​

Financial Samurai

Slicing Through Money's Mysteries

  • About
  • Invest In Real Estate
  • Top Financial Products
    • Free Wealth Management
    • Negotiate A Severance
  • Buy This, Not That (Bestseller)

Net Worth Targets By Age, Income, And Work Experience For Financial Freedom Seekers

Updated: 01/23/2023 by Financial Samurai 131 Comments

Everybody should have a net worth target to shoot for by age, work experience, and income. Net worth targets will help you stick to your financial plan and motivate you to do more. With net worth targets, you will likely build way more wealth than if you had zero net worth targets.

Too many people wake up 10 years later and wonder where all their money went. If only they could have a net worth guide. They could print it out and stick on their refrigerator to keep them on track. Lucky for you, you’ve found one.

Below is my net worth targets guide to shoot for. The net worth targets are based on a multiple of gross income, regardless of your savings rate.

Using a multiple of gross income helps keep you disciplined as your income grows. A multiple of gross income also helps keep you honest on your path to financial freedom. You can’t just slash costs to achieve financial independence.

If you start subsisting on ramen noodles and water, your financial independence number is probably not real. If you don’t do anything to change a suboptimal situation, like quit your job or leave a bad marriage, your financial independence is likely not real either.

My goal is for you to have a target net worth to shoot for by age or years worked so you will eventually achieve financial independence. Once you achieve financial independence, you will gain the ultimate courage to live your ideal life.

Net Worth Targets By Age, Years Worked, Income

Below is my net worth targets by age, years worked, and income. The key net worth target to shoot for is 20X your average gross income. Once you’ve achieved 20X your average gross income, I consider you to be financially free.

Once your net worth is equal to 20X or more your gross income, you are free to keep working, retire, or downshift to a different career that pays less money. You can use your highest annual gross income as a multiple or average your last three years of gross income.

Amassing a net worth equal to 20X your average annual gross income will be hard. But good news! Once you have a minimum portfolio balance of $300,000 you will start feeling free. And once your net worth reaches 10X your average annual gross income, that’s when financial independence really starts kicking in.

Using a multiple of income is better than using a multiple of expenses for your net worth target so you can stay more disciplined. As your income grows, your net worth target will also grow. Meanwhile, you can’t “cheat” your way to financial independence by slashing expenses.

Net worth targets by age or work experience chart, Financial Samurai

If you have a $200,000 income, you have a top 10% income. A top 1% income is over $500,000 today.

These net worth target figures are for those who:

  • Take action rather than complain about an unfair system
  • Max out their 401k and IRA every year
  • Save an additional 20% or more after taxes and 401k/IRA contribution
  • Take calculated risks through investments in various asset classes
  • Build multiple streams of active and passive income
  • Work on a side hustle before or after their day job
  • Focus on the big picture and don’t nitpick with minutiae
  • Want to achieve financial freedom sooner with their one and only life

In the beginning, it’s difficult to get started due to growing student loan debt, wage stagnation, and increased competition for good paying jobs due to globalization.

Despite expectations of a large generational wealth transfer, inheritances usually won’t happen until much later in life. But after about 10 years in the workforce, you will start to build momentum. Achieving the net worth targets based on higher multiples will get easier.

If you so happened to have delayed entering the work force because you decided to go to graduate school or go travel the world like a lot of wealthier college graduates do nowadays, no problem!

Simply follow the “Years Worked” column to find your appropriate multiple. For example, if you’re 30 years old with no work experience because you spent your 20s getting a PhD, your target net worth multiple is 0.

Big Inheritance To Boost Net Worth

On the flip side, partly because of such large inheritance expectations, I expect Millennials and Gen Xers to see significant injections to their net worths after the age of 45. Another reason the target multiples of gross income after are higher as we age is because all of us become much more savvy with our money.

When we’re older, no longer can we cry ignorance for not knowing how to properly asset allocate our investments. With the proper asset allocation, you’ll be able to better weather any storms.

Further, we become more knowledgeable about long-term investment trends. One such trend is real estate crowdfunding, where one can finally invest in real estate across the country 100% passively. I’ve personally invested $810,000 in private real estate funds to take advantage of heartland real estate.

By our 40s, we’ve already gone through 20 years of money making wins and losses. Surely, by now we should all understand our monthly budgets, net worth compositions, spending tendencies, risk tolerance, and the importance of diligently tracking our money.

I get much more pushback on my net worth targets from folks in their 20s and 30s than folks in their 40s and beyond. The reason is because when we are young, we think we know what we don’t know. We are more arrogant, more stubborn, and less experienced.

As we age, we see the positive effects of compounding that really starts to snowball with a larger financial nut. Accumulating the second million is much easier than the first.

Easier To Live On Less When Older

Being able to comfortably live on less is one of the biggest reasons why it’s easier to hit higher net worth target multiples as you age. The older you get, the desires of your youth slowly fade away because you’ve been there, done that.

For example, when I was in my 20s, all I wanted to do was drive different types of luxury cars. After going through more than 10 different cars after college, all I want is one understated car that is reliable and safe.

Let’s say you have a $2 million net worth and make $200,000 a year at age 50. Your net worth multiple is 10X, while I suggest it should be closer to 15X. If you can find a way to live comfortably off only $150,000 a year, or 25% less, then you’re spot on target at 15X.

If you can live off $100,000, then you can retire immediately due to a 20X multiple. In other words, the more money you make and the more money you accumulate, the easier it is to adjust your spending downward.

Growing Your Net Worth As A Retiree

For the first two years after leaving Corporate America, I was making around 70% less than I did while working. Funny enough, my after-tax savings rate still was around 50%. I just became super frugal by cutting out all extraneous expenses. I found joy in the things I already had.

Saving money is also easier when you don’t work because there are lots of free activities and discounts during working hours such as free museum week days, early bird dinner specials, the ability to enjoy free parks, libraries, hikes, etc. Your commuting costs go down and you no longer have to shop for work related clothes.

As a retiree, the biggest X factor are medical expenses and long term care costs. We currently pay $2,300 a month for a platinum health insurance plan for a family of three. Not cheap by any means, but affordable after a couple decades of aggressive saving.

I’m really what I consider a fake retiree. The reason why is because I operate this website that generates online income. It takes work writing and updating this articles since I started Financial Samurai in 2009.

Further, I spent two years during the pandemic writing my Wall Street Journal bestseller, Buy This, Not That: How To Spend Your Way To Wealth And Freedom. I received a book advance and will receive royalties.

Hence, even in retirement, I continuously am building my family’s net worth. Having a net worth target to shoot for keeps me focused.

Easy Net Worth Target Multiples To Remember

The major age milestones everybody thinks about are 25, 30, 40, 50, and 60. As a result, I’ve made it easy for everybody to remember what multiple of their average gross income for the past three years to shoot for.

  • Age 30: 2X your average gross income
  • Age 40: 10X your average gross income
  • Age 45: 15X your average gross income
  • Age 60 or whenever you want to leave your job: 20X your average gross income

When I left work in 2012 at the age of 34, my net worth equaled roughly 15X my average income over the last three years. In other words, I fell short of my 20X income target. However, thanks to a severance package that equaled roughly six years of living expenses, I was more confident to leave.

Since 2012, I have grown my net worth by building an online business. I’ve also watched my investments grow with this bull market. Meanwhile, I’ve lowered the amount of income I need to be happy.

One of the most pleasant surprises about early retirement is needing roughly 30% less that I thought was necessary. So many people forget that once they retire, they no longer need to save for retirement.

I’ve been well over the 20X income multiple for the past several years. No longer do I fear running out of money or being forced to live a lower standard of living.

Multiple income buffers such as passive income, online income, and the occassional consulting income ensure financial security.

Remember 20X Gross Income

If there’s one figure to remember from this post, it’s the 20X gross income multiple. At 20X, even if your net worth provided zero returns, it would still take 20 years to exhaust your wealth while maintaining your same standard of living.

You could of course invest your wealth in a risk free asset like Treasury bonds to extend the life of your principal. Or you could take slightly more risk and try and earn a higher return to increase your odds of your nest egg never running out.

Just know that once you’ve achieved a net worth of 20X your gross income, your goal is to never lose money again. This is the first rule of financial independence! Once you’ve got enough money to live the way you want, there’s no need to take excess risk.

The beauty about a 20X multiple is that you don’t have to wait until you’re over 60 to permanently leave work behind. If you can figure out a way to achieve 20X earlier, all the better!

There are too many middle-aged folks who wake up one day and wonder where all their money went because they didn’t stay on top of their money. When all they want to do is take it easy, they’re faced with the harsh reality that decades more work is their only option.

If you ever achieve a net worth equal to 20X your average annual gross income, you might want to accumulate more. Hedonic adaptation gets the best of us. Further, you might want to create multi-generational wealth. If so, you can check out my extreme net worth targets to shoot for!

Achieve Your Net Worth Targets With Real Estate

To help you achieve your net worth targets, I highly suggest investing in real estate. Real estate is my favorite way to achieving financial freedom. It is a tangible asset that is less volatile, provides utility, and generates income.

Roughly 40% of my net worth is in real estate compared to 30% in stocks. My real estate holdings also generate roughly $150,000 a year in passive income.

Given interest rates have come way down, the value of rental income has gone way up. The reason why is because it now takes a lot more capital to generate the same amount of risk-adjusted income.  

Take a look at my two favorite real estate crowdfunding platforms. Both are free to sign up and explore.

Fundrise: A way for accredited and non-accredited investors to diversify into real estate through private eFunds. Fundrise has been around since 2012 and has consistently generated steady returns, no matter what the stock market is doing.

CrowdStreet: A way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations and higher rental yields. Growth is potentially higher too due to job growth and demographic trends.

I’ve personally invested $810,000 in real estate crowdfunding across 18 projects. My goal is to take advantage of lower valuations in the heartland of America. This is in addition to my three San Francisco rental properties.

Manage Your Money In One Place

Sign up for Personal Capital, the web’s #1 free wealth management tool to get a better handle on your finances. In addition to better money oversight, run your investments through their award-winning Investment Checkup tool. See exactly how much you are paying in fees. I was paying $1,700 a year in fees I had no idea I was paying.

After you link all your accounts, use their Retirement Planning calculator. It pulls your real data to give you as pure an estimation of your financial future as possible.

I’ve been using Personal Capital since 2012. As a result, I have seen my net worth skyrocket during this time thanks to better money management.

Retirement Planning Calculator

Net Worth Targets By Age, Income, Or Work Experience is a Financial Samurai original post. Going 60,000+ others and sign up for my free weekly newsletter. I’ve been helping people achieve financial independence since 2009.

Tweet
Share
Pin
Flip
Share
Buy this not that instant bestseller Wall Street journal banner

Filed Under: Retirement

Author Bio: I started Financial Samurai in 2009 to help people achieve financial freedom sooner. Financial Samurai is now one of the largest independently run personal finance sites with about one million visitors a month.

I spent 13 years working at Goldman Sachs and Credit Suisse. In 1999, I earned my BA from William & Mary and in 2006, I received my MBA from UC Berkeley.

In 2012, I left banking after negotiating a severance package worth over five years of living expenses. Today, I enjoy being a stay-at-home dad to two young children, playing tennis, and writing.

Order a hardcopy of my new WSJ bestselling book, Buy This, Not That: How To Spend Your Way To Wealth And Freedom. Not only will you build more wealth by reading my book, you’ll also make better choices when faced with some of life’s biggest decisions.

Current Recommendations:

1) Check out Fundrise, my favorite real estate investing platform. I’ve personally invested $810,000 in private real estate to take advantage of lower valuations and higher cap rates in the Sunbelt. Roughly $160,000 of my annual passive income comes from real estate. And passive income is the key to being free.

2) If you have debt and/or children, life insurance is a must. PolicyGenius is the easiest way to find affordable life insurance in minutes. My wife was able to double her life insurance coverage for less with PolicyGenius. I also just got a new affordable 20-year term policy with them.

Subscribe To Private Newsletter

Comments

  1. Jim says

    October 24, 2022 at 3:12 pm

    Hi Sam. Enjoy all your posts. Maybe a stupid question but, when you measure net worth (I’m an older guy so looking at the 20x mark), do you include primary residence and vacation homes or liquid assets only? Choosing to not carry a mortgage on property has tied up $$ which I’m OK with (little bit belt and suspenders I know) but want to see if that factors into your calculation. TY!

    Reply
    • Financial Samurai says

      October 24, 2022 at 3:24 pm

      Totally fine to include the home equity as part of your net worth. After all, you can borrow against it or sell the property to realize it. Just take a discount based on taxes and commissions.

      Reply
  2. jack says

    September 20, 2022 at 9:30 am

    if your net worth is say $2M at age 50 then (and it’s all in the stock market, for example) then it will $4M by age 60, so why would you need it to $3M at age 50?

    Reply
  3. Ninja says

    December 30, 2019 at 10:10 pm

    The table suggests, based on $200k income, you should be increasing net worth by $600k between ages 30 to 35. That comes about saving/investing 70% of your income after taxes paid. Is it realistic?

    Reply
    • Financial Samurai says

      December 31, 2019 at 6:10 am

      Investment growth too.

      Reply
  4. amandapuri says

    December 8, 2019 at 8:23 pm

    Can I count the equity value of my business if I work as a self employed individual where the typical value of the business

    Reply
  5. John McNamara says

    September 5, 2018 at 9:36 am

    Hi Sam. Is this chart that identifies net worth by income updated for 2019 and beyond? It is located here: https://www.financialsamurai.com/how-much-should-my-net-worth-or-savings-be-based-on-income/

    I want to make sure that my personal financial growth matches up to your current guidance.

    Also, is the goal you recommend 20X expenses or 20X gross income?

    Thanks!

    Reply
    • Financial Samurai says

      September 5, 2018 at 7:00 pm

      Shoot for 20X gross income!

      A lot of people complained about the 20X gross income and argued for 20X expenses, but it’s better to go for income.

      Reply
      • Mitter says

        November 30, 2020 at 1:44 am

        Don’t buy the 20X Gross income threshold. I am ready to buy 50X Annual Expenses.

        I have friends saving 80% of their Monthly income to attain FIRE. In such cases, 20X Gross Income doesn’t make a lot of sense.

        Reply
        • Bridler says

          March 31, 2021 at 1:40 pm

          Why doesn’t it make sense in that case? Just curious

          Reply
          • ASH01 says

            February 7, 2022 at 8:44 am

            Because if I make 500,000 per year then by the 20x rule I would need 10 million saved to retire comfortably. Lets say I’m 40 or 50 years old and I live well and happy on 150,000 per year, then even earning no return on principal and no social security or inheritance, or whatever, it provides for 66 years of income.

            I think if you have tried to save for early retirement then you are in the practice of spending much less then your gross income, or isn’t even an option. It isn’t like you are changing your lifestyle and spending more in retirement. Actually alot of expenses such as dining and gas/auto care etc tend to drop.

            So in this scenario, 8x gross income and a conservative 4% annual return on investment would provide 0 loss of principal and dying with 4mill in bank. Seems sufficient.

            Reply
  6. Jayf says

    June 4, 2017 at 3:33 pm

    Sam great read… I have to say that living in CA housing market, the posts about saving a bunch of money living off only $200k is easier said then done. equity plays a huge part of NW. I pride myself on saving and 30% of gross is as good as I can get done barring an emergency. Also, the posts on living expenses vs. income as a calculation is not exactly accurate at first glance , I feel as you are still taxed on that money, correct? I am not sure how that tax is calculated purely in a calculation of expenses x multiple. Getting to $5m seems a task. I think the plan is save, sell the house and get out of CA?

    Reply
  7. John Ryan says

    April 16, 2017 at 4:22 am

    Just a comment for young savers. When you add kids and house, costs can increase at a surprising rate. I used to live on $15k per year when single (albeit 20 years ago). Now it’s close to 10x that, and I consider myself relatively frugal.

    Reply
    • Stu says

      July 9, 2019 at 10:06 am

      20x gross income?? That makes little sense to me. Especially if your retirement expenses are far lower than your working life expenses. More savings is always better but not at cost of working another decade unnecessarily. I plan around 22.5x retirement expenses. Firecalc supports that.

      Reply
  8. Ben Jackson says

    April 15, 2017 at 1:40 pm

    Hi Sam — just curious about the expected return rate on the 20X figure. Seems like that is assuming a 5% return (with no dipping into principal). Given today’s interest rates, seems like a high expectation… wouldn’t 3% be more realistic? And if so that would be more like 30X…right?

    Thanks,
    -Ben

    Reply
  9. Dan says

    April 14, 2017 at 6:35 am

    I think your net worth table is interesting, but the interpretation is something like: This should be your goal for savings to get you to the 20x by 60 (or something similar). A 20x NW is really a 5% withdrawal rate. So this is a different view on the standard rule of thumb – which was usually 4% for 30 years of retirement to slightly less these days according to most planners.

    Many of your readers are probably interested in retiring early and want to know when they can be serious about taking the plunge. This table is not that helpful for that question because the focus is increasing savings until the 20x at 60. A more interesting table is the same columns but the factors and values are such that you would be comfortable at any age to retire. So if at 60 you need 20x at 50 you need more – say 27x. The interpretation of the table would be – At whatever age you hit this (age, NW) mark you should feel comfortable trying out early retirement.

    Reply
    • Financial Samurai says

      April 14, 2017 at 6:58 am

      Hi Dan, I’ll make it more clear to help you another readers understand The chart. Because I have an original post.

      If you can get the 20 X your average household income, no matter your age, I declare you as financially independent and can retire early if you want, at whatever age.

      Reply
      • Steve says

        April 14, 2017 at 9:21 am

        When you refer to “average household income” in the 20 X recommendation, are you referring to NET or GROSS?

        Thanks Sam.

        Reply
        • Financial Samurai says

          April 14, 2017 at 9:28 am

          I’m referring to your gross average household income over the past three years, since top line can’t be manipulated.

          But you are welcome to use the average NET income if you want to be more aggressive.

          Reply
          • Manoj says

            July 14, 2022 at 9:11 am

            I had the same doubt. Isn’t gross income more aggressive than net (since it will be after taxes and lower)? Great articles. Read a lot of yours thanks.

            Reply
            • Manoj says

              July 14, 2022 at 9:12 am

              specifically I am at 350K gross and 180k net. So 20X 180K will be way lower than 20x 350K. Also out household expenses are way lower than your calculation. In that case should I calculate 20 K my yearly expenses? Thx

              Reply
            • Financial Samurai says

              July 14, 2022 at 9:43 am

              Yes. Using gross income is more aggressive. Therefore, it also makes you more conservative by boosting your net worth to a higher level before retiring.

              But really, once you reach about 10X annual gross income, you will start to free a freedom and levity. I just noticed that with a net worth at 20X gross income, you are finally totally free to do whatever you want.

              I hope you can pick up a hard copy of my bestseller, Buy This, Not That: How To Spend Your Way To Wealth And Freedom! You’re going to love it.

              Reply
  10. Ivan Shekerev says

    June 10, 2016 at 12:53 pm

    Sam, is there an easy way to translate your advice – graphs, financial goals etc. for someone planning on moving to England?
    Can you recommend a British counterpart of yours or something? :)

    Reply
« Older Comments

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *


n
n

Top Product Reviews

  • Fundrise review (real estate investing)
  • Policygenius review (life insurance)
  • CIT Bank review (high interest savings and CDs)
  • NewRetirement review (retirement planning)
  • Personal Capital review (free financial tools and wealth manager)
  • How To Engineer Your Layoff (severance negotiation book)

Financial Samurai Featured In

Buy this not that Wall Street journal bestseller

Categories

  • Automobiles
  • Big Government
  • Budgeting & Savings
  • Career & Employment
  • Credit Cards
  • Credit Score
  • Debt
  • Education
  • Entrepreneurship
  • Family Finances
  • Gig Economy
  • Health & Fitness
  • Insurance
  • Investments
  • Mortgages
  • Most Popular
  • Motivation
  • Podcast
  • Product Reviews
  • Real Estate
  • Relationships
  • Retirement
  • San Francisco
  • Taxes
  • Travel
Buy this not that WSJ bestseller 728
  • Email
  • Facebook
  • RSS
  • Twitter
Copyright © 2009–2023 Financial Samurai · Read our disclosures

PRIVACY: We will never disclose or sell your email address or any of your data from this site. We do highly welcome posts and community interaction, and registering is simply part of the posting system.
DISCLAIMER: Financial Samurai exists to thought provoke and learn from the community. Your decisions are yours alone and we are in no way responsible for your actions. Stay on the righteous path and think long and hard before making any financial transaction! Disclosures