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 and a steady 2015 so far, surely the average net worth has increased even further.

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.

THE ABOVE AVERAGE NET WORTH DECONSTRUCTED

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.”

FINANCIAL SAMURAI TAX DEFERRED (401K)  SAVINGS GUIDE

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

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.

THE IMPORTANCE OF REAL ESTATE

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

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.

THE X FACTOR

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!

THE AVERAGE NET WORTH OF THE ABOVE AVERAGE PERSON

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

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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.

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Retirement Planning Calculator

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Updated for 2016 and beyond

The stock markets are at all-time highs and the private equity market looks like a bubble. Don’t forget to rebalance and never confuse brains with a bull market!

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. Sam focuses on helping readers build more income in real estate, investing, entrepreneurship, and alternative investments in order to achieve financial independence sooner, rather than later.

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Comments

  1. Lady Jane says

    What happens when you are within range of your ‘age’ guide for overall wealth accumulation but married someone who was the opposite of you? I’m a 40 year old woman that has *never* made more than 200k in any year (and has made less than that the last few years as I had a baby and surprise, corporate America doesn’t love that). My overall wealth combining 401k, IRAs and savings is close to 600k. But my spouse started late and though he made more than me at certain points, he’s got maybe 1/3 of what I have. I love him but get so annoyed at his previous irresponsibility. Mostly I’m annoyed because though he’s slowly started to ‘get it’ (thanks to me) he’s constantly breaking his arm patting himself on the back for having what little he has now (he thinks it’s a lot because he’s used to pissing away every single dime he had before he met me). I just feel like I did everything ‘right’ and i’m going to wind up retiring on a lower income/lifestyle than I planned for due to him.

      • Sue smith says

        VERY good article, thanks. The whole bit about the taxes is exactly what we are going through right now. It’s so frustrating. Between corporate America dinging moms/married women and the gov’t taxing dual income families….it’s just depressing. I’ve worked hard for so long and sacrificed and it seems now to all just be for nought.

    • Thomas47 says

      Sue, it sounds like you have been very responsible and you’ve had a strong career.

      Your spouse probably needs more encouragement about saving, but at least he’s moving in the right direction. If you two work together, it seems like you have a great future as parents and likely have enough for a comfortable retirement.

      You are young, and your savings have plenty of time to grow.

      You can do it!

    • Ron says

      I just feel like I did everything ‘right’ and i’m going to wind up retiring on a lower income/lifestyle than I planned for due to him.

      Well, why’d you marry him? Why’d you have children — they *really* hit you in the pocketbook! — with him?

    • bossasaurus says

      Wow, sounds like some other issues that need to be worked out here. What happened to “…for richer or poorer” in marriage? Shit man, have a talk with your hubby and get your feelings out there for him to hear (not the message board people) or that divorce is going to cost you more than his ‘pissing money away’ ever will.

    • captain rod says

      Glad your not my wife, my wife is broke but I don’t care, I’ll take care of her forever cause I love her.

    • Stockbeard says

      Hey Sue, no offense but it seems your problem at this point is not your finances (with a total of 800k for you and your husband at 40, you’re very well off), but your marriage. The fact that you’re with a person at age 40 and are blaming him for his “mistakes”, is a problem that *you* need to fix on your end. I would almost argue that it’s not your husband’s problem here, but yours. When you married that person, you accepted the good and the not so good in him.

      Not everything is perfect in a marriage, but as Sam told you in a much more nice way than I just did, is that you should be looking at what happens next, as a team, rather than what happened before. What’s done is done, try to make things better, and lose the resentment, it’s not going to help your family/team.

  2. Squid4life says

    Wasn’t the premise of marriage based on for better or for worse? As a single parent who is above average, never been married, and still able to retire at 35, why wouldn’t your retirement be better being married? You have the extra income of your spouse and not everyone has the financial genius that got us where we are today. Some people love to spend and others love to save. Now I wouldn’t get married without a prenup but that’s because I have a child from a previous relationship and a business with whom I have partners. Therefore, in my case, combining finances would not be the best route for me. It also sounds like you are a bit resentful of your spouse.

  3. Matt says

    Here’s my story…

    I went to a 4 year college back in 99-03, cost $38k including room/board.

    I never finished…I was about 12 credits short, but since I changed majors I would have likely needed a full year to finish…even if I passed all my classes, but the material was just too difficult.

    I moved out of college with $10k in loans and $12k in the bank (I was working when I went to college.) If I could have redid things, I would have maxed out all my loans (3.125% interest instead of the 5% mortgage)

    I put $10k down on a $82k house when I was 22. I was working a part time job making $8.68/hr with a lot of overtime. Between 22 and 28 I was making between $22k and $28k a year. The house needed about $18k worth of repairs in the first 10 years and time were tough, but I put any extra money towards the mortgage. I started getting better selling things online and with my regular job and online my best year was about $65k.

    I paid the house off before I was 31 and the student loans shortly after. I lost my full time job due to a downsizing and sell online full time now. Depending on how much work I put into it, I can make $30-50k a year, but I would like to take it a little easier now.

    Right now I’m 34 I have a fully paid off house worth about $110k, 2 cars for a total of about $8k, and about $115k in bank accounts and investments, and no debt. (4 years ago I owed about $15k on the house, 3k student loan, had one $2k car and maybe 10k in the bank.)

    Having no debt makes money build up fast, (look at how much changed in the last 4 years) people say you should invest before paying, but in my situation, not having to worry about money sure freed up the opportunity to take more chances and not be tied down to a 40hr a week job.

  4. Eben says

    Okay, so I turned 45 not too long ago, have over $300k in the bank, my home is paid off, no debt of any kind and I’m a civil servant. Net work is about $500k. Being a civil servant, I’ll receive a pension when I retire, have some years to go, my thought is this. Of my savings, I’m only investing $50k. I’m using my father’s finances as a model, he was also a civil servant and did NOT have a 401B, invested in mutual funds here and there and he did very well/didn’t even need to rely on investments due to his state pension. I sometimes wonder if it’s truly necessary for me to invest in a 401B/IRA when following my current model I typically save about $100k every two years at this point in my life. Again, I’m 45 now, thoughts?

    • Christopher Nowak says

      You are laughing.

      I think that most of the the top 1% of all income earners cannot sock away 50 grand a year.

      As great as your accomplishment is, I think that mine is greater:

      1) My lifetime gross income from December 1986 to August 2015 (age 53.5) will be about $316,000 (about $11,000 a year).

      2) 73 % of my $500,000 net worth is in investments.

      3) I am expecting a 7.5%(+) long term return from my equities and a 2.5%(+) long term return from my bonds and cash (a 5% average).

      4) I shall make $18,250+ (that is 50 dollars a day plus) a year (which represents 166% of my average annual salary) even if I do not work.

      Maybe not enough to retire BUT a good cushion in bad times.

      • Eben says

        I’m laughing?

        I wasn’t trying to ‘one-up’ nor was I inviting a ‘one-up’, what would have been actually constructive would be someone’s thoughts on whether investing further or not

        • christopher Nowak says

          I believe that the benefit of rolling over your 401B to an IRA is that you will get more investing options.

          The fees with an IRA are also lower than what your 401B will charge you after you leave your job PLUS you do not pay taxes when you roll over.

          My conclusion: It is not necessary but still better if you invest in a 401B IRA.

  5. says

    This is a great article, and definitely makes me breathe a sigh of relief as I feel that I’m on track.

    One question – how do you determine what networth should be for a couple? Are the charts here assuming both parties in a couple have this month networth (so the actual amount in a married couple for savings should be double) – or does this change for married couples? At 32, I have about $350k saved but my future husband has maybe about $100k. I worry that we won’t have enough to retire.

    • says

      But why worry though? $350,000 + $100,000 = $450,000 once you get married. Are you worried because you worry about your abilities to make money and support the two of you? If so, welcome to what a lot of guys go through all the time ie it’s normal!

  6. Christopher Nowak says

    Update:

    I just landed a 13 dollar an hour janitorial gig and I am ecstatic!!

    If I can keep it, may annual average salary will jump from 11 thousand a year to 15 thousand a year.

    This wage is still about 55% the average wage in Ontario BUT I definitely do not mind.

  7. Lee says

    Interesting article. I am 29 and have been working for 3 years full time since grad school, and renting. It has definitely occurred to me how much wealth I would accumulate if I bought a house instead of renting. But according to calculators I used online, I don’t actually save or make any money considering my low rent, until after like 60 years. In some calculations I NEVER make more money in a buying scenario vs renting even if my rent increases with the market, because my rent is relatively low and my paper assets will grow not being tied up in my house.

    Anyway this is all financial nerd math that we indulge in. What really matters to me is becoming financially independent so I can have the choice to live and work wherever I want, doing whatever I want. Buying a house seems to lock me into a place, and currently the place I’m at is nice but I wouldn’t be here if it wasn’t for my work, which also isn’t bad but I would like the freedom of moving to, say, Hawaii if I wanted to. So for now I’m renting and building paper assets. Especially since I plan to be FI in 5 years, 4 if I’m lucky and 6 worst case scenario. Then I want to live in other countries and stuff while I continue to build my business and maybe get back into research in a University. Would be a shame to me, personally and not necessarily for anyone else, to just live in the US my whole life.

  8. Lady J says

    Great website. I’m a 37 year old woman from the West who moved to SF two years ago. Net worth is $675K… bad grades in high school (1.9) and college (2.9)… worked throughout college (Econ), MBA… success is due to RE and decent jobs in banking/finance to keep it all afloat.. Bought first home at 23 or 24, bought four or five more… 401K is still only $40K because I always drain them for downpayments, but growing fast now at a rate of 30K or so per year. Doubled salary with the move, bought a condo, rent out extra bm.. adding net worth at a rate of 80K a year between equity, 401K, and expected appreciation of 1.5% on 2M in property. — nobody provided down payments, parents helped a little with school (maybe 20K total). RE is the way but it does take a certain willingness to suffer… e.g travel to a rental 30 miles away to pull a toilet at 10:30pm because you can’t yet afford a plumber ;) Also – I am a terrible saver – i never like to put money in an account just to sit there… always want to put it to use ASAP.

  9. Jeff says

    Question: One thing the article does not explain. Should your savings in these columns reflect your post home purchase savings? My situation: 30 y/o, working corporate sales position. Graduated college 2008 and didn’t land job in my field until early 2010. Have been contributing around 8k annually to 401k plus company match and maxing out Roth contribution for 3 years. The 401k has about 65k right now. Have 50k savings right now and am looking to put a down payment on a home here in next 3 months. From this article, it sounds like I will be WAY behind once that savings drops to 10k after 40k DP on 200k home. Please share some thoughts here.

  10. says

    I have been inspired by your blog and I really enjoy reading your blog. It was definitely one of the blogs that made me want to start blogging myself!

    I just made a Net Worth model in Excel and was hoping to share it with you. I have posted it on my website: http://www.amoresuccessfulyou.com/self-improvement/net-worth-calculator/

    It gives a person a rough estimate of their net worth over time given multiple inputs. It would be interesting to see the results and forecast you have currently and what my model would spit out!

    Have a good day,
    Erik

  11. busymom says

    Your charts are great. But I would love to know what other factors are taken into account.
    Is your 401k and or the Post tax Cash, a straight up saving every year without taking into account a non- working or working part-time spouse and 2 or more children? Do you take into account 529 contributions for kids? Childcare costs are raising phenomenal.
    What about how much equity you have in your home? Is that factored in?

    I ask as I would like to know how behind we are:)

  12. Christopher Nowak says

    UPDATE:

    Due to my new job, my lifetime gross income from late 1986 to August 2015 (age 53.5) will be about $320,000 (about $11,130 per year).

    If I am able to keep this job, between my investment income, my job and the occasional high paid music gig, I am virtually guaranteed 100 dollars a day + until retirement.

    This is not too bad when you consider that I shall probably never hit the $20,000 mark for one year’s work EVER.

    • Christopher Nowak says

      Sorry Folks.

      I guess “EVER” is redundant here.

      It could very well be that the $18,335 (2001) will be the highest amount I ever made for one year’s work.

  13. Blake Stover says

    I think one thing that is missing from the article is the question of where you plan to spend your retirement years. I goofed off in college the first time through and dropped out with about 80 credit hours. I went back after 15 years in 2005 and at the time was making about 33k per year. But I had a 10% 401k allocation and 9% company match and profit sharing during the years I was making the lower salary. I had bought a house in 2003 with inheritance money, so I had what ultimately ended up being $185k in equity when I sold it and bought a new one this fall. I took part of the equity for remodel and the value of the house rose about the same as what I spent on remodel (value add remodel like hardwood floors and kitchen upgrades).
    So at age 45 I find I am worth about $500k and my only debt is a 4.25% mortgage that I already have about 50% equity in a $308k house.
    What matters most here though, is it’s in Texas. That same 308k house transported from north dallas to San Francisco would be $1.5 million. Cost of living here is quite low compared to California. There is no state tax at all either. So if I retire on $3million (which is a likely target for me) that to achieve a standard of living in SF similar to Dallas at $3 million you will need somewhat more money saved up. $3 million in Oklahoma where I am from likewise would get a standard there somewhat like $4 million here.
    So, when deciding whether your nestegg will meet demand, consider where you plan to retire. (This is why a lot of Texas retirees move to Mexico. For that $3 million there, you get a standard of living comparable to $6 million in north dallas)

    • Kid Rico says

      I don’t think it’s missing anything.

      I think the point of the article is just to let you know where you may stand financially (in terms of net-worth) when compared to your peers, if you are an ‘above-average’ person as defined by the author..

      One can make all kinds of arguments as to who is and isn’t above average, but this author has set out his definition, and given some assumptions to go along with it.

      A 45 year old professional with a decent job, who had a bit of help from the parents, but not ‘too much’, who made wise investment decisions, could theoretically have earned and saved $X in X amount of years…

      People have different goals in life.
      They live in different places and they pursue all kinds of different paths for a variety of reasons. I consider this article a sort of ‘keeping up with the Joneses’ cheat sheet to give an idea of the likely net worth of buddies who may have grown up, gone to college together, etc who are in a similiar situations…

      Anyone can feel free to take anything into account that they like when comparing themselves to the standards in this article.

  14. REO says

    The #s above are a nice starting place, thanks for putting them up….But let’s do some real thinking….about the Boomers: the richest generation ever. They have driven RE and stock prices up to high levels starting about 1981. Now, these Boomers will retire. Know what happens then? Prob. the biggest stock market and RE crash since 1929.

    Now, no one knows WHEN that day will be. But according to statistics, it should be fairly soon. Think not? Hmmm, look at it this way: who will BUY the RE if the Boomers start listing their 2 or 3 homes? Who will BUY all these stocks? Gen X? Gen Y? These 2 don’t have the money or the numbers to do so.

    So, be wary about anyone touting the returns of the stock market or how good an investment RE is. They WERE good, indeed they WERE. But will they be in the immediate future? A cursory glance at the stats foresees some dark clouds heading this way….

      • Kidrico says

        I’d probably agree with REO to a degree since RE and the stock market are both being propped up by these ridiculouly low interest rates, and yes, I’m aware of the big bust that already took place.

        However, I think that since we already went through a big bust so recently, the government is doing and will continue to do whatever needed to prevent it from happening again…

        They will try to inflate away the national debt and this will do it’s part, including some form of wage inflation eventually.

  15. Randy E says

    I think REO is in a state of analysis paralysis; that is, “the state of over-analyzing (or over-thinking) a situation so that a decision or action is never taken, in effect paralyzing the outcome.” I am one of those infamous Boomers he is referring to in his post. I have profited handsomely in real estate between 1995 and today; granted, I had to sell everything in 2005 and sit on the fence for three years, but I started buying again once the market bottomed out.

    There are, admittedly, deep structural challenges with the US economy that will need to be addressed in the next election cycle; however, after factoring in one’s age and the time remaining before assuming room temperature, it is imperative that “some risk” be taken in order to fund a comfortable retirement. I have been buying REO’s in a beach community for the past three years. They all have a positive cash flow and have appreciated 10 percent/year. A rising tide will certainly float all boats, but you have to wade in during low tide to enjoy the benefits that high tide has to offer.

    • Lynn says

      Well said Randy E. I, too, am one of those Boomer’s and have invested heavily in RE (20 rentals at present) for over 30 yrs. The statement that we will flood the market when we all sell our homes is misguided. Studies show that the vast majority of people “age in place” and I don’t see builder’s going crazy with spec building any time soon. Our personal residences (3) will be left to our son. He may sell one or two – but boomer sales won’t flood anything imo. The population continues to grow and I don’t see that reversing. People either rent or own – both of which requires a “home” exist.

      As to the stock market comments, if the P/E ratios make sense people will continue to invest. To suggest that people will pull market-changing amounts out is far-fetched.

      I fully agree with your “educated risk” investment attitude and discussion of analysis-paralysis. Those that blame external factors (fear, basically) for their financial short-comings are simply making excuses for their poor financial decisions and lack of wealth.

  16. J says

    Does it matter too much how the wealth is allocated? I am 34 and have $210K in a pre-tax 401k, $40K present-day lump-sum value of pre-tax pension, $110K in a Roth IRA, and $300K in real estate equity. I only have $15K liquid in a bank though and owe about $30k in car and student loans.

    So I guess that makes my total: $250K pre-tax savings, $95K after-tax savings, and $300K real estate equity. How much should I be trying to restructure this or do the proportions not matter too much?

  17. Robert Frost says

    I don’t understand what you mean by a 20% down payment giving a 10-15% return per year. Can you explain that more?

  18. Christopher Nowak says

    UPDATE:

    I am proud to say that after just three months on the job, I am now making $13.50 an hour (up from 13) as a janitor.

    I believe that I am in a very strange business (I was let go about 15 months ago as a janitor and yet, I tried harder there than I do now).

    The key for me: Pick a service provider that can match your skills appropriately.

    I shall probably be a solid millionaire by age 65 (11.5 years from now) and yet, never make more than 19 thousand for one year’s work.

  19. Dookie says

    Interesting data. Here’s a generalization for you. There are 3 types of people:

    1. The Above average person (you described)
    2. The opposite of that person (average or below)
    3. The extraordinary person (the Steve Jobs, Howard Hughes, Richard Bransons of the world)

    I’m an inbetweener, in between 2 and 3 above. I came here to look at the data which is interesting. Most of the advice seems good generally speaking. But, I waver a bit from your “above average” norm: I quit college/never finished my degree. I don’t plan to ever retire though I could in a few years. Ditched the 401k 10 years ago (it’s not worth my time). I also have no friends. Few mentors. Most of my acquaintances are similar folks and all are pretty much the “Above Average” you describe here because of the company I work for / city I live in, these are my acquaintances. Most all of them find me: a) Intimidating b) a prick c) out of touch 1%-er d) Someone they can take advantage of or e) a fake.

    I’m having a very difficult time the last few years continuing on. I don’t relate to anyone or find mentors other than people I read about who are out of my reach. I sit quietly most of the time or just avoid social events. I stopped offering input. No one is interested or understands any of my advice / thinks i’m insane. I’m becoming a hermit. People vehemently disagree with me look at me like I’m from mars or cling to me in some needy / take advantage or even fix-me way. Many hate me, because they view me as a 1%-er (though i’m close, but not quite), including my boss who often wonders why I even work here (my day job is a safety net to me). So, what advice do you have for me? Is it worth trying to be extraordinary or does it just make me a dick? When history’s business moguls are asked these questions, they pretty much all say it was worth it. I’m finding it difficult because I’m not rich enough yet for any of these people to become my close friends but I’m also becoming someone that the “above average” person can’t relate to either. I’m having a difficult time managing the onslaught of would-be “friends” who aren’t friend material, but just using me in some way. I don’t know what I’m asking for exactly with this post. What advice do you have for me I guess? Maybe this is the wrong place to ask…

    • says

      “Having no friends” is a concern. You need friends to get ahead in society. Maybe don’t focus on the finances, but focus on better communication skills. A great communicator trumps a brilliant mind in my book.

    • Chistian says

      Sounds like you are being separated from the world, but you keep trying to follow the world. Change your focus and it will change your heart, your life, and fill that empty void you keep chasing. You will not find it in money. You will not find it in friends. You will not find it in material things. You will not find it in the frivolous things of this world. There is one place to place your trust and the rest will fall into line.

    • Randy E says

      Ah, the age-old question: Can money buy happiness? Probably the wrong blog for this type of question, but what the heck. The relationship between what we earn and how we feel is obviously unique to each person, but I’ve known a lot of happy, successful and optimistic people in my life. They all seem to have the following in common:

      1. They focus on others;
      2. They are productive;
      3. They realize happiness is found from within;
      4. They have a “meaningful” circle of friends;
      5. They have a positive outlook on life; and,
      6. They have a content mind.

      I’m sure there are many others, but these are top in my mind. I follow this blog to discover ways to build wealth and “security” for my family, which is a contributing factor to my overall happiness. Increased wealth doesn’t improve one’s mental health, that comes from a variety of other areas (e.g., confidence, self-esteem, and being able to manage day-to-day life.).

    • Thomas47 says

      Agree with what Sam said. Try to avoid friendship as being something one needs to be “..rich enough” for. From the postings on this site, we see a variety of motivations for earning more and managing wealth well (family, retirement security, charitable causes, etc.). Money is just a tool, and it’s fun to learn more about it – especially when it is so incredibly easy mis-manage.

      You seem very articulate and intelligent, and there are probably hundreds of people and causes that you could have a great positive impact on. For example, visit a local school for special-needs kids and just volunteer to look at their books. A few hours of your time would probably bring huge efficiencies and help them help others for years to come … just one example of an wonderful thing you could do.

      If you do, please post back in a few months and share with the blog on how it went.

      (Sam’s note: See “It’s OK To Love Money“)

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