, education, and wealth; the

median by age peaks among families headed by a person aged 35 to 44; median debt is also

higher for couples, homeowners, and families headed by a self-employed person or a person

working in a managerial or professional position. Over the recent three-year period,

changes in the median amount of outstanding debt varied substantially across demographic subgroups. One consistent impression from the data is a marked increase in the

amount of debt held by older families; median debt rose substantially in percentage terms

for families headed by someone aged 55 or older—especially childless single families

Table 12. Leverage ratio of group by selected family characteristics, 2001–10 surveys

Percent

Family characteristic 2001 2004 2007 2010

All families 12.0 15.0 14.8 16.4

Percentile of income

Less than 20 13.5 15.1 13.5 18.3

20–39.9 14.5 19.4 18.6 21.4

40–59.9 19.2 23.2 24.3 26.5

60–79.9 18.0 21.6 25.3 27.7

80–89.9 18.1 22.7 23.3 23.0

90–100 7.4 9.1 8.3 9.8

Age of head (years)

Less than 35 33.5 46.4 44.3 51.6

35–44 22.6 26.0 28.1 37.3

45–54 13.5 17.3 16.3 19.7

55–64 7.1 9.3 10.2 11.0

65–74 4.2 5.2 6.5 7.8

75 or more 1.8 4.0 2.2 3.9

Education of head

No high school diploma 13.4 14.0 18.2 20.3

High school diploma 16.1 19.3 20.5 20.9

Some college 15.0 19.4 19.1 23.3

College degree 10.4 13.2 12.5 14.3

Race or ethnicity of respondent

White non-Hispanic 11.0 13.4 12.8 14.4

Nonwhite or Hispanic 23.4 27.2 27.0 29.1

Region

Northeast 10.2 12.8 12.7 14.7

Midwest 13.0 14.3 14.4 17.7

South 11.4 15.2 14.3 15.5

West 13.8 17.1 17.4 17.9

Urbanicity

Metropolitan statistical area (MSA) 12.0 14.7 14.6 16.2

Non-MSA 13.2 17.7 17.2 18.7

Housing status

Owner 11.9 14.9 14.7 16.2

Renter or other 14.2 16.7 17.7 21.7

Percentile of net worth

Less than 25 99.7 107.4 108.4 128.7

25–49.9 47.9 54.1 56.4 64.5

50–74.9 26.2 33.3 31.7 35.4

75–89.9 14.4 16.2 17.5 17.9

90–100 4.8 6.4 6.1 6.8

56 Federal Reserve Bulletin | June 2012
headed by someone aged 55 or older—and for families headed by someone who was

retired. Relatively large proportional decreases in the median amount of debt were widespread. Families headed by a person aged 45 to 54 saw a decrease of 8.7 percent, families

headed by someone who was self-employed saw an 8.2 percent decrease, and couples with

children saw their median debt fall 11.0 percent. Debt fell 17.8 percent among families

headed by a person who worked in a technical, sales, or service job and 13.0 percent among

nonwhite or Hispanic families. The median decreased 6.6 percent in the South region and

7.8 percent in the West region, the two areas hardest hit by the large decline in house values.

Mortgages and Other Borrowing on the Primary Residence

Paralleling the drop in homeownership discussed earlier, the share of families with debt

secured by a primary residence (hereafter, home-secured debt) declined in the most recent

period, ending a long upward trend dating back to at least the 1989 SCF.44 The fraction of

44 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 consist only of closed-end

loans—that is, loans typically with a one-time extension of credit, a set frequency of repayments, and a

required repayment size that may be fixed or vary over time in accordance with a pre-specified agreement or

with changes in a given market interest rate. As a type of open-ended 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.

Table 13. Family holdings of debt, by selected characteristics of families and type of debt, 2007 and

2010 surveys

A. 2007 Survey of Consumer Finances

Family characteristic

Secured by residential property

Installment

loans

Credit card

balances

Lines of credit

not secured by

residential

property

Other Any debt

Primary

residence Other

Percentage of families holding debt

All families 48.7 5.5 46.9 46.1 1.7 6.8 77.0

Percentile of income

Less than 20 14.9 1.1 27.8 25.7 * 3.9 51.7

20–39.9 29.6 1.9 42.4 39.5 1.8 6.8 70.2

40–59.9 50.5 2.6 53.9 54.8 * 6.4 83.8

60–79.9 69.7 6.9 59.2 62.1 2.1 8.7 90.9

80–89.9 80.8 8.5 57.4 55.8 * 9.6 89.6

90–100 76.4 21.9 45.0 40.6 2.1 7.0 87.6

Age of head (years)

Less than 35 37.3 3.3 65.2 48.5 2.1 5.9 83.6

35–44 59.5 6.5 56.2 51.7 2.2 7.5 86.2

45–54 65.5 8.0 51.9 53.6 1.9 9.8 86.8

55–64 55.3 7.8 44.6 49.9 1.2 8.7 81.8

65–74 42.9 5.0 26.1 37.0 1.5 4.4 65.5

75 or more 13.9 .6 7.0 18.8 * 1.3 31.4

Family structure

Single with child(ren) 38.3 2.7 50.2 45.3 2.6 10.1 78.0

Single, no child, age less

than 55 35.0 3.5 44.1 42.9 * 7.0 76.9

Single, no child, age 55

or more 22.0 1.9 18.9 30.2 * 3.7 48.2

Couple with child(ren) 69.0 8.4 62.9 54.7 2.0 7.9 91.1

Couple, no child 51.3 6.6 43.6 46.7 1.5 5.7 76.0

Education of head

No high school diploma 26.0 1.9 33.3 26.9 * 5.3 55.5

High school diploma 45.0 3.2 46.0 46.8 1.4 6.4 75.1

Some college 46.9 6.4 54.3 51.0 2.2 9.3 80.8

College degree 61.7 8.7 49.1 50.2 1.7 6.5 85.1

Changes in U.S. Family Finances from 2007 to 2010 57
families with home-secured debt fell 1.7 percentage points, slightly faster than the 1.3 percentage point drop in homeownership itself. Because the fraction of families with home-secured debt fell slightly more than homeownership, the fraction of homeowners with a

mortgage also fell somewhat, from 70.9 percent in 2007 to 69.9 percent in 2010.

Families in groups with higher levels of income, education, or wealth are generally more

likely to have mortgage debt, as are couples and families headed by a person who is

employed in a managerial or professional job or who is self-employed. Across age groups,

the rate of borrowing peaks among families in the 45-to-54 age group and declines sharply

among older age groups.45 White non-Hispanic families are more likely to have homesecured debt than are nonwhite or Hispanic families.46 Between 2007 and 2010, the prevalence of home-secured debt fell the most for families with higher levels of income, and it

also fell for families headed by a person who was self-employed or employed in a technical,

sales, or service occupation and for families headed by a person younger than age 75; the

45 Of the families that owned a home, the fraction of homeowners with mortgage debt was highest among families in the two youngest age groups in 2010—both over 90 percent.

46 This pattern reverses, however, when considering only homeowners; for example, in 2010, 68.8 percent of white

non-Hispanic homeowners had a mortgage, compared with 73.3 percent of nonwhite or Hispanic homeowners

(data not shown in the tables).

Table 13. Family holdings of debt, by selected characteristics of families and type of debt, 2007 and

2010 surveys—continued

A. 2007 Survey of Consumer Finances—continued

Family characteristic

Secured by residential property

Installment

loans

Credit card

balances

Lines of credit

not secured by

residential

property

Other Any debt

Primary

residence Other

Race or ethnicity of respondent

White non-Hispanic 52.1 5.8 46.1 45.1 1.6 6.7 76.8

Nonwhite or Hispanic 40.4 4.8 48.9 48.4 2.0 7.0 77.7

Current work status of head

Working for someone else 56.7 5.4 57.5 53.7 1.9 8.7 86.2

Self-employed 64.8 15.1 43.9 48.9 3.6 4.7 86.8

Retired 27.0 2.6 23.6 28.2 .8 3.2 52.3

Other not working 25.5 * 42.9 36.9 * 7.5 69.9

Current occupation of head

Managerial or professional 67.6 10.0 56.2 52.7 1.8 7.0 90.9

Technical, sales, or services 49.7 4.5 52.2 53.2 2.7 7.9 81.8

Other occupation 53.6 5.1 57.8 53.2 2.1 9.7 84.9

Retired or other not working 26.7 2.5 26.6 29.6 .7 3.9 55.0

Region

Northeast 48.4 4.9 40.7 44.3 * 5.6 73.3

Midwest 51.0 5.2 47.9 45.5 1.9 7.0 78.3

South 46.6 4.6 48.5 43.5 1.7 6.9 75.3

West 49.9 8.1 48.4 52.4 2.7 7.5 81.6

Urbanicity

Metropolitan statistical area

(MSA) 49.7 6.1 46.0 46.3 1.8 6.6 77.4

Non-MSA 43.5 2.9 51.3 44.8 1.6 8.0 75.1

Housing status

Owner 70.9 6.9 46.1 50.1 1.3 6.8 82.4

Renter or other * 2.6 48.6 37.3 2.8 6.9 65.4

Percentile of net worth

Less than 25 11.0 * 54.2 41.0 2.6 6.7 68.8

25–49.9 56.2 3.2 52.2 52.9 1.3 8.2 82.5

50–74.9 64.4 4.9 46.2 51.7 1.6 7.4 80.3

75–89.9 63.7 8.5 39.7 44.0 1.5 3.8 76.8

90–100 62.3 21.8 28.2 30.7 1.5 6.8 76.1

58 Federal Reserve Bulletin | June 2012
proportion of families with home-secured debt increased for the oldest age group and for

childless single families headed by someone aged 55 or older.

Overall, the median amount of home-secured debt fell 2.2 percent from 2007 to 2010, and

the mean fell 1.2 percent; these decreases reverse long-term trends, as both the median and

mean had risen nearly 50 percent in the decade preceding the most recent period.

Among families with home-secured debt, median home equity (the difference between the

value of a home and any debts secured against it) fell from $95,300 in 2007 to $55,000 in

2010, a 42.3 percent decrease (data not shown in the tables).47 Among those with such debt,

the median ratio of home-secured debt to the value of the primary residence rose 11.3 percentage points, to 64.6 percent in 2010. Over the recent three-year period, an SCF-based

estimate of the aggregate ratio of home-secured debt to home values for all homeowners jumped to 41.3 percent; that ratio was 34.9 percent in 2007. At the time of the

2010 SCF interview, 8.1 percent of all homeowners had home-secured debt greater than the

47 Among all homeowners in 2010, median home equity was $75,000; in 2007, it had been $110,000.

Table 13. Family holdings of debt, by selected characteristics of families and type of debt, 2007 and

2010 surveys––continued

A. 2007 Survey of Consumer Finances––continued

Family characteristic

Secured by residential property

Installment

loans

Credit card

balances

Lines of credit

not secured by

residential

property

Other Any debt

Primary

residence Other

Median value of holdings for families holding debt (thousands of 2010 dollars)

All families 112.1 104.8 13.6 3.1 4.0 5.2 70.6

Percentile of income

Less than 20 41.9 73.3 6.8 1.0 * 3.1 9.4

20–39.9 53.4 44.0 10.3 1.9 1.4 4.2 18.9

40–59.9 92.9 72.1 13.4 2.5 * 4.2 57.1

60–79.9 120.5 87.0 17.1 4.2 5.4 5.6 116.7

80–89.9 171.8 131.0 18.1 5.8 * 5.2 190.9

90–100 210.6 154.5 19.2 7.9 18.2 7.9 246.2

Age of head (years)

Less than 35 141.8 81.7 15.7 1.9 1.0 4.7 37.9

35–44 134.1 106.4 14.2 3.7 4.8 5.2 111.2

45–54 115.2 85.9 13.5 3.8 6.3 4.7 100.5

55–64 89.1 136.2 11.4 3.8 10.5 6.3 63.2

65–74 72.3 131.0 10.8 3.1 31.4 5.2 42.0

75 or more 41.9 52.4 8.4 .8 * 4.7 13.6

Family structure

Single with child(ren) 97.4 89.1 10.3 1.6 2.6 5.2 31.1

Single, no child, age less

than 55 102.7 82.2 10.5 2.0 * 3.1 32.5

Single, no child, age 55

or more 53.4 141.4 6.9 2.4 * 4.2 15.9

Couple with child(ren) 136.2 97.4 15.6 4.2 5.2 5.6 126.8

Couple, no child 102.7 131.0 16.3 3.5 4.0 5.2 74.2

Education of head

No high school diploma 52.4 55.8 9.2 1.6 * 4.2 20.4

High school diploma 88.0 85.9 10.7 2.4 1.4 4.7 41.9

Some college 101.6 83.8 12.6 3.0 4.0 5.2 57.0

College degree 149.5 131.0 18.2 4.2 6.3 6.3 130.3

Note: See note to table 1.

* Ten or fewer observations.

Changes in U.S. Family Finances from 2007 to 2010 59
reported value of their primary residence; among the group with home-secured debt, the

figure was 11.6 percent.

Mortgage interest rates fell dramatically over the 2007–10 period to a level well below prevailing rates in the 1990s, approaching historical lows. Low interest rates and the deductibility of interest payments on mortgage debt provide an incentive for families to borrow against the equity in their home, but the decrease in home values and tighter lending

standards following the financial crisis worked against the incentive. Borrowing against

home equity may take the form of refinancing an existing first-lien mortgage for more than

the outstanding balance, obtaining a junior-lien mortgage, or accessing a home equity line

of credit. The survey provides detailed information on all of these options for home equity

borrowing. The share of homeowners who had a first lien increased slightly—0.3 percentage point—to 66.4 percent in 2010 (table 14). The fraction of homeowners with a juniorlien mortgage fell 2.7 percentage points—to 5.8 percent in 2010, a level lower than any seen

in the SCF since at least the 1989 survey. The proportion of homeowners who had a home

equity line of credit decreased 3.1 percentage points, to 15.3 percent in 2010, and the share

of homeowners with an outstanding balance fell 2.3 percentage points to 10.3 percent; the

Table 13. Family holdings of debt, by selected characteristics of families and type of debt, 2007 and

2010 surveys––continued

A. 2007 Survey of Consumer Finances––continued

Family characteristic

Secured by residential property

Installment

loans

Credit card

balances

Lines of credit

not secured by

residential

property

Other Any debt

Primary

residence Other

Race or ethnicity of respondent

White non-Hispanic 111.1 95.2 14.0 3.5 5.2 5.2 80.1

Nonwhite or Hispanic 118.4 120.2 12.6 2.1 .8 5.2 46.0

Current work status of head

Working for someone else 122.6 93.2 14.2 3.1 3.0 5.2 86.0

Self-employed 141.4 158.8 16.2 4.5 5.2 10.5 128.5

Retired 49.3 104.8 9.1 1.6 6.7 4.7 21.0

Other not working 94.3 * 11.2 1.9 * 8.4 22.9

Current occupation of head

Managerial or professional 155.1 136.2 17.1 4.7 9.4 7.3 144.1

Technical, sales, or services 105.7 110.0 12.8 3.1 3.7 4.2 69.0

Other occupation 98.5 62.9 12.6 2.6 4.2 5.0 67.2

Retired or other not working 55.5 104.8 10.2 1.6 6.7 5.2 21.0

Region

Northeast 112.1 99.5 12.6 3.1 * 6.8 69.8

Midwest 98.4 86.5 11.5 3.1 5.2 5.2 64.1

South 103.7 83.8 13.8 2.9 3.3 4.7 63.8

West 157.9 167.6 14.9 3.2 4.0 6.3 100.1

Urbanicity

Metropolitan statistical area

(MSA) 123.8 105.8 13.9 3.1 3.7 5.2 81.8

Non-MSA 63.5 73.3 12.2 2.1 6.3 5.2 31.2

Housing status

Owner 112.1 104.8 14.8 3.8 7.9 5.2 116.4

Renter or other * 83.8 10.8 1.4 1.0 5.2 9.6

Percentile of net worth

Less than 25 112.1 * 11.9 1.6 1.0 5.2 12.4

25–49.9 88.2 77.5 13.6 2.9 2.1 4.1 67.3

50–74.9 109.0 75.4 14.6 3.8 4.4 5.2 102.9

75–89.9 134.1 98.5 12.6 4.2 10.7 5.2 133.0

90–100 188.6 167.6 17.9 5.2 45.1 15.7 215.2

MEMO

Mean value of holdings for

families holding debt 156.1 185.7 22.0 7.7 26.0 16.2 132.0

60 Federal Reserve Bulletin | June 2012
median amount borrowed against such lines rose from $25,100 in 2007 to $26,400 in

2010 (data not shown in the tables).48 Overall, the share of total home-secured debt that

was attributable to outstanding balances on first liens and home equity lines of credit rose

across the 2007 and 2010 surveys. The share of home-secured debt attributable to first liens

increased 0.8 percentage point to 92.1 percent in 2010, and the share attributable to home

equity lines of credit increased 0.6 percentage point to 5.4 percent in 2010. The remaining share, which is accounted for by junior liens, decreased 1.4 percentage points, to

2.6 percent, in the most recent period (data not shown in the tables).

In 2010, there was a reversal of the previously increasing trend in the share of the amount

of all first liens that was attributable to refinanced mortgages or where additional borrowing had occurred. First liens that had not been refinanced held steady at 30.5 percent of all

homeowners, while the share of homeowners without additional borrowing fell (table 14).

Among families in 2010 that had borrowed additional amounts at the time of their most

recent refinancing, the median additional amount borrowed was $30,000, compared with

$30,300 in 2007 (data not shown in the tables). In the 2010 survey, the most common use of

such additional borrowing was for home improvement or some other type of real estate

48 Of all families, 44.7 percent had a first-lien mortgage in 2010 (45.4 percent in 2007), 3.9 percent had a juniorlien mortgage (5.8 percent in 2007), 10.3 percent had a home equity line of credit (12.6 percent in 2007), and

7.2 percent had a home equity line of credit with an outstanding balance (8.5 percent in 2007).

Table 13. Family holdings of debt, by selected characteristics of families and type of debt, 2007 and

2010 surveys––continued

B. 2010 Survey of Consumer Finances

Family characteristic

Secured by residential property

Installment

loans

Credit card

balances

Lines of credit

not secured by

residential

property

Other Any debt

Primary

residence Other

Percentage of families holding debt

All families 47.0 5.3 46.3 39.4 2.1 6.4 74.9

Percentile of income

Less than 20 14.8 1.3 34.1 23.2 1.2 4.2 52.5

20–39.9 29.6 1.7 40.8 33.4 2.2 4.2 66.8

40–59.9 51.6 3.5 49.9 45.0 2.1 6.8 81.8

60–79.9 65.4 6.0 56.6 53.1 1.9 7.8 86.9

80–89.9 74.5 9.1 58.8 51.0 2.0 11.8 88.9

90–100 72.8 19.4 41.8 33.6 3.7 6.6 84.5

Age of head (years)

Less than 35 34.0 2.9 61.9 38.7 1.8 5.5 77.8

35–44 57.6 5.1 60.0 45.6 2.2 8.6 86.0

45–54 60.4 7.6 49.8 46.2 2.7 9.7 84.1

55–64 53.6 7.6 40.7 41.3 3.0 6.7 77.7

65–74 40.5 5.0 30.4 31.9 1.2 2.3 65.2

75 or more 24.2 2.9 12.3 21.7 * 2.0 38.5

Family structure

Single with child(ren) 36.0 2.6 49.4 35.3 1.2 6.7 73.5

Single, no child, age less

than 55 31.8 2.7 48.0 37.2 2.3 5.7 73.3

Single, no child, age 55

or more 29.0 3.2 20.4 26.9 1.0 2.5 52.2

Couple with child(ren) 64.9 7.3 59.6 47.4 2.8 8.8 87.5

Couple, no child 49.5 6.9 43.0 40.1 2.1 6.2 74.5

Education of head

No high school diploma 27.2 * 34.7 27.7 1.6 4.8 56.4

High school diploma 42.0 2.8 44.0 36.9 1.7 6.4 70.6

Some college 44.8 4.7 55.1 45.8 2.3 7.4 80.2

College degree 58.7 9.2 47.7 42.1 2.4 6.4 82.0

Changes in U.S. Family Finances from 2007 to 2010 61
investment; together, those accounted for about half of equity extracted. Other notable

uses for extracted equity include loan consolidation, business investment, vehicle purchase,

and education expenses.

Families headed by a self-employed person were more likely than families overall to have a

home equity line of credit—18.8 percent of self-employed families, compared with

10.3 percent overall in 2010—and to be borrowing against such a line—13.1 percent of selfemployed families, compared with 7.2 percent for all families in 2010 (data not shown in

the tables). These differences reflect, in part, the relatively higher rates of homeownership

among families headed by a self-employed person.

Amid rising house prices in the decade before 2007, much discussion focused on how families managed to finance the purchase of a home. Even though house price declines after

2007 benefited first-time homebuyers, existing homeowners were confronted with the

necessity of servicing mortgage balances accumulated earlier. One important determinant

of the size of the regular payment that families must make to service their mortgages is the

length of time over which the loan must be repaid. Between 2007 and 2010, the share of

fixed-term first-lien mortgages with a term of at least 30 years rose dramatically, continuing

a trend observed in the prior survey. The share of fixed-term first-lien mortgages with a

Table 13. Family holdings of debt, by selected characteristics of families and type of debt, 2007 and

2010 surveys––continued

B. 2010 Survey of Consumer Finances—continued

Family characteristic

Secured by residential property

Installment

loans

Credit card

balances

Lines of credit

not secured by

residential

property

Other Any debt

Primary

residence Other

Race or ethnicity of respondent

White non-Hispanic 51.8 6.1 45.8 39.3 2.4 6.1 75.9

Nonwhite or Hispanic 37.1 3.8 47.4 39.7 1.4 7.2 73.0

Current work status of head

Working for someone else 54.4 5.3 56.0 45.8 2.4 7.7 83.9

Self-employed 58.6 12.4 42.4 40.4 3.2 7.0 82.0

Retired 29.1 2.9 24.6 25.4 .9 3.1 51.0

Other not working 31.1 2.8 51.8 35.5 * 6.6 75.1

Current occupation of head

Managerial or professional 64.6 9.8 51.4 44.6 2.9 6.5 87.4

Technical, sales, or services 43.8 4.1 55.0 44.6 2.4 7.0 79.6

Other occupation 54.1 4.4 55.6 45.7 2.1 9.9 82.7

Retired or other not working 29.5 2.9 30.5 27.6 1.1 3.9 56.2

Region

Northeast 46.9 5.5 42.6 39.9 1.6 6.6 74.8

Midwest 52.8 4.2 48.5 37.4 2.3 5.4 76.4

South 43.6 4.8 48.2 38.2 2.0 7.3 73.6

West 46.9 7.3 44.2 43.0 2.4 5.9 75.9

Urbanicity

Metropolitan statistical area

(MSA) 47.8 5.7 46.2 40.3 2.1 6.5 75.8

Non-MSA 43.3 3.7 46.9 35.0 1.9 6.3 70.7

Housing status

Owner 69.9 6.9 46.1 43.1 2.0 6.5 81.4

Renter or other * 2.2 46.9 31.8 2.1 6.4 61.6

Percentile of net worth

Less than 25 20.0 1.8 57.1 36.9 2.3 6.6 69.2

25–49.9 48.9 2.0 51.1 44.5 1.5 7.3 78.8

50–74.9 61.5 4.6 47.7 46.2 2.2 6.7 80.3

75–89.9 56.9 9.7 34.4 36.1 1.8 5.4 72.2

90–100 58.6 17.8 21.9 20.9 3.0 4.5 70.4

62 Federal Reserve Bulletin | June 2012
term of 30 years or longer rose 5.6 percentage points, to 70.6 percent in 2010. Offsetting

that increase, the share of fixed-term first-lien mortgages with a term of 15 years or shorter

fell 4.4 percentage points to 21.1 percent in 2010, and the share with terms between 16 and

29 years fell 1.1 percentage points to 8.3 percent in 2010 (data not shown in the tables).

The level of interest rates is also a key determinant of the size of the regular payment that a

borrower must make to repay a loan. Between 2007 and 2010, the median interest rate on

the stock of outstanding first-lien mortgages on primary residences fell 0.50 percentage

point to 5.50 percent, and the mean interest rate fell 0.6 percentage point to 5.71 percent

(data not shown in the tables). Some mortgages have an interest rate that may rise or

fall over time. From 2007, the fraction of first-lien mortgages on the primary residence that

had a potentially variable rate fell 3.6 percentage points, to 10.6 percent in 2010.

Another factor that may affect a borrower’s ability to service a loan is the extent to which

the payment may change over the life of the loan for reasons other than a change in the

interest rate. Recent declines in house prices and changes in benchmark interest rates have

brought particular attention to mortgages with payments that may vary over the life of the

loan. In some cases, a mortgage may be structured so that the regular payments are not sufficient to pay back the entire principal over the contract period of the loan; in such cases, a

Table 13. Family holdings of debt, by selected characteristics of families and type of debt, 2007 and

2010 surveys––continued

B. 2010 Survey of Consumer Finances––continued

Family characteristic

Secured by residential property

Installment

loans

Credit card

balances

Lines of credit

not secured by

residential

property

Other Any debt

Primary

residence Other

Median value of holdings for families holding debt (thousands of 2010 dollars)

All families 109.6 98.0 12.6 2.6 6.0 4.5 70.7

Percentile of income

Less than 20 54.6 72.0 7.6 1.0 1.0 2.0 10.1

20–39.9 65.5 60.0 8.4 1.5 2.7 2.0 20.2

40–59.9 90.0 62.5 12.0 2.2 5.0 3.5 61.4

60–79.9 116.6 66.9 15.0 3.1 3.2 6.0 106.6

80–89.9 158.0 88.0 19.0 5.9 14.5 5.0 163.8

90–100 241.0 180.0 22.4 8.0 20.0 18.0 267.2

Age of head (years)

Less than 35 120.0 89.0 14.0 1.6 2.0 2.0 39.6

35–44 139.9 85.0 14.7 3.5 2.5 4.4 108.0

45–54 114.0 115.0 12.0 3.5 6.0 5.0 91.8

55–64 97.0 98.0 11.3 2.8 11.0 6.0 76.9

65–74 70.0 125.0 10.0 2.2 8.1 6.0 45.0

75 or more 52.0 74.8 7.8 1.8 * 13.0 30.0

Family structure

Single with child(ren) 96.0 95.0 9.9 2.0 8.1 2.8 30.2

Single, no child, age less

than 55 110.0 99.0 11.8 1.6 3.0 5.0 34.8

Single, no child, age 55

or more 64.0 72.0 7.6 1.7 3.3 2.1 28.0

Couple with child(ren) 132.0 106.3 15.0 3.4 6.0 4.2 112.8

Couple, no child 101.0 97.0 13.2 3.0 13.0 5.8 72.5

Education of head

No high school diploma 60.0 * 7.6 1.4 .6 2.3 17.6

High school diploma 83.0 62.5 10.0 2.1 3.2 3.0 42.8

Some college 106.0 61.3 12.1 2.1 2.7 3.0 59.7

College degree 150.0 125.0 18.0 4.0 13.0 9.0 127.0

Note: See note to table 1.

* Ten or fewer observations.

Changes in U.S. Family Finances from 2007 to 2010 63
“balloon payment” of the remaining principal is left at the end of the loan term. Over the

2007–10 period, the share of first-lien mortgages with a balloon payment fell 1.3 percentage

points to 3.2 percent. Payments on a mortgage may vary in a variety of other ways, but

such loans tend to be rarely found in the SCF.

Borrowing on Other Residential Real Estate

Although ownership of residential real estate other than a primary residence rose slightly

from 2007 to 2010, the prevalence of debt owed on such property edged down 0.2 percentage point over that time—to 5.3 percent of families in 2010. Among families that had such

real estate in 2007, 40.3 percent had a loan secured by the property; in 2010, the proportion

had fallen to 37.2 percent. Borrowing on other residential real estate is more common

among families in higher income, education, or wealth groups; couples; and families

headed by a self-employed person or by a person employed in a managerial or professional

position. Most of the changes in the prevalence of such debt across groups were small,

though there were substantial decreases for the highest income and wealth deciles and the

self-employed.

Table 13. Family holdings of debt, by selected characteristics of families and type of debt, 2007 and

2010 surveys––continued

B. 2010 Survey of Consumer Finances––continued

Family characteristic

Secured by residential property

Installment

loans

Credit card

balances

Lines of credit

not secured by

residential

property

Other Any debt

Primary

residence Other

Race or ethnicity of respondent

White non-Hispanic 112.0 110.0 13.6 3.1 6.0 5.2 85.0

Nonwhite or Hispanic 100.0 80.0 10.7 1.9 5.5 2.7 40.0

Current work status of head

Working for someone else 116.0 92.0 13.9 3.0 6.0 4.0 85.0

Self-employed 145.0 140.0 15.3 4.0 15.6 10.0 118.0

Retired 60.8 62.0 8.1 2.0 3.3 3.0 30.0

Other not working 92.7 94.0 8.3 1.5 * 5.0 21.1

Current occupation of head

Managerial or professional 150.0 140.0 17.0 4.0 10.0 6.0 137.0

Technical, sales, or services 110.0 86.3 12.8 2.3 2.0 3.8 56.7

Other occupation 90.0 52.0 11.1 2.6 5.6 4.0 63.5

Retired or other not working 68.0 72.0 8.1 1.8 3.0 4.0 28.2

Region

Northeast 114.0 118.8 13.7 2.3 6.0 6.0 73.0

Midwest 95.0 85.0 13.1 2.5 3.0 4.0 70.5

South 95.0 88.0 11.3 2.8 8.1 3.4 59.6

West 157.6 125.0 14.4 3.0 6.0 5.0 92.3

Urbanicity

Metropolitan statistical area

(MSA) 119.0 104.0 12.9 2.8 5.0 5.0 80.2

Non-MSA 64.0 62.5 12.0 2.1 14.5 3.0 40.0

Housing status

Owner 109.6 97.0 13.7 3.4 10.0 5.2 110.8

Renter or other * 105.4 10.2 1.3 1.5 2.7 9.6

Percentile of net worth

Less than 25 141.0 110.0 13.5 1.9 1.9 2.5 20.4

25–49.9 91.0 25.6 10.5 2.0 1.3 2.5 55.3

50–74.9 100.3 53.2 12.7 3.1 5.0 6.0 85.9

75–89.9 105.0 92.0 13.5 3.4 11.0 10.0 100.7

90–100 216.5 195.0 17.7 5.0 30.0 25.0 232.8

MEMO

Mean value of holdings for

families holding debt 154.3 179.6 23.5 7.1 49.1 16.8 130.7

64 Federal Reserve Bulletin | June 2012
The median amount of debt on other residential real estate for families having such debt

fell 6.5 percent in 2010, and the mean amount fell 4.2 percent. Changes over the recent

three-year period in the median and mean amounts exhibited a mixed pattern of increases

and decreases for subgroups of families, and the percentage changes were quite large in

absolute value.

Installment Borrowing

Installment borrowing is about as common as home-secured borrowing.49 In 2010,

46.3 percent of families had installment debt, a decrease of 0.6 percentage point from the

level in 2007. The use of installment borrowing is broadly distributed across demographic

groups, with notably lower use by families in the lowest income group, those in the highest

wealth group, childless single families headed by a person aged 55 or older, families headed

by a retired person, and families headed by a person aged 65 or older. By comparison, the

median amount of outstanding installment debt, for families having such debt, varies more

clearly across many groups. The median amount tends to rise across income and education,

and it falls across age groups. The median amount of installment debt is fairly similar

among families in wealth groups below the 90th percentile and somewhat higher for families in the top net worth group.

Installment borrowing is used for a wide variety of purposes. In 2010, 45.1 percent of such

borrowing was related to education, 39.3 percent was related to the purchase of a vehicle,

and 15.6 percent of outstanding installment debt was owed for other purposes (table 15). In

past SCF surveys, balances on vehicle loans have always accounted for more than half of

installment debt; the decrease to a share of 39.3 percent in 2010 reflects, in part, a decrease

in vehicle purchases in the years preceding the most recent survey. A contributing factor in

the decline of that share was an increase in borrowing for education, which rose 11.9 percentage points as a share of installment borrowing over the recent three-year period. The

increased importance of education-related installment debt is most evident for the youngest

age group; among families headed by someone less than age 35, 65.6 percent of their

installment debt was education related in 2010, up from 53.1 percent in 2007. Among families headed by someone reporting educational attainment of “some college,” the share of

49 The term “installment borrowing” in this article describes closed-end consumer loans—that is, loans that typically have fixed payments and a fixed term. Examples are automobile loans, student loans, and loans for furniture, appliances, and other durable goods.

Table 14. Type of home-secured debt held by homeowners, 2001–10 surveys

Percent

Type of home-secured debt

Homeowners with home-secured debt

2001 2004 2007 2010

First-lien mortgage 62.5 65.2 66.1 66.4

For home purchase 35.8 28.2 30.4 30.5

Refinanced

Extracted equity 9.7 12.9 14.3 11.4

No extracted equity 17.1 24.0 21.5 24.5

Junior-lien mortgage 8.5 6.1 8.5 5.8

For home purchase 1.3 1.5 2.1 1.7

Other purpose 7.2 4.7 6.4 4.0

Home equity line of credit 11.2 17.8 18.4 15.3

Currently borrowing 7.1 12.4 12.4 10.7

Changes in U.S. Family Finances from 2007 to 2010 65
installment debt attributable to education-related loans more than doubled, from 23.6 percent in 2007 to 49.4 percent in 2010.50

From 2007 to 2010, the median amount owed on installment loans fell 7.4 percent, while

the mean rose 7.3 percent. Changes in the median within demographic categories include

both increases and decreases. Large decreases in the median debt outstanding occurred

among nonwhite or Hispanic families (a 15.1 percent decrease) and among families headed

by someone who lacked a high school diploma (a 17.4 percent decrease).

Credit Card Balances and Other Lines of Credit

As with installment borrowing, the carrying of credit card balances is widespread, but it is

considerably less common among the highest and lowest income groups, the highest wealth

group, and families headed by a person who is aged 65 or older or who is retired.51 The

50 For an expanded version of table 13, including the categories of installment loans given in table 15, see www

.federalreserve.gov/econresdata/scf/scf_2010.htm.

51 In this article, credit card balances consist of balances on bank-type cards (such as Visa, MasterCard, and Discover as well as Optima and other American Express cards that routinely allow carrying a balance), store cards

Table 15. Value of installment debt distributed by type of installment debt, by selected characteristics of

families with installment debt, 2007 and 2010 surveys

Percent

Family characteristic

2007 2010

Education Vehicle Other Education Vehicle Other

All families 33.2 51.7 15.1 45.1 39.3 15.6

Percentile of income

Less than 20 47.0 24.4 28.6 40.6 29.1 30.3

20–39.9 29.8 43.9 26.3 44.2 32.2 23.6

40–59.9 33.6 54.7 11.7 54.0 34.3 11.7

60–79.9 32.7 59.4 7.9 42.6 46.7 10.7

80–89.9 38.3 56.2 5.6 50.7 44.6 4.7

90–100 25.5 50.9 23.6 37.3 43.7 19.0

Age of head (years)

Less than 35 53.1 41.2 5.6 65.6 25.7 8.7

35–44 24.3 57.8 17.8 48.1 37.5 14.4

45–54 27.2 53.5 19.4 36.1 51.3 12.6

55–64 21.7 53.8 24.5 29.9 42.9 27.2

65–74 * 73.2 19.0 13.3 63.7 23.0

75 or more * 88.0 * * 38.8 52.0

Education of head

No high school diploma 12.8 71.5 15.8 12.3 59.4 28.3

High school diploma 15.0 69.6 15.4 22.8 53.6 23.6

Some college 23.6 53.0 23.5 49.4 39.1 11.5

College degree 48.1 40.2 11.7 54.8 32.3 12.9

Race or ethnicity of respondent

White non-Hispanic 32.1 52.1 15.9 43.9 40.0 16.1

Nonwhite or Hispanic 36.2 50.6 13.2 47.6 37.7 14.7

Percentile of net worth

Less than 25 47.9 32.5 19.6 65.4 16.3 18.3

25–49.9 30.4 60.8 8.7 41.0 47.2 11.8

50–74.9 30.1 60.5 9.4 34.0 56.4 9.6

75–89.9 25.9 65.8 8.3 31.1 58.7 10.2

90–100 16.7 47.7 35.7 11.3 60.0 28.7

Note: See note to table 1.

* Ten or fewer observations.

66 Federal Reserve Bulletin | June 2012
proportion of families carrying a balance, 39.4 percent in 2010, was down 6.7 percentage

points from 2007. The decreased prevalence of credit card debt outstanding was widespread and noticeable across most of the demographic groups, though the prevalence of

credit card debt rose for families headed by someone aged 75 or older and among families

headed by someone with no high school diploma.

Overall, the median balance for those carrying a balance fell 16.1 percent to $2,600; the

mean fell 7.8 percent to $7,100. These decreases reversed some of the preceding run-up in

credit card debt (data not shown in the tables). Over the recent three-year period, the

median balance fell for most demographic groups; couples and childless single families,

higher-wealth families, and families headed by someone working in technical, sales, or service jobs and managerial or professional occupations all saw substantial decreases in their

median credit card balances. One group that saw substantial increases in the use of credit

card borrowing is families headed by someone 75 or older; median balances also rose for

single families with children and for families in the bottom wealth quartile.

Many families with credit cards do not carry a balance.52 Of the 68.0 percent of families

with credit cards in 2010, only 55.1 percent had a balance at the time of the interview; in

2007, 72.9 percent had cards, and 61.0 percent of these families had an outstanding balance

on them. The number of credit cards held by families also decreased. In 2007, 35.0 percent

of families held four or more cards, and that level of ownership fell to 32.7 percent by 2010.

Between 2007 and 2010, the fraction of families with three cards fell from 12.1 percent to

10.6 percent, the fraction with two cards fell from 12.7 percent to 12.2 percent, and the

fraction with one card fell from 13.1 percent to 12.5 percent (data not shown in the tables).

The proportion of cardholders who had bank-type cards decreased slightly over this threeyear period, and the proportion with store or gasoline card types fell considerably, while

the proportion with travel and entertainment card types as well as miscellaneous other

credit cards increased, as shown in the following table:

Table 15.1

Type of credit card

Families with credit cards

2010

(percent)

Change, 2007–10

(percentage points)

Bank 95.8 –.5

Store or gasoline 55.8 –4.4

Travel and entertainment 9.3 1.9

Miscellaneous 5.1 1.4

Bank-type cards are the most widely held type of card and thus hold particular importance

in any examination of family finances. Indeed, balances on such cards accounted for

85.1 percent of outstanding credit card balances in 2010, down from 87.1 percent in 2007

(data not shown in the tables). The proportion of holders of bank-type cards who had a

balance went down 5.9 percentage points to 52.4 percent; the proportion of holders of

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.

52 The remaining discussion of credit cards excludes revolving store accounts that are not tied to a credit card. In

2010, 5.1 percent (5.4 percent in 2007) of families had such an account, the median outstanding balance for

families that had a balance was $750 ($730 in 2007), and the total of such balances accounted for 3.5 percent

(4.4 percent in 2007) of the total of balances on credit cards and such store accounts (data not shown in the

tables).

Changes in U.S. Family Finances from 2007 to 2010 67
bank-type cards who reported that they usually pay their balances in full rose slightly, from

55.3 percent in 2007 to 56.4 percent in 2010. Over the recent three-year period, the median

new charges for the month preceding the interview on all bank-type cards held by the

family rose from $260 in 2007 to $300 in 2010. For families having any bank-type cards, the

median number of such cards remained at 2; the median credit limit on all such cards fell

from $18,900 to $15,000, and the median interest rate on the card with the largest balance

(or on the newest card, if no outstanding balances existed) rose 0.5 percentage point to

13.0 percent.

Only 4.1 percent of families had an established line of credit other than a home equity line

in 2010.53 Even fewer families—2.1 percent—had a balance on such a line, an increase of

0.4 percentage point since 2007. The median amount outstanding on these lines rose

50.0 percent between the most recent surveys, and the mean rose even more—71.9 percent—between 2007 and 2010. Borrowing on other lines of credit was more common

among families headed by a person who was self-employed or families in the highest

income or wealth groups, a pattern that is also apparent in earlier SCFs.

Other Debt

From 2007 to 2010, the proportion of families that owed money on other types of debts

decreased 0.4 percentage point to 6.4 percent.54 Borrowing against pension accounts rose

slightly over this period, while uses of other types declined, as shown in the following table:

Table 15.2

Type of other debt

All families

2010

(percent)

Change, 2007–10

(percentage points)

Cash value life insurance loans .9 †

Pension account loans 3.6 .4

Margin account loans .3 –.2

Other miscellaneous loans 1.9 –.5

† Less than 0.05 percent.

Rates of use of other debt are noticeably lower for families in the bottom two income

groups as well as for families headed by a person who is 65 years of age or older or who is

retired. The highest rate of other debt ownership is among the groups of families with children. Changes in the prevalence of such debt varied widely across demographic groups,

though most groups saw declines.

The median amount owed by families with this type of debt fell 13.5 percent to $4,500

between 2007 and 2010; over the same period, the mean rose 6.8 percent. In 2010, 40.2 percent of the total amount of this type of debt outstanding was attributable to margin loans

(36.3 percent in 2007), 26.4 percent to loans against a pension from a current job of the

family head or that person’s spouse or partner (20.5 percent in 2007), 8.0 percent to loans

against cash value life insurance policies (12.0 percent in 2007), and the remaining 25.4 percent to miscellaneous loans (31.2 percent in 2007) (data not shown in the tables).

53 In this article, borrowing on lines of credit excludes borrowing on credit cards.

54 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.

68 Federal Reserve Bulletin | June 2012
In 2007, the SCF collected information for the first time on whether a family member had

taken out a loan in the past year that was supposed to be repaid in full out of that person’s

next paycheck.55 Overall, 3.9 percent of families reported having taken out a so-called

payday loan in 2010, up from 2.4 percent in 2007. In 2010, the fraction of families that had

taken out a payday loan declined over age groups, falling from 5.7 percent of families

headed by a person younger than age 35 to 0.5 percent for families headed by a person

aged 65 or older (data not shown in the tables). Across income groups, the share of families

that reported such a loan was between 4.6 percent and 6.2 percent for the bottom three

quintiles, but for families in the top quintile, the rate was only 0.2 percent. Similarly,

8.1 percent of families in the bottom net worth quartile reported having taken out a payday

loan, and virtually no families with net worth above the median reported having done so.

The data indicate that families tend to take out payday loans to finance immediate

expenses. In 2010, the most common reason given for choosing a payday loan for families

that had taken out such a loan was “emergencies” and similar urgent needs or a lack of

other options (42.4 percent).56 The second most common reason cited was “convenience”

in obtaining the loan (24.2 percent). Many families also cited reasons that conveyed difficulties in meeting their regular financial commitments; for example, 17.4 percent of families reported a need to pay other bills and loans (up from 10.8 percent in 2007), and

11.0 percent cited the need to pay for living expenses, including food, gas, vehicle expenses,

medical payments, utility costs, or rent. The remaining 5.0 percent of families with a payday loan in the past year cited other needs, including “Christmas” or the need to “help

family.”

Reasons for Borrowing

The SCF provides information on the reasons that families borrow money (table 16). 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 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.

55 The family may or may not have had such a loan outstanding at the time of the interview.

56 This discussion considers the primary reasons given by families when asked why they chose this type of loan.

Families could provide up to two reasons, but 94.5 percent of those that had taken out a payday loan in the

past year provided only one.

Table 16. Amount of debt of all families, distributed by purpose of debt, 2001–10 surveys

Percent

Purpose of debt 2001 2004 2007 2010

Primary residence

Purchase 70.9 70.2 69.5 69.5

Improvement 2.0 1.9 2.3 1.9

Other residential property 6.5 9.5 10.8 10.5

Investments excluding real estate 2.8 2.2 1.6 2.0

Vehicles 7.8 6.7 5.5 4.7

Goods and services 5.8 6.0 6.2 5.7

Education 3.1 3.0 3.6 5.2

Other 1.1 .6 .5 .4

Total 100 100 100 100

Note: See note to table 1.

Changes in U.S. Family Finances from 2007 to 2010 69
Although the survey information on use is substantial, it is not exhaustive. Most important,

in the case of credit cards, it was deemed impractical to ask about the purposes of borrowing, which 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

had refinanced the mortgage and extracted equity for another purpose.

The great majority of family debt is attributable to the purchase of a primary residence;

between 2007 and 2010, the share of debt for this purpose was unchanged (at 69.5 percent).

Looking more broadly at debt for residential real estate, there was a decrease in balances

owed on residential real estate other than the primary residence—the second-largest share

of debt—and a similar decrease in balances owed for improvements on the primary residence. The share of debt attributable to vehicle purchases also fell—0.8 percentage point, to

4.7 percent of the total.

With a 1.6 percent rise between 2007 and 2010, the fraction of debt owed for education, at

5.2 percent, exceeded the fraction of borrowing for vehicles for the first time in the SCF.

The increase in the share of debt for education reflects to some degree the decrease in borrowing for other purposes, but the level of education debt also rose substantially. The share

of families having any education debt rose from 15.2 percent in 2007 to 19.2 percent in

2010 (data not shown in the tables). Among families with education debt, the mean

increased 14.0 percent (from $22,500 in 2007 to $25,600 in 2010), while the median rose

3.4 percent (from $12,600 in 2007 to $13,000 in 2010).

The fraction of debt owed for goods and services fell between 2007 and 2010 from 6.2 percent to 5.7 percent. The decline in the share of debt in the goods and services category was

smaller than that in the share of debt for vehicles, so goods and services continued to

account for a larger share of debt outstanding. About half of the debt in the goods and

services category, 50.1 percent, was outstanding balances on credit cards.57

Credit Market Experiences

The SCF also collects some information on families’ recent credit market experiences. Specifically, the survey asks whether the family had applied for any type of credit in the past

five years and, if so, whether any application was either turned down or granted for a lesser

amount than the amount initially requested. Families that give such responses are asked the

reason given for the decision. The survey also asks whether, at any time in the past five

years, the family ever considered applying for credit but then decided not to apply because

of a belief that the application would be rejected. Such families were asked the reason they

believed they would have been turned down.

In 2010, 61.7 percent of families reported that they had applied for credit at some point in

the preceding five years (66.3 percent in 2007). Of these families, 33.9 percent had at least

once in the preceding five years been either turned down for credit or approved for less

credit than the amount for which they had applied (29.7 percent in 2007). Of all families,

57 The surveys beginning with 2004 contain information on the use of funds obtained from refinancing a first-lien

mortgage. If this information for 2010 is used in the classification of outstanding debt by purpose, the shares of

debt were, for home purchase, 66.4 percent; for home improvements, 2.9 percent; for other residential real

estate, 11.0 percent; for investments other than real estate, 2.3 percent; for vehicles, 4.8 percent; for goods and

services, 6.9 percent; for education, 5.3 percent; and for other unclassified purposes, 0.4 percent (data not

shown in the tables).

70 Federal Reserve Bulletin | June 2012
18.5 percent had considered applying but subsequently did not do so because they thought

the application would be denied (15.3 percent in 2007). The most common reasons

reported for either having been denied credit or having not applied for credit were related to

the borrower’s credit characteristics, such as the lack of a credit history, previous performance on a loan or account from another institution, and the amount of debt held by the

borrower, as shown in the following table:58

Table 16.1

Reason turned down or did not apply

Families that applied for credit and

were turned down or received less

credit than the amount requested

(percent)

Families that did not apply for credit

because they expected to be turned

down (percent)

Personal characteristics 1.7 2.2

Credit characteristics 55.5 62.9

Financial characteristics 33.0 28.2

Miscellaneous, including no reason given 9.8 6.8

In 2010, the SCF began collecting information about credit market experiences of small

businesses owned by families. Although personal and business finances may be intertwined,

there may be differences in the ease with which persons and businesses obtain credit. In

2010, among the 23.0 percent of families having a small business that applied for credit in

the preceding five years, 25.1 percent reported having been turned down or received less

credit than the amount requested, and another 7.5 percent reported they did not apply for

credit because they thought they would be turned down. Among those who were turned

down or received less than the amount requested, 29.5 percent reported the reason was personal or business credit characteristics, 50.4 reported it was due to the financial characteristics of the business, and 20.1 percent reported miscellaneous reasons (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, restraint in spending, and financial distress in the wider economy might ensue

(such as was seen in the period after the 2007 survey).

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 families, divided by total disposable personal income. From the third quarter of

2007 to the same period in 2010, the aggregate-level measure dropped 2.2 percentage

points, to 11.7 percent.59

58 Personal characteristics include responses related to family background or size, marital status, sex, or age; credit

characteristics include responses related to the need to have a checking or savings account, lack of a credit history, credit reports from a credit rating agency or from other institutions, or the level of outstanding debt and

insufficient credit references; and financial characteristics include responses related to previous difficulty getting

credit, more “strict” lending requirements of the institution, an error in processing the application, or credit

problems of an ex-spouse.

59 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. 417–26, www.federalreserve.gov/pubs/bulletin/default.htm.

Changes in U.S. Family Finances from 2007 to 2010 71
The survey data for individual families may be used to construct a similar estimate of debt

burden for families overall as well as for various demographic groups (table 17).60 The SCFbased estimate is the ratio of total debt payments for all families to total family income of

all families. From 2007 to 2010, the SCF-based estimate was barely changed at 14.7 percent; conceptual differences between the aggregate measure and the SCF-based estimate

60 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 an estimate of disposable personal income from the national income

and product accounts 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 errors. As mentioned earlier in this article, the survey income measure tracks the most comparable measure of income in the

Census Bureau’s Current Population Survey.

Table 17. 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 60 days or more past due,

2001–10 surveys

Percent

Family

characteristic

Aggregate Median for debtors Debtors with ratio greater than

40 percent

Debtors with any payment past

due 60 days or more

2001 2004 2007 2010 2001 2004 2007 2010 2001 2004 2007 2010 2001 2004 2007 2010

All families 12.9 14.4 14.6 14.7 16.7 18.1 18.7 18.1 11.8 12.3 14.8 13.8 7.0 8.9 7.1 10.8

Percentile of income

Less than 20 16.1 18.2 17.7 23.5 19.2 19.7 19.1 16.3 29.3 26.8 26.9 26.1 13.4 15.9 15.1 21.2

20–39.9 15.8 16.7 17.2 16.9 16.7 17.4 17.1 17.5 16.6 18.6 19.5 18.6 11.7 13.8 11.5 15.2

40–59.9 17.1 19.4 19.8 19.5 17.6 19.5 20.3 20.0 12.3 13.8 14.5 15.4 7.9 10.4 8.3 10.2

60–79.9 16.8 18.6 21.8 19.3 18.1 20.7 21.9 20.4 6.5 7.3 12.9 11.0 4.0 7.1 4.1 8.8

80–89.9 17.0 17.4 19.8 18.0 17.2 18.3 19.3 19.3 3.5 2.6 8.2 5.3 2.6 2.3 2.1 5.4

90–100 8.1 9.3 8.4 9.4 11.2 12.7 12.5 13.1 2.0 1.5 3.8 2.9 1.3 .3 .2 2.1

Age of head (years)

Less than 35 17.2 17.8 19.7 17.0 17.7 18.0 17.6 16.4 12.0 12.8 15.1 11.6 11.9 13.7 9.4 10.4

35–44 15.1 18.3 18.6 18.4 17.8 20.6 20.3 20.9 10.1 12.4 12.8 16.4 5.9 11.7 8.6 15.7

45–54 12.8 15.4 15.0 16.2 17.4 18.5 19.6 19.2 11.6 13.3 16.3 15.5 6.2 7.6 7.3 12.6

55–64 10.9 11.6 12.6 12.5 14.3 15.9 17.5 17.6 12.3 10.3 14.5 13.0 7.1 4.2 4.9 8.4

65–74 9.2 8.7 9.6 11.3 16.0 15.6 17.9 17.0 14.7 11.6 15.6 12.1 1.5 3.4 4.4 6.1

75 or more 3.9 7.1 4.4 6.8 8.0 12.8 13.0 14.1 14.6 10.7 13.9 11.9 .8 3.9 1.0 3.2

Percentile of net worth

Less than 25 13.3 13.0 15.0 19.2 11.5 13.0 12.1 13.6 11.6 10.6 10.7 14.9 17.8 23.0 16.8 22.2

25–49.9 18.1 19.6 22.5 19.3 20.1 21.2 23.4 21.2 14.2 15.9 19.3 15.3 7.1 11.0 7.7 13.3

50–74.9 16.7 20.7 20.4 19.2 18.3 21.5 21.8 20.8 11.2 12.9 16.0 14.0 3.6 3.2 4.2 6.8

75–89.9 15.4 15.2 17.0 15.9 16.9 18.0 18.2 16.7 10.6 9.6 13.1 11.0 .7 1.0 1.2 2.0

90–100 7.4 8.6 8.1 8.8 11.2 12.7 12.7 13.4 8.5 7.6 11.1 11.0 .3 .1 .7 1.2

Housing status

Owner 13.9 15.7 15.6 16.1 19.9 21.5 22.8 22.2 14.7 15.0 18.1 17.1 4.3 5.6 4.8 8.7

Renter or

other 7.4 7.2 7.9 7.0 8.3 8.2 8.4 6.8 4.2 4.3 5.4 5.0 14.0 18.6 13.5 16.6

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.

72 Federal Reserve Bulletin | June 2012
can account for this divergence in the recent period.61 If total payments and incomes are

computed from the survey data using only families with debt payments, the results for the

recent period show an increase from 18.1 percent in 2007 to 18.5 percent in 2010; if the

ratio is computed using only families with home-secured debt, the data show a rise from

20.5 percent in 2007 to 21.1 percent in 2010 (data not shown in the tables). The SCF-based

estimate of the aggregate debt-burden ratio decreased for many demographic groups over

the recent three-year period, but there were notable increases for low-income and low-networth families as well as families headed by a person aged 65 or older.

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 fell 0.6 percentage point, to 18.1 percent in 2010; this decline is

small relative to the cumulative increases in this measure since 1989 that were otherwise

interrupted only by a decline between 1998 and 2001. Changes in the most recent threeyear period in the median ratio of debt payments to income across demographic groups

were mixed.62

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 2007 to 2010, the proportion

of debtors with payments exceeding 40 percent of their previous-year income fell 1.0 percentage point to 13.8 percent; in the preceding three years, the proportion had increased

2.5 percentage points. The changes were generally negative across demographic groups

except families in the bottom net worth group, for which the share rose 4.2 percentage

points. Changes for most of the income groups were small, though families with income

between the 60th and 80th percentiles saw a 1.9 percentage point decline in the fraction

exceeding the 40 percent mark, and those between the 80th and 90th income percentiles

saw a 2.9 percentage point decline.63

Fluctuations in a family’s income away from its usual level can have substantial effects on

the family’s payment-to-income ratio. If the payment ratio is defined in terms of families’

reported usual incomes, the fraction of families with a ratio exceeding 40 percent falls to

10.0 percent. This 3.8 percentage point difference reflects two facts: first, 4.4 percent of

families with debt had relatively high payment-to-income ratios based on the previous

year’s income but would not have if income had been at its usual level, and, second, a far

smaller share of families with debt—0.6 percent—had debt payments less than or equal to

40 percent of last year’s income but would have had a ratio above 40 percent if income had

been at its usual level. Families may draw on assets as well as income to meet debt payments. For all families with debt, 56.7 percent had transaction account balances equal to at

least three months of debt payments in 2010. For families with payment-to-income ratios

above 40 percent, however, this share fell to 22.4 percent.

61 The definition of debt payments in the SCF does not include payments on leases or rental payments. The survey collects information on vehicle lease payments and rent on primary residences, and, thus, in principle a

broader measure of debt payments could be constructed, one that would be similar to the “financial obligations

ratio” estimated by the Federal Reserve staff.

62 The median of the ratio for families with home-secured debt in 2010 was 24.8 percent, down from 25.2 percent

in 2007 (data not shown in the tables).

63 Of families with home-secured debt, the proportion that had total payments of more than 40 percent of their

income was 19.3 percent in 2010, a level 0.9 percentage point lower than that in 2007 (data not shown in the

tables).

Changes in U.S. Family Finances from 2007 to 2010 73
Other commonly used indicators of debt-repayment problems are aggregate delinquency

rates—that is, the percentage of delinquent accounts or the percentage of total balances on

which payments are late. Both account-based and dollar-weighted aggregate measures indicate that delinquencies on mortgages rose substantially from the third quarter of 2007 to

the third quarter of 2010, from 3.0 percent to 8.7 percent of accounts and from 2.8 percent

to 10.8 percent of dollar-weighted accounts. Over the 2007–10 period, the percentage of

delinquent automobile loans declined slightly, while the corresponding dollar-weighted

measure rose but remained relatively low at 2.8 percent. On net, a dollar-weighted delinquency measure for other closed-end loans rose from 2.5 percent in the third quarter of

2007 to 3.4 percent in the third quarter of 2010. Delinquency measures for credit cards also

differed by whether the measure was based on dollar volume or delinquent accounts, as the

account-weighted delinquency rate fell from 4.2 percent to 3.6 percent between the third

quarter of 2007 and the third quarter of 2010, while the dollar-weighted delinquency rate

edged up from 4.4 percent to 4.6 percent over the same period.64

A related measure of delinquency is collected in the SCF. Families that have any debt at the

time of their interview are asked whether they have been behind in any of their loan 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 loans; 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. The survey shows a large increase from 7.1 percent in 2007 to 10.8 percent in 2010 in

the proportion of debtors who were 60 or more days late with their payments on any of

their loans in the preceding year. This measure rose for families in each of the income

groups, but proportionately the changes were largest for higher-income groups; the percentage also rose across net worth groups. The share of families with debt that were at least

60 days late on a payment during the preceding year rose across all age groups and for both

homeowners and renters.65 For families with a payment-to-income ratio of 40 percent or

more, 22.0 percent missed a debt payment by 60 days or more (up from 13.8 percent in

2007); by comparison, 9.1 percent of debtor families with lower ratios had fallen behind in

debt repayment (up from 6.0 percent in 2007).

Summary

Data from the 2007 and 2010 SCF show that median income fell substantially and that

mean income fell somewhat faster, an indication that income losses, at least in terms of levels, were larger for families in the uppermost part of the distribution. Overall, both median

and mean net worth also fell dramatically over this period—38.8 percent and 14.7 percent,

respectively. Changes in housing wealth and business equity were key drivers in those

wealth changes. The preceding three years had seen only small changes in median and mean

income and in median net worth, but a sizable gain in mean net worth.

Although the median and mean of families’ holdings of financial assets decreased overall

from 2007 to 2010, financial assets rose as a share of total assets, reversing an earlier trend.

The offsetting decline in the share of nonfinancial assets was most strongly driven by the

decline in real estate prices and the value of business equity. The homeownership rate,

64 The most commonly used such measures are from the Consolidated Reports of Condition and Income (Call

Report), the American Bankers Association, and Moody’s Investors Service.

65 For families with home-secured debt, the result is very similar to that for homeowners overall. The proportion

with payments late 60 days or more in 2007 was 4.8 percent after rising to an estimated 5.6 percent in 2004

(data not shown in the tables).

74 Federal Reserve Bulletin | June 2012
which had risen noticeably between the 2001 and 2004 surveys, continued to trend downward, by 2010 retracing the path to the level seen in 2001. Declines in unrealized capital

gains were an important part of the decrease in assets; in 2010, 24.5 percent of total assets

were attributable to unrealized capital gains, a share more than 11 percentage points below

that in 2007; the decline was primarily due to changes in the value of holdings of real estate

or private business equity.

Debt fell more slowly than assets over the recent three-year period. Thus, overall indebtedness as a share of assets rose markedly. Home-secured debt fell slightly as a share of total

family debt, but in 2010 it remained by far the largest component of family debt. The share

of borrowing for residential real estate other than the primary residence fell slightly, but in

2010 it stayed high by historical standards. The percentage of families using credit cards for

borrowing dropped over the period; the median balance on their accounts fell 16.1 percent,

and the mean fell 7.8 percent. Use of education-related borrowing continued to increase in

the recent period, as the fraction of families with education-related debt rose from 15.2 percent to 19.2 percent, the mean balance among those with such debt rose 14.0 percent, and

the median balance increased 3.4 percent.

Declining consumer loan interest rates between 2007 and 2010 helped offset the fact that

debt rose relative to income for many families. As a result, the median ratio of loan payments to family income for debtors, a common indicator of debt burden, fell slightly over

the period to 18.1 percent in 2010; this measure remains above the values seen in the

2001 SCF and earlier. Data from the recent three-year period also show a decrease of

1.0 percentage point in the proportion of debtors with loan payments exceeding 40 percent

of their income, a level traditionally considered to be high; the share of families with payment ratios this high peaked at 14.8 percent in 2007. The fraction of debtors with any payment 60 days or more past due climbed from 7.1 percent in 2007 to 10.8 percent in 2010.

Appendix: Survey Procedures and Statistical Measures

Detailed documentation of the Survey of Consumer Finances (SCF) methodology is available elsewhere.66 The 2010 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, are expected to be available in June 2012 on the Federal Reserve’s website at

www.federalreserve.gov/econresdata/scf/scf_2010survey.htm. 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

66 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),

www.federalreserve.gov/econresdata/scf/scf_workingpapers.htm; 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

/econresdata/scf/scf_workingpapers.htm; and references cited in these papers.

Changes in U.S. Family Finances from 2007 to 2010 75
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.67 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.

Adjustment for Inflation

In this article, all dollar amounts from the SCF are adjusted to 2010 dollars using the “current methods” version of the consumer price index (CPI) for all urban consumers. In an

ongoing effort to improve accuracy, the Bureau of Labor Statistics has introduced several

revisions to its CPI methodology. The current-methods index attempts to extend these

changes to earlier years to obtain a series as consistent as possible with current practices in

the official CPI.68 To adjust assets and liabilities to 2010 dollars and to adjust family

income for the preceding calendar year to 2010, the figures given in the following table were

applied:

Table A.1

Survey year Adjustment factor for assets and

debts in the survey year

Adjustment factor for income in the

calendar year before the

survey year

2001 1.2254 1.2598

2004 1.1507 1.1817

2007 1.0477 1.0774

2010 1.0000 1.0165

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 person 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 or

the older person in a same-sex couple. If a single person is economically dominant, that

person is designated as the family head in this report.

Percentiles of the Distributions of Income and Net Worth

Throughout this article, references are made to various percentile groups of the distributions of income or net worth. For a given characteristic, a percentile can be used to define a

family’s rank relative to other families. For example, the 10th percentile of the distribution

67 For details on how these comparisons are structured and the results of comparisons for earlier surveys, see

Rochelle L. Antoniewicz (2000), “A Comparison of the Household Sector from the Flow of Funds Accounts

and the Survey of Consumer Finances” (Washington: Board of Governors of the Federal Reserve System,

October), www.federalreserve.gov/econresdata/scf/scf_workingpapers.htm.

68 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, 1978–98,” Monthly Labor Review,

vol. 122 (June), pp. 29–38.

76 Federal Reserve Bulletin | June 2012
of income is the amount of income received by a family for whom just less than 10 percent

of families have lower income and 90 percent have higher income. The percentiles of the

distributions of income and net worth used to define the income and net worth groups in

the tables in the article are given in the following table:

Table A.2

Item

Survey year

2001 2004 2007 2010

Percentile of income

20 20,600 21,800 21,500 20,400

40 37,800 39,000 38,200 35,600

60 63,000 61,700 62,500 57,800

80 100,800 102,800 102,900 94,600

90 145,600 148,900 147,600 142,300

Percentile of net worth

25 15,700 15,300 14,800 8,300

50 106,100 107,200 126,400 77,300

75 351,800 378,800 390,600 301,700

90 907,000 959,600 955,600 952,500

The groups that are created when a distribution is divided at every 10th percentile are commonly referred to as deciles. Similarly, when a distribution is divided at every 20th

(25th) percentile, the groups are known as quintiles (quartiles). Families in the first income

decile, for example, are those with income below the 10th percentile.

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 first. In the 2010 SCF, 6.1 percent of respondents

reported more than one racial identification, up from 5.4 percent in 2007 and 2.3 percent in

2004.

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 Current Population Survey (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 information on ethnic identification available in the surveys since 2004, but respondents

reporting multiple racial identifications in the surveys starting with 1998 are classified as

“nonwhite or Hispanic.” Of those who responded affirmatively to the question on Hispanic or Latino identification in 2010, 89.5 percent also reported “Hispanic or Latino” as

one of their racial identifications, and 82.3 percent reported it as their primary racial identification. Because the question on Hispanic or Latino ethnicity precedes the one on racial

Changes in U.S. Family Finances from 2007 to 2010 77
identification in the surveys from 2004 through 2010, the answer to the second of these two

questions may have been influenced by the answer to the first.69

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. Persons listed by Forbes magazine as being

among the wealthiest 400 people in the United States are excluded from sampling.

Of the 6,492 interviews completed for the 2010 SCF, 5,012 were from the area-probability

sample, and 1,480 were from the list sample; for 2007, 2,914 were from the area-probability

sample, and 1,507 were from the list sample. The number of families represented in the surveys considered in this article is given by the following table:

Table A.3

Year Number of families represented (millions)

2001 106.5

2004 112.1

2007 116.1

2010 117.6

The Interviews

Aside from the addition of new questions in the 2010 survey to address the financial relationships of businesses that are not publicly traded, 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 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 2010 SCF, the median interview length was about 90 minutes. However, in some particularly complicated cases, the amount of time needed was substantially more than three

hours. The role of the interviewers in this effort is also critical. Without their dedication

and perseverance, the survey would not be possible.

69 For a comprehensive discussion of standards for defining race and ethnicity, see Executive Office of the President, Office of Management and Budget (2002), “Provisional Guidance on the Implementation of the 1997

Standards for Federal Data on Race And Ethnicity,” Executive Office of the President, www.whitehouse.gov/

omb/fedreg_race-ethnicity.

78 Federal Reserve Bulletin | June 2012
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. 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 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 2007 and 2010, about 70 percent of households selected for the area-probability

sample actually completed interviews. The overall response rate in the list sample was about

one-third; in the part of the list sample likely containing the wealthiest families, the

response rate was only about one-half that level.

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 some 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 almost certainly also 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.70

Sources of Error

Errors may be introduced into survey results at many stages. Sampling error—the variability expected in 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 of the cases in each of the replicates.71 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.

70 The weights used in this article are adjusted for differential rates of nonresponse across groups. See Arthur B.

Kennickell (1999), “Revisions to the SCF Weighting Methodology: Accounting for Race/Ethnicity and Homeownership” (Washington: Board of Governors of the Federal Reserve System, January), www.federalreserve

.gov/econresdata/scf/scf_workingpapers.htm.

71 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/econresdata/scf/scf_

workingpapers.htm.

Changes in U.S. Family Finances from 2007 to 2010 79
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 and ongoing coaching 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 earlier, 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.

80 Federal Reserve Bulletin | June 2012