EBRI Issue Brief

Understanding the Finances of Rural vs. Urban Americans

Mar 3, 2022 16  pages


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. Consequently, the types and levels of assets that rural Americans have could result in them missing out on owning certain financial instruments that may help them better build wealth.

This Issue Brief examines the financial situations of Americans who live in urban areas vs. those who do not live in these areas (rural) by using the Survey of Income and Program Participation from the U.S. Census Bureau.

  • Eighty percent of Americans ages 25 or older lived in an urban area in 2020, while 13.8 percent of Americans lived in rural areas. The remaining 5.8 percent of the Americans ages 25 or older lived in unidentified areas.
  • The median total asset value was higher for those living in urban areas than for rural individuals in 2019. The median total debt and median net worth were also higher for urban individuals.
  • Yet, when controlling for income, rural individuals had higher median net worths in each income category except for the highest ($100,000 or more).
  • Those living in rural areas were more likely to have their assets from businesses: 33.1 percent of the assets of rural individuals compared with 22.3 percent of the assets of urban individuals. In contrast, urban individuals held more of their assets in their homes and retirement accounts as well as stocks and mutual funds.
  • Rural Americans were more likely to own their home and a vehicle, while they were less likely to own a retirement account or stocks and mutual funds than were urban Americans. Those living in both areas were nearly equally likely to own a bank account.
  • The differences in ownership of retirement accounts and stocks and mutual funds persisted among workers at larger employers and for unincorporated, self-employed businesses.  

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. In addition, 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. One clear commonality is that banks seem to be the economic base of most individuals, including those living in rural areas. Better understanding of how banks are being used by rural individuals may allow for an increase in the ownership of other assets for these individuals.