Where you live matters: Financial differences between rural and urban Americans

When describing any large group it’s important to understand and explain nuances that may show how different people might react to different situations. Simply saying “Americans” these days does not necessarily mean one monolith of people. The same is true for “investors.” There are long-term investors, and conservative investors and savvy investors and so on. Drill down even deeper and one can see the different types of investors depending on where they live.

Rural and urban investors naturally see things differently on many issues and investing is one of them. According to the Employee Benefit Research Institute’s report “Understanding the Finances of Rural vs. Urban Americans,” 80% of Americans ages 25 or older lived in urban areas in 2000, while 13.8% lived in rural areas. The remainder lived in unidentifiable areas. These numbers are derived using estimates based on the 2020 Survey of Income and Program Participation from the U.S. Census Bureau.

While the share of total assets attributed to homeownership was higher among urban individuals, those living in rural areas were more likely to own their home than those living in urban areas (59.5% vs. 51.4%). The report says this is likely due to the much higher values of homes in urban areas.

In addition, the share of assets represented by businesses was much larger for rural individuals, but the percentage of rural individuals owning a business was nearly identical to that of those living in urban areas (9.0% compared with 9.1% respectively).

Asset and debt values were higher for those living in urban areas, however rural Americans (33.1%) had their assets from businesses while 22.3% of urban Americans had assets from business. In dollar figures, that amounts to $116,179 vs. $78,800 for rural individuals.

The median total debt and median net worth were also higher for urban individuals ($10,000 compared with $6,100 for debt and $59,700 compared with $43,700 for net worth) Also, rural Americans are more likely to own their own home but less likely to own retirement accounts, mutual funds or stocks than urbanites.

Income can certainly have an effect on who owns a retirement account but, as the report lays out, so can employer size. Generally, smaller employers are less likely to offer a retirement savings plan. Rural workers were more likely to work at locations with 25 or fewer employees than urban workers, and urban workers were more likely to work at locations with 1,000 or more employees.

Overall, the report shows that rural Americans often have lower income and asset levels than urban Americans. Net worth, however, is higher for rural Americans even though they are missing out on key investment strategies towards a more secure retirement.