Photo: When comparing Americans at the same income levels, the net worth of rural individuals was higher than that of urban individuals except for those in the highest income group. (Courtesy photo/GoBankingRates)

A new Issue Brief released by the Employee Benefit Research Institute [EBRI] titled “Understanding the Financial Differences Between Rural and Urban Americans,” found that individuals living in rural areas were more likely to have lower incomes and assets than those living in urban areas. 

However, when comparing Americans at the same income levels, the net worth of rural individuals was higher than that of urban individuals except for those in the highest income group.

“Rural Americans attitudes toward their finances and access to financial institutions and instruments can differ from those living in urban areas due to lower population density, infrastructure differences such as less availability of broadband Internet services and their experiences with or exposure to various asset types,” Craig Copeland, director of Wealth Benefits Research at EBRI, wrote in a release.

“Consequently, the types and levels of assets that rural Americans have are different with homeownership and business assets being higher compared with the higher retirement account and stock and mutual fund ownership among urban residents,” Copeland wrote. 

According to the release, the EBRI Issue Brief examined the financial situations of Americans who live in urban and rural areas by using the 2020 Survey of Income and Program Participation from the United States Census Bureau

“Differences in the ownership of retirement accounts, stocks and mutual funds persisted among workers at larger employers and for unincorporated, self-employed businesses,” Copeland said. “The net result is that rural individuals appear to be missing out on certain financial assets, which over the long term have provided much higher rates of return than many other investments. Other means to access the financial markets may be necessary.”  

Additionally, Copeland concluded that rural business owners appear to have their assets highly concentrated in their businesses, which could be out of necessity to run their businesses. 

“However, a better diversification of assets could help protect these individuals’ retirement prospects if something caused the business to close,” he said.

Generational Wealth Planning Attorneys Portia Woods and her mother, Robin Woods, asserted that Black and Brown communities are in a financial state of emergency and likely don’t even know it. However, the lawyers said in an email that their aim remains to help families effectively protect and pass down more of their hard-earned wealth.

 “America’s racial wealth gap is enormous and getting worse,” the duo pointed out in the email. 

They noted one study warned that left unaddressed, the median net worth of Black Americans will fall to zero by 2053.

“We focus on multi-generational planning with an emphasis on closing the racial wealth gap in our communities,” Portia Wood said.

She said Wood Legal Group, LLP has always passionately focused on teaching Black, Latinx and LGBTQ communities to “protect, leverage and pass on their assets using the law of estates and trusts.”

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 stated 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 resources and opportunities,” Benz said. “For example, they’re less likely to have a bank account or credit score and they’re 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 climb out of poverty.”

Dr. Robert R. Johnson, a 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,” offered that urban Americans have a higher concentration of financial assets.

By contrast, Johnson said rural Americans possess a higher concentration of tangible assets.

“The net worth difference 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 larger income is necessary in urban areas to fund a given standard of living.” 

“Urban Americans are more likely to be investors rather than savers, while the converse is true with rural Americans. In addition, much of the wealth in urban America is inherited wealth – specifically, land – which can result in higher net worth’s but lower incomes, all else equal.” 

“Also, the distribution of wealth between urban and rural Americans is dramatically different. That is, the mean wealth of urban and rural Americans may be different, but I would have to believe that the medians aren’t much different.” 

“That is because the wealth means of urban Americans are highly skewed by the fabulously wealthy. Simply put, there are more urban high net worth individuals and some with an extremely high net worth than rural high net worth individuals,” Johnson said.  

Stacy M. Brown is a senior writer for The Washington Informer and the senior national correspondent for the Black Press of America. Stacy has more than 25 years of journalism experience and has authored...

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