Policy makers are concerned about the wealth of U.S. families because of the relationship between wealth and economic well-being. Wealth is a store of future income that serves a critical economic security function. In times of economic hardship, such as unemployment, illness, or divorce, wealth is an additional source of income to help pay expenses and bills. For older individuals, wealth is an important source of retirement income. In addition, wealth is a significant factor influencing the strength of economy-wide consumer spending, which in turn sets the pace of economy-wide recovery and job creation. Moreover, deliberations by Congress on such issues as taxation, education, housing, and entitlements could have implications for the accumulation of wealth by families. To help inform these policy debates, this report analyzes data from 1989 to 2013 of the Survey of Consumer Finances (SCF) on the trend in the level and concentration of wealth across families. The report subsequently examines the roles of financial assets and home ownership in wealth accumulation. It concludes with a review of explanations for the accumulation and distribution of wealth across families. Data regarding family wealth are very limited. Some data are available from estate tax returns, but these reflect only the small proportion of the population that is subject to the tax. The U.S. Census Bureau periodically reports on net worth and asset ownership, but the data are drawn from the Survey of Income and Program Participation, which over samples lower-income families. As a result, the Census Bureau data on wealth underestimate average (mean) and total family wealth. The most comprehensive source of data on the wealth of U.S. families is the SCF. The Federal Reserve Board (Fed), in cooperation with the Treasury Department, sponsors the SCF. Since 1992, data for the SCF have been collected by NORC, a research organization at the University of Chicago. The survey is conducted every three years, collecting detailed statistics not only on the level, but also the composition of family assets, liabilities, and before-tax income. In the SCF, wealth is measured by net worth (i.e., total value of assets minus total value of liabilities). The SCF counts both financial and nonfinancial (real) assets. Financial assets include the value of checking and savings accounts; stocks, bonds, and mutual funds; annuities and life insurances; and tax-deferred retirement accounts (e.g., individual retirement accounts and 401(k) accounts). Real assets include the value of principal residences, corporate and non-corporate businesses, vehicles (e.g., cars, trucks, boats, and airplanes), and miscellaneous valuables (e.g., antiques, jewelry, and coins). Liabilities include home mortgages and consumer debt (e.g., credit card balances and auto and student loans). Because of the substantial uncertainty associated with estimating the current value of families' future income streams from Social Security, Medicare, and defined benefit private pensions, these assets are not included in the SCF calculation of family net worth. Some argued that these are assets families have no direct control over and, therefore, are inconsistent with a concept of wealth as a marketable store of value that could be a source of potential consumption. The SCF has been criticized for these exclusions. Others have argued that some items the SCF counts toward net worth (e.g., vehicles) should be excluded. At least one researcher has constructed estimates of net worth that include pension and Social Security benefits, but exclude vehicles. To improve the accuracy of its data, the SCF uses a sample design consisting of two parts: (1) a standard, geographically based random sample and (2) a supplemental oversample of relatively wealthy families drawn from a list of statistical records derived from Internal Revenue Service (IRS) data. The over sampling of these families provides a means of correcting for nonresponse, which is differentially higher among families with high net worth. Correcting for nonresponse bias in wealth estimates makes the SCF better able than other surveys to gather complete and detailed information on high-income and high-net worth families. Two summary measures commonly used to describe the level and concentration of wealth are median and mean net worth. If all wealth-owning families are ranked from poorest to richest, median net worth is that of the family in the middle of the distribution. Put another way, it is the value at which one-half of families in the distribution have less wealth and one-half have more wealth. In the case of wealth distribution, the median is a more reliable indicator of the wealth of the "typical" family than the mean because of the way in which a mean is calculated. To derive mean net worth, the value of all wealth owned by families is added up and then divided by the total number of families. If a minority of high-wealth families own more than one-half of all wealth, the mean will be greater than the median. The difference between the median and mean indicates the general shape of a distribution. According to SCF data shown in Table 1 , mean family net worth in each year was substantially greater than median net worth. The mean ranged from almost four to more than six times the median during the 1989-2013 period. As explained above, such a relationship indicates considerable concentration of wealth among families in the upper half of the wealth distribution. Mean family net worth typically increased to a greater extent than median family net worth from 1992 through 2007, which suggests that the wealth distribution became more concentrated at the upper end of the distribution over time. Since 2007, reflecting the negative impact of the deep 2007-2009 recession and the subsequent slow recovery on income and asset prices, both measures decreased (see Table 1 ). Between 2007 and 2013, median family net worth declined by 40.0% and mean net worth declined by 14.6%. The median declining less than the mean indicates net worth decreased more, on average, for those in the lower half of the wealth distribution. The decrease in median net worth to $81,200 in 2013 dropped median family wealth almost to its level 21 years earlier ($80,500 in 1992). Mean net worth of $534,600 in 2013 was essentially unchanged from its value in 2010, remaining near the level of net worth reached 12 years earlier ($521,900 in 2001). That median net worth declined and mean net worth was unchanged between 2010 and 2013 was the result of a continuing general decline in asset prices, notably housing prices. The median family's total asset holdings fell 11%, from $200,600 in 2010 to $177,900 in 2013. The mean total asset holdings fell a more modest 3%, from $656,200 in 2010 to $638,900 in 2013. Helping to offset falling asset prices' negative effect on net worth was a substantial decrease in families' debt holdings between 2010 and 2013. The median family's debt holdings fell 20%, from $75,800 in 2010 to $60,400 in 2013. The mean value of debt holdings decreased 13%, from $140,000 in 2010 to $122,300 in 2013. A more detailed picture of the distribution of family wealth emerges from examining the share of total net worth held by various percentiles of the wealth distribution. The top 3% of families accounted for 54.4% of total net worth in 2013. The next 7% of families held 20.9% of all wealth. Taken together then, the top 10% of wealth-owning families accounted for a 75.3% share of total net worth, and the share of wealth held by the bottom 90% was 24.7% in 2013. Family net worth appears to have become more concentrated in recent decades. According to SCF data, the wealth share of the top 3% increased from 44.8% in 1989 to 51.8% in 2013. The share of net worth of the next 7% was 20.9%, effectively unchanged since 1989. Therefore, taken together the share of wealth held by the top 10% of wealth owners grew from 67.2% in 1989 to 75.3% in 2013. A decline in the share of net worth occurred in the remaining 90% of families, falling from 33.2% in 1989 to 24.7% in 2013. In addition to accumulating wealth through saving of current income, those who own assets may see their wealth grow or shrink due to rising or falling asset prices. The distribution of such assets as stocks and homes has implications for who benefits from asset appreciation and who is harmed by asset depreciation. The appreciation of stock values during the 1990s and of home values into the first decade of the 21 st century appears to have substituted for saving from current income as a means of increasing family wealth. A number of studies estimated a close connection between the decline in the household saving rate during the 1990s and the rapid rise in equity prices. Empirical analyses similarly estimated that appreciation in housing prices through the mid-2000s drove up the value of residential assets, which substituted for saving out of current income as a way to accumulate wealth. The median value of stock owned by families tripled in real terms between 1989 and 2001. Once equity prices stopped steadily increasing after 2000, the rapid rise in housing prices through 2006 appears to have kept the saving rate low. Whereas the real median value of stock fell by 16% between 2001 and 2007, the median value of primary residences rose by 39% over the same period. Although the share of families owning their primary residences grew much less (5 percentage points to 69%) than the share of families directly owning stock (19 percentage points to 51%) between 1989 and 2007, residential assets are more widely distributed than stock. In 2007, the wealthiest 10% of families held 38.5% of the gross equity in principal residences compared with 90.4% of the value of stock.