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Suggested Net Worth Growth Target Rates By Age

Updated: 02/11/2022 by Financial Samurai 111 Comments

This post will provide some suggested net worth growth target rates by age. It’s good to have net worth growth targets to help ensure you will retire comfortably. After all, everything is relative in finance. If you’ve got a net worth target of $1 million at age 30, but most people at age 30 have a net worth of $2 million, you’re actually behind!

In your younger years, your net worth growth will be faster because you are poorer. As you get wealthier, your net worth growth will likely slow down given a large base. As you get wealthier, you also don’t want to take as much investment risk out of fear of going in reverse.

Methodically growing your overall net worth is what wealth creation is all about. Your net worth is the culmination of savings, investing, real assets, and liabilities. I’m much more concerned about growing my net worth than only growing my stock portfolio because my stock portfolio is just a portion of my net worth.

Grow Your Net Worth Appropriately

Think of your net worth like a battleship during a time of war. As the intrepid captain, you are navigating your net worth to glory through sea mines of temptation and unknown icebergs of economic downturns. The greater you build your net worth, the more careful you steer.

It’s always important to think about your net worth in a risk adjusted manner. Putting 100% of your net worth into the stock market isn’t so bad when you’re a single 28 years old with $150,000 to your name.

But if you’re 50 years old with a couple kids entering college, you’re likely not allocating your entire $1 million in assets into the stock market.

My Net Worth Growth Goals

When I was in my 20s, I didn’t really track my net worth because I didn’t know better. I was focused on my career and saving as much as possible. My idea of net worth diversification was investing as much as I could away from the stock market given my pay and career were already dependent on the stock market. Every year 20%-30% of my compensation was paid in the form of company stock so there was no escape.

For 10 years this strategy worked pretty well because the stock market really didn’t go anywhere from 2000 – 2010 and real estate caught fire until 2007.

Now everything is on fire as both real estate and stocks are at all-time highs! Let’s just hope the battle ship doesn’t burn down with so much unbridled mania.

I’ve been much more surgical in managing my net worth in my 30s given it has grown to a point where it throws off an important passive income stream. Not having a day job anymore makes it that much more important to protect my financial nut.

If I can grow my net worth by 10% per annum, I’m usually satisfied. To put 10% in context, Bernie Madoff was able to amass $50 billion dollars under management because he delivered fake 10% annual returns!

In this article I’d like to provide several net worth growth targets to consider as well as a net worth growth framework by age. I think if I was able to read this article in my 20s and early 30s, I would have allocated more of my net worth into equities and would have a 10% higher net worth as a result. Hopefully this framework will help many of you build wealth.

US Household Net Worth 2017 Historical Chart - Suggested Net Worth Growth Target Rates By Age

Net Worth Growth Benchmarks To Consider

1) S&P 500 Index Performance.

The index of 500 large cap weighted stocks was introduced in 1957 and makes up 75% of the total US market capitalization of stocks. In other words, the S&P 500 index is the best reflection of the US economy. Returns have been anywhere from -43% in 1931 to +52% in 1954 to +30% in 2013. The average hovers around 8%.

The only way to get ahead if you are behind the average net worth for the above average person is to grow your net worth faster than the S&P 500 index. Targeting the S&P 500 index as a net worth growth benchmark is generally for middle aged individuals.

Just one thing to note. After a massive bull market since 2009, return forecasts over the next 10 years is way down. Therefore, you ironically will have a lower net worth growth target to shoot for.

2) Risk Free Rate.

The risk free rate is the 10-year government bond yield. It is risk free because the US government is the most sovereign nation and will pay you back unless we get attacked by aliens. The current risk free rate is roughly 2% in 2022 from a low of 0.51% in 2020. The risk free rate has been coming down for over 30 years as we’ve managed to contain inflation in the US and enact more effective economic policy.

Given I believe the ideal withdrawal rate during retirement touches no principal, growing your net worth by at least the risk free rate should be the base case goal for all individuals, especially traditional retirees over 65 who no longer have strong earnings power.

3) Industry Specific Indices.

Every industry has differing rates of growth. It would be unfair to compare the growth rates of the stable telecom industry with the growth rate of the internet industry. You can track your industry’s annual growth rate through the performance of industry ETFs such as: HDG (hedge fund), XLP (consumer staples), XLE (energy), XLF (financial services), XLV (healthcare), XLI (industrials), IYR (real estate), GDX (materials), IYZ (telecom), XLK (tech), and XLU (utilities). You can be even more specific by tracking your own company’s stock price performance if it is publicly traded.

If you want to expedite your wealth, then a large part of it has to do with choosing the right job in the right industry. This is why it’s important to do well in school so you have the options to choose your destiny. The top industries for MBAs are now tech and internet, as opposed to banking and management consulting in the late 90’s.

The Ideal Scenario: A great goal is to make money in good times and bad times. Based on my net worth growth rate benchmarks, an optimal scenario is to earn the risk free rate of return during down markets and match the S&P 500 growth rate during up markets. In order to do this, you’ve got to break down your net worth and make assumptions across each asset class. You’ve got to hedge out risk. No easy task, hence the ideal scenario. I’ll discuss my ideal scenario strategy in a future post.

Assumptions For A Net Worth Growth Target Framework

  • Risk tolerance: Risk tolerance decreases the older you get due to added responsibilities, a larger net worth in need of protecting, and less time to make up for investment losses.
  • Earnings power: Earnings power increases steadily up until about 50 and begins to decline due to age discrimination, risk of termination, less energy, and the risk of not finding work again if terminated.
  • Economic variables: Average historical variables of GDP growth 3%, inflation 2.5%, risk free rate 0.5% higher than inflation.
  • Education: Graduated from college or attended a trade/vocational school.
  • Employment: Continuous employment or livable income since graduation.
  • Savings rate: At least a 20% average after taxes over your entire career.
  • Net worth upon entering the work force: $0. I realize many students nowadays graduate with debt, but for simplicities sake we start with a $0 net worth. If you have student loans, then think of the educational capital you have to bring your net worth back to zero.

Net Worth Growth Target Rates By Age Chart

Recommended Net Worth Growth Targets By Age

18-30 YEARS OLD: EXTREME NET WORTH GROWTH PHASE

Between the ages of 18-30 you should be in the extreme net worth growth phase. If your net worth is $10,000 at the age of 23 one year out of college, it should be fairly easy to double your net worth to $20,000 if you make $40,000 a year and live rent free in your mom’s basement.

You’ve literally got nothing to lose when you’re young. It’s important to take calculated risks in your career and in various investments. You’ve got plenty of time to learn from your mistakes. You’re also able to have a redo by going to graduate school.

Net worth growth rate target per annum: 50%-100%+

31-35 YEARS OLD: RAPID GROWTH PHASE

Age 30 is a big milestone for both men and women. Speaking from a man’s point of view, we either will have “made it” or know we are on the right path to making it at age 30. Income should be much greater than income in your 20s, which should help accelerate savings and investing. 31-35 is the median age where most Americans buy a home.

After 8 to 13 years of contributing to your 401(k), you should have roughly $130,000 – $330,000 if you follow my 401(k) by age chart. You begin to see the growth of your assets make a difference to your overall net worth. No longer is it just about making more money by going to work. It’s about making your money work for you.

Net worth growth rate target per annum: 25%-50%

36-40 YEARS OLD: HIGH GROWTH PHASE

You begin to take risk off the table because you might have dependents. No longer are you going to have a majority of your net worth in stocks when you’ve got a spouse and a little one to put through school. Your parents are likely in their 60’s to 70’s if they are still around. You’d like to set aside some time and money to care for them if needed.

36-40 years old is a great time for income growth as you’ve now got 10-18 years worth of experience. You’re old enough to get real respect from your employees, clients, and managers. In terms of love life, 35 years old is also the golden cross of love for men. Your net worth is much more diversified now with real estate, stocks, bonds, and risk free assets. If you don’t have any dependents, you can afford to take more risk.

Net worth growth rate target per annum: 10%-25%

41-55 YEARS OLD: NORMALIZED GROWTH PHASE

After 20 years of saving and investing you’ve grown a respectable sized nest egg which you’d like to protect. You begin to tire working for the man so the thought of your retirement nest egg losing any value petrifies you to be more conservative with your investments. You’ve got a propensity to hoard cash like the rich.

With 25-45 years left to live on average, you can’t get too conservative. You’re actively looking to generate passive income streams or spend more time on optimizing your income producing investments. Assets that provide yield such as high dividend stocks, annuities, and muni bonds start looking appealing.

Net worth growth rate target per annum: 10% – 15%.

56-70 YEARS OLD: MAINTENANCE PHASE

You don’t necessarily have to be 56-70 years old to be in the net worth maintenance phase. If you’ve achieved your desired financial number at a much younger age, staying in the maintenance phase is fine too because you’ve got all the money you need.

With a minimum net worth return based on the 10-year risk free rate, you are assured to earn at least 3% on your net worth every year. On a large number, 3% is enough especially now that you’ll be able to withdraw from your pre-tax retirement accounts and receive Social Security.

Net worth growth rate target per annum: Risk free rate (3%) – 10%.

71+ YEARS OLD: REDUCTION PHASE

If we spend all our years slaving away at a job and die without enjoying everything life has to offer that would be a crying shame. I conservatively bake in a negative net worth growth rate to allow people to spend their money beyond the risk free rate of return. This is even though the ideal withdrawal rate in retirement doesn’t touch principal.

The ideal scenario is to earn enough to happily live off your dividends and interest to guarantee you’ll never run out of money. You’ll also be able to pass down your assets to the next generation and to charities.

If you find yourself with more money than you need, you can afford to take more risk with your net worth if you’d like. However, by this age I think you’ve figured out what makes you happy. Making more money likely is not necessary. It’s much more rewarding using your money to help other people instead.

Always Build Your Net Worth

Obviously everybody’s lives aren’t going to go according to plan or follow my various life stage descriptions. Some may find themselves long term unemployed during their supposed high earning years. Others might have hit the jack pot earlier and decided to de-risk because they’re completely satisfied with what they have.

The global pandemic should be considered an anomaly never to be experienced again. At least real estate and stocks did well during a global pandemic. But I don’t recommend baking such numbers into your retirement pro forma calculations. It’s much better to be conservative and end up with too much than come up short when you are no longer capable of working.

Once you get to a comfortable net worth level I encourage you to shoot for a 10% annual growth rate. My definition of a comfortable net worth is when you become UNCOMFORTABLE losing any more than 15% of your net worth in one year.

A 10% annual growth rate is close to the historical S&P 500 average annual return. 10% is also roughly 3X the risk free rate. This net worth growth target rate ensures that you are staying ahead of inflation. You also aren’t putting too much of your net worth at risk.

During bull markets, greed is going to really tempt you to go outside your risk tolerance zone. Definitely be honest with yourself in knowing what you can stomach to lose. During bear markets, fear will make you hoard cash and miss investment opportunities.

You might even develop a notion of wanting to spend all your money before the market loses it all for you! In either environment, try and be disciplined to sticking with a net worth growth target. I hope my net worth growth framework helps!

Wealth Building Recommendation

One of the best way to become financially independent is by signing up with Personal Capital. They are a free online platform which aggregates all your financial accounts in one place. This way, you can see where you can optimize your money.

Before Personal Capital, I had to log into eight different systems to track 25+ difference accounts. I then managed my finances on an Excel spreadsheet. Now, I can just log into Personal Capital to see how all my accounts are doing, including my net worth.

A great feature is their Portfolio Fee Analyzer. It runs your investment portfolio(s) through its software in a click of a button to see what you are paying. I found out I was paying $1,700 a year in portfolio fees I had no idea I was hemorrhaging!

Finally, they have an amazing Retirement Planning Calculator. It pulls in your real data and runs a Monte Carlo simulation to give you deep insights into your financial future. Personal Capital is free, and less than one minute to sign up. 

Personal Capital Retirement Planner Tool
Is your retirement on track? Check with PC’s Retirement Planner

Grow Your Net Worth With Real Estate

In addition to investing in stocks and bonds, I’m a big proponent of real estate investing. Real estate is a core asset class that has proven to build long-term wealth for Americans.

Given interest rates have come way down, the value of rental income has gone way up. The reason is because it now takes a lot more capital to generate the same amount of risk-adjusted income. Yet, real estate prices have not reflected this reality yet, hence the opportunity. 

My favorite two real estate crowdfunding platforms are:

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, higher rental yields, and potentially higher growth due to job growth and demographic trends.

Both platforms are free to sign up and explore. 

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. Thanks to real estate, my net worth has grown far greater than I could have ever imagined! Suggested Net Worth Growth Target Rates By Age is a FS original post.

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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.

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Comments

  1. Michael says

    May 9, 2019 at 10:43 pm

    Nice angle at structuring net worth thinking! There are many approaches to this, and one needs to find one that matches their life philosophy. I’ve been thinking a lot about how to match a flexible and “irie” lifestyle with very goal orientated perspective to growing net worth.

    Backtracking my performance… To my surprise, I’ve pretty much followed your guidelines.

    I am now 40 years old and my net worth is just over 700 000€. Between 30-40 my net worth grew exactly 25% per year.

    I’ve been investing in shares since I was 16, but also been making big investing mistakes (due to too much risk), paid the crazy 30% tax on profits while also spending some of the profits. Which I do not really regret, since I’ve been always able to grow my investing portfolio, but less than if I just put them in S&P500 for example.

    My big breakthrough was buying a large apartment in one of the most expensive locations of my hometown. The apartment was in awful condition and I basically went “all in”. I had to get my dad to guarantee the loan and help with the renovation cost, since the mortgage was way too big for me. Luckily, the interests were low and I got a 50% raise at work at the time.

    Now I’m 40 and for the past couple of years my net worth has increased 8,8% per year, including mortgage payments and investments.

    I have started thinking about moving purely to index funds in investing. I guess I just have to admit that I am not that great at picking stocks.

    However, if my plan works out, I should exceed 1M€ net worth in a few years :-)

    Reply
  2. Mark says

    April 9, 2017 at 12:00 pm

    commenting on an old article here, but wanted to provide some validity to your chart from someone now in my 50’s. Having tracked these figures for my situation over the years, I can tell you that your numbers are pretty good, with two notable exceptions. 1) Many, including myself, have negative years sprinkled in here and there. In my case, these were due to .com crash (’99/’00), poorly time real estate investments, and ’08 debacle. I’ve had 2 negative years in each of the age 31-35, 36-40 and 41+ brackets so far. Worst was close to -11% in my late 30’s, should have been dialing risk back but wasn’t. For some real world results, I closed out age 30 just over your target number, age 35 somewhat over, age 40 well behind, and am projecting will be over the number at the age 55 exit point. Married, long time homeowner, 3 kids, 2 now in college. Very good work on this article!

    Reply
  3. Phantm says

    February 20, 2017 at 8:22 am

    I’m curious why you recommend maxing your 401k, which for most people offers very limited fund options over taking advantage of the $5500 in a Roth IRA. Yes, it’s true that if you’re doing it “properly” you’ll probably be taxed less in retirement because you have less expenses and therefore will need less of an income stream… but I think you may be overlooking the earnings in your Roth IRA growing tax-free.

    I’d rather pay higher taxes on a smaller amount of money now than slightly lower taxes on a vastly larger amount of money later.

    Even for someone with great 401k fund options, the Roth IRA seems to hold its advantages. Am I missing something?

    Reply
    • Financial Samurai says

      February 20, 2017 at 8:47 am

      The government needs people to pay more taxes upfront to fund their endless spending. So, if you think the government is efficient and trustworthy, then by all means pay more taxes upfront in your Roth IRA.

      I’m of the belief the government is inefficient, corrupt, and highly wasteful. Therefore, I do not recommend contributing to a Roth IRA before maxing out your 401k. I believe it is the responsibility of financial freedom fighters to minimize their tax liability.

      To think you will be in a higher tax bracket in retirement than while you are working is delusional. But people just don’t realize it until it’s too late.

      See: Disadvantages Of A Roth IRA

      Reply
  4. andy says

    May 20, 2014 at 7:19 pm

    i want to be close to a million in 4-5 years.. I will be 30-31

    Reply
    • Financial Samurai says

      May 21, 2014 at 9:58 am

      Congrats! Keep the course and try and constantly push your savings limits until it hurts.

      Reply
  5. Sally says

    February 5, 2014 at 4:22 pm

    I’m confused – why don’t your net growth %’s keep track with the suggested net worth numbers in the table?

    For example, the low end for net worth at age 31 is 250K. At 25% (the minimum target annual rate of growth you list) for five years, you would expect 750K by age 36, but that’s more than the high end of the suggested net worth for 36-40. And that’s not counting additional savings.

    In fact, if I keep this up through age 70, using the minimum annual rate of growth in your suggested ranges, I would expect 13 million dollars by age 70!

    I must be missing something? Are there things like mortgages being accounted for?

    Reply
    • Skeptical says

      February 6, 2014 at 6:42 pm

      Yeah, it doesn’t make sense to me either. People aiming for these numbers are setting themselves up for disappointment. It gets even more extreme if you start from the beginning of the years listed on the table – see my comment above.

      Reply
    • Financial Samurai says

      February 6, 2014 at 9:07 pm

      You make a great observation Sally. The reason is: life happens and things get in the way. I didn’t want to make the suggested net worth range so out of reach that people get discouraged like they have been with my previous posts about net worth. But even with these figures, I’ll have people like “Skeptical” push back probably because s/he is not close to these figures.

      People will see these charts as snapshots in time in their life. If one was to see this post and chart since college, I think there’s a much better chance of getting to that 13 million you’ve calculated at age 70.

      Reply
      • Skeptical says

        February 7, 2014 at 3:09 pm

        Again, no need to be condescending.

        I don’t “push back” because I am nowhere close to these figures. I “push back” because by using your figures I get led to results that are far too optimistic, which makes me question the figures.

        As I said before, I would love to see a more accurate analysis that takes these life events into account. I believe that is much more useful than simply saying “everyone between 18 and 30 should be increasing their net worth by 50% per year.” Don’t you think so?

        Reply
        • Financial Samurai says

          February 7, 2014 at 3:15 pm

          It’s understandable to be frustrated if you’re not within the range. I get it. To explain “life happens,” the best way is to spend some time reading various articles on this blog.

          Actually, this is the best article to read to help address your frustrations, “Explaining Why The The Average 401(k) Balance Is So Low“.

          Also, you’re welcome to write a post for me sharing your thoughts on what should be the suggest net worth growth targets, and net worth range by age.

          Reply
          • Skeptical says

            February 7, 2014 at 5:52 pm

            Again, what’s with the condescending attitude?

            I’m not frustrated that I’m not in the range. I’m sure you wouldn’t say that a 22 year old with $25K is not on a reasonable path, and neither would I.

            I’m frustrated because because your figures lack an internal consistency.

            Reply
            • Sally says

              February 9, 2014 at 3:56 pm

              Please don’t let a few bad apples ruin this site for you. Yes, the numbers are high, but if you work hard your dreams will come true!

              Reply
            • Financial Samurai says

              February 12, 2014 at 2:24 pm

              BTW, someone impersonated me on some previous comments you might have read. They have been deleted. I even wrote an entire post on it at Yakezie.com. Check it out.

              Anyhoo, one of the biggest things in life is that it’s not linear. Things happen all the time. Hope you were able to read the post on explaining why 401(k)s are so low.

              My post tries to be dynamic and provide ranges by net worth, growth, and age to help as many as people as possible.

              Again, I WELCOME your viewpoint on net worth, growth etc if you can write a post for me on what you think is the right way.

              Reply
        • Joe says

          February 7, 2014 at 3:19 pm

          Dude, you are really annoying and offering nothing except complaints. Just accept the fact that you will not get very far in life because your attitude will make sure of it.

          Reply
          • Skeptical says

            February 7, 2014 at 5:55 pm

            Forgive me if I seek a logical consistency in a financial analysis.

            Reply
          • Harsh says

            February 12, 2014 at 12:32 pm

            Whoa, hold on there everybody. Skeptical provided a valid analysis year by year based on the values provided in the original chart. I understand that these are guidelines, but good god attacking him for providing a valid response, whose the real child here? Skeptical cleary pointed out that they felt the NW range itself was acceptable, he only pointed out that according to the math provided there is an inconsistency. I don’t know what is wrong with this Joe character, but reread your response and realize your nothing but rude. Your saying someone who takes it upon themselves to analyze a scenario and comes up with a discrepancy is annoying and offering nothing? I would completely disagree with you and say your resposne makes you sound like a child half the age of Skeptical. I’m sorry if you find my analysis of your child like behavior annoying and comes off as complaining, I guess I will never get very far in life due to my attitue.

            Reply
  6. Skeptical says

    February 5, 2014 at 4:04 pm

    I’m very skeptical of your target return rates. 50-100% in your 20s? While the market has been good the past year, more often than not you will be very disappointed if this is your expectation. And if you go about your investments trying to achieve this rate of return, it will often blow up in your face.

    You yourself note that the average growth for the S&P 500, which represents the majority of the US economy, is 8%. Do you really believe that anyone should target and expect 500%-1100% better than this?

    Reply
    • Financial Samurai says

      February 5, 2014 at 5:25 pm

      If your net worth is $5,000, and you make $50,000 a year, how hard is it to grow your net worth by 100% to $10,000?

      Reply
      • Skeptical says

        February 6, 2014 at 6:39 pm

        OK, so we’re not talking about rate of return then. But still, seems very high.

        Sure, it’s easy enough the first few years, but how long do you expect someone to be able to keep doubling their money? In your example, after five years you’ll have saved $160K. At this point, do you expect someone to save another $160K in a year? Even if your salary TRIPLES in five years from $50K/yr to $150K/yr, you would still fall short even if you save your entire annual salary.

        Even at the low end of the numbers you suggest, it’s unrealistic. Assuming you start from just $5,000, the minimum suggested rate of growth would set you up with $30 Million at 70 (which, as Sally points out, doesn’t seem to keep track with the suggested net worth you’ve listed, but that’s what the math comes out to).

        Let’s take a snapshot at 30. Using your minimum figures again, a 30 year old would be expected to increase his net worth from about $650K to about $975K. Even assuming an overly aggressive 10% rate of return on investments, how is he supposed to save $225K in a single year? The vast majority of 30 year olds are making significantly less then $225K.

        If you do the math, not only are the numbers unrealistic, but they aren’t even consistent with the rest of the table.

        Reply
        • Financial Samurai says

          February 6, 2014 at 9:03 pm

          Not sure if you are reading the charts right. I have a suggested net worth of $250,000 at the high end for someone 30. At 31 I’m suggesting a 25%-50% increase in net worth, or $50,000 – $125,000.

          I think it’s great you are using a $650K net worth for 30, but that’s outside the scope of my chart.

          At $650,000, the age range is 41-55 and the growth rate is 10-15%. Do you not see these figures?

          Can you share with me your age and net worth? I think it’s really important you develop a more positive mindset about your money because your finding lots of excuses why you can’t do something. Find some excuses why you CAN do it.

          Reply
          • Skeptical says

            February 7, 2014 at 7:02 am

            Did you read my post? I am pointing out the internal inconsistency of the charts, which is exactly why it seems as though I haven’t read the figures right.

            I’m 22 with a net worth of about $25K. Using myself as an example, I get the following expected net worth numbers if I use the minimum growth rate in your chart.

            Age, Growth Rate, Net Worth ($K)
            22, 50%, $25.00
            23, 50%, $37.50
            24, 50%, $56.25
            25, 50%, $84.38
            26, 50%, $126.56
            27, 50%, $189.84
            28, 50%, $284.77
            29, 50%, $427.15
            30, 50%, $640.72
            31, 25%, $961.08
            32, 25%, $1,201.35
            33, 25%, $1,501.69
            34, 25%, $1,877.12
            35, 25%, $2,346.40
            36, 10%, $2,933.00
            37, 10%, $3,226.30
            38, 10%, $3,548.92
            39, 10%, $3,903.82
            40, 10%, $4,294.20
            41, 10%, $4,723.62
            42, 10%, $5,195.98
            43, 10%, $5,715.58
            44, 10%, $6,287.14
            45, 10%, $6,915.85
            46, 10%, $7,607.44
            47, 10%, $8,368.18
            48, 10%, $9,205.00
            49, 10%, $10,125.50
            50, 10%, $11,138.05
            51, 10%, $12,251.85
            52, 10%, $13,477.04
            53, 10%, $14,824.74
            54, 10%, $16,307.21
            55, 10%, $17,937.93
            56, 3%, $19,731.73
            57, 3%, $20,323.68
            58, 3%, $20,933.39
            59, 3%, $21,561.39
            60, 3%, $22,208.23
            61, 3%, $22,874.48
            62, 3%, $23,560.71
            63, 3%, $24,267.54
            64, 3%, $24,995.56
            65, 3%, $25,745.43
            66, 3%, $26,517.79
            67, 3%, $27,313.33
            68, 3%, $28,132.73
            69, 3%, $28,976.71
            70, 3%, $29,846.01

            As you can clearly see, if you do the math these numbers do not match with the suggested net worth figures listed in your chart. The chart is not even internally consistent! This type of analysis is why I believe the growth rates listed in your table to be unrealistic (while frankly I believe the net worth amounts to be about right, if a little low).

            Reply
            • Financial Samurai says

              February 7, 2014 at 7:19 am

              Thank you for telling me you are 22. I understand your position much better now.

              My chart is a guide for various snapshots in time. Life is not linear. Things happen all the time. Definitely revisit this post after 3,5, and 10 years and I think you’ll be able to relate a little better.

              One important tip I have for you: Try and listen and be flexible to listening to advice to those who’ve been there. It’ll help you get much farther. Or don’t. All is good.

              Reply
            • Jerry says

              February 10, 2014 at 4:34 pm

              I’d love to learn about personal finance from a poor 22 year old who has never experienced life and thinks he knows everything.

              Let’s toss another one in the bin for the government to support 35 years from now.

              Reply
          • Joe says

            February 7, 2014 at 3:18 pm

            Sam, why are you even bothering responding to this know it all 22 year old guy who offers no solutions and just whines?

            He has no experience, doesn’t listen, and will probably end up with much less than what you’ve had in your charts because he’s irreverent. Chances are high he didn’t go to a good school and is working some dead end job.

            Don’t waste your time!

            Reply
            • Harsh says

              February 12, 2014 at 12:46 pm

              Joe and Jerry, I think both of you need to take a long look in the mirror before you make rash remarks. In general, yes a 22 year old may not have as many life experiences as someone older…… or they may have 10x the experiences. Age doesn’t make you mature or imature, the person you are does. You’ll notice that as you have been attacking Skeptical, the only remarks they have left are in regards to their original question to Sam while both of you felt the need to attack them on a personal level. For both of you to assume they will be poor or went to a bad school working a dead end job really speaks volumes about your character. Does it make you feel better about yourself to attack someone else while sitting at your computer? I may be mistaken, but I thought the point of this site/blog was to share ones personal experiences to try and help others, not attack and judge someone that you disagree with. I for one am very dissapointed that this had to turn into some sort of Yahoo type thread.

              Reply
          • Ow Sharptung says

            November 18, 2019 at 12:34 pm

            while I’m sure you will just say I’m whining and making excuses. If you follow your minimum growth rates and start with a net worth of 5k you end up at 27 million by the time your 70. Even very financially responsible people regularly fall short of this outcome. I am curious, I believe you will be close to your 40’s now, is your net worth around $4,833,427? If not whats your excuse?

            Reply
            • Financial Samurai says

              November 18, 2019 at 12:41 pm

              It’s much higher. And it’s not because of brains, it’s because I’ve been heavily invested in stocks, bonds, and real estate in one of the best bull markets in history.

              Everything could come crashing down, but so far, my investments have done OK. The other X factor that has grown is Financial Samurai, which someone offered some big bucks this year to buy. I declined, b/c I’m still enjoying the process.

              How are you doing in this bull market?

              Reply
  7. Sunil says

    January 14, 2014 at 11:09 am

    Hi Sam
    Great analysis as usual. I am 41 and my wife is 37 and our total net worth is around 1.2 mil. I hope we made the cut. The concern that I have is most of our net worth is in real estate. We also live in bay area and bought our primary residence plus 2 investment condos between 2010 to 2012. I had also purchased some inexpensive properties in India 10 years back which are worth 200k that I have included in my net worth. Can you include international real estate while calculating net worth? What about physical gold? what about money in 529 plan? Our 401k is really low for our age.. 160k combined. I am not sure if we will ever be able to catch up. Both of us have started making maximum contribution plus my wife gets a generous 10% match. We are not eligible for IRA due to our income, so our IRA is less than 10k. Also we find it hard to save 50% of our income (300k combined) for two reasons. One is due to our sons private school. We bought our house in a good school area but we have continued with the private school because we are somewhat skeptical about the public school in the bay area (and california in general. California has the 49th best school system in the country lol). Second one is vacation. We take expensive vacations to europe/ carribean at least once a year (sometimes twice). But we are very frugal with everything else. I am still using my toyota corolla that I bought after graduation (has over 250k miles). Always buy clothes on sale or discount stores such as Ross. After taxes and everything else we are able to save about 35% of income…

    Reply
    • Financial Samurai says

      January 14, 2014 at 2:03 pm

      Sunil, I’d definitely include your international real estate, gold and any assets which have market value! Nice job buying in 2010-2012!

      Reply
  8. Jack @ Enwealthen says

    January 12, 2014 at 4:13 pm

    Thought-provoking, as usual!

    While a nice framework, I disagree with the underlying assumptions that we’re all walking the same decade-banded path towards retirement. Depending on the choices you make in your 20s and 30s, or events outside your control, you may be way ahead of the curve, like Sam, or behind it, like most of the country.

    What matters most is knowing your destination, even if you’re not sure how you’re going to get there yet. I’m on the way to a safe, secure, and fun retirement.

    Of course, getting there is half the fun.

    Reply
  9. no says

    January 10, 2014 at 5:39 pm

    Having no children and no spousal dependent (we have our own savings, expenses, property, and do not rely on each other for financial support), I’m almost 37 and progressing as if I were in my 20s – when I did not have the opportunity to do so. I certainly am not at the half million mark as advised in here. In fact, nowhere near that.

    I’ve got a home of just over $200k with a low mortgage and a 4.85% rate (I bought a home that was half what I could afford so I’d have plenty of flexibility). My monthly expenses for utilities and property tax and food and everything else is around $2500. I earn $100k-$165k per year (it varies, but stays between there). I have $106k in a 401k and $11k in a traditional IRA (earned too much the last couple years to contribute to a Roth).

    I would be much farther ahead than this, except I’ve also had to assist some immediate family over the last fifteen years and I’ve also spent a lot of money renovating this home in the last four years I’ve lived here. I’m not considering this property an investment, so I have spent nearly $100k to make it a place I can enjoy and be comfortable in for the next 30 years. Upgraded the electrical panel, improved electrical safety (originally aluminum wiring). Gutted two floors and updated them. New windows throughout the house instead of the drafty cold rattly ones that came with it. A new top of the line evaporative cooler, sealing and insulating the entire house, built a custom bathroom with a spa tub (as an ex athlete and now an aging engineer, this has been a tremendous investment for my well-being). Even a new boiler and partial replacement of the hydronic baseboard heating units in two of the zones. Also renovated the 30 year old tired landscaping, adding security system, and so on. Oh, and had to replace a broken water main (ouch – costly!) this past winter.

    It has been expensive, but it should leave me with fewer expenses over the rest of my life in this home, instead of things popping up every few months. At this point, the only significant expense I plan to have with my home is the installation of a new sprinkler system to replace the dead one in our lawn that isn’t very efficiently planned-out for optimum coverage. That’ll be a few grand. After that… it’s all cosmetic… and probably nothing I’ll look at touching for about five years.

    I plan to keep maxing my 401k, my standard IRAs, putting a big chunk into a personal account with mostly S&P mirroring passive indexes and a little P2P to offset the lousy CD options out there right now.

    I’d love to have the time to focus on individual stock picking, but it’s a choice between making a decent income near or above six figures and not having the plentiful time to afford constant portfolio babysitting or going for funds and indexes.

    I wish I had started fifteen years earlier, but we’re at where we’re at.

    Reply
    • Lady says

      January 11, 2014 at 6:08 pm

      With a $100-$160,000 a year income and your financial situation, I’d think you’d be able to save 50% of your income, invest and catch up in no time!

      Reply
  10. Retireby30s says

    January 10, 2014 at 6:38 am

    Well compared to your results by 30 I’m not EVEN CLOSE!

    It is very hard IMHO to get to 50% growth when you’re in your late 20’s… maybe I am doing something wrong here.

    General states: Net worth at ~$250K, Gross income ~$175K (trying to get that promotion for a 20% bump!) and single….

    With that it’s quite hard to get to 50% growth. Even with aggressive savings say 100K is saved (net of taxes that’s about 65K) even if the market moves 10%… thats 90K… That is only a 36% move! As I said not even close even with aggressive assumptions!

    Also not too comfortable having a near 80% securities exposure so I got no idea how you’re getting 50% returns! Maybe I gotta read a few new books.

    Reply
    • Financial Samurai says

      January 10, 2014 at 7:56 am

      Howdy Mate,

      With a net worth of $250,000.. you’re on the border, and I’ve provided a 25%-50% range for that net worth amount. So your 36% up is right smack in between.

      Depending how old late 20’s is, you’re doing very well based on my estimates. $250,000 is the top of the 18-30 range.

      I wouldn’t get too caught up about hitting the exact numbers. Remember to think risk and reward together.

      Reply
      • Retireby30s says

        January 10, 2014 at 8:44 am

        Well i guess the issue is how to maintain call it 8% investment growth without going crazy.

        It’s actually mentally taxing at this point, your net worth moves by 4 figures on a daily basis and its hard to see all the small reinvestments you make from a measly paycheck here and there.

        Think that might actually be a good post topic!

        Also realized you asked me how I found the blog, I found it when looking around for information on Wall Street layoffs.

        Reply
  11. Spencer says

    January 10, 2014 at 4:49 am

    Since we and my wife are in our twenties we are definitely in the “rocket ship” growth phase. Our net worth was up over 300% this year. Pretty easy with a few bonuses, pay raises, an aggressive savings rate, and starting from so little. I’m planning on a 100-150% increase next year, depending on how the stock market performs. Maybe we’ll do even better if my wife’s start up gets the big win :)

    Reply
    • Financial Samurai says

      February 6, 2014 at 9:05 pm

      300% is indeed a rocket ship growth rate. Fingers crossed your wife kills it!

      Reply
  12. Andrew says

    January 9, 2014 at 9:21 pm

    Your blog continues to inspire and challenge… How does this chart change if any for an employee with a pension? I am 28 years old and due to retire at 52 with 90% of my highest paid year. My wife and I live in a high cost city in CA and have 25k in a 457 and 15k in cash but other than that we are having a challenging time pushing our savings further with our mortgage, child etc. Thoughts?

    Andrew

    Reply
    • Financial Samurai says

      January 10, 2014 at 6:46 am

      Hi Andrew,

      Having a pension is the golden goose. But pension plans might change in 24 years, so be careful not to overly rely on it and not save.

      Take your estimated pension annual income divide it by 4% (rough estimate) to get what it’s worth.

      Reply
  13. Smurfette says

    January 9, 2014 at 7:31 pm

    Apologies if you have already written about this somewhere, but how are you defining “net worth?” For example, if you own a house with a sizable mortgage, are you including the value of the house and the mortgage? How would you suggest determining the value of the house? Should we just look at current market values today? Also, how would you suggest estimating the value of a pension within your current net worth? Would love to get your pov on this as my husband and I both have pensions via our jobs.
    Thanks.

    Reply
    • Andrew says

      January 9, 2014 at 9:22 pm

      I posted the same question! Looking forward to an answer.

      Reply
    • Financial Samurai says

      January 10, 2014 at 6:45 am

      Check out this post: https://www.financialsamurai.com/why-its-ok-to-include-your-primary-residenc-in-your-net-worth-calculation/

      I say yes.

      On your pension, capitalize its value by dividing its annual expected income by 4%.

      Reply
      • Michael says

        January 10, 2014 at 9:06 am

        Maybe I’m just bad at math, but what are we taking 4% of. Here is how my pension works with some sample numbers:

        Say I worked 5 years at my company. If I quit today when I’m say 60 years old they will pay me 10k per year for life. The “balance” of my pension today (say I’m 30 years old) could be 40k, but when I retire it could be worth perhaps 200k (estimated that I live till 80). Am I taking 4% of 200k or 40k?

        Another way to look at it is that when I retire, I’m promised 50% of my salary for life for the remainder of my life. Again, assume that happens at 60 and say you’re 30 or 40 today. Does the “balance” in the account today matter at all? Or perhaps the only thing that matters is how much 50% of my salary is?

        Reply
        • Financial Samurai says

          January 10, 2014 at 9:13 am

          4% is the risk free rate plus 1% to be more conservative to value your stream of cash flows, which you say are guaranteed for life.

          Reply
          • Smurfette says

            January 10, 2014 at 6:18 pm

            Sorry Sam, i’m still confused on how to calculate the value of the pension.

            Say i make 100k currently, and stay at my current employer for the length of my career. And say that when i retire i’ll have 30 years of service, and my pension promises me 60% of my salary. So, assuming i have NO more raises between now and then (a conservative approach), 60% of 100k salary is $60k yearly income from the pension.

            If I understand you correctly, you said to take 4% of that….. would be $2400… and that to my current net worth?
            Seems like a very small amount. Almost nothing! am i calculating it wrong?
            thanks in advance for your response.

            Reply
            • Ace says

              January 11, 2014 at 8:46 am

              Smurfette,

              I can’t resist jumping into this thread…. $60,000/year is an excellent pension. You are very fortunate!

              If you go through a divorce, you will find out how really difficult it is to value a pension. Most financial planners look at the what it would cost to purchase an annuity with comparable cash flows.

              But for a ball park estimate. Divide the annual benefit by 4% which would give you a future value of $1.5 million (lump sum). The 4% rate is typically considered a safe annual withdrawal rate from your retirement plan. If you really like math you could discount this $1.5 million back to today’s dollars. $1.5 million/(1.04)^30= $462,478 with assumption that you have to wait another 30 years to collect.

              So basically, a lump sum investment of $462,478 with a 4% rate of return will give you $1.5million 30 years from now.

              Hope that helps!

              Reply
            • Smurfette says

              January 11, 2014 at 9:30 am

              Now I feel like a real idiot… I was multiplying by 4% instead of DIVIDING! no wonder it was making no sense to me! Thank you Ace for jumping in, much appreciated!

              And the $60k/year pension is actually my husbands, not mine – but yes, i guess he is really fortunate, and I am too :) I do have a pension as well from a previous employer, but it’s much smaller!

              One big caveat, the $60k/year is only assuming he stays with his employer until retirement. If he were to switch jobs for example, and thus have less than 30 years of service with this employer, the pension would be much smaller. We’re going to look at the what the pension would pay assuming he quit today (with 6 years of service), and use that number to divide by the 4% to add to our net worth. I’d think that is the correct way to do it as we can’t just assume he’ll spend 30 years at this employer.

              Thanks again for the response!

              Reply
  14. Ryan says

    January 9, 2014 at 11:14 am

    Is there a post on how you should save for retirement? For example, generate an emergency fund of XX amount, then max 401k, then Roth IRA (if allowed), etc etc

    Reply
    • Financial Samurai says

      January 9, 2014 at 12:01 pm

      I don’t think so. I think you should always max out your 401(k). I’m not a fan of a ROTH IRA.

      Read:

      How much should I have in my 401(k) at different ages
      Disadvantages of a ROTH IRA

      Reply
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