What is the Average Net Worth by Age?
Understanding your net worth gives you a better picture of your financial situation and can guide your future goals. Having this information is your first step towards setting goals, monitoring progress, and mapping out your future.
Below, we’ll take you through the average net worth by age group and what those numbers mean for you. We’ll also cover practical steps to help you increase your wealth, no matter where you are now.Â
‍
What is Net Worth? Why Does it Matter?
Your net worth is the total value of what you own, minus what you owe. Here are some examples of what factors play into this equation:
- What You Own: Cash, investments, property, and retirement accounts
- What You Owe: Credit cards, student loans, or a mortgage
Knowing your net worth gets you on the best path to saving, investing, and planning for retirement. It’s a great way to see how you’re doing and where you might want to focus next.
‍
Key Benchmarks
In theory, net worth typically grows the older you get, but the numbers vary based on income, debt, saving habits, and life events. Looking at averages by age group gives you a good idea of where you stand.
According to the Federal Reserve, net worth increases with age and often peaks around retirement. Here’s a look at how net worth generally changes over time:
These numbers are only a starting point. What matters is how you use this information to create your own financial goals.
‍
‍
How Net Worth Compares to Income
It’s easy to assume that someone with a high salary has a strong net worth. However, that’s not always true. Net worth and income are two different things.
Income is what you earn. Net worth is what you keep after subtracting what you owe from what you own. That’s why someone can have a big paycheck and still have little or even negative net worth.
For example, someone earning $250,000 a year might seem financially solid. However, their net worth could be very low if they live in a high-cost-of-living area and spend most of their income on a large mortgage, car payments, credit card debt, and other expenses. Maybe even below zero.
That’s where a net worth-to-income ratio comes in handy. It gives you a quick way to check how well you’re turning income into lasting wealth. A simple goal is to have a net worth equal to at least one year of income by your early 30s. Then, increase that ratio as you age.
Looking beyond income helps you focus on building a strong financial foundation, not just a big paycheck.
How Life Events Affect Net Worth
Life is full of changes, and your net worth will shift. That’s normal and expected.
Some events boost your net worth. Getting married may mean combining two incomes and sharing expenses. A job promotion or career change could lead to higher pay. In some cases, an inheritance or financial gift adds to your assets quickly.
Other events might put pressure on your finances. A divorce can mean splitting assets or taking on new expenses. Job loss, medical bills, or unexpected emergencies can shrink your savings or increase debt.
The key to remember is that your net worth will go up and down over time. What matters most is having a plan to adjust, rebuild, and keep progressing. Wealth doesn’t happen overnight. It’s shaped over time through choices, habits, and life’s ups and downs.
How to Estimate Your Net Worth
Figuring out net worth is easier than you think. All you need to do is add up everything you own and subtract what you owe.
*Disclosure: The example provided is being shared for illustrative purposes only.
You can use a spreadsheet or a financial tracking app to keep tabs on your numbers. Regularly updating it will keep you on track with your goals.
‍
Net Worth and Retirement: How Much is Enough?
There’s no simple answer for how much you need for retirement. However, there are a few rules that can help you plan.
One common guideline is the 4% rule. It suggests that you can withdraw 4% of your retirement savings each year and have a good chance of your money lasting for 30 years. So, if you want $40,000 per year in retirement, you’d need about $1 million saved.
Another simple rule says that for every $1,000 you want to spend each month in retirement, you should have about $240,000 saved. This gives you a starting point as you ponder what kind of lifestyle you want and how much you might need to support it.
Millionaire Status: How Many Americans Make It?
You might think becoming a millionaire is out of reach, but it’s more common than you think. This is especially true if you start saving and investing early.
According to the Federal Reserve’s 2022 survey, about 18% of U.S. households had at least seven figures net worth. Many reach this milestone over time through consistent saving, home ownership, and long-term investing.Â
It’s a reminder that building wealth is really about small steps taken over many years.
Building Net Worth Through the Decades
No matter your age, there are smart moves you can make to strengthen your financial situation. Here’s a look at how you might focus on building net worth over time:
In Your 20s, Start Strong
- Build good financial habits early: set a budget, save consistently, and avoid unnecessary debt.
- Start an emergency fund to cover unexpected expenses.
- Begin investing, even if it’s a small amount, to take advantage of long-term growth.
In Your 30s, Grow and Protect
- Focus on increasing your savings rate and contributing more to retirement accounts.
- Pay down student loans and other debts aggressively.
- Think about big purchases, like a home, carefully and avoid stretching your budget too thin.
In Your 40s, Maximize Earnings
- These are your prime earning years, so use raises or bonuses to boost savings rather than lifestyle.
- Continue growing investments and start thinking more seriously about retirement goals.
- Pay off remaining debts when possible to free up more for savings.
In Your 50s, Prepare for Retirement
- Catch-up contributions to retirement accounts can help you save more.
- Review your net worth and adjust your financial plan if needed.
- Start thinking about when you might want to retire and what kind of lifestyle you’ll want.
In Your 60s and Beyond: Protect and Enjoy
- Shift focus toward protecting your savings while making them last through retirement.
- Keep tracking your net worth to make sure your spending stays on target.
- Work with a financial advisor to handle retirement income, health care costs, and estate planning.
No matter where you are right now, it’s never too early, or too late, to take steps that can strengthen your net worth over time.Â
Steps to Improve Your Net Worth at Any Age
No matter your age, there are steps you can take to build your net worth. It’s all about steady progress over time.
- Pay down your debt. Focus on high-interest debt first, like credit cards or personal loans.
- Increase your savings. Set up automatic transfers to a savings or retirement account. Even small amounts add up.
- Invest regularly. Consider a mix of retirement accounts and other investments that match your goals and timeline.
- Watch your spending. Keeping an eye on your monthly expenses can free up money to save or invest.
- Make a plan. A financial plan gives you a roadmap, and working with an advisor can help you stay on track.
Building wealth doesn’t happen quickly. However, consistent habits are what help you in the long run.
Net Worth Mistakes to Avoid
As you work on growing your net worth, it’s just as important to avoid a few common missteps that can slow your progress.
- Counting too much on home equity. While your home can be a big part of your net worth, it’s not always easy to access that value without selling or borrowing against it. Balancing home equity with other liquid assets like savings and investments is helpful.
- Overlooking debt. It’s easy to underestimate how much debt eats into your net work, especially concerning credit cards or student loans. Make sure you’re factoring in all your liabilities when calculating where you stand.
- Forgetting about depreciation. Not everything you own holds its value. Cars, for example, lose value quickly over time. Just because you paid $30,000 for a car doesn’t mean it’s still worth that today.
- Not paying attention to spending. Day-to-day expenses add up fast. If you’re not tracking where your money goes, knowing what’s holding back your savings or slowing down your financial growth is hard.
Track Your Progress, Plan Your Future
Your net worth is a way to see how your financial life is shaping up. Consistent tracking tells you what’s working and where you need to adjust.
Key Takeaways:
- Net worth is your assets minus your debts.
- It changes over time, and that’s normal.
- Knowing your numbers helps you make better financial choices.
- Saving, investing, and paying off debt all grow your net worth.
- It’s never too late (or too early) to start endeavoring to build wealth.
Next Steps:
- Check your net worth once or twice a year.
- Set a goal for where you’d like to be in 5 or 10 years.
- Build a plan that fits your life, income, and goals.
- Consider talking to a wealth advisor for personalized guidance.
‍
Mike has been in the wealth management industry for 10 years, beginning his career at BNY Mellon’s Silicon Valley office. There, he learned the intricacies of wealth management and discovered his passion for helping families achieve their financial goals. He later became a Portfolio Manager at an ultra-high net worth RIA in Boston, where he honed his skills in developing custom investment strategies for clients. Inspired by Savvy’s mission to bring a tech-focused energy to the wealth management industry, Mike joined the firm in July 2022 to drive the launch and continued evolution of their advisory capabilities. At Savvy, Mike has played a key role in developing, launching, and managing the in-house investment solution, Savvy Wealth Investment Management (“SWIM”). He also leads Savvy’s Client Experience Team, partnering closely with associates and advisors and aimed at producing best-in-class services for their clients. Mike is a graduate of Northeastern University and holds his Certified Financial Planner™ (CFP®) designation. He resides in New York with his wife, Alex, and their golden retriever, Bondi.
Material prepared herein has been created for informational purposes only and should not be considered investment advice or a recommendation. Information was obtained from sources believed to be reliable but was not verified for accuracy. All investments involve some degree of risk, including loss of principal. All advisory services are offered through Savvy Advisors, Inc. (“Savvy Advisors”), an investment advisor registered with the Securities and Exchange Commission (“SEC”).
‍
What is the Average Net Worth by Age?
Understanding your net worth gives you a better picture of your financial situation and can guide your future goals. Having this information is your first step towards setting goals, monitoring progress, and mapping out your future.
Below, we’ll take you through the average net worth by age group and what those numbers mean for you. We’ll also cover practical steps to help you increase your wealth, no matter where you are now.Â
‍
What is Net Worth? Why Does it Matter?
Your net worth is the total value of what you own, minus what you owe. Here are some examples of what factors play into this equation:
- What You Own: Cash, investments, property, and retirement accounts
- What You Owe: Credit cards, student loans, or a mortgage
Knowing your net worth gets you on the best path to saving, investing, and planning for retirement. It’s a great way to see how you’re doing and where you might want to focus next.
‍
Key Benchmarks
In theory, net worth typically grows the older you get, but the numbers vary based on income, debt, saving habits, and life events. Looking at averages by age group gives you a good idea of where you stand.
According to the Federal Reserve, net worth increases with age and often peaks around retirement. Here’s a look at how net worth generally changes over time:
These numbers are only a starting point. What matters is how you use this information to create your own financial goals.
‍
‍
How Net Worth Compares to Income
It’s easy to assume that someone with a high salary has a strong net worth. However, that’s not always true. Net worth and income are two different things.
Income is what you earn. Net worth is what you keep after subtracting what you owe from what you own. That’s why someone can have a big paycheck and still have little or even negative net worth.
For example, someone earning $250,000 a year might seem financially solid. However, their net worth could be very low if they live in a high-cost-of-living area and spend most of their income on a large mortgage, car payments, credit card debt, and other expenses. Maybe even below zero.
That’s where a net worth-to-income ratio comes in handy. It gives you a quick way to check how well you’re turning income into lasting wealth. A simple goal is to have a net worth equal to at least one year of income by your early 30s. Then, increase that ratio as you age.
Looking beyond income helps you focus on building a strong financial foundation, not just a big paycheck.
How Life Events Affect Net Worth
Life is full of changes, and your net worth will shift. That’s normal and expected.
Some events boost your net worth. Getting married may mean combining two incomes and sharing expenses. A job promotion or career change could lead to higher pay. In some cases, an inheritance or financial gift adds to your assets quickly.
Other events might put pressure on your finances. A divorce can mean splitting assets or taking on new expenses. Job loss, medical bills, or unexpected emergencies can shrink your savings or increase debt.
The key to remember is that your net worth will go up and down over time. What matters most is having a plan to adjust, rebuild, and keep progressing. Wealth doesn’t happen overnight. It’s shaped over time through choices, habits, and life’s ups and downs.
How to Estimate Your Net Worth
Figuring out net worth is easier than you think. All you need to do is add up everything you own and subtract what you owe.
*Disclosure: The example provided is being shared for illustrative purposes only.
You can use a spreadsheet or a financial tracking app to keep tabs on your numbers. Regularly updating it will keep you on track with your goals.
‍
Net Worth and Retirement: How Much is Enough?
There’s no simple answer for how much you need for retirement. However, there are a few rules that can help you plan.
One common guideline is the 4% rule. It suggests that you can withdraw 4% of your retirement savings each year and have a good chance of your money lasting for 30 years. So, if you want $40,000 per year in retirement, you’d need about $1 million saved.
Another simple rule says that for every $1,000 you want to spend each month in retirement, you should have about $240,000 saved. This gives you a starting point as you ponder what kind of lifestyle you want and how much you might need to support it.
Millionaire Status: How Many Americans Make It?
You might think becoming a millionaire is out of reach, but it’s more common than you think. This is especially true if you start saving and investing early.
According to the Federal Reserve’s 2022 survey, about 18% of U.S. households had at least seven figures net worth. Many reach this milestone over time through consistent saving, home ownership, and long-term investing.Â
It’s a reminder that building wealth is really about small steps taken over many years.
Building Net Worth Through the Decades
No matter your age, there are smart moves you can make to strengthen your financial situation. Here’s a look at how you might focus on building net worth over time:
In Your 20s, Start Strong
- Build good financial habits early: set a budget, save consistently, and avoid unnecessary debt.
- Start an emergency fund to cover unexpected expenses.
- Begin investing, even if it’s a small amount, to take advantage of long-term growth.
In Your 30s, Grow and Protect
- Focus on increasing your savings rate and contributing more to retirement accounts.
- Pay down student loans and other debts aggressively.
- Think about big purchases, like a home, carefully and avoid stretching your budget too thin.
In Your 40s, Maximize Earnings
- These are your prime earning years, so use raises or bonuses to boost savings rather than lifestyle.
- Continue growing investments and start thinking more seriously about retirement goals.
- Pay off remaining debts when possible to free up more for savings.
In Your 50s, Prepare for Retirement
- Catch-up contributions to retirement accounts can help you save more.
- Review your net worth and adjust your financial plan if needed.
- Start thinking about when you might want to retire and what kind of lifestyle you’ll want.
In Your 60s and Beyond: Protect and Enjoy
- Shift focus toward protecting your savings while making them last through retirement.
- Keep tracking your net worth to make sure your spending stays on target.
- Work with a financial advisor to handle retirement income, health care costs, and estate planning.
No matter where you are right now, it’s never too early, or too late, to take steps that can strengthen your net worth over time.Â
Steps to Improve Your Net Worth at Any Age
No matter your age, there are steps you can take to build your net worth. It’s all about steady progress over time.
- Pay down your debt. Focus on high-interest debt first, like credit cards or personal loans.
- Increase your savings. Set up automatic transfers to a savings or retirement account. Even small amounts add up.
- Invest regularly. Consider a mix of retirement accounts and other investments that match your goals and timeline.
- Watch your spending. Keeping an eye on your monthly expenses can free up money to save or invest.
- Make a plan. A financial plan gives you a roadmap, and working with an advisor can help you stay on track.
Building wealth doesn’t happen quickly. However, consistent habits are what help you in the long run.
Net Worth Mistakes to Avoid
As you work on growing your net worth, it’s just as important to avoid a few common missteps that can slow your progress.
- Counting too much on home equity. While your home can be a big part of your net worth, it’s not always easy to access that value without selling or borrowing against it. Balancing home equity with other liquid assets like savings and investments is helpful.
- Overlooking debt. It’s easy to underestimate how much debt eats into your net work, especially concerning credit cards or student loans. Make sure you’re factoring in all your liabilities when calculating where you stand.
- Forgetting about depreciation. Not everything you own holds its value. Cars, for example, lose value quickly over time. Just because you paid $30,000 for a car doesn’t mean it’s still worth that today.
- Not paying attention to spending. Day-to-day expenses add up fast. If you’re not tracking where your money goes, knowing what’s holding back your savings or slowing down your financial growth is hard.
Track Your Progress, Plan Your Future
Your net worth is a way to see how your financial life is shaping up. Consistent tracking tells you what’s working and where you need to adjust.
Key Takeaways:
- Net worth is your assets minus your debts.
- It changes over time, and that’s normal.
- Knowing your numbers helps you make better financial choices.
- Saving, investing, and paying off debt all grow your net worth.
- It’s never too late (or too early) to start endeavoring to build wealth.
Next Steps:
- Check your net worth once or twice a year.
- Set a goal for where you’d like to be in 5 or 10 years.
- Build a plan that fits your life, income, and goals.
- Consider talking to a wealth advisor for personalized guidance.
‍
Meet
Michael McCarthy, CFP®
Mike has been in the wealth management industry for 10 years, beginning his career at BNY Mellon’s Silicon Valley office. There, he learned the intricacies of wealth management and discovered his passion for helping families achieve their financial goals. He later became a Portfolio Manager at an ultra-high net worth RIA in Boston, where he honed his skills in developing custom investment strategies for clients. Inspired by Savvy’s mission to bring a tech-focused energy to the wealth management industry, Mike joined the firm in July 2022 to drive the launch and continued evolution of their advisory capabilities. At Savvy, Mike has played a key role in developing, launching, and managing the in-house investment solution, Savvy Wealth Investment Management (“SWIM”). He also leads Savvy’s Client Experience Team, partnering closely with associates and advisors and aimed at producing best-in-class services for their clients. Mike is a graduate of Northeastern University and holds his Certified Financial Planner™ (CFP®) designation. He resides in New York with his wife, Alex, and their golden retriever, Bondi.
Material prepared herein has been created for informational purposes only and should not be considered investment advice or a recommendation. Information was obtained from sources believed to be reliable but was not verified for accuracy. All investments involve some degree of risk, including loss of principal. All advisory services are offered through Savvy Advisors, Inc. (“Savvy Advisors”), an investment advisor registered with the Securities and Exchange Commission (“SEC”).
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