The Average Net Worth For The Above Average Person

The average net worth for the above average person is largeEverything is relative when it comes to money.  If we all earn $1 million dollars a year and have $5 million in the bank at the age of 40, none of us are very wealthy given all our costs (housing, food, transportation, vacations) will be priced at levels that squeeze us to the very end.  As such, we must first get an idea of what the real average net worth is in our respective countries, and then figure out the average net worth of the above average person!

According to CNN Money 2014, the average net worth for the following ages are: $9,000 for ages 25-34,  $52,000 for ages 35-44, $100,000 for ages 45-54, $180,000 for ages 55-64, and $232,000+ for 65+. Seems very low, but that’s because we use averages and a large age range.

After a 13% rise in the S&P 500 in 2014, surely the average net worth has increased even further for 2015.

The Above Average Person is loosely defined as:

1) Someone who went to college and believes grades and a good work ethic do matter.

2) Does not irrationally spend more than they make.

3) Saves for the future because they realize at some point they no longer are willing or able to work.

4) Takes responsibility for their own actions when things go wrong and learns from the situation to make things better.

5) Takes action by leveraging free tools on the internet to track their net worth, minimize investment fees, manage their budget, and stay on top of their finances in general. Once you know where all your money is, it becomes much easier to optimize your wealth and make it grow.

6) Welcomes constructive criticism and is not overly sensitive from friends, loved ones, and strangers in order to keep improving. Keeping an open mind is critical.

7) Has a healthy amount of self-esteem to be able to lead change and believe in themselves.

8) Enjoys empowering themselves through learning, whether it be through books, personal finance blogs, magazines, seminars, continuing education and so forth.

9) Has little-to-no student loan debt due to scholarships, part-time work, or help from their parents. Our parents have saved and invested through the largest bull market in history. It’s understandable that parents want to help their children out.

Now that we have a rough definition of what “above average” means, we can take a look at the tables I’ve constructed based on the tens of thousands of past comments by you and posts I’ve written to highlight the average net worth of the above average person.


First, we must highlight what the average tax-deferred retirement savings plan is for those in America. We’ll focus on the simple 401K system we have here where one can contribute $18,000 of their pre-tax income every year in 2015 (was $17,500 in 2014).

This chart can be used as a rough estimate for those with the RRSP plan in Canada, and retirement plans in Europe and Australia as well. In fact, any country that has any sort of tax-deferred retirement plan and social safety net program for retirement that has a GDP/capita of $30,000 or more can use the below chart as an aspirational guide. Remember, we are talking about the “above average person.”


401k Savings By Age Potential

The assumption here is that the above average person is able to start maxing out their tax-deferred retirement plan every year after the second full year of work, and continue on without fail until 65.  The low and high end account for 0% to a relatively conservative 5% constant rate of return.  Of course you can lose money and make much more if you are good and lucky.

This chart does not take into consideration any after-tax savings post 401K contribution. To understand what the average after-tax savings rate is post tax-deferred retirement contribution is a gargantuan task because there are too many assumptions that are debatable eg. income and after-tax savings rate post maximum pre-tax retirement contributions. That said, I’ll offer a base case guide anyway.


Financial Samurai Post Tax Savings Guide Chart

The above chart assumes on the low end that one saves about $5,000 a year in after-tax income and around $10,000-$15,000 a year in after-tax income on the high-end after maxing out their tax-deferred retirement vehicle. I’ve tried to keep things as simple as possible, assuming no inflation and no investment returns. I also believe saving $5,000-$15,000 a year in after-tax income is very realistic for the above average person, and probably very easy for many who earn more than $85,000 per person. Finally, the chart should show you the power of consistency.


A 2010 study showed that the average net worth of a homeowner is roughly $200,000, or 40X greater than the average renter’s net worth of $5,000. We can debate the merits of this study (done by a real estate association of course) all day long (demographic sampling, housing price changes, etc), but the point is, “above average” people generally all own homes and are wealthier, be it 2X wealthier or 40X wealthier than the average renter.

The return on rent is always -100%. You get a place to live and that’s that. There is never a positive return on an asset after a month, or 30 years of renting. A renter cannot pass on her paid off house to her kids or grandchildren. There is no asset accumulation at all.  There is a reason why some 97% of millionaires are property owners.

The value of real estate varies across all the land and the world. It is very hard to make an assumption of what should be inputted as a result. According to the US Census bureau, the median home price in America is $221,800 while the average home price is $272,900. You can’t get anything livable in San Francisco, New York City, Los Angeles, and maybe even Washington DC and Boston for $250,000. But, you sure can in the mid west for $250,000.

Hence, let’s construct an equity value chart of something based on a range of $250,000-$500,000, with the assumption that upon retirement, you have your house paid off and can attribute this amount into your net worth, or the capitalized value of all rents you would pay if you did not own.


Financial Samurai Home Equity Accumulation Guide Chart

I assume that the above average person buys a $250,000-$500,000 piece of property at 27. By the time they turn 28, they will have owned the property for 1 year and have paid down $3,500-$7,500 in principal on a $250,000-$400,000 loan. I conservatively assume a $250,000 no money down loan for the low end house, even though after 5 years of working, the low-end above average person should have around $25,000-$30,000 saved up in cash based on the after-tax savings charts above.

By the time a 27 year old pays off his or her mortgage in 30 years, s/he will be 57 years old with a place to live rent from for the rest of his/her life. That is the true value of the property, the rent saved for the remainder of the owner’s life. It can be calculated as the present value of those future rental payments, or simply the market value of the home. I assume zero price appreciation on the home to keep things conservative and no extra payments to accelerate the payoff either.

Home prices have historically returned just a bit above inflation every year e.g. 2-3%. But given the above average person puts down about 20%, the 2-3% returns suddenly turns into a 10%-15% cash-on-cash per year. 10-15% compares favorably to the average S&P 500 return of roughly 8%. Add on the tax benefits for mortgage interest deduction and owning a home through a mortgage becomes very beneficial for higher income earners.


So far, we’ve touched upon pre-tax savings, after-tax savings, investment returns of 0 for those savings to remain conservative, and real estate. You need to spend less than you earn for that inevitable day you no longer have an income. You also need to live somewhere, hence, you should own your property if you know you will be there for much longer than 5-10 years.

There’s something missing in all of this, and that something is what I call the X Factor. Above average people seem to always be thinking of new ways to build wealth.  There is an optimism about them that no matter what happens, they can always find ways to make more money. It’s hard to quantify what that X Factor is for the average above average person, but it’s there somehow through music, writing, athletics, communication, entrepreneurship, hustling, and so much more.

The great thing about savings and real estate is that the process is highly automatic.  If you implement the plan and wake up 10 years later, you will inevitably be worth much more provided you keep your job and your home.  Given savings and building equity in your home over the next several decades is largely automatic, the X Factor comes out because you have so much more free time to do something else!


I have gone ahead and averaged the averages for pre-tax savings, post-tax savings, and real estate equity progress in the spreadsheet below. The pre and post tax savings can be invested however you see fit and is a topic of another post. Another thing to note is taxation, given pre-tax savings have to eventually be withdrawn and taxed. Again, these are rough estimates to give you an idea of the average net worth of the above average person.

The Average Net Worth For The Above Average Person by Financial Samurai

There you have it! Based on my assumptions above, the average net worth of the above average 30 year old is around $250,000. By the time this person is 40, his/her net worth should climb to around $660,000 and all the way up to around $2,180,000 million by the age of 60.

The key is to stay disciplined with your savings and investing routine. With a proper asset or net worth allocation, you’ll be amazed at how far your net worth will grow over time.

Of course some of you above average Financial Samurai readers will have a total net worth much higher than the chart. But then, I’d have to write another post entitled, “The Average Net Worth Of Financial Rockstars!”

Recommended Actions For Increasing Your Net Worth

* Manage Your Finances In One Place: The best way to build wealth is to get a handle on your finances by signing up with Personal Capital. They are a free online platform which aggregates all your financial accounts on their Dashboard so you can see where you can optimize. Before Personal Capital, I had to log into eight different systems to track 28 different accounts (brokerage, multiple banks, 401K, etc) to track my finances. Now, I can just log into Personal Capital to see how my stock accounts are doing, how my net worth is progressing, and where my spending is going. You also get your net worth amount sent to your inbox weekly.

One of their best tools is the 401K Fee Analyzer which has helped me save over $1,700 in annual portfolio fees I had no idea I was paying. You just click on the Investment Tab and run your portfolio through their fee analyzer with one click of the button. Their Investment Checkup tool is also great because it graphically shows whether your investment portfolios are property allocated based on your risk profile. There is no better free online tool that has helped me stay on top of my finances more than Personal Capital. It’s important to aggregate all your accounts to get an entire view of your net worth profile. It only takes a minute to sign up.

* Check Your Credit Score: Check your credit score at least once a year given the risk of identity theft as well as the importance of having a good credit score when borrowing money, apply for a mortgage, and applying for a job. For over a year, I thought I had a 790ish credit score and was fine, until my mortgage refinance bank on day 80 of my refinance told me they could not go through due to a $8 late payment by my tenants from two years ago. My credit score was hit by 110 points to 680 and I could not get the lowest rate. I had to spend an extra 10 days fixing my score by contacting the utility company to write a “Clear Credit Letter” to get the bank to follow through. Check your credit score for free here at and protect yourself.

Completely updated 1/27/2015.



Sam started Financial Samurai in 2009 during the depths of the financial crisis as a way to make sense of chaos. After 13 years working on Wall Street, Sam decided to retire in 2012 to utilize everything he learned in business school to focus on online entrepreneurship.

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  1. Tony Kim says


    I’m 29.5 years of age. I’ve been working for 6 years. My parents helped me pay for 2 years of college I paid for the last 3 years. I graduated with a total of 27K USD in debt. I got my first job making $31,200 USD after tax. I worked there for 1 year 2 months before I got laid off early 2010(during the recession, I was working in oil and gas). My first year of working I lived at home with my mother for 2 years to save extra cash and drove a 1995 toyota corolla that was fully paid off. The first year of working I focused on saving every dollar possible. I was able to stay on a budget of around $100 USD per week for food and gas. I didn’t eat out for lunch and ate before meeting up friends at happy hour. After I was laid off I had about 25K in Cash and stocks. Luckily I started making money as the market was crashing so I jumped into the market at the bottom.

    I have been unemployed since. I first liquidated my stock account and started an online retailer that failed. I lost approx. $3,000 USD and about 5 months of time. Then I started a food business that didnt take off until early 2011. This business I kept for 2 years and solid it early 2013. After I sold the business I had approx $150,000 K in cash. I sold the 2nd business as I was starting a 3rd business(brick and mortar retail). It has now been a little over a year and I currently have about $125,000 USD in the stock market(managed by a financial advisor) and $75,000 USD in cash, no home equity. By 30 which is only 5 months away I should be worth close to $275,000 USD(business worth not included). I know I’m ahead but I still feel behind. I am currently looking to start a new business or looking to get into real estate. Any tips?

    None of my friends want to open up about their personal finances. Its frustrating!! Why is it so taboo to talk about net worth?

    note: I didnt start paying off college loans until last year because the interest was below 3%. I also found it difficult to get a business loan so instead of paying off college debt I decided to use the money to grow my businesses that luckily returned over 3%.

    I use a simple excel sheet to track my net worth. I update it every week. I have tried mint but its not too accurate on labeling different purchases.


    • says

      Great story Tony about starting at the bottom, taking risks, and working your way up! You’ve come to the right place if you enjoy talking about personal finances.

      Your friends are probably a little embarrassed about their personal finances, hence why they don’t want to discuss.

      I highly recommend signing up for Personal Capital to track your net worth. They are a free online tool which not only tracks your net worth and sends you a weekly e-mail on how it’s changed with some latest news on the markets, it also analyzes your investments for excessive fees and helps you keep track of your net worth. I found $1,700 a YEAR in investment fees I had no idea I was paying with their free tool!

      I used to do Excel once a month for 10 years until I found them. It’s a great tool and a no brainer to use technology to help in growing our wealth.

      Good to have you around and keep on saving!


    • Randy says

      You should be congratulated for focusing on net worth at such a young age. It is an interesting metric to factor net worth/dollar of income earned, which keeps you focused on both sides of the equation. My experience tells me you are light years ahead of your friends, which will pay huge dividends in terms of overall security later in life. Good job!!

    • Shawn Miller says

      Tony – I think you are doing great and I applaud your entrepenurial spirit in light of challenging economic times. I speak with some credibility as I do financial counseling for the poor. I encourage you to get your debt – school and business – paid down or paid off completely. Once you are debt free you will not believe the no-stress, financial freedom you will have. One book that has really helped me is Dave Ramsey’s “Total Money Makeover”. I do not work for Dave or his organization so am not biased. I followed the process in the book and over several years got completely out of debt – even mortgage debt and am building net worth as I get closer to retirement (I’m 52). But anyway – just wanted to encourage you – you are doing great. Keep under-spending and over-achieving! :)

  2. Joseph says

    Why is the delusional belief that grades matter needed to be considered above average. There is no significant correlation between good grades and higher salaries. When I completed my degree in Physics I had a 2.8 and had several job offers at graduation including Google where I ended up deciding to work.

    Going to college is important. Choosing a major employers respect is important. Choosing classes that are challenging and relevant to your career goals is important. Grades do not matter at all. Nobody has ever asked me my GPA since I graduated. Employers do not care.

    If anything focusing on grades encourages people to take easier classes and less classes per term. Only taking on as much as you can do perfectly may be a good way to keep your GPA up in school, but once you graduate you will be unable to adapt to the real world where that just isn’t practical.

    • says

      Impressive you got into Google with. 2.8 GPA. Where did you go and how did you get your foot in the door? Of the googles I’ve asked, several have said they have a minimum GPA cut off,

    • Jack says

      To me, grades do matter. I work at a Fortune 500 company and when I interview people, I do look at their grades, but it’s only just one aspect of a person and would never hire on grades alone.

      Why does a good GPA matter? It shows to me that the person was disciplined in getting their assignments done, on time, and did a good job to deserve the grade they were given. If I had to interview a person with a 2.8 GPA right out of school, they better be damn great in the other areas I look at.

        • Ivan says

          GPA in Science degree are generally overlooked in the industry… (have a 2.8 GPA in physics who have some understanding of advanced Calculus, optics, and eletronics are at far better position then folks who has a 4.0 GPA in humanities (which go back to you said “a degree that employers respected”). With good experience, a 2.8 phyical science or math graduate shouldn’t have too much trouble getting a job in a great company (but consider that they may not get into grad school which lower their chance of getting promoted).

          • says

            I don’t know about that Ivan. If someone got a 2.8, that’s a C+ average. There must have been some heavy, heavy partying, irresponsibility, lack of focus or something else going on as a result.

            If you were an employer, would you risk it over a candidate with a 3.3, all things being equal? There are tons of 3.0+ students out there looking for a job.

            • Grades don't matter says

              I’m going to disagree on this, to the extent of my experiences. I work for a fortune 250 company, and as a hiring manager have interviewed hundreds of candidates over the past 15 years. I put much more value on those that contributed to paying for their education and got a “C” average than one who got a 3.0+ but never actually had to work and whose education was paid for by parents. “Partying” is a part of most grads experience, but understanding work ethic is not necessarily understood by straight A students. Have never asked or cared during an interview…and upon post reflection have seen that our most successful employees not only had a sub 3.0 average, they are also amongst the hardest working and successful employees. That said..there are also those with above and below 3.0 that have failed… In the end, it’s about the whole person, their experience, and most importantly about their drive that determines their eventual success or failure.

          • Jack says

            Professions and grades are not related to each other so I’m not sure why you’d mix up the two.

            Someone with a BA is most likely not looking for a job that requires a BS degree and vice versa. That’s downright foolish when the job says a B.S. degree required to do the job.

            We already know that people with STEM degrees on average earn more than those with non-STEM degrees and that there is a higher demand for those with STEM degrees than non-STEM.

            What I’m saying is when I’m interviewing a bunch of candidates for a particular job, they are usually candidates with the similar specializations/skills. for example, a bunch of chip designers. There’s not going to be a professional journalist, librarian, or teacher in those list of candidates when I’m comparing GPAs.

            • Adam Miller says

              Financial Sameria, it sounds like you are more familiar with lower level colleges. At top schools, a 2.8 GPA in an engineering track or Physics is pretty good. I am sure if he chose Physics at a top university, he wasn’t interested in getting as much partying in as possible.

            • says

              If you think William and Mary and Berkeley are lower level colleges, then yes.

              But nobody with under a 3.0, more like under a 3.5 would even get a response at Goldman Sachs, where I started. The same went for places like McKinsey, Bain, private equity shops etc.

              Why would a company bother interviewing a 2.8 in engineering when they have tons of 3.8s in engineering?

              Where did you go to school, what was your GPA and what are you doing now?

            • Lockon says

              @Financial Samurai: I had a 2.8 GPA in EE from a respected engineering school and had no problem getting offers. I was asked about it during interviews but I could show that I had a more practical grasp on problem solving than theoretical during the interviews – that’s the type of job I was applying for and the type of job I got. I had a physics professor once who said “it’s now what you know, rather its about knowing where to find it”… words I live by.

              It depends on so many things beyond just GPA. Saying “all things being equal” is meaningless because no two people are the same, nor are all job requirements dependent on theory or book learning.

              Having said that, I’d also like to say thank you for such an excellent article. It really helped me to understand where I should be at my age and gave me some peace of mind.

            • says

              No problem Lockon. Glad you were able to get a good offer with a 2.8 GPA. When you’re in a hiring position, if not already, you will probably also give those with similar GPAs more of a chance, and that’s good.

              Glad you found the article useful!

        • matt says

          I had an 2.80 GPA in Electrical Engineering. I also worked my way through college working 30-40 hours a week. Compare me to someone who got a 3.8 is that they probably did not work and had enough time to study where I did not. Also most were born with a silver spoon in their mouth. Grades do not necessarily point to intelligence or worth ethic. I am in a position to hire engineers and techs and I can tell you I could care less about grades.

          • says

            I think we tend to pivot towards what we know. If we didn’t do well, then we are more forgiving of those who also didn’t do as well.

            Good you are giving other 2.8 GPAs a chance! The question is, would you let your kids get below a 3.0 GPA?

            • Rob says

              I help to hire and direct talent. I think, and agree with the posters that engineering (my discipline) is the misnomer. I lead my team, recommend whom we hire and don’t really consider grades. We aren’t looking at people for what a talking head nominated as their worth on a 4.0 scale – we want proactive problem solvers who can do the work we give them.

              I would take a 2.8 in Physics and weigh that person equally the same as any other candidate. In IT we are looking for talent. Having good grades is sufficient but not necessary to explain someone is talented.

            • matt says

              I 2nd Rob and add that grades are only a small part especially in Engineering. What you learn in school is only a fraction of what makes a person succesful. The smartest person in the world is useless if they can not work with people and cannot explain their thoughts clearly.

              I would take work ethic and can do attitude anytime over somebody with grades.

            • Josh says

              You need to do your homework on the average GPAs at schools like Berkeley. The technical degrees tend to have much lower GPAs (there are very few 3.8s with everything graded on a curve). These same students had very high GPAs entering college. I could understand if you have a finance degree, then the average GPA is going to be (and needs to be) higher.

              Where did you go to school: Georgia Tech
              What was your GPA: 2.9
              What are you doing now? CFO

            • Jon says

              Grade point is one of the few measures of success an interviewer has of a person who is just graduating college if that graduate has no other pertinent experience that applies.

              That said, companies who use grade point as their main criteria for hiring are missing the boat big time IME. I’ve been hiring and working with technical types (mostly engineers) for over 30 years now. Some of the best “problem solvers” i’ve hired and worked with were not 4 points.

              4 pointers tend to be good at theory that is already printed in a book somewhere. They usually fall flat on their face when they have to manipulate the formulae and/or the problem solving method beyond what they’ve memorized in a book. Which happens all the time in engineering fields.

              Of course i’m generalizing here as i’ve also dealt with 4 pointers that were VERY good at application as well. It’s just been my experience that folks with lower grade points tend to be more open to the possiblity that they are not always right and tend seek out other, better solutions.

              High grade point many times mean larger ego. Much larger! Which is a huge problem in technical fields.

            • Kevnst says

              Actually, technical degrees tend to have lower graduating GPAs than their humanities and social science counterparts. I speak from this personally as an ME grad and as a tutor. The engineering programs usually are at least 130+ units programs to be completed in 4 years as opposed to other degrees. Chemical Engineering may be a 150 unit program and kids are expected to graduate in 4 years as well. The school I went to, albeit an average college, has plenty of 1-unit lab courses for engineers which really ended up being 3-6 hours of lab/lecture per week.

              Albeit dated, here are some results from a good college:

              The “average” graduating GPA for STEM is in the range 2.7-3.2 and about 3-4 for social sciences and business, and the top of the ladder is almost exclusively linguistics.

              I’m so glad that the financial and tech titans of the world aren’t made of up of linguists since a 4.0 is always better than a 2.8 GPA ceteris paribus.

      • bob says

        I too have conducted many interviews as an executive and have not one time discussed GPA’s during an interview. Its important to pass to obtain a degree, however, some do not test well and is not a good representation of a persons skills. Many tests are designed to have only one correct answer however there is a runner up with a minor discrepancy that determines the difference in a correct answer. So, it may better test some attention to detail but does not define a persons ability. Sure there are many opinions on the topic and quite frankly there is no right answer. The guy who made it into Google may have had to take some sort of engineering test at Google as part of the interview process so they could assess his skills which is a much more effective method than testing for correct answers….

      • Eric says

        As a business owner and also someone who’s worked in pretty high visibility positions, I know that grades don’t mean much. I understand that some people place more value on them than others, but it really is all about who you know and how well you know your stuff.

        I beat out people with higher degrees and grades than me basically every single time I interviewed for a job because I was better than them. I don’t say that to be arrogant, but it was just true. I made it a point to do my own thing in school, and, in fact, just stopped going because I didn’t feel I was learning anything.

        Is my situation common? Perhaps not. But attitude and skill mean more to most employers than a piece of paper. Granted, there are jobs that I would want someone to have gotten good grades and worked diligently (a doctor, or tax accountant perhaps), but in general, I don’t think as many employers as people think really care about grades at all. It’s about how you carry yourself, how well you can demonstrate your knowledge of the applied subject matter, how well you can communicate your skills, and who you know.

        If the paradigm that grades and educational institution matter were true, there’s no conceivable reason why I should have beaten out people with masters degrees when I didn’t even have a bachelors degree. It’s about knowledge and confidence above most else. Fortunately, I only answer to myself as a boss now. So I make the rules. But if I were to go out into the “regular” job market again, I have no doubt I’d beat out most college grads because I have more experience and skill than they do…and it shows. I won’t lie, I go into an interviews with confidence. I’m not intimidated by interviewers. But again, I’ve been to war too, so I guess that prepares you for anything too.

    • Bud says

      I agree with Joeseph, grades do not matter. There is a known correlation between high gpa and life time W2… Where the same person who received a mid level gpa due to working full time during college while volunteering their time at big brothers big sisters, and starting their own company is clearly someone I’d rather hire/partner with/be friends with/trust. At my company gpa is the last thing we ask an applicant and only if we don’t find enough other impressive life experiences. Everyone is different, to stereotype is to overgeneralize, however guys like Joeseph with a 2.8 typically are more well read, have higher work ethic, are all around more socially adept, and think much more creatively, than their 3.8 gpa counterparts. This is a reflection of the work theory popularized and proved by Captain Christopher Lee who postulated the idea of heads down time vs heads up time. If anyone spends all their time buried in the books, they will do well with gpa but miss so much of life around them, and vice vs. 2.8 gpa’s make better workers, friends, entrepreneurs, inventors, and investors… On another note, I’d take the bet that the graduating class of Any state college vs any Ivy League school has higher mean net worth per student over their lifetime.

      • says

        If you’re the CEO of your company and happier with hiring 2.8 GPA candidates that is great. I’d just rather own and invest in a company that hires 3.8 GPA candidates no matter where they went to school. Work ethic cannot be overemphasized.

        • Anticlimacus says

          A big 4 accounting firm won’t even look at someone with a GPA lower than a 3.0. I worked for one for 5+ years and was involved with recruiting during my employment. A good GPA is vitally important in that field.

    • Steven says

      I don’t agree. I graduated summa cum laude in geophysics and I never once used my degree. What is did take away from college was fortitude. The fortitude to graduate with a 3.96 and a senior research paper that could have been published, was a great accomplishment. It showed me that I am a capable human being and that I can tackle anything I chose when I apply myself. That is invaluable in business, personal life, and all endeavors. You have to be kidding me if you don’t think reputable firms whose salaries are commensurate to success do not look at GPA and honorary decrees like summa cum laude as a basis for hiring. Trust me when I tell you, that when I see honors mentions I immediately take notice. I know how hard I had to work to make that happen, and no one escapes the effort when achieving honorary mention from a top IT school in this nation. It is a badge of grueling mental endurance. It is a worthy one. It is noticed.

  3. Jewie says

    It’s a good post. Essentially what your financial life *could be* if you have batted 1.000. At 35 I’m $100k behind the $418k bogey, due to some unlucky events (divorce), some lucky events (buying a foreclosed property at a $50k discount to fair value), and typical early 20s lifestyling. But I don’t consider the $418k completely unfair.

    I’m with the author that grades often do matter. I’m shocked Google doesn’t have minimums, unless you’re a coding unicorn or data scientist PhD. On Wall Street, GPA minimums are the norm even for experienced hires at most mutual funds, hedge funds, sell side.

  4. Squid4Life says

    I don’t believe grades should matter. I kept a 4.0 GPA and didn’t bother finishing college when I realized that employers don’t really care. I taught myself finance and did better than the people in grad school. Then again, I love playing with numbers so finance and accounting came with ease. No employer has ever asked me for my GPA and when they see I didn’t finish college and ask why, I am honest about it. I was able to sell myself, without the added padding. My current salary is six figures. My friends who went on to grad school don’t even make close to what I do and they have major debt still from school.

  5. Eric says

    I have to imagine most of the people on here are full of it. How are you 24 with a net worth of $100k? Or these guys that are in their 30s saying they have $500k.. You have to all come from money, there’s just no way these numbers are even possible unless you’re making $250k a year.

    My wife and I started bringing in about $110k a year after taxes starting 2 years ago (I’m 30)
    our monthly bills come out to about $7,000 so that leaves us with $26,000 a year. When you figure nights out, gifts, extra junk, that leaves me with about $15,000 to put away each year. I currently have a net worth of about $50k, with $25k in my investments. (would have been more if I didn’t have to pay for an engagement ring and part of a wedding last year) Even if I continue to put $15,000 a year away, and average 20% returns I’ll still have under $175k by the time I’m 35… someone please tell me what I’m doing wrong? FYI I’m doing way better than most people I know. I do know one guy that has been maxing out his 401k since he was like 22 and has about $65k in there, but he still lives at home with his parents at age 29!

    • Jonathan says

      Eric, it’s glaringly obvious what you’re doing wrong – “our monthly bills come out to about $7,000″

      I can’t even imagine how your monthly spending is that high. Presumably there’s some major student loan debt in there – but even so, those are some high expenses! You don’t mention children so I assume it’s just the two of you.

      My wife and I are also 30, and make a bit more than you; however, we’re able to increase our net worth by nearly 50% of our incomes each year (mostly by saving…partly through asset appreciation) and give away about 25% of our income. Our basic spending each month is well under half of yours, even with a baby.

    • Lynn says

      You need to track where your money goes. An average American household brings home less than half of what you and your wife make, you definitely can find rooms to trim your expenses. When I was your age my husband and I made about what you make. We lived in a one bedroom apartment, ate at home most of the time, walked the park as a recreation, did staycations instead of vacations, invite friends over instead of going out (invest in a good margarita machine). In two years we saved $100k, roughly half the take home and didn’t even feel like we didn’t have fun. Watching our nest eggs grow is fun.

      • says

        Tracking where your money goes is EXACTLY what everybody should do! How many times have we withdrawn money from the ATM machine and then several days later we are wondering WHERE IT ALL WENT?! Now imagine if we don’t track our net worth and expenses, then that’s a disaster.

        I recommend everybody sign up for Personal Capital, a free financial tools program that tracks your net worth for you, sends you an e-mail once a week with the latest net worth amount, and highlights your portfolio performance. You can manage your expenses and income and analyze your portfolios for excessive fees too. They’ve got their software as an app for the iPhone or Android too.

        One we start knowing where our money is going, we can start optimizing our wealth. You saving $100,000 is awesome in two years, especially since it’s half your take home. Well done!

    • Adam Miller says

      I made my money by living small in my twenties. When I graduated college, I used a VA loan to buy a triplex and lived in the middle crappy unit while I fixed it up and lived there essentially rent free. Once it was fixed up, I used the money I saved to buy another triplex and did the same thing. I bought another triplex and lived in the crappy unit while I fixed it up. At that point, I had $1000 in cash flow with a free place to live and I was 24 years old. I am 36 now and own a B&B, and own 30 units with a net worth about $650,000. It all started by living small when I was young. Would I be willing to live like that now? Hell no!! That is why I did it when I was 22 and used to the college lifestyle.

      • says

        Wow, 30 units is a lot! Where do you own these properties? In SF, one unit would be at least $600,000, and a one bedroom, maybe.

        You are exactly right about doing this stuff in our 20s, b/c we won’t want to hustle as much when we are older.

    • bonnie says

      Not full of it, but definitely more frugal… Whatever you are doing to have a monthly budget of 7k means you haven’t yet recognized the difference between necessity and personal choice.
      I started out of university with a salary of 30k, and prioritized putting the max in my 401k that I was allowed. I am now mid-30s and still make less than 6 figures a year (some of the sciences really don’t pay all that great!), but I have maxed out my 401k every year that I’ve had one (there were two years where my employer didn’t have one), and have invested carefully and consistently. I have lived in a tiny studio apartment for more than 12 years in order to save up enough cash to buy a home. While I don’t live in SF, I do in another high cost of living area in California where even a fixer upper starter home will run you around 500k. Not coming from a family with a ton of money, I wasn’t yet in a position to risk it all and purchase when the market here began to skyrocket back in 2001. Instead, I opted for sacrifice and a little extra patience while continuing to try to live like a starving college student. Family and friends have heckled me for years, but I finally got my break earlier this year when I managed to land a duplex in a good neighborhood in town as a result of having invested the difference I saved between living in luxury for the past 12 years (having a larger apartment) or scrimping a bit (living in my shack and sucking it up). Even after buying the property, I have 300k in my 401k, around 60k in stocks and bonds, and 20k in my savings/checking. The duplex came with tenants that get to finish out their leases, so I am still just renting a room in town (which definitely sucks), but I am saving up even more money in the meantime. Net worth clocks in at about 630k. Monthly expenses = about $1200. I worked to pay my own way through school (UC) and came out with, while perhaps not the GPA I wanted, 0 debt. I worked my butt off to do it, and I still do today. I don’t work at my ‘dream job’ – and I don’t make oodles of dough – but my job has survived the economic downturn and has provided me with a roof over my head, groceries and enough extra money to save for retirement and to indulge in my various hobbies (within reason). I have only owned 2 cars – both bought used and with cash (I splurged last year and upgraded from my 97 corolla to an 08 Honda fit). I eat out, but usually for breakfast rather than dinner, and while I love to travel, I usually only manage to take one big trip a year, and I always budget for it in advance. I don’t try to keep up with the Joneses or my more affluent friends. Those that don’t respect or understand that I can’t always eat out at the 5 star restaurant, take the cruise to Mexico, or hop a flight to go skiing in Colorado with them and still maintain my financial solvency/independence aren’t really friends (or prospective spouses/partners!)… and I learned early on to eventually distance myself from them. When I am tempted to waver from my long-term plan I just remembering/thinking about where I want to be when I am my parents’ ages. I have seen how their individual work ethics, investment strategies, personal life decisions (divorce, home purchases, relocations for jobs/homes – and timing of same) and plain old dumb luck (good and bad) have impacted them – often for the worse. Who knows if I’ll be able to ever retire? I don’t. Not sure I’ll want to anyway. BUT – I do hope to have the duplex paid off by the time I’m 55… and to move up a little bit from my backpacker’s budget when I travel. After that, who knows!

    • Steven says

      7000 in monthly payments? Wow. That is crazy. Mine are 2200 on a tight budget, and 4200 if I allow for additional payments on the house, extra to savings, and extra spending for personal endeavors. 7000 is an extravagant lifestyle even for New York or SF. Seriously. And if you are those places you would be making way more than an extra 25k a year. And that is two people. Me think you need an honest reassessment of your financial life.

    • G-Hard nuts says

      If he was maxing out his 401K for 7 straight years, his contributions would have been way more than $69,000… let alone all of his capital gains realized in that period. What has been the average annual returns in the past 7 years… conservatively at LEAST 10%.

      I’d imagine he’d be closer to 150k than 69k. Just sayin.

  6. Eric Z says

    I find your articles intriguing. Thanks for helping me think about the future. I’m 40 years old and worked for an HR Outsourcing firm for 14 years consulting on and working with DC and DB plans. I spoke with many clients and their employees and thought it was so sad so many 50+ year olds didn’t even have $70K or $80K in their 401(k) plans; these were also employees who were making decent money- $60K+/year. I always remember my Dad telling me to save as much as early as I can in my 401(k) plan. I feel that was revolutionary coming from an immigrant from Lithuania who never even finished middle school. I’m proud him and my Mom saved a decent amount for retirement. Unfortunately they have both passed away but left me with some good saving habits.

    I’ve saved around $320K in my 401(k) plan so far and have another $50K in my old ESOP. My wife is a year younger and has $130K. I feel comfortable where we are, even though it’s low according to your “what should you have saved by XX chart.” I feel your chart is the ideal amount to save but not very realistic for many because of low earning potential out of school and debt. I was fortunate and saved a decent amount living at home but I was only making $26K out of school.

    Regarding grades, my thought is the most important part is to graduate. I had a high 2 GPA from a state school in IL. I feel many more employers now ask for and take into consideration a candidate’s GPA, but I feel it doesn’t directly correlate to high job performance. The same goes with graduate degrees, especially when a candidate goes straight from their bachelors to their masters. I always recommend gaining true work experience before going back to school. The job market is saturated with many grad degrees with little experience. I still value experience but it’s unfortunate many just look at grades and degrees. As you’ve said and others have commented, it’s important to look at the whole person when assessing candidates.

    My current role is an HR leader in health care making decent living financially (I know that’s relative though).

    Thanks again.

  7. NotBrian says

    What an incredible bunch of drivel.

    I have a HIGH SCHOOL DIPLOMA (much like BILL GATES), and have a net worth of $2,000,000. I invested in real estate that I bought outright (NO MORTGAGES), have a steady rental income of $15,000 per month and an appreciating portfolio.

  8. AJ says

    Hello! I have been reading this website for awhile but this is my first post! :) I think I’m on par for my age. 33, 350k net worth (290k in 401k and Roth IRA and 60k in pension) I plan on leaving my job due to military transfer in a few years and will be rolling my pension into an IRA since who knows if it will be there in 30+ years. My husband has another 150k in his 401k and Roth. We are working on early retirement. He has 8 years left in the military and I’d love for him to be able to relax after that. He is about to leave for his 5th deployment and we want to enjoy life after the military. Early retirement can be done with a little hard work and financial knowledge! I started work with a telecommunications company at age 19 and went to college while working. It was not easy but it gave me the ability to begin saving early (started my Roth at 19 and always contributed the max, contributed around 10% to 401k in beginning but just started maxing out a few years ago) I was fortunate enough for have my employer help with tuition reimbursement of 3k per year but I payed the rest myself as I went and graduated with no student loans. We have no car payments, only a mortgage. But our goal is to pay that off before he retires from the military in 8 years. No kids (it’s a little hard to do when he is constantly gone) but hopefully that will happen in a year or so. I also credit no children with the ability to save, although some people would have spent that money on nicer cars, homes, etc. This is not to brag but give my story and how I made it happen! )

  9. says

    I graduated from a lousy school with a 2.8 GPA. I skipped most classes because it was old guys teaching old stuff. Instead I learned how to identify challenges and solve them with critical thinking – a far more universal skill. Now I’m killing it at a prominent space industry distruptor, whose name I don’t care to mention. Prior to that I was at two successful startups in SV who are at the core of technology you use dozens of times per day.

    Some jobs [most in finance probably] require people who can follow instructions. In which case, grades might be a good indicator of how well a person conforms and performs to standards. Other jobs, like those that are paving new ground for humanity, require people to invent things that can’t be graded on anything other than success. In which case, deviations from the norm combined with raw talent are probably a better indicator of success.

    As a fellow above-average person I propose a change to bullet (1):

    “A person who is assertive and can develop skills that deliver value to and assure success within his/her environment.”

    Email/web/full name excluded for the sake of my employer(s)

  10. Lynn says

    We bought our first house at age 22 and had 10 by 30yrs old. We never over-spent when we were young. We took a lot of educated risks and now, in our 50’s, have a nw of 14mil. I handle the RE (20+ rentals) and my husband is a highly compensated executive. No one ever gave us anything. We did things outside of the 9-5 to get wealthy. My kid bought his first rental at age 20 and is worth about 200K at age 25. Yes – we did give him the downpayment. He is a smart kid and makes about 100K. You probably won’t achieve wealth from your 9-5. Your 9-5 allows you the opportunity to get in to other investments. You must not get so caught-up in the day-to-day that you lose sight of the real opportunities. Think outside the box and put some time in to it EARLY. We made sick $$$ in our 20’s, but not through the 9-5.

  11. Lynn says

    I haven’t looked in to any studies regarding the generational wealth transfer that is expected. I expect about 500K (the minimum would be 350K coming from an insurance policy that I own) – not big bucks in the scheme of things. Nothing from my husbands side. In fact, we have been partially supporting my inlaws (and sister) for over 15yrs. I know that my 20 something will be getting a lot, albeit 25 yrs down the road. We are, however, going to start “gifting” the max this year and we have funded his Roth (since he was 16 and still do today). We paid cash for his Ivy education (at our Alma Mater). For comparison sake, we were making 200K at age 30 – 25yrs ago. I don’t know what that would be in today’s dollars. I remember computing nw at 33 and it was 850K. By our early 40’s, it was about 2.5mil. We consider ourselves upper-middle class (not wealthy or rich). On a side note, I find it interesting that many “younger” posters here separate what each spouse has. We never have thought in those terms, but, then again, we married 3 wks after college graduation (with a negative net worth – husband had college loans). We came out of school in 1980, making 14K and 12K.

  12. AD says

    Hi all,

    Interesting article and comments. Would love to hear from those who got into real estate with little/no formal education in finance/real estate, because my degree is in something else entirely. Especially interested in which books or resources you used to educate yourself. Although not a genius (like many of you seem), I’m a bit of an autodidact and very interested in the passive income (even if only supplemental to my low six-figure income) that owning properties can provide. Eventually want to manage multiple properties and get out of corporate America, and start “living absolutely free” as Samurai puts it. I’d then be able to focus more on my creative/artistic endeavors.

    Much appreciated,

    • Lynn says

      We went heavy into Real Estate right out of school and had 12 or 14 properties when I “retired” at 31 after our son was born. I still did a lot of buying (many at the Courthouse), selling, 1031’s, etc. and built the portfolio up to 20+. We also have 3 personal homes – buying our summer home at 29. I had no “formal” training (I was an Econ major in College and then went to Law School at night while working a 9-5). I did grow up with a mother who owned and managed small (4 or 5 unit) apartment houses and spent many a summer painting and cleaning those places. She was a School Nurse. I used to enjoy going with her to look at prospective purchases – but had no exposure to the actual “numbers”. I read everything I could get my hands on (“Nothing Down” comes to mind). These were years (decades) before any info was available on-line. Now, people can learn as much as they want by simply going on-line. I’d recommend a great web site (I have no financial interest in it), but I don’t know if that is allowed here. It’s free to join and everyone is friendly and helpful (from newbies to seasoned mega-investors). It’s only been during the past 5 or 6 yrs that my husband’s “outside” activities have caught-up with our RE NW.

  13. Squid4Life says

    I guess I would never work for FS since my gpa was oh let’s say less than most. I was working since I was twelve albeit illegally but making the bucks nonetheless. At 35 I am very well off and I don’t know the gpa of anyone who works for me. My team knows that a spiffy resumes and connections to big names don’t mean a thing to me. Results, work ethic, personal values and creative and analytical thinking are all that matters in my business. Everyone has their ideas as to what they look for in a worker.

  14. dustin faeder says

    So I understand that this is “for the above average person,” but I think there is a seriously flawed assumption going on here: that your above-average person begins work at 22. I would certainly consider my wife and I “above average,” in that we have 20 years of higher education between us, at well-reputed institutions such as Vanderbilt, Tufts, and the University of Michigan. Together we have undergraduate degrees in German Studies, Economics, Philosophy, Psychology, and Sociology. We also have masters in Sociology and Philosophy, a PhD in Sociology, and a JD. But this means we didn’t really start working until age 30, have had to manage our student loans, and didn’t become solvent until 31. Now that we are out of school and working, however, we are rapidly accumulating wealth. For many professions, there is an educational delay that is later recompensed by a higher pay rate, but that is not reflected in your model.

      • Dustin Faeder says

        So that’s exactly the problem I’m highlighting. There are many definitions of what constitutes an “above average” person. By labeling this article the way you do, you seem to imply a close correspondence between a person’s quality and a person’s wealth, which seems like a false equivalence. Many famous artists, intellectuals, and saints were notoriously poor. The article would be more aptly named “The Average Net Worth for the Richest 20%, By Age,” which might be even more aptly named “How Much $$ You Would Have in the 95th percentile of wealth for Your Age Group.” These numbers are just guesses, but one further point they make is that I’m confused why you use the average rather than the median, since that is vastly skewed by the wealth of the 1%.

        You are right that a person could use the “Years Worked” column, which would then represent an estimate of the average wealth of an individual in some high wealth percentile who has only worked for X years. However, that would be a poor proxy for the different economic track typically enjoyed by those with higher educations, since the entire curve of wealth building looks different for different education levels.

        • says

          I understand you’re frustrated that you don’t fall into the above average net worth estimations. This has been common feedback by many who get a lot of education. Just simply blaze your own trail Dustin and make your own rules. These figures are just what I believe in.

  15. Rich says

    I love reading these comments.

    Some of the things I agree with:
    * GPA counts, but only for your first few years out of college, and if you plan to do any grad school. Nobody cares after you have work experience in your field. I also agree that it does reflect work ethic in college, but not necessarily intelligence and absolutely not earning potential.
    * It’s easy to look at other people’s success and feel they had it easier. I know, I’ve done it a lot.

    My stats: just turned 44. Married, two kids and net worth of ~$615k. My wife currently doees not work much at all, choosing to stay home with the kids. I am an engineer in the Midwest earning an average engineer’s income. I like the poster who said the table gives a good number if you bat 1.000. Things that have probably set me back:
    * Wife brought in $25k of college/consumer debt. NOTE: I emphatically do *NOT* consider her a liability :-)
    * Upgraded our home near the peak of the market and overpaid considerably.
    * I didn’t understand investing in my 20s at all. I once bought a mutual fund with the letters OTC in them and didn’t know what they meant. I do now!

    My financial plan includes:
    * maximizing 401k contributions and a 6% match from my employer to really grow that retirement money
    * continuing to pay on our 15 year mortgage to eliminate mortgage debt in the next 10 years.
    * follow the advice in Ben Stein’s great book, “Yes you can time the market” about SMARTER dollar cost averaging
    * Of course tracking net worth with Personal Capital by linking all my accounts
    * tracking the budget with YNAB. It’s basically the envelope budget system but with an Android app instead of envelopes.
    * Ultimately, being prepared to possibly *semi* retire at age 55. I will spill the beans on an IRS detail that I may take advantage of. In the year you turn 55, if you leave your job for whatever reason, you can begin to withdraw from that employer’s 401k *WITHOUT PENALTY*. If you plan ahead, you can roll previous 401k money into the current employer’s plan and have essentially ALL of your retirement money available to you at age 55.

  16. Andy in Denver says

    Great info.

    At age 49 I’m at about 2M ($750K retirement, $750K investment, $500K home equity). $400K of that investment is from a recent inheritance. I own a vacation property out of state and a condo that I rent out (both free and clear), and live with my domestic partner in a house he owns and pay him a modest monthly rent.

    Even with a not super high end income (just over 100K) I max my 401ks and will do catch up in 2015 (when I turn 50 – $24K max contribution). Use the qualified dividend income from investments if I need extra cash and limit my tax burden by deferring income. (Also, max the HCSA account; another way to stash cash away tax free).

    A previous post talked about removing 401k monies after age 55 from a qualified plan; that’s true, but the order to use your retirement money is always – taxable first – then tax deferred (401k) – then tax free (Roth). Unless you have no other cash you would not want to take 401k money at age 55. And if you don’t have any other cash – why are you retiring?

    Admittedly no kids to raise or send to college, so one reason why I’ve accumulated so much cash. But I keep my cars for 10-15 years, buy cars with cash, cook at home a lot, and don’t spend money on useless things. I cringe when I talk to (much less wealthy) friends about their leased cars, or how their car will be paid off in a few months and they will go out right away and buy new.

    I use Quicken pretty exclusively to track my investments.

  17. Erin says

    I’m not sure how people can afford those contributions, either. My husband and I are 35 with a household income of 64k (which I understand is about average). We are currently only able to contribute 3840 to our 401k each year, with a match of 2560 for a total of 6400. We own a median home (220k) with 95k in equity and a 15-year mortgage payment of 1326 per month. Our expenses come out to 3500 a month, we have no debt except our mortgage, and we’re very frugal- shopping at garage sales and thrift stores, eating a simple diet of lots of beans and grains with mostly only the cheapest produce under a dollar per pound and no meat. We drive cheap, paid-for cars. We don’t have cable, and my flip phone with no data costs $10 per month. We have four children ranging in age from 2 to 10. The only real extravagance we have is that three of the four kids take piano lessons for $120 per month. This chart may be realistic for single people or married people with no children, but it doesn’t seem very workable for families.

  18. Rich says


    Fair question re: use of 401k money. My comment was mostly about my wanting that flexibility. I am not suggesting everyone follow the same plan. I don’t know about you, but I don’t believe I would ever have enough to retire without using at least some 401k money. Perhaps if the strategy was to put everything into post-tax savings that is possible (i.e. a Roth 401k with high contribution limits?). I’ve got some in post-tax, but the lion’s share in pre-tax savings. Of course you are right in your order of what to draw on first, but it’s not as bad as you might think if you plan to retire in the 15% bracket. Were I to shift my savings today to be more post-tax, I would be paying 25% federal income tax on that money. Nobody has a crystal ball with respect to future tax rates, but after the Bush tax cuts for the lower brackets were made permanent by this administration, I have a least a little confidence that 15% is where I’ll be if I choose to retire at 55. It doesn’t sound lavish, but with a paid-for home it’s not bad. I can also choose to pick up work here and there to supplement that income. As a software engineer with fairly relevant skills I get unsolicited requests to work 3-12 month contracts pretty frequently.

  19. John says

    So I’m 30 and have a net worth of about $750k. However, I only have about $25k in 401ks, $250k in cash, and the rest is equity in my home (combo of appreciation and aggressive principal paydown). I owe about $260k on my house and I’m considering just paying off the mortgage and loading up on “investments” after that. I personally have the blessing of making too much to deduct hardly anything from pre-tax retirement accounts and therefore my only real contribution each year is maxing out my HSA ($5,500/yr). What’s my move in my 30’s? In a good market my household can bring in $350k+ and in a down year probably $250k+. However, if my wife quit or went part-time we’d be down $100k/yr. What should my goal be over the next 10 years?

  20. Shawn M says

    My advice would be to 1) eliminate non-mortgage debt and 2) pay off your mortgage. Some would say leave the mortgage debt and invest in the market, but I’m not one of those people. I think its better to be out of debt, besides, the market is at/near all time highs and we are due for another recession at some point (its been ~ 7 years since the last one) and I don’t think stock market returns are going to be spectacular for the next couple of years. Good to max out your HSA and 401K.

    Your “move in your 30s” depends on your goals – and you should think bigger than financial (ie, do you want kids/more kids? If so, is your wife going to keep working? Does she want to quit to spend more time with the kids, or cut back to part-time). These kinds of decisions made now, when kids are young and impressionable, are more important than the financial ones. Those things aside, I would 1) pay off all debt, 2) build wealth. It’s that simple. Dave Ramsey’s “Total money makeover” can spell out more details.

    Congrats on your current net worth position. At your age that is admirable.

  21. says

    I have been looking for an honest net worth appraisal on line for stewards of finances for years. Great job! For the first time, I can see I do have a lot of work to do, while, understanding that I am focused on retiring early. Thank you for your effort.

  22. Lockon says

    Question about including equity in a home: some “experts” say that including equity in your home is meaningless to net worth because if you were to realize that equity (sell your home) you would need the same money to either buy a new home or pay for rent. Can you better explain why you include home equity in the equation?
    PS, I’m not disputing the importance of owning – that is 100% clear.

    • Thomas47 says

      To illustrate:

      Imagine three houses on a street, each worth $300k.

      House A has 33% equity with $200k mortgage balance

      House B has 50% equity with $150k mortgage balance

      House C has 100% equity with no mortgage

      Otherwise, the finances are the same for the house’s owners.

      The only way to fairly measure net worth is to say that the owner of house C has the most NW. It would not be accurate to omit equity and say all three households have the same NW.

  23. Robert says

    I’m a small business owner and you have a problem with saving as much money as you predict. I own a construction company and get about 20 to 50,000 a year under the table. I put a lot of money into toys and my wife and I go out quite often. Any suggestions as to where to invest liquid cash that I don’t want Uncle Sam to find out about? My wife works and we claim last year right around 100 K in combined in gross income. I plan on building a house in using the liquid cash to pay subs to do so. My goal is to be 35 with a $300,000 plus home paid for but I have no money invested and 401(k)/retirement. My wife is a teacher and obviously will have a pension in my business typically has 30 to 60,000 in it. Just wondering if anyone can help with how to spend liquid cash because obviously the tax-free benefits of it or how I can get ahead.

  24. Steve says

    This seems like a load of nonsense. The “above average” net worth is seemingly based on the comments of a group of rich people who gather to talk about all the money they have. Talk about selection bias!

    I’m probably about average for my age based on the “above average” net worth chart, but there are so many people who I would also consider to be doing well for themselves that are no where near these figures. Anyone going to grad school, which is a common thing these days, will be way behind these numbers for the first decade or two of their lives.

  25. Jasmine says

    I’m 22 with a net worth of 60k (45k in savings, 15k in retirement.)
    Would have been 80k but when I got my licence I purchased a 20k car.

    I haven’t been financially dependent on anyone since I was 17.
    I didn’t go to college, in fact, I left school when I was 14 – no regrets.

    Despite not finishing high school the first job I landed paid 46k PA.
    I suppose I’m lucky the minimum wage In my country is $16 an hour but most employers pay a minimum of $18.52 an hour.

  26. Josh says


    One thing that doesn’t add up to me is the use of the 2015 tax deferred limits for all ages. For example, a person who is 45 years old in 2015 could not have legally contributed $18,000 back when they started investing as a 21 year old in 1991. Back then, the limit was only $8,475. So if you assume that a person has contributed the maximum amount for their entire career, then you have to factor in that 401k limits have increased over time. Otherwise, the numbers are skewed upwards the older a person is.

    • says

      Excellent point. The chart is more forward looking than backward looking. BUT, I also think the chart can pertain well to anybody given I don’t include any company match or much growth on the low end and high end.

      • Josh says

        5% growth on investments isn’t really conservative, if we’re talking about growth AFTER an assumed long term inflation rate of 3%. I typically assume a long term pre-inflation growth rate of ~8%, so if I want to think in present dollars, then I assume a real long term growth rate of 8-3 = 5%.

        Since you also assume in your chart that the tax deferred limits will never increase from their current 2015 levels, then I view your chart as being presented in present dollars when doing forward projections (since the limits are indexed to inflation, they tend to stay relatively constant in terms of real purchasing power).

        Huh…now that I think about it a little more, maybe you can use the chart to do proper backwards analyses. You just have to mentally consider that while the past years’ contribution amounts were actually lower in past dollars, they were worth more in present dollars – which is accounted for by using the after inflation 5% growth rate.

        Might need to dig out my old Finance for Engineers book to confirm if I’m thinking about NPV correctly…

  27. says

    Well, I don’t “fit” into the averages….I’m a single female, aged 60, no kids, no hubby. I graduated from the U.of Wisconsin 1977 majoring in Bacteriology, worked as a chemist for five years, and have had my own business(es) for 33 years. In 1980, I signed up for seminars on retirement planning , at the Fortune 500 where I worked, but at that time, Human Resources informed me that I was “too young” to attend so I was not allowed to go.

    I bought my first condo here in California in 1989 and still own it and yes, it’s paid off. In 1993-94 I attended a year of graduate school on a full fellowship and dropped out of the PhD program as I saw a future in academic biological research as the path to legalized welfare. (competing for grants when only 12 percent were getting approved.)

    I started another business, doing well when I could/can work through migraines which last three days and are debilitating. These come when I eat certain foods or inhale certain fumes. My renewal commissions were forfeited/stolen for my first two businesses. I learned a lot the hard way.

    So today I have a business that I have ready buyers for my future discounted flow of commissions. I sold some future commissions a couple years ago to buy marketing material. My business is only worth about $163000, but it is growing fast now that I can manage my migraines. In addition, I will be completing my MBA in three months at my current age of sixty. I will also have completed the HTML5 Content Developer Certificate at the junior college while I have sat here launching what is now my third business. Today I signed three contracts for products that I have sold before, but these new contracts all give me my own URLS to use and I now have the computer skills I need to benefit from these.

    Here is me: 1) my dog, Winston, aged 6 is paid off and I have breeding rights; I bought him for $600. Ok….I don’t plan to breed him…he’s strictly my buddy, and from my standpoint he’s worth over a million! 2) My condo is worth $160,000 and as mentioned above is paid for. 3) a vacation home at the base of Sequoia Park on the river is worth around $400000 and paid off. A friend occupies the large bedroom and pays me $750 a month. 4) I have two other condos out of state that I net around $500 a month total from. They are worth about $100,000 together. 5) Liquid cash and collectibles are worth $46,000. 6. Steady renewal income is about $1800 a month. Renewals are increasing at a rate of about $400 a month. If I did nothing to maintain the renewal income they would be expected to last about 7 years. I guess all this adds up to around $823,000 so according to the standards set down above I have failed royally.

    On the other hand, I walk 2 miles a day, take no meds, do yoga, and feel I have a bright future as my MBA and computer marketing skills are helping me a great deal and I have a feeling I will be starting a marketing branch as part of my business. Although I appear to be a failure I can enjoy my weekends in Three Rivers by Sequoia National Park, and because of my steady renewals I feel I am not stressed out and at risk for a heart attack.

  28. Cheryl says

    Hey! A coworker introduced me to your site and I am fascinated by your articles.
    I was wondering if you could give me some advice:

    I am 24 years old and a project manager making 70k

    In 2009 i graduated community college with $0 debt (state paid for tuition thanks to 4.0, even profited over $2,000 in cash scholarships for maintaining it while in college). And since I had no money for college, my parents convinced me to take a Service Desk Tech (IT help desk) job for around 30k after community college while I enrolled at a public school with an online Comp Sci bachelors program (part time has cost me roughly 7-8k per year). After 1.5 years I was promoted to a QA Tester making around $35k, then to business analyst after 6 months (no raise because i was still “entry level” with no bachelors), and finally to lead business analyst 7 months later (to a salary of 41k).

    A year later, I was fed up with being underpaid for my work (41k is piddly for a business analyst even without a degree, nevermind one who is a supervisor), so I went and got my CAPM certification (slowing my degree by a few months), and asked for a raise. Company said they couldn’t afford it, so I jumped ship when I found a company offering me 70k, 50% 401k match, and tuition reimbursement.

    So now it’s 2015, I’m 4 months from graduating college, I’m making 70k as a project manager (been working here for 2 months), putting 10% of my income into my 401k (currently valued at 10k, & 50% is matched by my employer, i’m at their max for matching), living at home with my parents, I have 3k in CD’s, $26k in savings, and have no debt whatsoever (paying $8k per year for school in cash, so no student loans). I will be continuing to graduate school for my masters in the fall, so I am still expecting to have bills for school for the next 2-3 years (although potentially reimbursed by my job). With my new salary I am dumping $2k of my after tax pay into my savings every month (some of which gets dipped into when tuition time comes).

    I see you recommend putting into the max for 401k’s. I’ve never heard of this before and am fascinated, however, being 24 I really want to save for a house. My mom says I shouldn’t worry about upping my 401k at all right now since I don’t have a big nest egg (for a house) and I can’t take money out of my 401k till retirement and I’d need the money now. I was wondering if you had advice regarding whether one could be in my financial situation and still pay for school, save for a house (I’d like to be able to leave my parents house in 5 years), and still be able to up my 401k contribution percentage?


    • says

      Hi Cheryl,

      Welcome to my site! First of all, nice job implementing a savings structure and getting some more education for your future.

      Contributing to a 401k or saving for a house is certainly a dilemma many people face. The question becomes: How much is the downpayment for the house you want to buy?

      With a $70,000 salary and living at home, you should easily be able to max out $18,000 a year for 2015. Still leaves you with a gross salary of $52,000 to live/save.”Housing fever” desire is strong w/ many people, but if you are still in school and just starting this job, you need to think long and hard about whether you really plan to stay put for AT LEAST five years before buying a house. What if another opportunity arises? Housing has moved up a lot since 2009. Is there a rush?

      Check out:

      Contribute To 401k or Invest After Tax?

      • Cheryl says

        No real eminent rush, just simply that i’m 24 and want to move out without throwing away my money into rent (my parents only charge me 400 a month to live home and “mooch” when apartments in the area are around 800 not including utilities and the food i’d have to pay for).

        Also my boyfriend and I have been together about 4 years. He just graduated college and is in HUGE student debt from RPI (I’m fairly certain it’s around 80-100k though he won’t give me the specific #), but we definitely want to start thinking about a future together soon-ish (hopefully within the next 5-7 years), so I know with his debt I’m going to need to save for the future “us” mostly on my own (and again, I don’t want to throw away rent money on a temporary place when I could save it towards a permanent place).

        Considering where I’m located (between 2 major cities within an hourish radius, plus a lottttt of IT companies in the area), I know I have no need to move where I live much if any to grow my project management career (Google, Bloomberg and others are within an hourish radius, plus my current company is pretty great and I wanna stick around as long as it works out). So i know picking a permanent residence won’t hurt my opportunities.

        And in answer to your question: Good houses in this area go for 250-300k so I’m assuming I’d need 50-75k for a down payment??

  29. Michael C. says

    Financial Samurai, I enjoyed the post. However, I think the definition of Above Average Person is a little off with the claim that he or she “has little-to-no student loan debt due to scholarships and part-time work”. Huh? Whether or not a person has student loan debt has little to do with moral fiber and a lot to do with the side of the tracks on which they were born.

    In the comment section you said that you went to top-tier schools (W&M, Cal) and, as such, you should know that most people do not get a full scholarship–or even a 50% scholarship–to elite colleges and universities, particularly graduate programs (MBA), medical schools and law schools. Top schools don’t need to entice the choice candidates with scholarships; I promise you that Harvard Law is NOT giving full rides to everyone with a GPA above 3.7 and LSAT above 170 (that would be almost the entire class). The reason top universities are not handing out scholarships to every Mensa member is because they rely on paying students to remain solvent!!

    So if the Above Average Person has little-to-no student loan debt, how are they accomplishing this feat? Part-time work? The total 2014-2015 cost of attending Harvard College without financial aid is $58,607 for tuition, room, board and fees. The most amazing part-time, college student job in the world wouldn’t pay half of that amount!

    Here’s the reality–the overwhelming majority of people who graduate with no student loans from top-tier colleges and universities were able to do so because their family financed their education. And that’s ok. My gripe is that having family money doesn’t make anyone “Above Average”–it just means that you won the baby lottery.

    Wake up Financial Samurai. All of the characteristics of the “Above Average” person require them to affirmatively do something–to delay gratification, to reach a higher level of awareness, etc. But not this student loan nonsense. You are attributing a virtue/accomplishment to people who, more likely than not, did nothing to earn it.

    My brother and I both have multiple degrees from top tier schools. We had a variety of athletic and academic scholarships throughout and worked while undergrads (I worked in grad school as well)–and we still had to fill in the gap with student loans. At top-tier schools, part-time work and scholarships usually don’t come anywhere close to covering $50k+ per year in tuition, room, board and fees. Many of our friends and former classmates are your “Above Average” people who graduated with no student loans. And virtually none of them accomplished this feat on their own.

    One final nit–my brother and I are both in our late 30’s and have average net worths firmly within your Above Average person scale. Accumulating wealth has been slow and difficult; also, the wealth building process is not linear (for most people). Its more like a hockey stick. So your average net worth scale should probably be adjusted to reflect the 80% of us who didn’t get an economic head start from our family.

    • says

      Affirmatively do something… does working during the summers, or a part-time job, or applying for scholarships/grants not mean affirmatively doing something to reduce tuition?

      And who said the above average person does it all on their own. Above average people get a lot of help from their parents. They are in other words, LUCKIER than average. It is the person who is born on third, who things s/he hit a triple that society hates.

      Read: A Massive Generational Wealth Transfer Is Why Everything Will Be OK

      • Michael C. says

        Suggested additions to definition of “Above Average”:

        12) Above average people get a lot of financial assistance from their parents.

        13) Above Average are, in other words, LUCKIER than average.

  30. gabija says

    This was a great read! We are dual retired military. Our numbers have to go in very different columns — there was no TSP (401K ) in the military until about 2001 — so, we are heavy in the taxable accounts, the Roth accounts come next, and our TSP (tax deferred) accounts are small in comparison. We both maxed them as soon as they were available, but that was late in our career. In reality, for us that is best, because with our pensions, and considering the tax benefits of a good portion of our military active duty compensation, tax deferred is not our best long term option. For us, Roth is best.

  31. JK says

    Education: Less than 2 year attending community college (high school GPA 2.3)
    Age: 34
    Married – 2 kids

    Current net worth: ~$700,000
    • 401k and other retirement savings: $400,000
    • House equity (conservative): $125,000
    • Cash: $75,000
    • Other: $100,000
    • No debt (cars paid)

    Outside of items 1 and 11, the criteria above generally describes my professional and personal attributes. Obviously my lack of education limits most high paying opportunities, but with proper work ethic, good business sense, and the ability to market your strengths – anything is possible.

    Looking back, I completely understand the limited professional success I’ve accomplished is an anomaly and would not recommend this formula as a blueprint for anyone looking to maximize their inherent potential. My point is that there’s something to be said for an individual who (outside of formal education) relentlessly pursues financial stability.

  32. Patrick Veling says

    Of course grades matter. But so does the choice of one’s educational focus and degree.

    Getting high grades in technology or business school endeavors is different in today’s economic environment than getting high grades in social work. Some areas of enterprise are simply more financially rewarding than some others. It’s pretty clear that somebody can get mediocre grades in a high demand or high income specialty and do MUCH better than one who gets the highest grades in a career choice with little job growth prospects or demand.

    In my opinion, college-bound students are not counseled correctly regarding their choice of academic direction as it relates to their near and long-term job and income prospects.

    • Dr Jon says

      Absolutely Patrick!

      It should be a requirement for all high school counselors/college admissions specialists that they discuss cost vs benefit.

      The rule may be flexible, but one years first salary as a maximum for total school loans is a fair and reasonable threshold.

      How anyone can justify a 40K/year school for a undergrad in any BA is ridiculous unless you have a generous parent/grandparent paying your way.

  33. Ken says

    Perhaps I’m missing something, but isn’t this ignoring the debt on the home? Sure you can count equity in the house as an asset, but only if you count the remaining loan amount as a debt, right?

    • Mark says

      Hi Ken,

      It sounds like you may confuse market value with home equity…
      By definition, home equity takes into consideration the remaining loan amount.
      ie: house market value = $300k, mortgage balance = $200k, equity = $100k.


  34. Ken says

    I think grades matter in getting the next degree, but in relation to making money probably not for most people.
    It does matter to the individual however, in their understanding / mastery of the subject.

  35. Randy says

    Discussing your GPA relative to net worth is about as interesting as “Inflategate,” root canal surgery or the U.S. Tax Code. “Formal education will make you a living; self-education will make you a fortune.” I left college with a degree, $70.00, one ugly suit and $1,000 in school loan debt. I currently have several paid-off commercial and multifamily properties. My college education provided a good foundation for success, but the “School of Hard Knocks” taught me more than I could ever learn in a classroom. This blog has placed more focus on GPA than it actually deserves. I’m more interesting in “how you got there” than “how you started.”

  36. Eric says

    I’m going to have to go ahead and challenge some of your number crunching here, man, because you’re not telling an accurate story.

    It is, in fact, true that most millionaires are property owners. So far so good. What you’re article here seems to imply is that if everyone buys a house they are on track for the same outcome. This is simply not true. At all. The math doesn’t work that way UNLESS certain things are assumed.

    A younger person, we’ll say someone who’s 30, who mortgages a house with minimal money down (assume a maximum of 5% down) with a 30 year mortgage at current rates (around 4.5%) and stays in the house will NEVER make money on the property. It simply isn’t possible UNLESS they pay it off far sooner than 30 years. The interest paid to the bank on a mortgage DWARFS whatever sale price they eventually sell the house for. If they sell sooner than 15 years, they don’t have anywhere close to enough equity to make it worth it. So, in essence, realtors and financial planners sell the ILLUSION of weath from owning a home, but never point out that in order to increase your wealth, you have to make more money than you pay over time…which is ABSOLUTELY NOT the case when you finance a house without at least the same amount in assets. Mortgaging a $300,000 house when you have a net worth of maybe $95,000 clearly isn’t going to make you more wealthy. So there’s that.

    Most millionaires BUY their property with cash, OR they have the assets to liquidate the debt when needed. Most 30-somethings don’t have those resources, and thus, are only pushing themselves further into poverty…albeit, their monthly PAYMENTS may be lower than renting.

    The bottom line here, is that you CAN build wealth by renting, actually. Because there isn’t a one-size-fits-all formula to wealth growth. If there was, everyone would do it. There IS, however, a one-size-fits-all formula to wealth redistribution (i.e., you are transferring your future wealth to people who are already rolling in money), and it’s called mortgaging a house. People need to do their own legwork and calculate what they can and can’t afford and make rational decisions based on facts, not what a financial planner or realtor says they need to do. Their incentive is to sell things to you to make money, not help you become financially independent. This isn’t to say there aren’t honest folks in the industry, but most don’t care if you end up better off than when you started out. That’s just how it is.

    So, to anyone who may happen to come across this article, and subsequently see these comments, keep that in mind. You DO NOT need to finance a house to get rich. The claim that you do is patently untrue UNLESS you have the money to buy a house outright or, at the very least, mortgage less than half of the purchase price. This is extremely important to understand. A HOUSE is a place to live, nothing more. It is NOT an investment vehicle.

    • says

      Eric, nobody says you can’t build wealth renting all one’a life. Of course you can.

      I’m saying that you have to live somewhere, the return on rent is always -100% every month, and the government provides mortgage interest tax breaks, while property has inflated over time. I think it’s prudent to buy at least your primary residence and be neutral real estate.

      Please share your net worth, age, education, work field etc so we get an idea of where you are coming from.


      • Eric says

        My net worth is in the 6-figures. I’m 36. I have an AAS in audio engineering and studied finance at a university before just leaving. I built my net worth from a starting point of -$27,000 about 12 years ago.

        And I didn’t say you said you can’t make money renting…if I did, there was either a typo or something. But I think you were being misleading by pointing out millionaires own their homes. Of course they do, millionaires only borrow money they can afford to pay back (unless, as we learned in the years leading up to 2008, they’re playing with other people’s money…then they’re fine with leverage). Return on rent isn’t 100%, by the way. It’s 0%…in purely financial terms. I’m simply paying for a roof over my head. The return may be 100% in abstract terms, but not monetary terms.

        The math, however, ONLY works one way. You can’t make money if you don’t have money. Borrowing more money than you have to purchase something you can’t afford NECESSARILY MEANS that you will NEVER make a return on it. This is a trap so many millions of people fall into–either by willful ignorance (wishful thinking), or stupidity. You CAN make money if you have money, however. The only thing that will grow your wealth is understanding what you’re doing, how the numbers break down, having discipline, and not being stupid. That’s it. The paths to get there are many and vary greatly depending on individual financial resources, but the MATH is ALWAYS the same. That is my point.

          • Dan says

            Because Eric’s right. There’s no return on a house either, and it’s usually a bad bet. Let’s say I live in a $700/month rental property for 30 years. After 30 years, I’ve paid $252,000 to live there. Someone else buys a $250,000 house and lives there for 30 years. By the end, he’ll have paid $430,000, not counting property taxes, maintenance, etc. After 30 years, he has a house. I have about $200,000 that I didn’t spend on interest, maintenance, property taxes, etc., and I can easily move to somewhere I want to live if I don’t like where I am. He’s stuck where he is.

            Seems like you should be taking tips from Eric.

            • Jonathan says

              Eric’s argument, aside from not making sense, absolutely ignores time value of money. Your argument ignores inflation. The homebuyer has fixed mortgage payments for 30 years while his asset appreciates; the renter has to deal with rising rents and has no asset. Assuming 3% annual inflation, the renter is now paying $400,000 (in face-value dollars) over 30 years, at the end of which he has nothing to show for it. The homebuyer, who’s spent $430,000 (your number – yes I know you left some stuff out but the point is the same), now owns an asset worth $589,000, which he can sell if he desires (he’s not stuck with it if he wants out).

              Nobody claims that homeownership guarantees wealth, but Eric’s implication that homeownership is a path to financial ruin is just odd.

            • says

              I think you’re missing one variable. The appreciation of the house.

              When I cleared my first million in net worth at age 27, a decent portion of it was due to appreciation of my San Francisco property. That property is now generating $3,800 a month in rent and has a mortgage of $1,300, only $200 of which is interest. The property appreciated from $580,000 to $1,050,000. My cash on cash return went from $120,000 to $930,000 now. That’s pretty good imo, and that’s just one of my four properties.

              I think it’s good you are investing the difference with what you are saving buying property. The reality is, most people don’t save and invest that difference. Most people spend.

              What is your age and net worth currently? I like hearing people’s perspectives and taking people’s advice. So I’m all ears.

              Check out: The First Million Might Be The Easiest


            • Mark K says

              I have to agree with Jonathan & Samurai, as most readers probably will. Long-term prices appreciate. After a house is paid off, there is only property tax and insurance to pay, while a renter has never-ending, always escalating rent to pay. This rent is income to the owner or it pays for principal and interest on the owner mortgage, building equity for the owner… There is a reason why 97% of millionaires own their own home:


    • Randy says

      I had to read this article twice in search of the “implication” that renters can’t build wealth. I couldn’t find it? There must be something in Eric’s personal story that led him to this conclusion. I’m 55-years-old and currently own multiple rental and commercial properties. My personal homes have played an integral role in helping me acquire additional investment property. The average tenure of a home seller is relatively short, with owners selling their homes after owning them for only six years; it was even shorter prior to ’03. We moved many times over the past 20 years and never made less than 30K on a home; in fact, one home doubled in value during the housing boom. This strategy coupled with the traditional advantages of owning a home (e.g., mortgage interest tax breaks, etc…) helped us reach our financial goals much faster than anticipated. It is certainly possible to build wealth as a renter, but you can’t beat the financial advantages that home ownership provides.

      • Eric says

        The implication is manifest in the assumptions at the beginning of the article for what is considered “average”. The “average” person saves next to nothing and isn’t working what, for the purposes of this context, could be considered a “career”. Most people in their prime years are working to pay off student debt and many of them have multiple jobs and still can’t afford to live.

        I’ve worked for HUD before, doing audits and policing mortgage companies. I’ve seen the assets and W-2s of many borrowers, and I know all the trickery lenders use to make things seem a certain way when they aren’t. Most people can’t afford houses. Affording the payments is not the same as affording the house. Furthermore, spending 6 years in a house when you take out a 30 year mortgage does not help you grow wealth faster. That’s crazy talk. What math works that way, UNLESS, as I’ve previously stated, the buyer HAS THE ASSETS to absorb the debt. Which represents MAYBE 1% of all buyers. You said yourself that you own multiple rental properties. Who can afford that but people with money? That is the point.

        A house is not an investment, at least not for 99% of all the people that buy them. They have been intentionally misled into believing that it is because they don’t know any better. A house is a place to live. Can you make money on it? Sure. But very specific criteria need to be met before you turn a NET profit. Selling the house for more than you bought it for doesn’t mean you made money. The only people who make money are the ones who understand how finance works…which is very few. I try to advise as many people as I can to NOT buy houses UNLESS they can afford it. Meaning that you never borrow more money than you can pay off. Taking on debt is a wonderfully affordable way to grow wealth IF you can liquidate it immediately should you need to. Borrowing $500,000 when you only have $95,000 in assets NECESSARILY MEANS that it is IMPOSSIBLE to make money.

        That is what I have been talking about. I never said that owning a house can’t be a good idea. It’s a good idea if you can AFFORD TO OWN IT. Period. Most people can’t…which is why no one has any money.

        • says

          The above average person buys things they can afford, which includes a house.

          The people you are talking about are not above average people. They are the people who got in way over their heads during the 2008-2010 financial crisis and hurt others who were responsible and kept paying their mortgage.

          Again, there’s nothing wrong with being a renter. In fact, landlords needs renters. There is a symbiotic relationship. And there is a reason why the average net worth of a landlord is much greater than the average net worth of a renter. Again, it’s up to each individual to accumulate assets or not.

        • Mark K says

          Hi Eric,

          I agree with Financial Samurai on the home ownership point.

          I’m 45, self-employed, net worth ~$3M. I own my own home + two investment properties, looking to buy a third. I had minimal financial help from my parents, who were lower middle class financially and I graduated with about $20k in student loans (BS in Acctg from public university)

          I put down 20% on the first investment property, 10 years ago, at age 35…$70k on a $350k house. Interest @ 6.375%, ~$2k/month including property tax and insurance. I got $2k/month in rent, so was at roughly break-even on a monthly cash-flow basis. The annual mortgage interest tax credit put me in positive cash flow. Today the property has a market value of $600k, and rents for $3000/month. It has definitely been a worthwhile investment. I refinanced to under 4%, and pay down the mortgage more rapidly. It contributes $400k of my net worth. and is now a cash cow.

          Let’s take a scenario: Put down 5% ($20k) on a $400k owner-occupied property.
          With a 30 year fixed mortgage @ 4.5% on $380k your payment is $1925/month. For ease of calculation, assume property tax of $4,200 (~1%) and insurance of $1.2k, which are reasonable. This means your monthly payment is $2,375.

          After 6 years (average home ownership), you will have paid approximately $100k in interest while paying down $40k in principal.

          Roughly $555/month of your monthly payment goes towards your own net worth, as your mortgage balance will now be $340k instead of $380k.

          Roughly 30% of your interest expense (more or less depending on your tax bracket) $30k ($400/month) comes back in the form of annual tax credits.

          So the average person buying a $400k property with 5% down ends up with an effective carrying cost around the same as a renter paying $1400/month (+ utilities.)

          The differences are: 1) the renter has no upside, while the owner does. 2) The owner has a higher monthly payment and assumes the risk of a market decline.

          If they can’t afford the monthly payments, the owner should not buy the property, and the above average person would not get into a mortgage commitment they don’t understand.

          Financial Samurai, I have mixed feelings about the GPA argument. I had a 2.7GPA and I do feel it was because of my work ethic wasn’t great in college. However, I consider myself above average intelligence, and am a think-outside-the-box kind of person. Although I wasn’t highly paid at my first jobs, I put myself in positions to learn the business I was working for. When the time came, I took a leap, set out on my own, and thankfully I made it work. I feel I added a lot of value to the companies that took a chance on me, and I wasn’t all that well compensated for it, but in the end everything happened for a reason.

          I currently don’t hire anyone other than for positions where education isn’t important. I think if I were in a corporate structure and in a position to do so, I would still prefer to hire a high GPA person. However, I would definitely reserve judgement and give consideration to someone with a lower GPA, since there’s a lot of facets to what makes someone a good worker, and I can relate since I myself was a low GPA person… Also, since a low GPA person may often have less options, you can potentially compensate them less at the outset, and therefore get more value from them for your money… I know that in the Accounting field, the big firms have minimum GPA requirements before they will call someone in for an interview.

          I guess at the end of the day, since it is an article of the ‘above-average-person’ I was not ‘above-average’ at the time of college graduation as strictly reflected/defined by my sub-par GPA. However, I now fall above your net worth requirements, at an older age…

          However, there are multiple possible definitions of an ‘above-average-person’ and not all of them relate to net worth. There are people who take a completely different track in life, choosing to forego a pursuit of material things in order to pursue other things such as altruism. Of course anyone can make their own decisions and judgements about this, and yours is certainly an interesting and useful article/analysis and basis of comparison if you want to see how you might compare with the Joneses.


          • says

            Thanks for sharing your thoughts Mark! On the 2.7 GPA front, you hit the nail on the head when you said it was about work ethic, or lack thereof. GPA is more work ethic than intelligence. My motto is to never fail due to a lack of effort, and if I’m hiring for a position for someone within 3- 5 years out of school, I definitely must consider GPA and what s/he has done after professionally.

            Sometimes, people do so bad in school that they try hard after school to make up for their bad GPA. I like those people. They are hungry and have a “I messed up, but now I’m going to do my best” attitude which I love.

        • Lockon says

          Eric, I think the partial point you are trying to make is that far too many people were duped into “buying” houses that they could not afford (i.e they broke the old rules about how to gauge what price level you can afford based on income).

          However, overall your logic is shortsighted. The idea isn’t to make money on short-term outlay of money when you purchase a house. As others have mentioned, you get the tax breaks and the hope is that the property increases in value. But, even if it does not, you are building equity in the property – equity which you can then take on to the next property and so on. Even if you stay in the house till it is paid off, you are ahead despite the fact that you potentially paid more than it was worth… why? Simply because based on the averages you will far outlive that loan and will own your residence until you decide to downsize in your old age or pass on. So, bottom line is that you can think of buying a house as a savings plan. Taking $X/month and investing in the house vs the same $X/month and spending it on rent is a no-brainer. At the end of 30 years you have a rent-free place to live vs paying rent to someone else for the rest of your life (and helping them build wealth).

          I speak from experience – I’m 49 and semi-retired because I bought a house when I was about 30 – paid it off in about 16 years (30 year loan with accelerated payments) and now I’m able to save almost all of my income and prepare for full retirement without the burden of worrying about how I’m going to pay for housing for the rest of my life.

  37. Randy says

    The housing boom in the early 2000s along with the decline from the 2006 peak has created a distorted view on the value of homes as an investment. We can talk about all the bad players (lenders, politicians, greedy investors, etc…) that contributed to this period in history, but personal responsibility would more accurately hit the mark. I live in a resort area that turned PLUTONIUM HOT during this period. In fact, so hot that it defied logic in terms of normal housing appreciation. It made me so nervous that I sold everything I had in 2006 and parked the money in a safe account until the market stabilized. The housing prices were as unrealistically low in 2011 as they were high in 2006. So, knowing that “a rising tide lifts all boats,” I started buying foreclosures in 2011. The opportunities to make favorable investments in real estate, including the real estate that happens to be your home, depends on whether you are willing to make the “right decisions” relative to the marketplace. Eric, I had a negative net worth at age 27, so you are in a far better place financially than I was at your age. Real estate investing, as in most investing, is a dynamic endeavor with a multitude of variables, which makes it difficult to talk about buying a home as an investment in such a static way. I read blogs like this for that very reason. These types of blogs offer me knowledge that is just not attainable in my local market. I appreciate your comments, Eric. Thanks…

  38. $iddhartha says

    I fit most of the mold you laid out except I took out student loans for an expensive education. Despite having a negative net worth at around 30, looks like I’m still on track to catch up to your “average” before age 40.

    I like a stock allocation around 70%-90% so I don’t really consider myself a conservative investor. Nonetheless, I can’t help but relegate myself to an optimistic annualized return of 4%. (actually I use a range: 0% pessimistic and 4% optimistic) I’m skeptical that returns will mirror those of the past, so I don’t want to set myself up for disappointment 10 to 15 years down the road.

    • says

      A 0%-4% long-term expected stock return is a good idea. Better to be conservative and end up with more than expected, than end up with less than expected. Folks like Dave Ramsey calling for a 11-12% annual return in stocks when the 10-year yield is under 2% are way too aggressive imo.

  39. Drew says

    Sam – love the site and all of the content. Couple issues I’ve been having with Personal Capital (I recently signed up):
    1. My wife also has accounts with same mutual fund firm (Vanguard) and we can’t seem to figure out how to link two accounts from the same provider (?)
    2. We have an investment in a private real estate fund which has done quite well, but there doesn’t seem to be a way to track this (?)
    3. I work for a small advisory firm that was recently bought by a larger bank – since I now have a 401k and other accounts with the big bank (not my preference but nothing I can do about it), any ideas on how to link this?

    Thanks so much!

  40. Douglas says

    Just got through reading the article and all of the comments. Some great information in here; inspiring stuff as well. I just turned 23, and have been working full time in my career for 7 months. I was fortunate enough to graduate with zero debt, and I live at home with my parents. My salary is $59k and since I started working I’ve been able to put away $18,000 in savings plus a few more thousand in my maxed out 401k that my company matches 6%. My goal is to have $50,000 in my savings account by my 25th birthday, but after reading some of the comments on here it seems like I will still be behind many of you!

  41. Kevin tx says

    i have been reading this site since I started working about 4.5 years ago. It absolutely motivates me (bc I want to be the best). I’m 28 now but I graduated dual bachelor civil engineering and physics after a whopping 6 years. So one can imagine I definitely started off behind the 24 yr old/25 curve. However I did get scholarships and was in state (state school) so I had zero debt upon graduation. I have always saved everything I could from the start because I knew I wanted to be rich/wealthy or at the very least not have to slowly die in corporate America. I started out with a 60k position living at my uncles place in NYC paying around $500 in rent. Saving around $2k/mnth buying equities with all of it. Then I made some bad decisions promptly lost $13k was heart broken bought a bmw which ultimately cost me another $13k after selling (and I’m being generous). I was probably worth about $70k after leaving ny 1.5 yrs there- to tx the cheapest and hey no taxes. I switched back to save mode and sold my 650i for a civic and since I paid cash for the bmw I got $10k back. From there I’ve probably averaged around 5-10k to 401k +5% match from comp. I do not like putting money in 401k bc I feel my options suck plus i would suffer 10% loss if I ever wanted to pull it out. Long story short I have bought several stocks and made money on most but on specific stock apple has blown me past the 30 average. I hope to buy some rental properties next year if this year goes as good as I hope (I say hope because in this world Anything is possible).

    Also in tx I got room mates paid $600/inclusive for rent and moved 4 miles from work. My expenses total around $1.7k/mnth and I can eat out occasionally and every once and a while so a nice trip.

    In regards to home ownership it’s not necessary sure. I could also be an nba player and be a millionaire having never invested went to college or opened a finance book. I do know a friend of mine moved to tx while I was here sold after a year and reported a $50k gain. Needless to say, crap that coulda been me!

    My numbers which fluctuate day to day
    Equities $203k
    401k/+cash option benefit plan $73&
    Civic $13.2k according to kbb

    PS I am plotting on million nw by 32.

  42. Above Average Black says

    Overall, I’ve been tracking pretty well in regards to the chart listed. I like to keep my retirement, post tax and home equity fairly even. Therefore, my retirement is lower that the chart listed. My post tax is higher than the chart listed. My home equity is higher than the chart listed.

  43. Kansas CPA says

    I was curious if you factored in things such as regionality of cost of living into this calculation, since this would effect not only your annual earnings, directly lowering your net worth potential, but also the cost of a home, which would indirectly lower your net worth potential. For instance, in my area, I could purchase a 3100 sq. ft. 5 bedroom house on a 1/2 acre lot that is less than 5 years old for $330k (list price) which is right around the average of what you’re are saying a 27 year old would be buying, this seems a little excessive to me for a first home purchase.

  44. geri says

    I looked thru the charts on your article. I have worked for 32 years, so I checked out the 33 year line on each chart. I was absolutely consistent in max contributions to 401k throughout the years, and was lucky to have good matching employer amounts…still I made a lot of mistakes. Guess what? I ended up almost exactly where your chart indicates for my years of work. I always thought the consistency was on my side….sort of like the Tortoise and the Hare


    • says

      Awesome for providing an extra datapoint of support for my analysis after 32 years of contribution!

      The feedback is basically a lot more naysayers from the younger demographic and a lot more support from the older demographic.

      I hope for those younger people who believe saving such amounts is impossible, to simply know that if you stick to consistent contributions in a balanced investment portfolio, the chances are high that you too, will get there. Compounding growth and disciplone goes a LONG way! You just have to believe and get started!


  45. William says

    I sometimes read articles on websites like this one because, in my heart, I’m basically scared to death that I’m not really doing as well as I should be doing.

    I grew up in a small town in the south. My parents had five kids and we were, at best, middle class. My Mom was a waitress and later a restaurant manager. My Dad drank heavily, and when he was sober he worked as a used car salesman. Once my parents divorced, my Mom was the family’s only source of income. She worked her butt off. My Dad never helped us out after he basically deserted our family.

    I got good grades and was hell-bent on going to college, but money was very tight at home. I had to pay my own way, working part time and summers. Eventually it was just too much and I left college to work full time.

    My first big break came in my early 20’s when I got a corporate job in a major city. I didn’t know a single soul there, or even how much money I should ask as a salary to live a decent life in such an expensive city. Despite never finishing college, I got the job and along the way was able to work my way up a notch or two.

    My next big break came when my company offered me a job overseas. It was supposed to be a one year assignment, but it ended up being a few years. Once again, I worked my way up a notch or two on the corporate ladder.

    Once I had a good income, I was able to start saving and could invest a little money. I had a few close relationships, but didn’t get married until years later. I always counted only on myself, remembered how it was when I was kid and our family had no safety net at all, and was always worried that I would end up back there.

    After years of working and changing jobs a few times for better opportunities, I recently entered my 50’s. I’m happily married. We don’t have kids and never wanted a family, just each other and our dogs. My spouse had no money when we met, is not employed, but certainly does work hard at taking care our home. Over the past few years, I’ve finally started to feel financially secure. Our net worth is about $6 million and I’m still working hard in my corporate job. I know many reading this will think the journey I’m describing is impossible, or perhaps you will wonder, how did it happen?

    Many reasons: 1.) good luck; 2.) work, work, work; 3.) growing up in a family without any money, so that I’ve always been worried about financial security; 4.) working overseas for several years, which allowed me to save and invest early on; 5.) jobs that provided an income beyond what I needed to live on, although I will admit that I’ve actually lived very well by most standards; 5.) eventually getting into a long term relationship that provided domestic stability.

    Although I’m fairly secure at this point, I still worry a bit. As you make more money and accumulate some wealth, you have to be careful that you remember the value of a dollar. It’s easy to spend more than you should, just because you can. Starting to believe you’re “rich” just because you have a few million dollars stashed away is a really big mistake. Failing to enjoy your money while you’re healthy is also a big mistake, because you can’t enjoy it once you’re gone.

    Thanks to the moderator for giving me a place to share my story, and I wish everyone here well in their own personal journeys.

  46. William says

    In addition to telling my own personal story, I want to offer some thoughts on a couple topics that were discussed pretty extensively in this thread.

    GPAs – I’ve hired (and, sadly, had to let go) quite a few people in my career. In my experience, a person’s GPA never said much about whether that person would be successful in a certain job. Other factors, among them learning agility and the ability to build collaborative relationships to name just a couple, were always much more important to determining success. All other things being equal, a high GPA might be indicative of work ethic or other desirable traits, but a person’s GPA is not a factor I’ve ever given much weight to when making hiring decisions.

    Rent vs. Buy – For most people, buying a home is a good decision. Of course, this presupposes that the person can afford the down payment and the loan repayments, just as affordability can turn any otherwise sound investment choice into a bad decision. However, it’s not always a slam dunk that buying a home is a better financial decision than renting one. For some people, it does indeed make sense to maintain liquidity and avoid the relatively long term commitment that home ownership usually requires. These are usually people who can afford NOT to own a home, despite the fact that millionaires often do own their homes. Regardless of your financial situation, understanding your time horizon and possible alternative uses for the equity are important things to consider when you are making a decision on whether to rent or buy a home.

    • Mark K says

      Awesome story William! Much respect to you and your accomplishments… Your comments were well stated as well.

      Financial Samurai loosely defined his first criteria that the above average person went to college and believes that grades and a good work ethic do matter….

      I think he’s just building a frame of reference for this theoretical net worth chart… the degree to which you agree or disagree with a specific criteria probably doesn’t matter too much, but it does make for interesting sharing of views and opinions.

      I think most people, including Samurai, will agree that grades are a tool for comparing people at a specific point in time in their life… Obviously the further one gets from the age at which they graduate from college, the less grades will mean anything to someone comparing them to other candidates for a job… All things being equal, someone with real life experience in a particular line of work will normally be easier and cheaper to seamlessly and quickly integrate into a business.

      Grades typically only matter when someone first graduates from school and they are applying for certain jobs cold with little to no relevant work experience. A lot of major firms have minimum GPA requirements in order to consider a candidate… That doesn’t mean the low GPA people could not do the job as well as, or better than the high GPA people, but it does mean they won’t even be considered for those jobs. Thus having a low GPA automatically reduces the number of opportunities available to them.

      The GPA demonstrates (to some extent) that the student was able to figure out what would make their professors happy enough to give them an A. Or at least that they were strategic enough to seek out the easy A classes. Absent a lot of other relevant information and or experience, this has some meaning… This same person should hopefully be able to figure out how to make their employer happy enough to rate their work an A.

      Of course it’s not the only indicator, but it a useful indicator at a specific point in time. A few years later most people will consider it irrelevant and lean on experience…. Ok, yes you got good grades in school, but what did you do with that after? It’s difficult to really know how any person will perform at a job until you see them in action.

      A few minutes or hours at a job interview is not enough to really know how it will work out with a candidate so employers make judgements using their own experience, and for a young, inexperienced person, grades may be one of the few things you can use to differentiate.

      Parents who value education will normally encourage their children to get good grades, and help them along the way however possible. This is because they believe grades matter for something.

  47. Randy E says

    Great story, William! Your life story is a true indication that where you start in life has no bearing on where you finish. I know this because my story is similar. I too came from a large family of limited means. My parents, albeit good and hardworking people, were brutally honest with their kids. We clearly understood their responsibility was to get us through high school; what we did beyond that was our responsibility. I’m happy to report that four out of six kids graduated from college. I had to sleep in my car the last semester of my senior year, but I did graduate. I enjoyed a 25-year career in corporate sales and now live off of passive income generated by real estate investments. I think six key lesson have helped me along the way:

    1. Know what you don’t know. Learning is a life-long endeavor, so intellectual curiosity is a key to success. As a great man once said, “If you are not willing to learn, no one can help you. If you are determined to learn, no one can stop you.” [Zig Ziglar]
    2. Working smart, not hard. Focusing on “high-priority” tasks that contribute to accomplishing your goals. Work towards your objectives every day.
    3. Follow your passion and have a clear sense of direction.
    4. Do the right thing. I’m a big believer in Karma, so “doing the right thing” and helping people along the way is critical to ones success in life.
    5. Marry a good woman! I have an incredible partner who has always worked hard to help us reach our goals. She makes me a better person!
    6. Live within your means. No explanation required.

    I love your story, William. You should be very proud of your accomplishments!!

  48. Katrina says

    Thanks for this article! I read your blog on 401K balances and was surprised at first to find that, despite saving aggressively and maxing out for the last 5 years (I’m 33), my husband and I were only “on par” with your optimal range (now ~450K) . However, our total net worth is $725K (not counting any assets other than our home). Given that there are many ways to accumulate wealth and different risk tolerances for different age groups, I think the total net worth measure is probably the most accurate way of measuring one’s savings progress.


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