Wealth concentration in the USA using an expanded measure of net worth

Defined benefit (DB) pensions and Social Security are important resources for financing retirement in the USA. However, these illiquid, nonmarket forms of wealth are typically excluded from measures of net worth. To the extent that these broadly held resources substitute for savings, measures of wealth inequality that do not account for DB pensions and Social Security may be overstated. This article develops an alternative, expanded wealth concept, augmenting net worth data from the Survey of Consumer Finances with estimates of DB pension and expected Social Security wealth. We explore the concentration of wealth among households ages 40–59 and find that (i) including DB pension and Social Security results in markedly lower measures of wealth concentration and (ii) trends toward higher wealth inequality over time, while moderated, are still present. Simulation exercises show that reductions in Social Security benefits significantly increase wealth concentration for the youngest birth-year cohorts.