A new report released by the Employee Benefits Research Institute [EBRI] noble “Understanding the financial differences between rural and urban Americans,” found that people who lived in rural areas were more likely to have lower incomes and assets than people who lived in urban areas.
However, when comparing Americans at the same income levels, rural people’s net worth was higher than urban people’s, except in the highest income group.
“Rural Americans’ attitudes toward their finances and access to financial institutions and instruments may differ from those living in urban areas due to lower population density, infrastructure differences, such as lower availability of broadband Internet services broad and their experiences or exposure to various types of assets”. Craig Copeland, director of Wealth Benefits Research at EBRI, wrote in a statement.
“Consequently, the types and levels of assets held by rural Americans are different, with home ownership and business assets being higher compared to higher ownership of retirement accounts and stocks and mutual funds among rural Americans. urban residents,” Copeland wrote.
According to the release, the EBRI briefing examined the financial situation of Americans living in urban and rural areas using the 2020 U.S. Census Bureau Income and Program Participation Survey.
“Disparities in retirement account, stock and mutual fund ownership persisted among workers at larger employers and for independent unincorporated businesses,” Copeland said. “The net result is that people in rural areas appear to be losing out on certain financial assets that, over the long term, have provided much higher rates of return than many other investments. Other means of accessing financial markets may be necessary.”
Additionally, Copeland found that rural business owners appear to have their assets highly concentrated in their businesses, which could be due to the need to run their businesses.
“However, better asset diversification could help protect these people’s retirement prospects if something were to cause the business to go out of business,” he said.
Generational estate planning attorneys Portia Woods and her mother, Robin Woods, asserted that Black and Latinx communities are in a state of financial emergency and probably don’t even know it. However, the lawyers said in an email that their goal remains to help families effectively protect and pass on more of their hard-earned wealth.
“America’s racial wealth gap is huge and getting worse”, the duo noted in the email.
They noted that one study warned that, if not addressed, the median net worth of African Americans drop to zero for 2053.
“We focus on multigenerational planning with an emphasis on closing the racial wealth gap in our communities,” said Portia Wood.
He said Wood Legal Group, LLP has always been passionately focused on teaching the Black, Latino and LGBTQ communities how to “protect, harness and convey their assets using probate and trust law.”
Max Benz, founder and CEO of BankingGeek, added some key financial differences between rural and urban Americans.
“For one thing, rural Americans are more likely to live in poverty than urban Americans,” Benz said.
He cited the most recent data from the US Census Bureau, which indicates that 17.3 percent of rural residents live in poverty, compared to 14.2 percent of urban residents.
“Rural Americans also tend to have less access to financial opportunities and resources,” Benz said. “For example, they are less likely to have a bank account or credit score and are more likely to rely on alternative financial services like payday loans. This lack of access can make it difficult for rural Americans to build wealth or lift themselves out of poverty.”
Dr. Robert R. Johnson, professor of finance at the Heider College of Business at Creighton University and co-author of “The Tools and Techniques of Investment Planning, Strategic Value Investing and Investment Banking for Dummies,” said urban Americans have a higher concentration of financial assets.
In contrast, Johnson said rural Americans have a higher concentration of tangible assets.
“The difference in net worth between rural and urban Americans at the same income level can be explained by the fact that the cost of living is much higher in urban areas, particularly housing,” Johnson said. “That is, a higher income is needed in urban areas to finance a given standard of living.”
“Urban Americans are more likely to be investors than savers, while the opposite is true for rural Americans. Furthermore, much of the wealth in urban America is inherited wealth, specifically, land, which can result in higher net worth but lower income, all other things being equal.”
“Furthermore, the distribution of wealth between urban and rural Americans is dramatically different. That is, the median wealth of urban and rural Americans may be different, but you would have to believe that the medians are not very different.”
“That’s because the wealth media of urban Americans is heavily skewed toward the fabulously wealthy. Simply put, there are more urban high-net-worth individuals and some extremely high-net-worth individuals than rural high-net-worth individuals,” Johnson said.