Here’s how Americans in cities and rural areas build wealth differently

Doug Langley clears the combine head for weeds before he begins to harvest, during the wheat harvest in Shelbyville, Kentucky, on June 29, 2021.

Amira Karaoud | Reuters

Many rural Americans may have stronger economies than urban dwellers, but their wealth may lack diversification, jeopardizing safer retirement.

This is according to a report by the Employee Benefit Research Institute, which analyzes data from the US Census Bureau to compare each group’s finances.

“Many people think rural areas have less wealth, which is true,” said Craig Copeland, author and senior researcher at EBRI. “But when you check for income, a lot of it disappears, except at the very highest level.”

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In fact, rural Americans had a higher median net worth for every income level except those earning $ 100,000 or more, compared to Americans with the same earnings in urban areas.

Some of the reasons for more robust wealth among rural Americans may be the lower cost of living along with cultural consumption disparities, Copeland said.

But there were sharp contrasts in the types of assets that make up each group’s wealth, the report shows.

Although there was not much difference in the percentage of business ownership, rural Americans had larger amounts of wealth concentrated there, which represented about a third of their total assets compared to about 22% for their urban counterparts.

“These business owners did not seem to be diversifying,” Copeland explained.

Although rural Americans typically owned their homes and vehicles, retirement savings and other investments were smaller overall percentages of their net worth compared to urban Americans.

And with rural Americans more likely to be self-employed or work for smaller businesses, they were less likely to have a retirement plan.

“They don’t really have a setback,” Copeland said. “While if you own a business and diversify with retirement accounts or savings, there is something to draw on if the business is not doing well.”

With less in retirement savings, rural Americans may have to rely on social security in their golden years, which can be challenging as they are also more likely to have medical debt, he added.

However, banks serve as an economic base for both groups, according to the EBRI report, which could provide opportunities for rural Americans to increase investment in other areas.

The report analyzed data from the Census Bureau’s 2020 survey of income and program participation, including demographics, wealth, income, labor force participation, and employer characteristics.

About 80% of Americans 25 years and older lived in urban areas by 2020, and the report based assets on individual values ​​by the end of 2019.

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