By Robert Manduca, University of Michigan
How wealthy are you?
Like most people, you probably would do some math before answering this question. You would add up the money in your bank accounts, the value of your investments and any equity in a home you own, then subtract your debts, such as mortgages and car loans.
But many economists believe this approach, known as calculating your net worth, leaves out a big chunk of your wealth: the benefits you’ll get in the future from Social Security, if you live in the United States, or similar government benefits programs that help retirees pay their bills in other countries.
As a sociologist who studies income and wealth inequality, I wanted to figure out just how much government safety net programs are worth to their recipients, and whether they truly can substitute for private savings.
A $40 trillion trove
A team of researchers recently estimated that future Social Security payments amounted to more than US$40 trillion as of 2019 – about $123,000 for everyone in the U.S. That huge number, which is not adjusted for inflation, was nearly one-third of the $110 trillion of Americans’ collective net worth in that year.
In a recent peer-reviewed study, published in April 2025 in Socio-Economic Review, I found that even this expanded definition of wealth leaves some important things out: unemployment insurance, the child tax credit and other widely available benefits. People who have access to these programs don’t have to dip into their savings as much when unexpected costs come up.
Social Security is by far the largest of these programs. As of 2019, the typical worker nearing retirement had banked about $412,000 in future Social Security benefits, I found – nearly as much as the $472,000 in private retirement savings such workers had. This estimate doesn’t include Social Security benefits to orphans, widows or people with disabilities.
The value of Social Security retirement benefits varies according to workers’ income and work history, ranging from $271,000 for the poorest 10% of recipients to $669,000 for the richest 10%.
Benefits from smaller safety net programs can also add up. Because some programs differ by state, I analyzed California and Texas, the two largest states. In California, I calculated that the average 45-year-old worker can count on almost $12,000 in unemployment insurance over 26 weeks, while in Texas the same worker would be eligible for more than $15,000 over the same period.
Meanwhile, under current law, many families having a child in 2025 can expect to receive about $29,000 through the federal child tax credit over the course of that kid’s lifetime.
Texas doesn’t mandate paid family leave, but California requires that each parent receive eight weeks of their salary. That’s worth another $13,000 to a family earning $90,000 a year – the median in my study – and more if the parents have higher incomes.
Where there’s even more hidden wealth
These somewhat hidden sources of wealth are worth far more in many other countries, especially Scandinavian ones. Norway provides a useful contrast.
The typical Norwegian worker retires with more than $510,000 in public pension wealth, I calculated. The exact amount they collect will vary depending on what they’ve earned and how long they live, as is the case with Social Security. But, unlike in the U.S., if they get sick, Norwegians are eligible for a up to a year of paid sick leave – worth about $57,000 to the median worker.
Norwegians can get unemployment insurance benefits for almost two years, amounting to $70,000 for the average worker, depending on their wages. And the combination of Norway’s child benefit and parental leave is worth between $60,000 and $80,000 from the time each child is born until they turn 18, depending on the parents’ exact income.
In the past few years, researchers have estimated the wealth value of public pensions – though not other government benefits – in several countries, including Australia, Austria, Germany, Poland and Switzerland, among others.
In many nations, this value rivals or exceeds that of all stocks, real estate and other private assets held by their residents combined.
Because so many people are eligible for Social Security or its equivalent public pension programs in other countries, there is also much less inequality in total retirement wealth than in standard measures of net worth.
Wealth vs. income
Wealth is much more unequally distributed than income just about everywhere. In the United States, for example, the richest 5% of the population has 32% of all income, but 70% of all wealth.
Wealth inequality has grown over time, and the Black-white wealth gap in the United States is particularly large. While typical Black families have incomes that are about 56% of what white families earn, they own only 18% as much wealth as the typical white family.
For these reasons, many politicians, scholars and activists have proposed ambitious policies to reduce inequality in private wealth, such as a wealth tax. Another idea gaining in popularity is to start issuing “baby bonds,” which give each newborn a prefunded savings account.
Wealth embedded in government benefits offers a complementary method of addressing wealth inequality. Even today, when Social Security and similar pension programs in other places are counted alongside private savings, inequality in retirement wealth is much lower than in privately held wealth alone.
Less flexible source of wealth
To be sure, the wealth you’re eventually due through Social Security and other government programs isn’t the same as the private assets you might own.
You can’t sell or borrow against your future Social Security benefits to meet an unexpected expense or make a down payment on a home. And if you die before reaching retirement age, you won’t receive any payments from the Social Security system yourself, although your spouse or heirs may be eligible for survivor benefits.
Also, government programs are not set in stone. Eligibility requirements can change, and benefit levels can be cut.
For instance, if the Social Security trust fund is depleted, retirees could see their benefits decline. But private wealth is also never guaranteed to last: Stock values can fluctuate wildly, and inflation erodes the value of any cash you’ve saved over time.
For these reasons, having a combination of private savings and government benefits offers the most promising way for everyone to prepare for their future. This can also help society address wealth inequality.
About the Author:
Robert Manduca, Assistant Professor of Sociology, University of Michigan
This article is republished from The Conversation under a Creative Commons license. Read the original article.
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