Aspen Institute director: Wealth is not a luxury, but three in four U.S. households don’t have enough

The Aspen Institute Financial Security Program has introduced a new wealth metric to assess not only a family's capacity to pay bills, but also their level of resilience, prosperity, and overall well-being. According to the institute, only 26% of American households possess the essential wealth threshold, which is typically achieved by owning appreciating assets like a home and a retirement account, and maintaining six weeks of liquid savings equivalent to six weeks of take-home pay.

This critical threshold allows families the freedom to take calculated risks and plan for the future. The remaining 74% of households fall into two categories. The largest group, accounting for 43% of households, has net worth that covers only three months of expenses at the federal poverty line, falling short of the essential wealth benchmark.

This group faces challenges in saving for down payments or emergency car repairs, and must often choose between these necessities and retirement savings. The gap between these two categories does not narrow with age; in fact, only 24% of households aged 50 to 64 reach the essential wealth milestone, meaning most nearing retirement are still vulnerable.

The Aspen Institute's analysis, based on data from the 2022 Survey of Consumer Finances, also reveals that families lacking essential wealth assets are not only more susceptible to financial shocks but also forego the potential growth these assets offer. Over the past two decades, home prices have increased by around 60% after accounting for inflation, while the S&P 500's total return has been approximately 200% after inflation, whereas real median household income has grown by just 15%.

The implications of this wealth disparity extend beyond individual families, affecting the overall economy. When a significant portion of households is stretched thin by the rising costs of necessities such as fuel, food, housing, healthcare, child care, and other essentials, the entire economy becomes more fragile. A financial setback like a job loss or medical emergency can compel families to reduce spending, accumulate debt, and fall further behind.

However, families with savings and assets to draw upon can rebound more swiftly, preserving their choices and aspirations. The essential wealth framework underscores what many already understand: wealth is not a luxury, but a necessity that enables individuals to invest in their future, capitalize on opportunities, and navigate life's uncertainties.

This metric is not merely a statistic; it provides policymakers with a tool to devise programs that assist families in building wealth and evaluate the effectiveness of these interventions. The perspective presented in this commentary is solely the author's and does not necessarily represent the views of Fortune.