Everything 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 the Federal Reserve Consumer Finance Survey 2016, the average net worth for the following ages are:
Under 35: $76,200
35-44: $288,700
45-54: $727,500
55-64: $1,167,400
65-74: $1,066,000
75+: $1,067,000
Not bad, to be frank. But these numbers are skewed by the super rich who have generated an enormous amount of wealth since the financial crisis. Although the average net worth for all Americans is $692,100, the median net worth is a more pedestrian $97,300.
Let’s look at the average net worth for above average people.
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 a maximum of $18,500 of their pre-tax income every year in 2018.
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
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 a conservative 0% return to a more historical 7% – 8% constant rate of return. Of course you can lose money and make much more if you are good and lucky.
Given the 401k maximum contribution limits have increased over time, the three columns from left to right can also be used as guidance for older savers over 45 years old, middle aged savers between 30 – 45, and younger savers under 30 who get to max out at $18,500 a year at the minimum for the majority of their careers. For example, when I started contributing to my 401k in 1999, the maximum contribution limit was only $10,000. As a 39 year old, I’ll focus on the Mid End column as a guidance.
This chart does not take into consideration any after-tax savings post 401K contribution, but the high end does include 401k company contributions, as this is common for those with seniority and those who work at profitable, generous companies. For example, for the last five years, my company paid out more than $20,000 a year in profit sharing As I was the vice president and executive director.
FINANCIAL SAMURAI POST-TAX SAVINGS GUIDE
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
The 2016 Federal Reserve study showed that the average net worth of a homeowner is roughly $1,034,000, or 11X greater than the average renter’s net worth of $91,000. We can debate the merits of this study all day long (demographic sampling, housing price changes, etc), but the point is, “above average” people generally all own homes and are wealthier.
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 $265,000 as of August 2018. You can’t get anything livable in San Francisco, New York City, Los Angeles, and maybe even Washington DC and Boston for $265,000. But, you sure can in the Midwest where I’m aggressively investing money through real estate crowdfunding with Fundrise. Valuations are so much cheaper and the net rental yields are so much higher compared to coastal city real estate.
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
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 For 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.
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!”
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Where I live, I think a responsible renter can accumulate a higher net worth than a homeowner easily. Home prices in the DC area are ridonkulous. If you invest – I mean really, invest and not blow – the amount you save by renting instead of owning, you should be able to come out ahead of the average homeowner. Later down the road if you wanted to own a home, you could just move to a lower cost of living area, pay cash for a house, and have a more diversified portfolio of assets.
The question is, have renters, or people in general shown enough discipline to consistently “save the difference” and invest?
The monthly temptation to spend is difficult to overcome….
Not for me. If your plan is to invest the difference, then you execute on the plan. I know a lot of people don’t follow through, but they’re just trying to sound smart while simultaneously being mediocre money managers.
Sounds good. How do you stack up based on my charts as a renter then? thx
I am a renter and invest the difference. I’m 27 but line up just over your 25 y/o benchmark. By 30 I expect to be somewhere around 200-230 depending on returns, extra saving, ect. I’ve crunched the numbers and with my median income it would be impossible to save as much as I currently am with the housing prices in my area (Boston). I know people who have property tax bills of $10,000, combine that with $10,000 in interest, a couple thousand in extra utility bills, a couple extra thousand in upkeep/furniture/insurance/ ect. and you have a pretty crappy investment. There are definitely locales and situations that would make home ownership make sense but blindly labeling it as “responsible” would be like suggesting a whole life insurance policy was an “investment”, sure you get returns, but are they really good?
I am really late to the game but I don’t necessary agree. If you don’t buy a million dollar house then your property tax won’t be 10k. I currently own an apartment in greater Boston area. I bought it a bit more over 500k and right now its estimated to be a bit below 700k. Because I live in my property I got 2000 dollar tax exempted so my property tax is only 1500. Plus the rest is tax deductible. I put a big down payment so my monthly mortgage payment (payment + interest + property text) is 1800. If I rent my place the rent is about 2600. My hoa is about 300 and it includes heat and water and garbage. So my additional utility is really just electricity which is about 50 a month. You have to pay electricity even if you rent. My friend got a place 4 years ago for 400k and similar story as me. 3 years later they sold it 50% more than their original price and was able to purchase a bigger place a little further but still in the city.
I made $1.2 million as a renter/investor. My rent was $1000/month for a private 1-bedroom apartment vs $2700/month if I would have bought something slightly larger in my area. The opportunity cost of that difference played out over 15 years made all the difference.
That’s great but I don’t know how good $1.2 million is without context. How much would you have made buying the same condo years ago plus investing in the stock market? They aren’t mutually exclusive.
A lot of people move on with their lives and live in a nicer places after college. I don’t know many couples or families still living in a one bedroom condo after college.
After selling a property in 2017 I bought in 2015, my $315,000 downpayment turned into $1,788,000 after all fees and expenses. It was the easiest money I’ve ever made, just living in it and renting it out for several years.
How old are you and do you live by yourself?
A big concept about renting for the long haul that people don’t quite grasp that they are actually have a lot of debt. The debt is “off balance sheet” in the form of an “unfunded future rent liability”. Since rents increase over time…its a growing problem. In equity research on retailers that lease all their stores, analyst often put a figure 7x -9x annual rent as the amount of debt the firm really has.
To be fair to the renter. They could over come this liability with an solid amount of investment gains outside of real estate that offsets the liability or inherit a property from mom and dad that they can live forever.
On the flip side,, people who own a house with no mortgage don’t grasp the concept of owners equivalent rent. As an example, perhaps the house you live in that is worth $1MM would rent for $5/month in nice neighborhood in Boston. The family that owns the house and lives there gets $60K a year in owners equivalent rent or 6% rate of return on the $1MM of value they have in the house. …only takes 16 years in rental value payments to own the house for all time.
Let’s say the family moved away and rent the same house to someone for $5K/month. That renter would have to make in w-2 income at least $6500 to pay the rent (taxes take a bite) or $78K per year…and the end of renting the have nothing. This is why owners of long lived appreciating assets get wealthier than people who don’t own the same assets.
I really fail to understand your high contributor column to 401k retirement accounts.
You went from 25-27 to 100k-200k. So if maxed at 18k for those 2 years you’re at 136k but by age 27 you’re at 200k. Huh? That’s a return in 2 years of about 47%.
From 27 to 30 you went from 200k to 350k, again 3 years @ 18k deposited is 54k, so 350k NAV from 254k is 38%. Again uhhhh how? You yourself took the conventional ROR of a traditional 7-8%. So how you are earning all this massive compounding I don’t know. That kind of out-performance while possible of course is completely unrealistic, so I really need to hear how you got to those numbers.
Is this per person or family? What if we have two income earners? We are doing ok by your estimate. The after tax saving is not as high, but our real estate equity made up for that short fall. I was too aggressive with my stock market investing and I think that hurt me in the long run with the schizo over the past 15 years. I’m not comfortable sharing our net worth yet and I’m curious if many people will share.
“The Above Average Person”… however, I recognize things change in life and people get married, quit their jobs, be SAH parents etc. Hence, it depends on one’s definition of person and the union of marriage. If marriage = one person, one and the same, then this can be for a family.
I encourage everybody to look as these number from an INDIVIDUAL standpoint because it’s: 1) more conservative, and 2) bad things happen with marriages as well. Got to count on yourself and hope for the best.
That’s true about marriage these days. We are still ok from the individual standpoint because we are both savers. Once I leave my job, it will be a lot more difficult to stay with your curve, but that is expected.
By your estimate, I’m almost at the average net worth for a 24-year-old. Of course, going back to school and taking out loans will drop me down all the way to negative :( Hopefully I can get back where I want to be (by the standard of your chart) after I graduate… Ahhh, this is making me nervous. By that time I should have property though, so we shall see how that works out.
A snapshot of property is just accounting… but over time, property becomes an important part of your diversified portfolio. Are you living at home or finding a new place during law school?
I’m not doing too well by these standards, but I have only recently begun to take control of my finances (instead of having them control me), and I am still sort of young, so hopefully I can catch up. I like what you have written about passive income streams and I am trying to find my niche in that area.
It’s sad, but your average net worth numbers in the beginning are pretty accurate. I work with investors everyday and what I see scares me. Many retirees are sitting on less than 6 digits. As you’ve talked about in a previous post – I suppose they’re all betting on social security.
My net worth is slighty below what you’ve listed but only because I have snatched up some real estate during this amazing opportunity (low rates and prices). Currently, I’m renting the homes out while I await a housing recovery. During that time, the renters are paying down my principle while I reap the tax benefits.
Are you a financial adviser, which is why you get to see people’s statements?
Why do you think retirees who’ve worked for 30+ years didn’t save/invest more?
I’m a principal of an OSJ (office of supervisory jurisdiction), so I have to approve all accounts, trading activity, etc. One financial aspect I can’t see is housing. I’m assuming and hoping that most of the retirees have their home paid for in full. If not, I don’t see how they could live on Social Security coupled with their meager IRA distributions.
I believe that the main contributing factor was the lack of retirement accounts in the 70s and 80s. Most large firms did not offer 401(k)s until the mid to late 80s. Pensions were also more common than they are today.
Gotcha. So actually, they could have a $500,000 house fully paid off at least right?
Also, a pension paying just $50,000 a year for 20 years is worth well over $1 million. Hence, we shouldn’t be too concerned right?
That will depend heavily on the individual. I definitely believe that on average, homeowners are wealthier than renters, but not necessarily because they are homeowners. I am a renter, but I own three rental homes as well. At this stage of life, it’s easier to rent an inexpensive, small house where I don’t need to worry about maintenance and don’t feel compelled to upgrade and then pour all savings into buying more cash-flowing rentals. Basically, a person can be a smart renter or a smart homeowner – both involve assessing your needs and your budget and sticking to both.
The X Factor really jumped out at me. That’s it. That is why LBYM is so important.
ERE mentioned something like this awhile ago: Imagine someone has $200K in debt and another has $200K in assets. One has to pay 6% interest while the other gets 6% interest. Both make $50K/year. The one in debt has now $38K, while the asset person now has $62K.
While one is worried about making payments, the other is free to explore the X Factor you mentioned. Never thought about that, but how true. That’s why even if I have a lull in my incoming monies, no bother, tomorrow’s possibilities are real.
Good points. When money is working for you, you don’t have to worry about it. I’m looking at the structured notes to invest so I don’t have to worry either knowing at the very worst, i’ll get my money back.
Based on the above chart, I don’t rank at all! I don’t have a real appraisal of my home, but based on Zillow, I am negative (though I think an official appraisal would put us about dead even). I’ve only got about $15k put away in retirement savings (I’m age 26) and about $20k in cash-savings. My net worth on my Mint account says I’m at about -$30k. I have some work to do!
Hang in their Jacob! Your lesson on cherishing money after that 100K spent in your younger years will go very very far.
I’m hoping so. After reading some of your posts on investing and retirement goals, I can’t help but think back and wonder what life would be like if I had made my money work for me instead of blowing it all. But I am definitely motivated, that’s for sure.
And look on the bright side, I’m sure you had a damn good time blowing $100,000 in your early 20s! Got it out of your system.
Another great post!
I’m 29; net worth = $340k; home status = own.
I have about 180k after tax saving; 110k retirement (401k & roth);50k home equity. I’ve been very fortunate to graduated from college without debt (combination of scholarship & working 30+ hours/week for 4 years), above avg. job for my age. At the same time I’m very discipline with my personal finance (considering myself an above avg saver), made a lot of sacrifices.
My goal is to increase my passive income revenue stream. I attempted couple business opportunities but no real return so far. Any helps, recommendations, leads are greatly appreciated.
Looks like you are on a good track Hiro! Saving ~$300,000 in 7 years after college is a great feat. Now it’s all about figuring out what to do what that nut!
I am a bit behind for my age bracket and a lot of that is because I didn’t start contributing to a 401k plan for several years after I started working and had a low salary out of college. I think I’m doing pretty good now though and think I meet your 10 point definition for an above average person for the most part. It’s definitely a good kick in the pants for me to keep working hard and to keep saving as much as I can looking at all the cool tables you put together!
Knowing you so well Sydney, you are doing great. The point is knowing now so we are better positioned in the future.
As a 65 old person, I am in excellent shape, if I include the fixed portion of my retirement into the equation. I calculated the equivalent based on a 5% return. I think that is conservative since there is a built COLA and lifetime medical. This is what early planning does for you.
What about just dropping everything and doing other stuff Larry? Or, do you love what you do so much that you are happy to continue teaching?
Unfortunately, I need to teach just a little longer (approx 5years) to vest for full retirement and receive lifetime medical. I am putting off taking Social Security until I turn 70 years old to max that as well. Although teaching has changed with my new assignment, I looking into changes there too. 5 years is a relative short time to nirvanna. Things may change in the next few years, but I am prepared for retirement and other opportunities.
I like how you are calling retirement “nirvana”! :) I hope it is for you.
I’m just a little worried, b/c the median life expectancy is 80.
I’m on the low end of the 401(k) for my years worked (2), but I only started maxing it out after I’d been working for 10 months and that amount went to after-tax savings instead. I’m years ahead in after-tax savings though (closer to about 8 years worked) and I would guess that my net worth is around 5-6 years worked from your chart.
I am renting now and banking plenty of money while doing so. I don’t know when in the future I will buy necessarily, but I probably will at some point in the next ten years. In the meantime, I’ll just continue growing my net worth.
I’m definitely ahead of my age bracket though.
I am 38 but have a NW (me and DW) that is greater than the age 65 category for this post… I think it depends on the type of job & career you can make. Living in a low cost of living area is a big bonus as well.
-Mike
Good to hear. Don’t forget to share the wealth!
Have been to some extent.
Relative to annual expenses I donate about 50% to charity, plus family.
-Mike
Excellent! Feel free to donate some my way! :)
Naah, I’m not going to bet against Obama. As Wesley Snipes said (in demolition man???), always bet on black…
-Mike
I am about 30…I am much higher in some categories and much lower than others. I think it is pretty aggressive to assume maxing out of a retirement account at 25 especially considering the recent study that said most 50 year olds have less than 100K in retirement accounts
I think you can max out your 401K after 3 years of working, making $50,000 a year if you really wanted to Evan.
I don’t care about studies of 50 year olds having less than 100K. That’s just an excuse to make people feel better about not saving.
You want to be a 50 year old with less than 100K?
Good point on student loan debt. Would it be safe to argue that the above average person got scholarships, help from their parents, and worked jobs to lessen that debt level or eliminate it altogether?
I guess I could subtract $20,000-$30,000 due to debt in all the columns, but it doesn’t really make a huge difference towards then end.
If you went to Harvard and didn’t get a scholarship, you would by definition be above average out of graduation and probably get a waaaay above average job and income no?
Not necessarily. This is unrealistic for the average American, by far. There is a student debt crisis that was ever present even when this article was written 5-6 years ago. According to Forbes and the Fed, student loan debt in the US has reached 1.3 trillion, with the average student in the class of 2016 having $37,172 in student loan debt at approx. 6% APR. Figure that that into your average net worth scenarios, and then we’ll be seeing true average representations in this article. Otherwise, it’s not a representation of the average middle class.
@Michelle
The article is not supposed to be a representation of the average middle class person. The article refers to “the Above Average person” and Financial Samurai goes on to define what that means in his article. There are plenty of above average people who have no student loan debt because their parents paid for their schooling. Of course the average person probably has debt, and a number of other factors may make it more difficult to have a net worth as per this schedule… However, for the above average person, I think he’s right on. I am well above these figures at 48 years old. I went to a SUNY (Binghamton) and had student debt at graduation, and I don’t meet all the criteria with lower middle class parents, who were unable to help me much financially. I was well behind the figures in my early 20s, but my net worth grew with the start of my own business, real estate investments over time, and with the bull stock market of the past 8 years… I know many of my peers/friends from SUNY B are also well above these figures, so I will argue that it is a good benchmark for the above average person… You don’t need to feel bad or be angry if you are way below these figures. My parents are still way below these figures, long retired, in their late 70s/early 80s and they are doing just fine.
I think the article serves it’s purpose of giving the reader a benchmark for where you can be financially in an above average situation, NOT in an average situation…
@Michelle,
It’s not meant to be representation of the average middle class. It’s meant to be about the above average person as defined in the article.
I am well above the figures at 48 years old.
I went to a SUNY (Binghamton) and had lower middle class parents who could not afford to give me a lot of financial aid, so I had student debt at graduation..
I was certainly below the figures in my early 20’s, but my net worth increased over the years with the start of my own business, real estate investments, and the bull run of the stock market the past 8 years…
I think it’s a good guideline and lets you know where you could be financially as an above average person. Most of my SUNY B peers/friends are above these figures (in my estimation) as well, so I think the figures are very attainable for the above average person…
You don’t need to be upset if you are way below these figures. My parents are way below these figures, in their late 70s/early 80s and they are doing just fine.
It’s intended as an informational tool, and I think enough people have responded positively to tell you these are not unrealistic figures for above average people, who are focused on building wealth.
Now if it were written about the average person, then I’d agree that it’s way off.
My figures roughly
$2.6m real estate
$1.5m stocks/liquid investments
$0.5m 401k
$0.2m bank
48 years old, married with 2 kids.
You can major in art history at Harvard too. Not everyone coming out of an Ivy League school gets an Ivy League salary.
I feel the inclusion of help from their parents in the above average person’s financial plan for college is a little odd. IMO the above average person would not need help from their parents, certainly not a luxury I had or would change because it made me the financially conscious person I am.
Most homeowners were renters once.
You just have to do the calculation over TIME. What is your return on rent after 30 years besides a place to stay? The return is -100%, and you will have to keep on renting unfortunately.
It’s just accounting. You have 20% liquid in cash, or 20% in your property.
Even through all the ups and downs of the past 10 years, I wish I had invested more in real estate in SF and elsewhere. The cash flow is very good, and thanks to inflation, a fixed or lower rate, things get better practically every month.
To be able to own a home, or several homes free and clear when you’re retired or decide to do something else is an amazing feeling.
A nice structure and guide to reference, that can be tailored to our specific situations. Thank you.
I appreciate your bullishness on leverage. I’ve noticed we’re always more bullish when we are younger, and then after years of experiencing up and down cycles, we become less so.
I hope creating wealth really is that simple and that you accumulate more than your wildest imaginations.
At what age did you earn your first million? Or if not yet, when do you think that will be?
Why didn’t people follow the advice of this post? https://www.financialsamurai.com/2012/03/15/should-i-take-profits-and-sell-stocks/
Seems like common sense to me.
You’re saying things are easy to spot and investing is easy, yet you’ve barely seen one cycle.
If things are that easy, then you should be wealthy by now don’t you think?
You have good comments. Just make sure you put things in perspective. Things are NOT as easy as you think. And if you think things are easy and have the audacity to say being wealthy and investing is easy, then you better have the financials to back it up.
Take my advice and be more low key with your words on investing. If not, I guarantee you that your interviewer will slaughter you and never give you a chance. Or not, and continue to rebel against the very gatekeepers that decide on letting you in or not.
Good man. Being more low key, especially about making money in the markets is a very smart idea when talking to others. EVERYONE in the business has lost money before, and coming in what a cavalier attitude that you never have and are a genius will lead to an instant pass.
Is it OK to just be average then? That’s a discussion we can have in a follow up post.
Sam,
We’re 51 and 50, both with good jobs living in the NE. Sent 2 kids to private college for 4 yrs each (both kids have some student loans, <$20k, so they'd have some skin in the game). We consider ourselves savers, but those kid raising years really are expensive. That been said, we're right in the middle of the range for pretax savings, trending towards the high end of the range for after tax savings and over the top for the HE (we have a vacation home).
Seems like we're headed in the right direction, thanks for the charts and comments.
I enjoy your blog, seems like you're absolutely headed in the right direction at a young age! Congrats!
Hi Marcus,
Thanks for sharing your perspective and info as a couple in their early 50’s! I do not know what I do not know since I’m not that age yet. However, these ranges are based on what I think are above average net worth ranges for above average folks.
It’s good to hear you guys are buttressing the data!
I loved the X factor you described. I’m 27 now and probably closer to the 25 year old you described so I’m a little behind but not by much. I’m hoping that in the next few years my X factor will continue to push me forward and not only meet but exceed these figures. I like how you described it as being more than just some get-quick-rich-scheme because it really is. Everyone has ideas about fast money but to be successful the focus should be on sustainability and building wealth.
I think there are wild swings in the first 5 years, but things start smoothing out the older we get. Perhaps it’s because we make more, want less, or appreciate more as we age.
I am 30 (well, 31), but between taking 5/6/10 (depending on what accounting system you use) years to graduate college, and being unemployed & underemployed for the last 3 years, I haven’t been in the workforce for anywhere close to 8 years. I’d say more like 4 years of working for somebody else and 2 years of eating my savings while trying to make a go of working for myself. And saving $50-85k? That’s more than I’ve personally made in my life.
If we ignored when I was born, and worked off your charts, we would guess my age to be about 23-24.
Thanks for sharing Edward. The question now is, what’s next and what do you want?
Well, as my construction job winds down, I’ve been putting out feelers to get a job, or at least an internship with a geotechnical firm. My degree is in physics and earth science, but I managed to graduate without any meaningful experience, so I’ve been having trouble actually getting my career started.
Once I actually get started, I will go into high powered debt repayment and saving mode.my wife and I are paying debt and doing some savings, to the tune of a little over $10k/yera. With a “real” job, our combined income could go up anywhere from $20-40k per year This would allow us to pay debt and save at 2-3 times our current rate.
Darn, I am not an above average person!
Also, I have often wondered, are these charts for a household, or individual? My husband and I have always just lumped all our money together, except for 401k contributions obviously. Since I am 44, should I solely have a net worth of 891k to be above average? (And my husband also have 891? Or did you explain that and I somehow missed it?) If that is the case, I would probably be qualified more as a ‘substandard person’.
Very interesting post Sam.
Defining a person is somewhat subjective. It depends on how strongly you believe in your marriage. A person is a single person before marriage. If you absolutely know for sure that your marriage will last, then you can treat your marriage as a person too. Just be prepared to divide the assets up in case anything changes.
At 44… an above average married couple if defined per person is closer to around $1.4 mil.
Well, I will have to accept my substandardness! :) However, I would not do anything different. I still would have stayed home with the kiddos and chosen private school. At least I am not a drain on society. (yet :) )
All these are really just figures and guidelines. If you’re happy and wouldn’t change one thing, then that is the best thing ever!
Damn, I’m well below the average as well.
Even with a property under my belt, I’m still under the $239,000 / 30 Yr Old avg.
Never the less your post is very interesting Sam.
Somehow though the numbers you present are in the ideal world, there are way too many variables for a 30 yr old working for 8 years roughly to achieve that net worth. Doable? Absolutely, but one would have to come out of college with virtually no debt, which we all know that in today’s day and age is pretty tough.
There certainly are a lot of variables Eddie. I bake in practically 0 returns on property and savings for all these years to account for the good and the bad.
Yes, student debt is a big one, hence why I added an 11th point in the post to address.
Yes you did address that Sam. One thing that particularly stands out for me in
terms of building wealth is that as a single household income, my wealth building
income streams are x3. I think the days of a single income, and getting ahead
are slowly diminishing.
One observation in the table… at age 55, total net worth is about 1.5M, going up to 2.0M at age 60 and 2.5M at age 65. If we have a lost decade like the 2000 – 2010 period it will be very hard to achieve that rate of growth… savings along won’t create that much growth.
It goes to show that once you accumulate a lot of money you have to be careful where you put it… if you can put it into a rising market that is a bonus but if not the case you can come up short. Timing is everything…
-Mike
Tis true… hopefully when one is 55, one is invested in a stable value fund. I’d rather be up 4% with inflation fears than lose 20% with inflation fears as well.
I’m a 29 yr Software Engineer in NY(moved from southwest a few months ago).
I’m still well below the 240k of net worth(my net worth is hovering around 140k).
Most of it is from 230k house with 180k loan back in the southwest.
I’ve had the same thoughts you posted about home ownership vs rental. I have been thinking that I should buy a condo/coop around NY area(I’m currently renting for a year to see if I like NY), but the shear cost of purchasing a shoebox still intimidates me(comparing to the space v cost from southwest). What do you think? Should I wait another year or so to purchase in the NorthEast?
Thanks for your inspiring blog!
Buying a home is a gamble on your longevity in one place. When I bought my first property, I knew with 95% certainty that I would be there for 3 years, and 80% certainty for 5 years given I had to finish my graduate degree.
If you see yourself there for 5 years or longer, I’d buy.
How did you find my site by the way? Always curious to know. Thx
I found your blog while trying to search for an answer on where my 401k should be around at my age and profession. I think the search landed me on a very detailed post with clear numbers. It inspired me that I need to save a lot more =D
I think these are very realistic numbers for those of us who went to college and have normal spending habits. I’m in my 40s and am around $1.3 million.
This looks close to me.
32 year old renter from your area, Sam. I’m over $650K. Mostly from savings, as opposed to appreciation.
Hi Sam,
Thanks for your keeping your blog for so long…I’ve enjoyed reading your posts.
There are definitely exceptions about your comment on renters versus homeowners, namely myself. I’m happy where I live for now and I pay 600/mo or 7200/yr to stay in a nicer area of town. Granted, I am living in Texas so cost of living is lower and I have a roommate.
However, if I were to buy a home, it would likely be at least 250,000 which can get you quite a bit in Texas. With a 250,000 home, I would pay roughly 6500 a year in property tax alone! That is 250,000 x 3.5% property tax rate (totally realistic here in Texas) x .75 (tax deductible) = 6562. On top of that, I would have to add mortgage interest, home owner association fees, property insurance, maintenance/repairs, vastly increased utility bills, and I also have to fill the home with all that square footage.
I would say I’m very disciplined in my saving habbits (about 65% after tax savings) and all of my money saved from renting goes towards investments. My point is, in Texas at least, it can make sense to rent sometimes because there is no state income tax and I am able to avoid high property taxes – something that probably infuriates you, sorry.
For background I am 23 yrs old, no debt. I have 3 rental homes, 65k in taxable stock accounts, 28k in IRA, and 45k in cash (trying to acquire 2 more rentals this year). I feel extremely lucky to be in this position due to being blessed with a high paying job out of undergrad (100k+), and also an inheritance of 90k tax free last year.
3.5% in property taxes is ridiculous! It’s “only” 1.17% here, however prices are 5X more.
$600/month rent is cheap. How did you amass 3 rental properties so soon?
Also, you should definitely share your story about making $100,000 right out of college. I’ve been telling people on this site for years a lot of people make a lot of money, and there still is so much disbelief.
I’ll share my story and hope it will help anyone reading this who may have kids in high school. This is a long post, sorry in advance.
I studied way too much in high school but as a result, I graduated top of the class and had options for college. I ended up choosing a state public college for the following reasons:
College credit – I took so many college credit courses in high school that I essentially started college as a junior. Most top private schools won’t accept any credit because it’s not good enough for them I guess…As a result I could graduate college in 3 years and save a year of expenses and time. Advice is to take as many college courses as you can while it’s free in high school.
Price – Tuition cost me 8k a year for in-state tuition. Private tuition I was looking at would have cost me 30k a year. Also, state schools are willing to give A LOT more scholarships. My parents were middle class meaning they were too poor to be able to pay for my college but too rich for me to get any freebies from the government. FAFSA (student aid) and federal grants are BULLSHIT a lot of the times because they give money directly to students instead of the institutions. This means a lot of the grants meant for school get squandered away through Macbook Pros, fancy apartments, etc.
In the end, I was able to graduate a year early (age 21) with a starting salary of 90k with 20% bonus with extremely generous benefits. One large caveat to my story is that my major was petroleum engineering. There is a huge demand for petroleum engineers right now. It has ultimate job security even in these rough times. This is a result of oil and gas companies not hiring anyone in the 80s and now they are screwed because everyone is retiring with no one to replace them.
My story would’ve been completely different depending on what major I chose. Looking back, I was lucky again to have chosen this because quite frankly, I didn’t know what the hell I was doing in high school or even why I chose this major. I definitely believe college is an investment and should be treated as such. Some majors give a lot better return on your money than others.
As for my ability to have 3 rental homes, I have been in the workforce for nearly 2 years now so I’ve had time. I put down about 15k per home to gain control of them (100-140k homes). Sort of complex so e-mail me if you’re interested in details. It involves creating equity from the start of the process and seeing about 250-300/mo cash-flow until you’re ready to sell. Can’t count on appreciation here in Texas.
I do have a question for you though. I don’t contribute to my 401k because I am interested in cash flow more so than ultimate net worth. I don’t hate my job but would love to accelerate the time it takes to live off of income producing assets. Thus, I would rather have 70,000 generating cash flow that I can live off of NOW rather than having 100,000 generating cash flow that I can’t touch until I’m 60. Furthermore, the returns I’m seeing in real estate are so much more than my 401k. I’ve been back and forth so many times, am I being crazy here? Could you ever justify not contributing to your 401k?
Thanks
would love to hear your story. We have a similar background.
I’m 34 and I have a net worth of $220K, about 80$ in stocks and rest in cash. I also own a home which is paid off and it’s worth about $100K. Since the cost of living here in Romania is about half of the one in US I could say I have a net worth of $640K. My wife is a stay home mom, but she is also managing an online business we have. Looking forward to double the cash and stocks portion of the networth in the next 2 – 3 years.
I had a substantially longer than average education due to grad school. Bottom line is I’ve only been in the work force for not even 4.5 years. So by age, I’m way behind. But by years worked, I’m on point.
That’s why I added the column “# of years worked” to account for those who’ve gone to grad school or taken a different route.
I have generally found your numbers to be high relative to my world. Having a non-working spouse with student loan debt has not helped. But my kid gets the kind of attention we prefer. I can’t pin all the financial lags on her as I had no 401k contributions for an 8 year period and my first 10 years I did not come close to maxing out.
Hi Eric, which country/world are you from? :)
Interesting analysis. My first impression is that this seems a little high for the average person. It would also make sense to break this down to location. I would imagine you would end up with a higher net worth in a larger city or more expensive city. Even though your costs are higher, you would have a higher salary and a more valuable asset in your home. In the mid-west, an $85,000 salary would represent someone who is doing very well in most cases.
Thank you for putting in the time to analyze this. Very nicely done.
Thanks. That’s why this is the average net worth for the ABOVE average person :)
@PK
I also think the “above average” person would consider graduate school in a professional area such as law, business, accounting, or medicine. This doesn’t account for non-undergraduate student debt. I agree that this person would catch up by 35 or so but the 20s are often about paying down debt fast.
One important point to make is: Not everybody wants to be above average. Yet some also wonder why doesn’t everybody want to be above average?
First timer. And want to say that I LOVE this site!! Have already learned a lot and have also very much enjoyed the comments of all. GREAT site!
Based on the number of years worked, I’d say that my net worth is higher than that listed, in all categories. I’ve been lucky, but have also saved like mad. Like you, Sam, I dont order soda when eating out and almost never buy anything unless its on sale, online and further discounted via coupons. On the other hand, if I really like it, I will buy it. But my needs are few and very simple.
Would like to comment on whether you should sell your house. No, you should not. Market is not right and you will not get top dollar. Besides, you seem to love your house, so why not enjoy it? Its better to own than to rent, and as you said, a rental won’t be as nice as your house. Wait a few years, let the market come and then sell at top dollar. We kept our first house and are glad we did.
Another thing you can do: Rent a place for a few months and see if you like it. That way, you can always change your mind and go back to your house. Even better, rent out your house for a month and go rent an apartment in Paris for a month!!
Welcome Ash! I’m testing the real estate market now and asking a price where I think the house will trade in 2-3 years time. If there is no bid, then I won’t sell since I just refinanced.
On sabbatical now, so looking through all options!
What do you do? Cya around!
I dont think that a 2-3 year time projection is enough. I think the market
will rebound very strongly only after 5 years. Meanwhile, the price will only
go up. You have to stay in your house at least 12 years or so to get back
any sort of “serious” money and to allow for market fluctuations.
But there are several ways to monetize your house….rent out your
basement if you have one. Or rent out a room to a grad. student [they
work a lot and wont mess up the room or be too noisy], but this comes
with privacy issues. If you have the space, put an addition to the house
and rent that room out.
btw, in another post you had talked about making money/income on
the side. I really liked your ideas! Like you, I spend a LOT of time thinking
about ways to make extra cash without killing myself! Its great fun! I
actually did make a little money [6k] selling my paintings, but it was also
difficult to let go of some of my art…
Oh, Im a professor and I teach and do research….and I love it so much
I doubt I’ll ever retire!! I’d go NUTS if I retired as I would not know what
to do with myself. I NEED to be engaged and I love being stressed!!
Very cool that you are a professor. PhD perhaps? I have a post on PhDs coming up, which you might want to participate in!
Housing prices went down about 10% in SF but are marching back up to peak levels again. We’ll see!
Yes, Ph.D. and I would absolutely LOVE to participate in your article! And can help you do some research too….lots of my friends are Ph.D.’s. Let me know how I can help.
On a different post, I saw your comment in response to someone else’s comment re: that maybe you should cost-average your equities down monthly instead of constant buy/sell. You replied that you liked your method and were 5-6% ahead of the market. So my Q is: Why trade so often and pay 30% taxes to Uncle Sam instead of 15%, if you hold for a year or longer?
I’d like to hear from others regarding their trading strategy and how much they make day trading vs selling after making X% profit vs staying long in a stock.
Me, I prefer to be long in most stocks as I think you make the maximum this way and also dont get “hit” by daily fluctuations. But I also like to trade now and then if I have made >10%.
Technically, I’m above the average, but not above your above average. ;) How’s that for a vague comment. I agree with one of your earlier comments that some of the studies about people not saving enough just gives most an excuse not to save. I like your aggressive net worth scale, but I will fall behind quite rapidly unless I start earning 6 figures.
Corey, don’t you earn at least $4,500 a month from your day job? That plus $5,000 from only is over six figures no?
The rent vs. own discussion is interesting. There is no law that say houses will go up in value in the long run. There have been times in history they have been good to own, and times when they haven’t. Additionally, even though the return on rent is always -100%, so is the return on house taxes, insurance, maintenance. Everyone compares rent rates vs. mortgage costs.. including those three items, it’s much more expensive to own a home. For the approximate annual cost of those three, I couldn’t rent my exact home, but one that’s pretty close, and dollar cost average the amount that would have been my mortgage.
I think the real pros and cons to home vs. apartment are non-financial. Do you want stability, or do you want flexibility? Do you want a customized living environment, or just a good roof over your head?
It’s financial for sure. If you never own your own, you will rent forever. That is the true value of your home.
Furthermore, the rental stock is inferior to the ownership stock here in SF, hence why I bought. I wanted a nicer place to live.
I am 30, I own 5 houses 3 cars all 100% paid off. I went through a divorce in 09′ and only had 1 house and 1 car and about 3k in cash. 3 years later I have all of this and my net worth is $297,000.00 and growing fast.
I graduated with a Ph.D. when I was 30, so I started in the workforce relatively late. I’m now 40 and am making $150K (in California) now, which is more than my peers (in age and field). When I started out, I took a job as a postdoc which didn’t pay much, but it me started in retirement savings in the university’s 403b, and now I have been maxing out my 401k every year (except two years where I switched jobs and there was a 3-4 week gap due to unemployment — would appreciate an article on how to properly max out one’s 401k in that situation or catch up).
My current savings total $194K in 401k/403b and $152K pos = $346K total. My annual savings are $23K in 401k (my own plus company match) and $35K post. I own a small house with about $70K equity. I have 0 debt other than my mortgage (is that considered debt?).
So given these facts and looking at your charts, I don’t know whether or not to classify myself as “age 40” or “10 years worked”. The former seems to be more consistent, except for the fact that my salary and income is on a higher trajectory than non-PhDs. The latter seems more appropriate, but obviously I will end up with about 10 years less time to work. I did the calculations a few years ago, and even at the reduced salary of that time, the commitment to the PhD seemed to be a net financial gain.
You can classify yourself in either category. It depends on how long more you want to work. The chart should give you some motivation, or some comfort. It shouldn’t alarm folks unless people are seriously spending more than they make.
I like the info. Averages are a good simple math but distort the true story. Wages haven’t grown in decades even for the financially responsible set. This info does not calculate negative equity that many homeowners face, especially those with higher incomes because they bought homes when the market was up too. Not accounting for student loans is bad because even the financially responsible took out loans to get graduate degrees. I agree they are better off and the article displays that very well. I just don’t agree that there is that big of a difference between average and above average. Plus the older people get the more financially unstable they get due to high health care costs. A small group navigate this well but for most even the achiever’s have a difficult time.
Average is at $77,000 in Networth at around 32-35. In my above average networth chart, the range is $240,000-$440,000. That’s a significant difference imo.
I’m a 30 years old captain in the Army. So far I essentially meet your average above average financial qualifications. I got started late, by your standards, at 25 years old. When I deployed for the first time as a Captain, I was able to take advantage of a $35k bonus, and the lack of bills allowed me to save a significant portion of the money I made. I caught up by investing as much as possible during that and another subsquent deployment. Now I have 86k in retirement accounts, $110 in normal investments, $16k in savings, and roughly $30k in assets. My budget allows me to save $2,500 per month. With an increase in pay from promotions and time in service, I should stay somewhat close to your charts above, though by my calculation, it’s going to take 38.800 in investments or returns between 30 and 35 to stay with you. However, I feel that I don’t really have to keep up, because military retirement as a Lieutenant Colonel with 20 years of service (age 42) is worth close to $48k/year currently and *should* keep up with inflation. The value of that retirement is comparable to pulling 4% of a $1.2 million principle. Thus, if I stay in until retirement, and have approximately 800k in investments at that time plus military retirement, I will be in a way above your templated average above average situation. I’m not sure I can stomach 12 more years in the military, but reading this type of information certainly gives me some incentive to do so. No X-factor here…. just prudent saving and the sacrifice of a 20 year military career.
Good stuff. I’d definitely stick it out for 20 years if I got a pension. Sounds painful now but I’m sure you’ll love it in your 40’s!
The wife and I retired last year with 20 years each, no kids, and no home. Trust me, it’s worth it to stick it out. Just do yourself a favor and set it in your mind now that you WILL retire at 20 years. You’ll have plenty saved, and on your pay you should have either paid off your home or saved enough to pay cash. As lowly enlisted folk who came together with debts from previous marriages about ten years ago, we’ve made about a 300K impact on our net worth in the ten years we’ve been together, going from -60k net worth to +240k. We’re 8 years ahead on our mortgage just one year into it, and we’re still saving money each month. Retiring at age 39 (my case) is not much different than at 45. Still young enough to start a new career, and financially wise enough to make it work without going back to work. Most say I should go back to work, but who’s going to watch my foxes and coyotes all night?
You’re lucky that the government pays for your retirement. In the private sector, we have to put aside money for ours. Reitre at 42! Unbelieveable! I’ll be 65-70 when I retire.
The solution is to therefore figure out a way to work for the government!
I knew going into it at the wise old age of 17 I was in it for the long haul, and it was quite the positive experience, at least for the first 8 or 10 years. I wouldn’t necessarily say the government paid for my retirement, but that’s just semantics. The skill set I employed and my responsibilities, even as a young Soldier, were on-par with those of much better-paying jobs “on the outside”. At about 5 years into it I was responsible for about $200M in equipment and supervised a crew of 19 technicians, on a salary of less than $20K per year. Even at the end of my career I wasn’t making much past 35k/yr, but with housing and meals covered, living expenses were pretty low.
In my decision to serve, retirement at twenty years was second only to my desire to serve this great Nation of ours. Given the choice to do it again I’d probably do it, but the leadership climate and demands put on our servicemen are getting worse with each passing year. Perhaps being public servant as a civilian employee would be less stressful, but that doesn’t come with an option to retire at 20 years, although it does come with 401(k) matching up to the first 5% of salary.
Wow, I remembered this article and wanted to see how I was doing compared to it, today. It’s been 6.5 years, and from the looks of it, I’m still between the mid and high ends of the charts. Now, including investments and liquid capital, I have ~$620k, though I consider the market to be overvalued.
My assets are in the ballpark of $60-70k, conservatively.
I had a setback in my career. As an infantryman, after the surge, a lot of us were pushed out, and after another civilian job, it took 1.5 years before I found a way back onto Active Duty. I still hope to retire as a LTC in 2026 @ 44 y/o, and I suspect I’ll achieve my goal of $800k invested as long as the market sustains current prices or grows. The setback was a painful thing to go through, and through my planned future into turmoil. Now, even as I expect to retire, I’ve found a way to get the Army to send me to school for my masters full-time on their, and I’ve switched from infantry Operations Research Analyst, which would make for a very lucrative post military career, if I choose to, or need to, pursue it.
I still have no real-estate, but I would very much like to purchase a house in the near-term (2-3 years). I believe leveraged real estate is a great way to hedge against inflation while remaining primarily invested in higher returning investments. To this point, I’ve never lived anywhere long enough for a home purchase to make sense, but I have a very good chance of that in my next assignment.
correction to the above: meant to say 38.8k/annually between ages 30 and 35, not 38.8 total.
I am a 52 year old, homeless, unemployed female. The conversations had here have created such a sense of dispair in my heart that it is overwhelming. The only assets I have to my name are a $320k retirement/investment account and a 1.5 acre of land assessed at $65k. I am about $10k in debt. How do I find “nivarna”?
Perhaps you should use some of the $320,000 to rent a room rather than be homeless?
Fortunately, I do have rooms to use free of charge just not of my own. I need a plan for purchasing and furnishing a home while still maintaining a reasonably prosperous retirement fund. Got any other ideas?
I don’t know about retirement “right now”, but you could make a decent start in the midwest or southern states. You obviously had a decent career; perhaps you could ply your skills in a new career where living is much cheaper. We considered Belize, on the south-eastern side of the Yucatan peninsula, but retiring to another country seemed a bit extreme for us.
I enjoy these charts, for net worth at certain age brackets etc.
In reviewing my situation, I’m a little “behind” on the scale. And yes part of it was stupid financial decisions early on (listened to the wrong people, had the wrong girlfriend…many of us have been there).
However, one big reason is that I spent almost my entire 20s pursuing the dream in music. I’d be 26 years old, spend my Saturday nights playing shows for free, and spending my $2k tax return on a much needed new instrument for our upcoming demo. And while a financial education would have served me greatly, at the time I was thinking, “success first, finances second.”
And then around age 30, I spent a lot of time with startups, only this time I did have a financial education. Still, the landscape was one of working hard, for very little money, but if things took off, the sweat equity would have paid off in spades.
It has only been recently that I really focused on current cash flow instead of laying the ground for a quantum leap. Did I sell out? Anyway, my net worth is almost 10 years behind what this chart says for my age. My “number” would be much much higher if I had walked a different path, such as a friend of mine who graduated college, went Big 6 accounting firm, wrung himself for every hour of overtime his body could handle, and within 10 years became senior management for some very large projects in Europe.
Jason, but at least you pursued your dreams and had a lot of fun right?
Is your friend happy? Because although a lot of us work hard and have a lot of stress in our jobs, many of us are also very happy.
I DID pursue my dreams, and had some very good success with them–just not the financial kind.
I am no longer in touch with that friend….we simply grew in different directions. I do know he worked himself to the bone during his mid-20s, and was developing a problem with alcoholism which he used to hang on. Later I heard he was at the forefront of a major economic expansion with some country, and became quite wealthy. Haven’t heard anything else since.
I will count my husband and I as one unit since we have lived off of only one income for the large majority of our marriage. We wedded shortly after our college graduation, and I only worked for one year before we had our first child. I have been a stay-at-home mom now for the last ten years (one child attends a public charter school, one child is homeschooled due to a special needs). Our net worth is a little less than what you would project for our age. We are 33 and are at about $300k. The breakdown of our accounts is quite different than what you have listed, however. Retirement is at $72k, college savings at $28k (not listed, I realize), cash at $50k, and home equity at $150k, the value of our house. (We live in the midwest, and though it is smaller than the average home, we like it). Anyway, we wanted to pay off our mortgage first before heavily investing in retirement. My husband contributed 10% to his 401(k) yearly, we made sure we had about $20k in the bank, and everything else went to the mortgage principal. At age 30, it was off our hands. My husband was making $50k at the time, but has since been promoted and is now at $80k. We have since invested much more heavily in the 401(k) and college savings for our children…while having extra money for special classes and extracurricular activities for the kids. It might not seem like the wisest choice to have attacked the mortgage first, but we wanted to make sure that no matter what happened with my husband’s job, our home would not be taken away. When our kids are in college, I plan to work (I hope to also do part-time work in a couple of years from now, too, if we are able to find an appropriate school for our oldest child.), but we probably won’t to be able to save as much during those 6 years at university, so our net worth probably won’t be anywhere near what your chart says, but I think that we’ll still be okay when it comes time to retire.
Sounds good to me Renee! Seems you guys are on the right track, and the 28K for college education can be considered savings.
How about gradually increasing that 401K contribution by 1% a month for the next 10 months and see what happens?
Thanks for the advice, FS! We’ve decided to up the 401(k) by 3% for now and start paying maximum contributions into IRAs–that way at least a little something will be in my name even if I am the beneficiary on his 401(k). If something were to happen to him down the road and things and I couldn’t touch the funds due to the complications in the court system or something, he thinks it would be good for me to have easy access to some funds for a little while. We’ll try to get the 401(k) up to 10% more than what he was investing over time–this year’s activity fund for the kids has kind of exploded but I think we should be able to start adding 1% per month after the holidays. Just curious, is there a reason that you suggest on this post maxing out the 401(k) but make no mention of IRAs? Thanks!
Hi Renee,
Good work! I didn’t mention the IRA in this post b/c I’m focused on the 401K. Furthermore, the IRA is only available to people making under X amount (I think it’s around $110,000 per household), which is disappointing since I believe everybody should be able to contribute to their retirement.
Good luck!
Sam
We have two income earners and are doing ok by your estimate. We are in the above average group. Our after tax saving is not as high but that is because we pay almost 50% tax in Canada. We do have a lot of retirement savings though and real estate equity. I think we are headed on the right path as far as growing our net worth.
50% is a lot of taxes, but at least you’ve got cheap health care and cheap college tuition unlike here in America!
Good job Miss T!
We don’t pay 50% tax in Canada.
Taxable income is income after certain deductions, among them the basic personal amount which is $10,527 (Federal/2012) and $9405 (Ontario/2012). Basically your first 10K is tax free.
After that, here are the rates:
Federal/2012:
15% on the first $42,707 of taxable income, +
22% on the next $42,707 of taxable income (on the portion of taxable income over $42,707 up to $85,414), +
26% on the next $46,992 of taxable income (on the portion of taxable income over $85,414 up to $132,406), +
29% of taxable income over $132,406.
And for the most populous province, Ontario, the provincial rates are
5.05% on the first $39,020 of taxable income, +
9.15% on the next $39,023, +
11.16% on the amount over $78,043
So yes, we get taxed at close to 40% on salary earned over $140K, but everything below that is taxed at a lower rate. Our effective tax rates are never 50%.
Got it. 29% as the highest rate isn’t that bad at all actually, even if the income level of $132,406 is much lower than ours in the US.
The big difference is that if you have a nice $30,000 mortgage interest a year, you can’t deduct that from your income.
It’s colder during winter too right? :)
Canada has done well. I have a real estate appraisal business and have worked in this field over 30 yrs. The real estate market will never be the same here. I am in New England. For young people it isimportant to to be fluid You are being told that you will change jobs every few yrs and have several careers. That does not create stability in a society. It is not a healthy environment. The depth of the fraud by Wall St. , BIG BANKS. Is ten times worse then you can imagine. Be fluid. Aim to be debt free asap and if you are young and adventurous you may want to look outside the ol’ USA for jobs. Things will get much worss I’m afraid. Both parties are very corrupt. Just had a seminar on this. It’s going to get worse. Oh 401Ks wereNEVER NEVER meant for retirement. Read about them. They were tl be in addition to your pension. Oh right those are gone.
Your descriptions of an above average person describe me and my husband to a “T”. Your figures for an above average net worth, for our age, is exactly what we have.
The only thing is we didn’t go to college. Our parents could never afford to send us so we started working out of high school. Maybe we’re ahead because we never had student loans?
This makes more sense than CNN stat as it is being skewed due to age range. Since I am heavily into commercial assets, I’ve surpassed way over million dollars mark in total assets. I also have sizable 401(k), but my real estate portion is much larger.
Why is the government not doing way more to place our soldiers in good paying, relevant jobs?
I would consider my wife and I AAPs, but we’re well below the low end of your net worth table for our ages. We’re both 30 years old, college graduates, both are working on advanced degrees where the tuition is covered by our employers, and currently have a base household income of $163,000/ year. I graduated without student debt and she graduated with about $12,000 in student debt. We both put 14% of our before tax income in to our 401ks, have both been working and renting for about 6 years, and have what I would consider a relatively high net savings each month. We also are about to close on a $460,000 home, are putting $50,000 down on it, and plan on paying the loan off in 15 years. Our net worth including our 401ks, savings, assets, and debt is currently about $204,000. That means were less than half of where you say we should be for AAPs.
AAP? Above average people?
I donno man, if you can only put down 10% on a home, I would say you guys are no more than average. Those who only could afford to put down 10% were the ones who go us into this mess.
Can you not put $100,000 down? With a $50k buffer?
AAPs= Abover Average Persons
We could have put 20% down but that would have cut in to our buffer. My wife’s real estate law professor for her MBA recommended we get in to a house while interest rates are low, even if we were only going to put 10% down. Our original plan was to put 20% down and have a $50k buffer this winter, but we bought a house earlier to take advantage of a 3.75% interest rate.
You grossly over simplify the real estate melt down by stating that the people who could only afford to put 10% down are “the ones who got us in to this mess”. The vast majority of the people that got us in to this mess bought over priced homes with no money down and didn’t have the means to pay for them. A variety of banks made very risky loans and those loans were repackaged as investments and sold on the market to put it simply.
The median HOUSEHOLD income for the US is about $50k/ year. Any single person making that amount has an above average income. The median net worth of a household in the US in 2010 was $77k. Any single person at or above that is above average. I think this article should be titled “The Average Net Worth of the Far Above Average/ Exceptional Person”. Seems this article serves the purpose of making financially secure people feel insecure about where they are. If you can save that much and build that much equity all by yourself by the ages you state, you either have a far above average income or don’t have much to live off when it comes to your remaining expenses. Any single person who is meeting these targets is doing very well, and far above average compared to the rest of the US in my opinion.
Your net worth estimate belies your net household income. What on earth are you spending it all on? You don’t need an expensive car, home, or suit and timepiece that proclaim to the world your level of income, but I’d bet you’re both driving really nice, overpriced cars in the best clothing. If my wife and I can improve our net worth by $30K per year on less than half of your net household income, then you should be able to do much more.
I agree with you on what got us into the mess with the housing market. It’s shameful what the mortgage industry has done and continues to do. It’s also shameful how credit-dependent everyone is.
We really wanted to pay cash for our first home, but it was going to take too long to get there and we, like you, were throwing money away on renting, setting us back further. We settled on putting 1/3 down and paying off the rest rapidly, so here we are now a year into the mortgage and 9 years into principal. Our next home purchase, if ever, will most certainly not involve a mortgage.
i agree with Financial Samurai. I am below average on my savings. I earn 90k, and my wife stays at home taking care of my son. But i already achieved your financial goal.
This was a great article; I really enjoyed reading it. My wife and I are quite a bit above the average. We’re both 30 years old with a net worth of ~$465k.
$130k paid for house, $212k in retirement, ~$70k in liquid savings, $12k emergency fund, + no debt, pay for everything with cash.
My wife stays home with our two kiddos. I’ve had a 100% commission job with the same company for the last eight years. I’ll make ~$175k this year.
Living the PAW and Dave Ramsey lifestyle. Hope to retire around age 60. Great site, I’ve enjoyed surfing around here!
Welcome to Financial Samurai! Glad you enjoyed the post. Feel free to subscribe to the RSS or e-mail feed and keep in touch.
Glad you are doing well!
Wonderful article! I didnt meet the average goal of where i should be, and this refocus my savings goal. The best part is the X factor. I 100% agree with that statement.
I highly doubt these stats are accurate. They may be, but what percent of persons or families are you basing this information on. Or better yet how many people in total really have these amounts of cash at age 45 or fifty. Not many.
I am 44 years old and about to hit 45 in few weeks. My net worth is close to $7,900,000.00. i was taken out of high school before graduating due a my father falling ill and having to “take over” the household and work. Thus I do not have a high school completion nor any other schooling afterwords. Five years ago I had a very bad accident where I almost lost my life and had a two year span of rehabilitation. I bounced back and took on life by the horns. I live in Toronto Canada (where our winters are not that bad and our spring and summers are very beautiful and warm). The real estate market here has been very strong and I am a 100% believer in owning your own home and other real estate. Where else can you leverage your asset(s) like you can with real estate. Now the interesting thing is I am always an optimist in life, I believe no matter how bad things look, there is always a route around the mess some how. I grew up some what poor until the age of 12, my parents where European immigrants that came to Canada with not a penny to their name and worked hard. With no insurance, no real savings, and no real assets accept some real estate, I learned a hard lesson in life when my father had is issue with health. You can utilize your principal residence on a rainy day if you have to, you can not do that with a rental that you don’t own. I know I am an above average earner, and I took many chances in life, I have no regrets. My beautiful wife and two children are my reward to all my hardships and accomplishments. Yes Canada has a high personal income tax structure, but our corporate tax structure is quite low compared to most G7 countries. Get some good accountants, bookkeepers and lawyers behind you and enjoy life.
Good stuff! Please share with us how you amassed your wealth if you don’t mind!
38 years old, My net worth is close to 5.4 Million US. I made almost a million saving and investing diligently and investing conservatively (stocks/bonds mainly). I own my own home and own a rental property. I made the rest of my money when I sold my business, I started. There is no better way to accumulate wealth then having a business. I never thought I would sell my business or that anyone would want it, which is why I saved a lot in retirement and non retirement accounts. This is a great site and just what I was looking for. It is amazing to see all the people that are doing extremely well saving too, it inspires me and humbles me to read some of the stories. I have been incredibly blessed there is no denying it and will be retiring in a few more years to focus on my family.(when I am 43) I live in a very affordable part of the USA, which allows me to do that. The Financial freedom my work has provided me, has definitely taken a toll on my family and it is time to priortize them as number 1 and enjoy life before it slips away. That is what I am learning to do now, I actually never thought it would be that hard, but I guess I was wired to just think about ways to make money so for me it continues to be a struggle, but it is a challenge I will overcome. For all you savers, take it from me and enjoy the ride along the way to your fortunes, after all that is what life is about.
Interesting blog. A little bit too much emphasis on social status and ego for my liking rather than projections of future wealth & freedom, though still a fun read.
I was a pro sportsman in a minor but global sport for 12 years. I didn’t accrue the wealth possible due to dot com crash at my peak earning period in 99-00, too much on chasing women around the world, traveling for fun, pilot’s licence, MBA and a general lack of knowledge about how to invest rather than save.
Took a steady job in 2005 and started immediately investing in 401k/403b at 100% plus contributions, and last year a multi-family residence. To me this is a necessary investment if you can deal with the stress. Write off mortgage interest, depreciation (and 80% of expenses if it’s a primary residence), and you’re getting others to contribute to your cash flow and future wealth. I’ll probably do more, though unsure if I’ll do multiple residences by borrowing on the others or if I will use cash for a large down payment. ROI is still good even if using cash. End game is a mid-sized luxury multi-unit run by property managers.
The other thing I will do for the foreseeable future is open an LLC using my skillset, sellable outside of my 8 month working position, and could create $30-60k per year without much stress. This also seems to be a good way to write off some necessary living expenses like car, home office, paying family for work, etc.
I have a 5 year old son and a wife that earns well; she has an amazing state-run pension in Canada ( I work in the US and commute), owns a $1m+ house since she has benefited from the 15 year consistent increase in home value. If all goes pear-shaped, we keep our own assets. She’s worth around $1.3m, though is nearer 50 than 40. Still beautiful.
Due to this, I judge my assets on personal walk-away (not from my son!) assets. If I had to sell everything tomorrow, my personal assets are less than the figures mentioned for my age (39), around $360k, nearer $300k once 401k penalties, real estate fees, etc are played out.
I’m happy though. I have a lot of quality time to spend with my family, freedom and a little cash to think about other investing ideas. I’ll never be rich, though I have had an interesting time so far, and I should be able to push toward retirement around the 50 mark, seeing as I would rather lie on a beach in Thailand, hang out with family, play tennis, read and research ancient sites and play with my consciousness rather than have the cottage, boat, fancy cars and accoutrements of the aspiring upper-middle. To me this is like death by blonde and bland Stepfordness.
My 2 cents – if you are not in a high-earning job (banker, real estate finance, etc), follow your skills and/or passions. Perhaps take a job, though definitely open an LLC, even as a consultant, to funnel expenses through. Invest in rental properties, though understand cap rate and other relevant indices. Don’t get involved in chasing what your peers make or buy. Get the fundamentals right, and maybe one day you will have a bit of spare cash to throw at higher-risk investments or start-ups, or better yet, explore other ideas unrelated to the accumulation of wealth.
So long as you are happy, that’s all that matters.
I wrote this post for the “above average person” because everybody believes they are above average, even though math says that’s not possible.
You may enjoy this post, “Achieving Financial Freedom One Income Slice At A Time” and “Taking A Leap Of Faith And Retiring Under My Own Terms”
How’d you find this blog anyway?
Appreciate the reply and the references. I’ll take a look. I found the blog because of the thing I was mocking – trying to figure out where I stand.
OK, I’ve read your stuff and it’s a great achievement. You were diligent, had a plan, and achieved the freedom you wanted at an early age. As is obvious, you still have financial goals, and perhaps need some active income to achieve that. However you stack it, it’s an impressive feat ($2.5-3m diversified net worth by mid-30’s?), and should you decide to pursue work, it’s on your terms. This is a great achievement and merits a book and a blog.
The one thing a little distasteful about your comments is the acerbic tone you use to disparage the observations/criticisms of others. While you are young, intelligent and you can do the math, you probably don’t understand the trade-offs made in highly individualized achievements, having kids, pacing life, etc. While merited sometimes, other times your comments come off as self-congratulatory and disparaging to others that are making reasonable points.
Either way, I’ll keep on reading your stuff and the comments made, as there’s some great info and great stories. Accumulating wealth is something we all have to do, though ultimately it’s how you use it. Your story really begins now. Good luck.
Thanks for the feedback Martin. I really appreciate it. There is a fine balance in defending and arguing a point every blogger must go through. I’ll try and be less acerbic in the future.
Do you have a blog, or write regularly for readers to criticize? If so, let me know as I’d love to read it. One of the strategies I’ve thought about was just reducing comments down by 90%, or altogther, or just don’t respond to criticism. What do you think? Saves me a lot of time and allows me to focus on writing.
Do you mind highlighting a couple specific examples of where my comments rubbed you the wrong way?
Check this post out, “Too Many Comments Can Be Detrimental To Your Health“
Family of four – 78K in traditional IRA and 401K, 225K in Roth IRAs, 200K in Home Equity.
Puts our net worth at about 500K – low by your standards (we are 45). Also have 60K in 529s for kids college (dont count this towards net worth because its going to be spent!). We make about 80K a year jointly.
My advice – we built the bulk of our savings and home equity prior to having children. It was easier to save even while paying student loans – we were also making 2x’s what we make now. Once the kids arrive, you are going to want to scale back on work and we decided not to move for job opportunities so the kids can stay in the same schools district their whole education.
Mom, thanks for your info and perspective post children!
Looks like you’ve built a nice but. Good job!
Age 34 – Net worth $1.5 million – property own 3 houses payed off
Savings $ 35k the problem I have now is that I had a great business that was making good money but due to some issues I had to close the business and now I dont have any money to start a new one ! All the money I made I invested in buying homes cash , and now I collect the rent but the rent is not enough to be a amount for me to start my own business again , it just pays for my everyday expenses. I at the moment working for a company and getting OK money but nothing special.Just waiting for that golden opportunity. and by the way I dont have any college degree.
I wish I did though,would have been nice , but I proffered work and $$$ at that time :)
I like the attempt here. It’s a nice way of seeing where others should be given that the median/averages put out by the government stats seem to point out most of the nation is in trouble. I’m light on 401K and Roth, but heavy on real estate and small business equity.
That said, I’d caution young professionals from putting everything into their 401K. The problem with that strategy is that you can’t get the money back until later, and growth is not smooth and linear. The biggest thing this example can show is the years worked. Periods of uninterrupted work and a balanced personal budget go a lot further than a cyclical boom/bust pattern. You’ll graduate with debt, you’ll need money for a ring and a wedding. You’ll need more money for a home downpayment. You’ll need emergency money in case one of you become sick or unemployed. You’ll have hospital bills or need to buy a car. Essentially, make sure to get the 401K match, as its free money. Next establish a safety net against the unexpected. Third max your Roth account. Once all of that is established, start saving for a home. Once that’s all done, then you can start maxing your 401K.
However, even beyond that, marry well. Seriously, having a partner that can both contribute and budget is the best financial decision to occur. 10 years ago a group of college friends met up for a camping trip. The light conversation of who would become a millionaire first arose. The guy making the most and certainly with the highest IQ wasn’t really favored. The guy seriously dating a cougar with a bank account was. Second came an above-average clean cut guy working for the government (ok, but not great) who was marrying a vetrinarian. Third most likely was a guy who, while losing himself to drugs, was marrying a girl who also shared his interests, but came from considerable wealth. (Inheritence still plays) Finally came our buddy that was a genius and I drew last. We’ve all done well since then, but keep that in mind. College bills are just the start, not the end of the non-linear items you’ll need to be saving for.
Chris, great thoughts! I agree with what you say. Max the 401K out, but at the same time, don’t depend on it at all. Expect the government to take it all away from you! That way, you can focus on investing and saving your after tax money and building alternative income streams. If SS and your 401K is there when you are 62-65, then great! If not, no big deal.
Why were you considered last of your friends?
You should check out my post on 9/17 about 401K rebalancing.
I was considered last because I wasn’t dating people seriously then. I was very much a fan of field. If you think of the economy of scale achieved by a couple, it doesn’t much matter how much more one can achieve individually, and there were only two people to be expected to be single 2 years from then, myself and the genius. I’m not saying I’m rice pudding, and that trip actually marked the start of a new promotion that was big for me at the time, but the sooner you can find a good fit, the better. Defensively, you are less likely to need to raid savings if you have two contributing partners. But the biggest meal ticket is entrance into real estate. You can afford to buy a home and have a tendancy to make better decisions about location/schools etc. What you’re looking for are good, stable assets. For this, one needs to think outside of the stock. If I have $20,000 and I put it into the stock market and make 10%, I’ve done well and made $4,000, but after tax it will drop to $3,000. If put it into a $100,000 home that grows just 3%, I still make $3,000, but then I also have a tax deduction of $3,200 that will be worth about $900. While the last couple of years have seen a large rise/fall in valuations, normally homes are fairly stable assets. Everyone needs one. That said, you can’t buy this asset with your 401K. You can’t pay for a hospital stay with a 401K. The 401K solution, and while certainly better than nothing, is very weak because it can’t be used as collateral and can’t be retrieved for any sort of liquidity. It’s perhaps your most worthless asset. It was made that way by design. It was to replace pensions. Seeing it every day makes us feel rich and not broke, but the reality is that I made two errors. Marry late and stick my savings all in a 401K. Now, that said, if one marries badly, that is tremendously costly, so don’t rush out and get engaged to the hot gf that’s good in the sack but needs a walk in closet for her baggage, but don’t think you’ll be able to outdo an average couple by being above average as a single. Though it’s not written, the world we live in is scaled to the couple level. The only clawback is children. They are cherished, but they destroy wealth and time like nothing else. It’s totally worth it though. However, it really puts single parents in a difficult spot. Incidentally, of the 5 of us, the predictions were likely correct. But the biggest factor was marriage. So, save, hit singles with your money, make investments that don’t cause fights and take care of each other. Live good lives and the benefits pop up in unimagineable ways.
I’m 66. 401Ks did not start 40 years ago. Think they started only in the mid-1980s. So the 401K amounts seem skewed high for the older folks like me. Otherwise most interesting.
Fair enough. Thanks for your perspective. Hopefully you can replace the 401K amounts with just regular savings or a pension.
I am 26 and have a net worth of $240k, so I am ahead of your above average person for my age. I am worried I will fall behind when I go to get my MBA. I’ll be spending $160k and have no income for two years. I might not catch up till I’m 35.
Great net worth for your age, and definitely a valid concern getting your MBA. I got my employer to pay for my MBA and did it part-time. Any way you can do the same? The returns for getting an MBA are going down. However, you can still strike it big, and if you work long enough, you will definitely earn things back.
I am 72 and retired, female and divorced, with graduate degrees and 45 years an academic in higher education. Saved throughout my career and lived well but below my means. I have no debts whatsoever, plenty of cash savings, a very healthy retirement portfolio, a nice home all paid for, a good pension plus above average social security payments, so I am able to travel widely and stay in high end hotels. My net worth is just under $2 million, and I only have one child, who is well set up, similar situation to mine at 40 years of age.
I am grateful I was able to live with financial discipline so I can relax and enjoy the rest of my years. Oh, btw, I am Hispanic of European descent.
Congrats Eliana! What do you plan to do with your $2 million NW? Sounds like consistent savings and investing paid off nicely!
36 yrs old, single (never married), degreed engineering, <100k salary in the last few years. Recently sold my home to relocate for a job. ZERO debt; car is paid off, no credit card debt, no house payment anymore.
The total net worth numbers for me seem right on. I always roll over my 401k's when I leave a job so it is difficult to know that total. I just recently hit a salary mark that makes tax deferred saving difficult; Roth IRA is out of reach and even putting in the max 401k has been an issue for me in the past (top heavy contributor companies resulting in my contributions being returned).
My net worth is about $425k; mostly investments (no real estate) and about 25% cash. Remember no debt, yes I am proud of that.
I am very surprised at the numbers and that I am just above average. The people I know (even college grads with good jobs) have nowhere close to this saved up. Most spend too much money and are too far in debt. I asked my financial advisor how I was doing last year compared with people under 50, and he said very well. He is not one to overstate this since he obviously wants me to contribute more. He did say he sees lots of people doing well at my age but most have an inheritance… SO, for us that worked hard to get where we are (wherever that is) keep up the hard work. I think if I can stay single and not have kids I will be able to stay on track. For those of you with little ones, I don’t know how you do it!
So much for me thinking I was saving too much and was well above everyone…. Time to cut back and save more!
oops – meant >$100k….. on the first line.
Since I’m almost 60, I’m always looking for “average net worth” info, and yours was very informative–thanks for posting.
We’re quite a bit above the high average on your charts because we have a lot of equity in a CA real estate, and seven figures in savings.
Looking back, I would, however, say there are many “wild cards” younger people will encounter throughout their lifetimes, and getting to the ultimate net worth destination is not as easy as it may sound.
We were lucky, but many friends who also had great careers and great plans fell by the wayside with job, family and health issues along the path of life, so my advice would be to save as much as you can as soon as you can and try to hold on to it!!
How do you plan to spend your millions now that you’re almost 60? Do you feel you have trouble spending after years of savings? Sam
I would also like to add, as others have mentioned, that we also lived the lives of our dreams along the way–by the beach in CA–traveling the world, etc., as we built our net worth.
The last thing you want to do is end up with millions and no time to spend it!
Indeed. Spend away! It’s why I have a house in Hawaii and another place in the snowy mountains of Tahoe while living in SF. No point making money if you don’t spend it!
Fantastic, FS–sounds like us–only we’re in SoCal. In the end, we believe it’s all about our spiritual beliefs and our eternal destination anyway, but it is a blessing to enjoy life to the max while we’re here!
Your numbers are not grounded in reality – where are they coming from ? I was a loan officer and was in a position to ask people about finances and these numbers in your tables apply to the top 3% of the population.
So what may be possible for a few is beyond the daily functioning of an uneducated materialistic generation(s) schooled by ignorant libtards who care not about bettering the future of anyone except themselves. Also life just has a way of getting in the way of the best laid plans – I have never seen tables projecting net worths that high as it pertains to the masses
These are projections for the ABOVE average person, not the masses.
Here’s my take: I’m a renter and I am doing better than the high end “above average” person per Sam’s charts.
Despite the fact that I’m a renter, I DO own real estate. In that regard, I believe owning real estate is absolutely critical to improving one’s financial picture.
great article! I would fall above the mean in most of the categories and ultimately above in net worth. Not sure I agree with the aggressive buy a home stance. Essentially when you buy a home you are really renting money. In most cases even taking into account tax deductions your home would need to appreciate 3-6% every year to break even. This includes the assumed 20% one would put down vs invest. Net I would say buy investment property and rent till you die.
Here’s a 1,300 word post I published in October 2012 of why owning a home is a no brainer right now. Feel free to read and disagree, but I don’t think you will after you read it!
Thanks for stopping by.
OK I read it and that’s an awesome story, however, I think you may be in the minority right now.
I do appreciate owning property but only when you can pay for it up front.
This is one of a couple of quick reviews you may find interesting too. Save on!
khanacademy.org/finance-economics/core-finance/v/renting-vs–buying–detailed-analysis
Does above average people NOT help other their parents or siblings or contribute to the charity? These points will affect your financial standings, and yet I don’t see those listed in your assumptions of what defined as above average person.
…Or above average person here means ‘selfish rich kid’
By absolute amount, above average people contribute way about average to charity. What’s your point? The fact of the matter is if you only make $30,000 a year, you can only donate $30,000 a year. If you make millions a year, you can donate many fold more. Should we attack rich people for being the most charitable people in our society?
My point is that your definition of ‘above average person’ is almost as meaningless as to the point of comical or laughable. Does above average person is also super-human that they don’t have any ailment. Surely you’ve heard that most of us one serious ailment or accident away from being poor?
Indeed. Everybody needs insurance! https://www.financialsamurai.com/category/insurance/
Those who don’t want a comfortable financial living standard as they get older have to come to grips reality that nobody will take care of them. We must depend on ourselves.
Had you just define ‘above average’ as someone with above average net asset, I would have no problem. But then you went on, tried to define what an above average person really means. that’s just comical.
Many people could’ve done all those things in your ‘definition of above average’ and yet still fall to hardship out of bad luck. And many others who didn’ t do all those things you listed and are ahead than most of people (lottery, inheritance, gambling, etc). There are many external factors we can’t control.
Just define ‘above average’ as someone with above average net asset. Does it really matter how they got there?
Do you mind sharing your story and assets? Thx
Excellent topic.
Things get a little confusing when someone has most of their net worth in their home. I live in an area with low home prices and my house is paid for. My home only accounts for 15% of my net worth. I have 75% of my net worth in cash and investments. The last 10% would be allocated to vehicles and pocessions with value.
How does this break down compare to others? BTW, I live in North Texas.
Not sure, as you don’t provide any numbers for any variables so I can’t solve for the equation.
Also depends on whether others count their home as part of their NW.
If the median net worth is $75k, the median home equity is a scary $70k!
Well I am sorry I sis this search, we xome no where close to these averages. I am a disabled person, left the work force 14 yrs ago and my husband is still working at age 65 and will probably continue to do so because we can’t afford to have him retire.
Name: Donald Chen
Age: 19 Years Old
Net Worth: $2 million
I admire your blog because I’m always interested in where I would be if I didn’t try hard from an early age.
I started teaching myself everything about making money at the age of 11. I was reading books and reading other people’s stories and listening to advice from older people. I found out trading to be something I easily picked up. I started out with just paper trades and a virtual account. I found out that certain stocks would go up depending upon how much publicity it would get. I carefully selected certain stocks that had the best probability to go up based on a trading formula I devised. In under 2 years, I made over $2 million.
I feel once you make a certain amount of money, life changes for the better. You are free to do more hobbies, activities, and enjoy better meals. I saved up for everything to have a constant capital flow. I could not date, drink soda with my meals, or anything extravagant. Later, my life changed. I was dating 2 girls a day, not looking at the price on menus, and spending time doing the recreational activities that I enjoyed.
I have never gotten into understanding real estate because of it’s complexity.
I decided to no longer take any more gambles (I read so many stories of people making large amounts of money, only to lose it all). I told myself I will be content and be satisfied with what I have.
I invested the entire $2 million into a combination of option trades, bonds, and safe stocks. (I am selling puts on some stocks which I predict will rise, and I have sold covered calls on safe stocks and collecting dividends, and I have found some good bonds that are paying a good safe dividend)
I am generating 6% per year through all these strategies (minus commission and taxes).
With my $2 million base, I am collecting $120,000 year in profits without any work. I am living within my means and using the monthly income to do the things I need to enjoy.
Any advice on what I should do next? Everyone tells me to “live life and just enjoy it and not work too hard”, but I feel I should work even harder.
I want to learn how to create a blog that is successful like yours and would love to learn how. Please contact me by email.
Nice work! My #1 advice is do not think you are invincible. There will be times you lose money. Limit your losses. Rule #1, don’t lose your Nut!
Also, not sure if you are going to college, by I’d definitely recommend getting a degree. You need backup. You’ll never know what can happen.
Good luck!
Really enjoy the article. There appears to be a significant lack of benchmarks for financially motivated, higher-earning / saving young workers. If I read “contribute $100 per month to your 401(k)” one more time on financial blogs for twenty year olds I think I may kill someone…
My only gripe is the assumption that savings should go into a pre-tax retirement accounts first. I feel like NOBODY ever questions the benefits of this strategy. In my mind:
1) We don’t know what future tax rates will be. Given the financial direction of this country, rates will likely have to increase (at each income threshold). The general assumption supporting pre-tax accounts is that tax rates will be constant.
2) We don’t know what tax bracket we will be in when we retire. The general assumption is that we will be in a lower tax bracket. However, you estimate $2.5M net worth at 65. Even at 4% withdrawal, we’re talking about $100K in income. (My goal is higher than $2.5M).
3) The value to liquidity should not be understated. I don’t like the concept of money being locked up until 59 1/2, especially since I hope to retire well before then. This is especially applicable to younger workers with resect to down payments / wedding costs / etc.
I only contribute the max to get matched in my retirement account–a recent change in my plan means I can now hit $17K, but that’s not the point–and save the rest in taxable accounts.
One note. I do think retirement accounts are valuable, but mainly for the average person unable or unwilling to save post-tax. But we’re not talking about the average person here…
29 years old. $220K post-tax investment accounts, $60K 401(k), $10K savings
JJK, never pay taxes to the government if you don’t have to. I’m assuming you make more than $100,000 a year, but here is a good article that explains the rationale.
https://www.financialsamurai.com/2012/03/29/disadvantages-of-the-roth-ira-not-all-is-what-it-seems/
I understand your theory, but I’m taking the singularly pragmatic approach of limiting my personal tax liabilities. I don’t believe a 401(k) is beneficial due to my first two reasons above. Now, that’s an opinion, but I think it’s well founded and surely not worth the lack of liquidity if I am indeed wrong.
My decision to pay taxes now rather than later has no bearing on federal spending, both now and in the future. I’m not willing to pay extra taxes just to spite a profligate government.
Thanks for the response and viewpoint
JJK, 401K is bonus money, and I’m a big advocate of saving pre-tax money AND post-tax money. My post tax money savings is in the seven figures, more than my 401K money of $405,000 at the age of 35.
I highly suggest doing both. Take advantage of the gov’t. Don’t let them take advantage of you.
Good stuff. We’re ultimately on the same page.
From an overall investment strategy–not just thinking about each individual dollar saved–people should consider tax diversification as an additional benefit of saving pre and post-tax.
I dont fully understand all of this, and this may be a dumb question. When i looked this up i was merely curious if i’m making above average for my age, or what was the average salary for my age. I’m 22 years old about to turn 23, married and have a son. I’ve been working in the coffee for about 5 years now and took every chance in the stepping ladder. So going back to my question, what does the average 23 year old make a year? My current salary is 65K, i rent and own a a shitty pt cruiser and live in New York City. It’s just a weird question but i guess i’ve set it my goal to make 4 figures by mid twenties.
So any advice / tips would be appreciated… I’m 34 currently saving 6-7k per month post tax, currently have 515k usd saved, we own our home outright valued at 2.2 mil usd but no real pretax savings as we do not live in the us and are essentially self employed, I may also be the least financially savvy person on the website…I have about 35k usd in a rtf… Any advice on where what we should be doing with our savings to maximize returns.?
As you know, savings rates of 0.2% sucks. CD interest rates, even 7year CDs suck at 2%. I’m investing in peer-to-peer lending for realistic 5-10% returns with my liquidity. Check out the post. I think it’s a no brainer.
I think the numbers here for the 20-somethings are pretty unrealistic, especially for the tax-deferred number. I definitely fit into your “above average” category (management consultant, graduated with honors from a top school, save actively, read up on finances), but there is no possible way that I could have hit these numbers. I’m 25, net worth of 32k, graduated with 5k loan debt I paid off in year 1, so basically I’ve saved 37K in 3.5 years, or a little over half your “average.”
Where I think the numbers deviate from reality is the tax-deferred savings numbers. When I first got out of school, I was only making 50k/year. While saving 8k in year 1 is a stretch but doable, saving 17k in year two as the LOW end (over 30% of my income – and that’s before the after-tax savings) is extremely unrealistic. I will max out those contributions when I can, but I think a tax-deferred rate of around 6-10% as the low end is a much more realistic number.
That said, I think the after-tax numbers are pretty spot on. I save about 7k/year through an ESPP, plus kick whatever I don’t spend every month over to savings for a total of about 8.5-9k/year. Those numbers are still a stretch but definitely doable.
I appreciate the effort that went into this, thank you.
No problem Mike. I saved 15K in my 401K in 1999, and I only had a base salary of $40,000 then AND lived in NYC. I shared a studio with a roommate.
It’s up to everybody to calculate their numbers and make their own savings plan. In the end, there’s nobody to congratulate or blame but ourselves.
This is an excellent site! I love the article and the tables provided. My suggestion is to refine the tables and make them look more like a curve. There will be smaller slopes (increases) when you start out and they get steeper after the third year until the the 10th to 15th year. Then income declines gradually. The reason why I am saying this is because when I first started working I had very little net worth. They were well below your chart. After the third year, then that was the time that my net worth exponentially increased.
I was curious to ask Financial Samurai about your comment on your first year’s 401K value of $15K in 1999. Can you give some clarity on that? I also lived in NYC and did investment banking – although I started in 2004. Most firms would only match 100% of the 6% of the Base Salary contribution. Six percent of $40K is $2.4K so if your employer matched that, that would be $4.8K. How did you get to that $15K? Was there a special one time bonus given? Or did you just put in a lot of money?
Another comment is that you (the readers) can have some variations or adjustments to the table as everyone has a different situation. Some people marry early, graduate late, or go to graduate schools with a high cost of tuition (IVY Leagues – business school, med school, others) so when they graduate they have accrued a high amounts of debt making their net worth tilt to the negative. So, don’t feel bad if you are on the lower end or below the line in the beginning or when you are just getting out of a huge life investment. The most important thing to remember is you are having an upward trend and improving your savings/investing accounts (i.e. living within your means). But having a goal written on paper that you can see and remind yourself daily can make the difference (I do this).
I have some friends who, after reaching their $1MM mark, changed their spending habits and attitude quite a bit. I think you can upgrade your life style to some degree. But it is important that you still be modest even though you can afford it. I have kids now and I want to make sure that they see me as being prudent and set a good example for them.
Cheers….
I have a hard time believing that Samuri put 15K into the 401K in 1999. The tax deferred limits were not that high at that time. See the table below,
2006 $15,000
2005 $14,000
2004 $13,000
2003 $12,000
2002 $11,000
2001 $10,500
2000 $10,500
1999 $10,000
1998 $10,000
1997 $ 9,500
1996 $ 9,500
1995 $ 9,240″
I had a half year work under my belt in 1999 – started in summer after graduation.
2000 was the first year I started maxing out my 401k.
You know, it took me 5 years to save up $175,000 working 3 jobs as a security guard. Being just shy of being 40 years old. It is not easy.
I am a 24 year old who graduated in December 2011 with a computer science degree who has a little over $50K in combined cash and stock with no debt (paid off ~$20K in student loans.) Getting a raise soon that is going to push my salary above six 0’s, so I should do pretty well by the metrics in this article… albeit I have no money in a 401K or real estate (yet).
Anyway, thanks for the quality post. I will do my best to surpass the high-end “above average” individual going forward :)
Good luck Ryan! Hope you make it big and not let life’s temptations get in your way!
32 y, male, married (for 1 year). Combined household income (pre-tax, pre-401(k), $170K. Combined 401(k) $230K. Combined Roth, $55K. Liquid + Stock $80k. 3 rental property units (just acquired last year, so maybe %20-25 equity), $130K. So ~ net worth of $495K (divided by 2, ~$250K per person). On target, but income rise is very slow, so we’ll see how we stack up in 5-10 years.
Just stumbled on your website through Pinterest… WHY HAVE I NOT FOUND THIS BEFORE?!
I like the guidelines… And I would say that personally I’m “on mark”. Just turned 31, $150K annual salary, $140K in 401Ks/ IRAs, $70K in home equity, own my car outright, no CC debt, and $20K in savings = $230K total net worth, so pretty close to the target. Also just took out a cash-value whole life policy that I am overfunding so that I can lower my effective rate of taxation in retirement.
I think that the difference for me was I paid my way through both Undergrad and Grad, and so while I didn’t have the benefit of saving money during this time, I did manage to graduate without student loans. The long-term cost benefit to me was greater that way than savings during this period of time. Still, I’d like to have more…
Got married about 2 months ago, and unfortunately my husband hadn’t always made the same good financial decisions as me. He was “bullied” by his mom at the age of 23 to buy a house he couldn’t afford, was overpriced versus market, and was a forcl so needed a LOT of money to get into good condition – Tripple Whammy!!
We managed to sell his house earlier this year, and didn’t have to short sell it…. BARELY. But it didn’t help to recoup the $20K we had to pour into it to make it sellable (and I’m taking things like replacing wood rot, roof, necessary repairs, not stupid stuff like staging here) plus any of the down payment he put on it.
All things considered its better than it could have been… but it was definitely a hit. It did, however, allow me to convince him to let me take over our finances, which he was very happy to do. And he’s GREAT at working within a budget!
Wow, I’m on Pinterest? I can’t keep up
Welcome to my site and congrats on your financial progress! Sounds like your hubby is on board now and things are going well.
Spend some time looking around, subsribr and don’t get too offended by my opinionated posts!
Glad to have you.
Sam
Sometimes, a hit like your husband’s house may actually be a good thing. You broke even and learned a lot in the process… more than you can say for most college classes.
I’m in line with the Above Average savings plan. Hopefully, I’ll be above the “above average” soon.
This is a great website and much needed for the US, more than ever before. It’s very simplified.
I’m 26 years old, have a college degree, but job isnt great. However, I have 2 rental properties that cashflow $500/month and have about $30,000 equity in both. Also, have about $15K in Silver, and a little in stocks.
2013, I plan to buy 2 more rental properties and lock interest rates below 4%.
Predictions for 2013 (see below)
1) I predict interest rates remaining below 4%.
2) I predict the Fed to double their Quantitative Easing from $35 Billion/Month to $70 Billion/Month. I see massive inflation continuing to rise with all the Quantitative Easing.
3) I predict single family home values begin to increase.
4) I predict the DOW to fall to ~8,000.
All the best,
Daniel
Daniel, what makes you think the DOW is going to fall 30% next year? Very pessimistic!
Care to bet? Ill spot you 1,000 points and say the Dow doesn’t even breach 9,000 for whatever amount you like!
Let me know!
Sam
Housing cannot go up much, if any, with Dow down 30% in same year. Markets are more correllated than that.
You think the markets are going down 30%? Care to make a bet for 2013?
Just happened on your site — quality stuff! BTW, I really hope you got some action on the Dow to 8,000! Hindsight is 20/20 but no way was it going down 30% this year!!!
My profile is a little different than those I’ve reviewed here so far, but here you go… Single, age 49, 401k 565K, DB lump sum pension value 440K, cash balance pension value 60K, Roth IRA 52K, Brokerage Account 94K, Unvested RS 72K, Checking 38K, Home Value 520K, Inv. Prop Value 350K… DEBT: Home 440K, Inv Prop 220K, Stud Loan 32K, 2xCars 30K… My lump sum value will close to double at age 50 based on early rtmt factors coming into play. What say you Samurai?
Unfortunately, I got no action from our bearish friends.
What is your net worth? Kind of hard to tell. It’s great you have a pension!
Too bad, the least they could have done is bet you lunch — that would have proved to be a good meal for you!
I would put my net worth at 1.4M. No doubt about it — great to have the combination of both the db and dc plans, but working 25 years for an oil company will do that for you! Unfortunately, like most companies, mine chose to shift away from the db plan back a few years ago, so they closed the plan to new hires and froze us legacy folks — no additional benefit for service but age still counted in the formula. Used to be when the plan was still open, that at age 50, your lump sum would basically double… Now, depending on what age you were when the plan was frozen, you see something less than doubling at age 50. The company partially made up for this by introducing a Cash Balance plan. While that doesn’t make up for the lost value in the legacy plan, it takes away some of the sting.
This is funny now!
That the dow will plumett below 8000,
Interest rates can’t remain low, property values rise, and the Dow fall all at the same time. If property values rise, interest rates are generally low since buyers can afford to buy mortgages.
Some correction is definitely in order for stocks, but such is life and markets in general.
Well, 2013 came and went, lots of things changed and lots of things stayed the same. Interest rates were relatively flat (compared to historical numbers). However, the markets clearly outperformed your prediction (generally speaking closed up 26%+ for the year). Real estate (physical real estate) posted some decent gains as well…obviously your mileage will vary depending on your location.
It’s crazy how well the markets did in 2013! I certainly wish I had leveraged more. Here’s my 2013 year in review.
Great approach for those who continue to strive through competitive and comparable methods. Although my pre-tax contributions fall below the average, my post-tax savings exceeds your calculations.
Quick Bio:
Graduated 4 years ago with $12k outstanding auto loan and $15k outstanding student loans. Been working in the energy business like a dog ever since.
My approach, albeit fairly elementary, removes external risk that I’m currently unable to manage due to time restraints. I can’t control the market and flat out don’t have the time to research and monitor investments. My employer matches dollar-for-dollar 401k up to 5%, thus, I contribute 5%. I plan to increase in 2013 for tax purposes and historical fund performance. I would also like to preface this by stating that my approach is not for all ages but can be used to build the strong foundation many people are searching for.
Since I can’t control the market, I manage my net worth in a way that I can control 100% of exposure – manage spending habits and saving.
I wont see Apple/Google like returns in a savings account, but I can guarantee I wont see Circuit City like losses either.
I’m 25 years old, will earn a pre-tax 2012 income of $125k, have zero debt (credit cards, student loans, mortgage, auto), hold a 401k balance of $30,000, Roth IRA with $4,000, Investment Account with $400 and a savings account with $140,000. Total net worth of ~$175,000 ($100k above average according to your table).
My theory is many people in their 20’s and 30’s are swamped building the foundation for their career and don’t have time to properly manage investment accounts, real estate projects, etc. Unless luck falls on their side, they will likely see unfavorable results when attempting to invest with limited information (as did I). Go back to the days when mom & dad taught you to save – you can manage it every day by making smart decisions. The last thing a person starting their life needs is to lose hard earned money in the ever changing stock market.
Every good house is built on a strong foundation. I believe it is important to begin pre-tax investments early on in life, but leave the market play and real estate projects until you have a firm foundation. Don’t over leverage.
This approach also gives you the flexibility to make purchases, take vacations, etc, when you want, and without debt restrictions.
My apologies for the long post, but it is rare to find a group of individuals in one place striving to be above-average. Thought I would pass along my thoughts for those in their 20’s and early 30’s.
Cheers!
Good stuff! Can you share with us how you saved $140,000 in just four years out of college? I think it will be very helpful for all!
I’ve believe for the longest time that people have much more money than we think!
Started out making $47k a year, but lived like I was making $30k. Worked hard to earn promotions and although my salary has more than doubled, my spending has only slightly increased. I set monthly goals and track progress every week to ten days, adjusting each spending category as needed to meet end of month objectives.
For comparison, when you receive a promotion, don’t go out and buy a new car – keep driving the same vehicle and save the car payment. Saving an extra $500 per month may not seem like much, but that’s $30,000 over five years…over and above anything else you’re saving.
Earn $100k in salary, but live like you’re making $40k.
Great job! It is clear you are actively on top of your finances which is key.
Just based on a quick read, looks like EiS is doing great, but I think the approach has a tremendous opportunity cost in terms of what he/she could have been earning based on even the most conservative investment plan (forget about exotic, highly risky investments) rather than actually losing money to inflation based on close to nothing in returns at the bank. The loss of the compounding effect of that conservative rate of return (again compared to next to nothing in the bank) is a silent killer in this case!!! That said, at 25 there is still time to put a great investment plan in place now and be looking pretty in 25 years! Start letting that money do some of the work for you — it works!
Ok I honestly thought I would blow away the stats on this, but after reading the levels I’m just not sure they are realistic for 20 something’s.
As a 27 year old working on wallstreet I make a salary of just a tad over 100k. (55k 1st year) When I graduated in 2008 I had savings of $300, but zero college debt. Stated otherwise, I was essentially starting from a point of zero savings. After 5 years of working, paying rent, living life, I’ve managed to save 113k total networth.
I think some of the “above average” started out with savings from mom and dad because I don’t see how some of these kids already have multiple rental properties at age 25? I guess I didn’t start out with a silver spoon, but managed to work up to a respectable net worth. I mean my avg friend my age doesn’t even have a qtr of what I saved, albeit, they the typical generational bum indicative of our culture today.
The point I’m making is the the curve is skewed that the above average person might already have some kind of networth or doesn’t live in NYC and is still pulling 100k salary. Obviously the above guidelines are just that, an estimated guideline, but perhaps I really don’t fit into the “above average” criterion.
At the end of the day I’m flushed with cashed, not assets, but I don’t know if that’s a good thing anymore. I day trade almost everyday so my networth also fluctuates anywhere from $500 to 15k daily. Biggest one day score was 18k. Worst same day loss was 14k.
John,
I definitely think folks with multiple rental properties in their early 20’s started out with a helping hand. It just is what it is when the bank of mom and dad can’t help but help their kids launch, especially if they have the means.
It’s much HARDER for someone in their 20’s to follow my savings guide, b/c we have more desires and less financial discipline when we are young. Things get much easier after you get all the spending on stuff out of the system. Finances get easier the older we get if we stick with our savings.
Definitely look to BUY SOME ASSETS such as real estate (click the link) with your cash as our cash is getting devalued quick.
Good luck!
Sam
John, I had multiple rental properties in my early 20’s and am 34 years old and my brother and I own 70 apartments and a couple of houses. We are business partners. We did not get a dime from our parents. My older brother was in the Army and I was in the Navy so we both qualified for a VA loan with no down payment. While my friends were off buying cars and spending their money at the bar, both my brother and I started off with a triplex with no money down. I lived in the worst of the three apartments while I renovated and the other two tenants pretty much covered the mortgage at the time. I saved my pennies and bought my second triplex when I was 24 years old and 2 years out of college.
In 2011, my brother and I bought a total of 11 properties, in 2012, we bought 3 and we are in contract on 2 properties right now. I get over $1000/month in positive cash flow from the 2 triplexes that I bought back in 2001 and have substantial equity in both.
One thing I disagree with the author is on how often he refinanced his properties. I agree that 2.625% is a great rate, but 3.25% is also great and you only have the rate for 5 years. My rule of thumb is that I don’t refinance unless I can drop my rate by a full % point. This way, I feel like the cost to close the loan makes sense. Two each their own I guess. I do like skipping 2 months of payments when I close, but I don’t recommend refinancing unless you drop your rate a full 1%.
Also John, you are 27 years old with $113,000 in assets. If you get out of NYC, that is a great down payment on 2-3 rental properties.
Dang, I wish I’d started the game sooner. I just turned 29 this month. I have a stay at home spouse with our first 11 month old boy. We save alright. Have been dumping the company match % into 401k for a few months now that I’m eligible. Our net worth is around 23k. My salary is 68k, but 10 percent of all income goes to our church. I graduated college late but debt free in 2010 and got a high paying hourly job (for a new grad) at about 120k/yr for the first 7 months, and am now happy with the 68k as my first salary rate out of school (engineering), but hope to see those raises keep coming because I’m pushing 30 and am nowhere near average apparently. This must be putting my siblings into the “scum of the earth” category. They have very low salaries and don’t save much yet. (They are from NM, we live in Richmond for the time being.) By the way, my wife and I are looking to buy a house soon, but want to make sure we’ll be in the area for at least 3 years before we do. Wish we had more assets at this point, but it is what it is. We’re also afraid there may be another recession, and we don’t know what to invest in. I know inflation will be terrible, but there don’t seem to be any markets that jump out as “stable”. I’m not much of a risk taker. I just with the value of the dollar would stay the same.
Daniel,
Better late than never. If it doesn’t hurt a little to save, you are not saving enough imo. Don’t rely on the government, parents, or anybody to take care of you is a good way to think.
At least you have no debt! Your siblings aren’t scum of the earth, they are just going to have to work for their entire lifetimes.
Good luck!
Sam
I am 40yo with a networth of about $790k. I do not own a home am renting in a tier 1 metropolitan area for a rent of about $2k per month. When I look at the pre-tax/post-tax % split, I am below the low end on your pre-tax mostly due to not maxing out the 401k for many years but only contributing up to the employer match of 6%. My 401k is about 200k and an additional 40k in traditional IRA. Post-tax is in combination of mutual funds, stocks and CDs. Overall I feel I have been to risk averse up to this point and could have gone much more heavily in the stock market. At present including pre and post tax I have about 47% in stocks or mutual funds and rest in CDs or Savings. I feel I could have increased my wealth many fold, if I had invested more aggressively. My goal is to retire by 55 with at least $1.5MM networth.
$790,000 ain’t bad at all, especially since you are a renter. Do you not plan to ever buy? The benefit of homeownership, besides the tax deductions is the fact that once the home is paid off, you have a rent free place to live forever. All you have to pay for is maintenance and property taxes.
Real estate is my FAVORITE asset class to build long term wealth.
Yes, I do plan to buy. We are a single income family of 4 (2 kids who are in elementary school). The average price of SFH in our area are $600k or higher in any decent school district and the breakeven time period for owning a home is around 8-9 years. I owned a home in the midwest for about 5 years and sold it at about a $15k loss because I had to move in a hurry. The experience left me uninterested in buying again in the event that we have to move again. I feel a certain degree of freedom renting. However, I realize that we have been here for almost 4 years now and if we were to stick around for another 4-5 I do realize that I would have made a mistake by not buying. However, we are too unsure if we will for me to take the leap. The low interest rates are very tempting though. Eventually we plan on moving to a metropolitan area that is tier 2 or tier 3 where SFH prices are in the 200-400 range. That is when we would make a decision to buy.
Gotcha. As you know, buying can be overrated due to the markets and to maintenance and property tax expenses.
Take your time! If you are getting squeezed on rent though, I would buy, especially if you think you’ll be there for 5+ years.
I’m 28, and I have only been working for less than three years. I only made 28 k in 2010; 55 in 2011 and will likely make 58 this year. I’ve been living at home, so I’ve saved 70 grand. I don’t have any other investments. I don’t have a full-time job, yet. I mostly do temp legal work. Even when I get one, it’s unlikely that I’ll make a SALARY of more than 100 k. I am going to inherit at least 2.5 million tax free from my father and at least 1.5 million from my mother via life insurance.
Enjoyed the post!
I wandered by after calculating my Net Worth just now – which at 28 is around $247k at the moment. Thankfully we have a generous match and profit share at my workplace which helps out quite a bit, and I’ve been diligently investing in Real Estate since I my wife was 20 and I was 21! We started with about $10k she had saved since she was a little girl and have always diligently reinvested in our rental business. I calculated our Internal Rate of Return at over 18% since beginning (a rough estimate) which seems pretty good! I’m hoping I can maintain that going forward – although at some point I’m sure it will become more difficult. I sense I’m in a zone right now though were we actually have increasing options / flexibility for investing that may even boost that rate in the short term. I should mention we both have rather modest incomes and lower opportunities in the workplace than we had hoped for when we graduated due to the dismal economy – but I think this article points to how ‘the X factor’ benefits those who work hard and keep their shoulder to the wheel… anyhow, thanks again!
Just for clarity: modest as in I make $46k and my wife makes $35k – and we made less to begin with. So remember: investing is a process, and starts slowly.
Just start!
Congrats Dustin! Real estate is one of my FAVORITE investment asset classes for sure. Check out the post.
Good luck and hope you subscribe and stick around!
Sam
You started investing in real estate 7 years go when you were 21? So in 2006 you started buying real estate and are doing well? If you don’t mind me asking what did your balance sheet look like at the end of 2008? How far did your real estate investments pre 2008 go into the red and have they fully recovered yet?
I am 42. I have mid 250s in 401k/Roth IRA. I have close to $100k in bank. No debt. I am renting. I have real estate outside of the country worth $500k. I have become financially serious and have been contributing $27k towards retirement everyyear plus $6k into kids 529s. My goal is to hit $1million by 50 between 401k/IRA/Bank account. Wondering if you could offer any advise.
Great post. It’s also been awesome reading the comments.
Thought I’d contribute my numbers since it’s been so interesting to read about everyone else.
I’m 27. I’ve been working for six years in technology. Currently: cash $20K, 401k $137K, IRA $10K, stock $139K, home equity $248K & a boring old car valued at $12K. Comes out to $566K net worth.
I’ve been employed as a regular engineer at a couple large software companies. I’ve been fortunate to have been at a few that had good bumps in their stock prices while I was there. I also got decent returns by getting into the stock market near the bottom of the 2008-9 collapse. Parents also paid for my college where I got my computer science degree, so I started off with zero debt. Besides that, I’ve been saving and saving. Nothing fancy, I guess.
Looking forward to keeping up with this blog & its community! FS: I’m impressed by your financial achievements.
Sam,
Thanks for the interesting post. I enjoy reading this type of material as I work to convince myself about taking early retirement. I feel we are in a good position for me to be able to walk away from my job in a few years, but leaving behind the max earning years and options that a regular retirement would provide are proving tough.
I am 45 and married with no kids. My wife does not work. We have no debt, but also no real estate. I work as an expat in the oil business and have been overseas for the last 4+ years. Foreign service premiums in hardship locations have provided a nice boost to savings. We have about $1.2-M in my company 401-k and I have made Pre-tax After-tax contributions to the maximum extent permitted for the past ten years. The company match is 7% if I contribute 6% to the savings plan and offers a traditional defined benefits pension. If I retire at 55 (regular retirement at my company), I can take a lump sum pension payout, but would be required to take an annuity if I leave early. I have funded a non-deductible IRA since I was 24 and converted it to a Roth last year. Total IRA’s are worth about $110-k. I have accumulated about $1.31-M in a brokerage account. Total Net Worth is now in the neighborhood of $2.62-M and we are 70% in diversified equities. My goal to retire is $3.5-M with my pension annuity to kick in at 65. Our goal is to get to $3.5-M and retire in 2015, but this is highly dependent on the market returns. We intend to live overseas in a relatively low cost country and travel extensively in the future.
While most of my career as an engineer has been spent outside the top 10% of earners, I have been a diligent saver and believe in living well below our means and saving for the future. I owned two cars over a 20-year period. I owned one home and sold it before going overseas. The sale was at the market high and that equity was put into the market at the 2008/9 low – serendipity is good sometimes. Choosing a solid field of study, industry, and company has helped our situation out a great deal. I came out of college with a good education and no debt, but no assets or inheritances.
The best advice I can give to others is to start early, set short-term and long-term financial goals, track your spending and progress towards those goals, and adjust your spending and savings habits as necessary to stay on track. Your advice on deferred compensation, tracking your habits and progress, and real estate are all on the mark.
Thanks again for the interesting analysis – good work.
Hi Bob,
Nice to hear from you! No debt = freedom! Although, I do like to have a $1 million mortgage to maximize what the government allows us to deduct. It’s just accounting really.
Sounds like you will have no problem getting to $3.5 million in the next several years. Having a pension is sweet, and something most of us don’t have.
Enjoy life and hope you stick around and explore more of my site.
Sam
Thanks for the post, FS. I worked two jobs after college, slept in living rooms, and bought one meal per day. I learned about investing on my free time, and used that to increase my net worth. For instance, I wrote an article recommending the purchase of common shares in Bank of America when it was trading for far less than it is today. My net worth exceeds the $70,000 that your table charts, but I still think your numbers are too optimistic. I don’t know many people in my age group with any net worth at all. Young people today have fallen on very hard times. The combination of high rents and low wages makes it very difficult for anyone to save or invest. I recently found a job in Lebanon that pays for my rent and offers a higher wage than I was able to earn in the US, so I have moved; but the civil war in neighboring Syria means I am taking on considerable risk to avoid the plight of my peers.
There is a war on young people today and I know that most of my friends and cousins will not have a bright future if it continues. Esquire has some interesting articles on the topic, for instance: https://www.esquire.com/features/young-people-in-the-recession-0412
Take care,
Colin
Hi Colin,
Thanks for your thoughts. Congrats on your net worth. One of the things I’ve noticed is that people are much wealthier than the mass media portrays them to be. You are a perfect example.
It seems like we always know someone who is broke, but never ourselves. This is why I’m optimistic we are in better shape than depicted.
Who is waging the war against our youth? The elderly or the youth themselves?
Sam
I’m 35 and a bit shy of your above average category with a net worth of 184K. I got serious about finance when my son was born 3 years ago and have increased my net worth by 90K since then (gross combined income is $150K). My biggest concern is that I can’t afford to buy in my market (NYC) and am renting (approx. 20% of gross income). I am the chief bread winner (and mom), have a great schooling option in my neighborhood for my son, and loathe the idea of a long commute. I would appreciate your advice on my situation. I am proud of my financial turn around and am motivated to take it to the next (above average) level.
Hi AF,
Power to you for being a mom and the chief bread winner! Not easy I can imagine. The NYC market seems to be like the SF market… heating up.
I am VERY bullish on real estate now, and we will kick ourselves for not buying today, 10 years from now. However, if you don’t have 20% for a DP and a 10% buffer after that, then I would keep on renting, saving, and investing. You don’t want the stress of putting everything you have in your house and then losing a source of income.
Sam
I am turning 35 in 2013, Graduated in 2007 with PhD, worked as post-doc for 3.5yrs, not great salary now little better but still little low around $89K. got married 2 yrs back with a kid now. Have been trying to save for the past 6 yrs with and avg of 31 k/yr. Invested all the savings (~$190K) in real estate (not rental property) in a foreign country (as i am from another country). real estate value today is close to (~$270K) now. was eligible for 401 k only for the past 2 yrs with $25K in it. With single income in the family, i have to be very disciplined to even come close to this value. I do not know how to achieve the high end, so that i can retire by 45-50, may be have another kid and move to my home land.
Smart girl!@ Meredith
Thank you so much for this! I have been trying to figure out how on/off track I am for a mid-twenties person for so long. It doesn’t really mesh with me to compare myself with those I work with because most of them are in way more debt than I would tolerate and manage their finances in a way I would call irresponsible. Unfortunately I am not on track but it gives me something to work towards, and I’m only a off a bit. Roth 11K, 401k 18K, and personal savings 27K, and only 2k in debt thats interest free. Just need to beef up my retirement this year and next which was in the plans anyways and I’ll be at the 25yr old avg 1 year late not too bad I think. Again thank you for the work you put into this and I like your definition of an above average person.
I think this site shows how having rich parents makes you “above average”. I graduated in when I had just turned 22 had about 40k(not unusual) in student loan debt and 20k for the car I needed to go to work. Ive paid off pretty much all the debt by 28 but thats an extra 60k plus we’ll say 10k in interest. If you dont have that when you graduate cause your rents gifted you a car and loans you can afford to max the 401/invest in house downpayment and enjoy the compounding interest.
Im actually glad I was saddled with this debt cause otherwise I might have bought a house in 2007 (smirk that the study about houses sited prices at the top of the boom). Not that houses arent a good investment its just that many people are convinced its a sure thing no matter what its better than renting which its not.
Also. Im not sure how a roth doesnt get mentioned here in investment vehicles. I would argue that for somebody in there 20s not getting an employer match on their 401 its a way better investment choice. Plus you can pull your initial investment without penalties if something comes up so it can be safer than stocking it in a 401 in the event of you needing emergency funds.
If you have rich parents, then of course you have a likely chance of being above average if you have above average parents. How does your net worth compare to my charts?
I love real estate. Here’s my latest post on the subject. https://www.financialsamurai.com/2013/01/04/the-real-estate-investors-mindset/
Owning is definitely better than renting. Provided you didnt make that decision in late 2007.
I’m solidly behind your projections in net worth maybe by $100k. Although if you take the 60k in loans and give me the interest I paid on them instead of having it leave me I’m actually not all that far behind.
Interesting site. I wish I had come across it sooner.
I’m 44, married, 2 kids 12 and 8 yrs old. Combined net income from all sources is $270K/yr. My salary is $160K, wife’s part-time income is $60K, and we own four multi-family rental properties with good equity in them (I bought the last one in 2004) and they have appreciated significantly in value since. Net worth is approx. $1.4M.
We plan to retire within the next 10 years. Net worth goal is $3M. Net income stream from the rental properties is currently $50,000/yr. Once the property mortgages are paid off (the plan is within 5 years), the properties will produce $100,000/yr in net income. Our 401K savings are only $250K, mostly due to the fact that we had alot of debt in our earlier years and did not contribute the maximum amount until recently.
We are starting college savings plans for the kids (yes, it’s late), but expect that the bulk of their college will be paid for by scholarships or income from the rental properties.
The dilemma I’m facing is whether to follow the conservative path and plow the rental property earnings into paying off the mortgages, thus increasing my rental property income, or acquiring more properties. The trade off is that managing 4 properties is pretty tough with a full-time job, and adding more would require some major life changes. I’d also be open to selling all of the rental properties and putting the equity into one much larger property that can be professionally managed for me.
One note to the people just starting out: investment property is definately a way to go if you have the time to manage your properties effectively. That is key. If you are willing to take some risk at first and get your hands dirty, you can establish a good net worth builder with real estate.
Hi Pete, welcome to Financial Samurai! How did you find me?
It sounds like you guys are doing fine, and since you have a 10 year horizon, there is plenty of time to kick yourself in higher gear. Id consider a property manager if it’s too hard to juggle.
I strongly recommend you visit this page to better track your finances for free. You are in the perfect scenario to take advantage.
Good luck and hope you sign up for my e-mail feed and keep in touch!
Thanks for the advice. I found you with a simple Google search for “net worth by age”.
I’ll stop in frequently to see your updates.
Wife and I just turned 34 and have 2 children living in the Pittsburgh area. We both started out making around 30k and in 12 years later now make around 65k per year each.
We have 215k in 401k, 55k in Roth IRA, paid for house worth 160k, and 380k in cash – total assets of 810k. Currently our net worth grows by 7-10k per month depending on the stock market (about 3k-4k in cash and 4k-6k in retirement accounts).
I believe the numbers you’ve come up with probably seem high to many people but they are very doable with the guidelines you’ve come up with. It just takes time and patience and living on less than you earn, dual income helps. Key is to get out of debt early. We had small student loans (12k) and new car loans when we graduated but paid them off quickly and then put everything against the mortgage. Once the mortgage was paid off we up’d retirement savings and now max out both roths and both 401k’s.
Great site!
I read all these posts about high salaries/contributions to 401ks and it makes me wonder if I’m really that bad or if all you people are really that good? I graduated college in May 2011 with a degree in accounting. Took a 23k/year job and now make 31k/year same company. I have 60k in student loan debt, I lease my car, have a rent payment and contribute the minimum 6% to my 401k to get the employer match. I work some weekend jobs for a little spending money. Am I doing something wrong or am I just “average”? I feel like I will never be able to reach those numbers. Thanks and great article!
Joe, you JUST started your career. The point is you have a frame of reference and a target. The beginning is ALWAYS hard. Takes a lot of sacrifice and long hours. But trust me when I tell you that if you keep it up for 10 years, you will feel incredibly free. Please spend some time to look around my site and subscribe over e-mail. I think you will be able to benefit a lot!
Exactly. If you graduated in 2011 you are doing FINE! I graduated in 2005 and for the first year I made about $10k and the second year I made $25k. I’m 8 years out now and have $200k in networth. Yes, I moved jobs a few times and got significant increases in pay (make sure you do that as moving jobs helps you increase pay – staying at the same job you won’t have the same kind of lift in salary) – but it’s definitely do able and you’re well on your way to success. The only thing I’d recommend (though it’s probably too late) is not leasing your car and instead buying a car 5-6 years old that is checked out before you buy it and considering of good quality. I spent $8k on my car when I got out of college with cash up front and it was the best decision of my financial life. It’s been good to me (on it’s last legs now at 200k miles) and I never had debt to pay it off.
Wow! Going from earning just $10k and 25k your first two years to building a net worth of $200k is impressive! If you haven’t written a detailed post on how you did it, I’m sure it would be a hit. Actually, I read the 4th link in your about me page. Nice work.
I hear you on the car buying thing. In fact, I have the 1/10 rule for car buying rule I encourage everyone to follow. https://www.financialsamurai.com/2012/10/06/the-110th-rule-for-car-buying-everyone-must-follow/
I previously had a 20 year old car which i drove into the ground (sold it for $1,000). It got me thru high school and college. My commute is roughly 50 miles a day and it is a great peace of mind knowing that my car is not going to fall apart on the way to work (and if it does it will be repaired at no cost). My old car was breaking down about twice a year with the average expense of $750/breakdown. The lease I have is $220/month so I’m only spending $1,100 more per year on a car (not including free oil changes and tune ups). Plus there was nothing due at signing.
I’m 23 forgot to mention that.
Thanks,
Good article. 35 yo male: 250 in savings/cash trading account; 250 in retirement. The 250 includes sep, roth, 401k and hsa. About half of the retirement is after tax (e.g. roth, hsa).
Tips to others: live under your means, start a biz and stay aware from greedy women!
I disagree with your negative article about a roth….it depends on many factors, one also being your income when you retire and what the tax brackets will be at that time. I converted some money to the roth for some of the obvious reasons, but also for the less obvious: a self-directed ira that I am planning for in the future.
Also, another creative way to save for retirement is an HSA…I don’t ever take money out of the HSA…even for medical, I am treating that as another retirement vehicle as are many:
I’ve lived the life of the “above average” person. Started saving/investing when I was a busboy at 16 years old. Always lived below my means whether I made $22,000 a year or $200,000. Saved first, invested conservatively, but consistantly in all markets. I am now 49 and have a net worth of over 2 million. Does that make me a financial “rock star”?
This chart was quite useful, albeit a little upsetting. I didn’t have access to a 401k until two years ago at the age of 27, so I don’t have $180k in my 401k (just a measly $37k.) I do have a total of ~$180k in networth at the age of 29, plus $20k in purchased stock options (so theoretically $200k in networth.) My goal has always been $250k by 30. However, I’ve been able to do this because I rent. One thing you should take into consideration is how cheap it is to rent if you are willing to have roommates. I’ll admit it sucks from time to time, but today I pay $650 in rent and if I were to own, even a crappy studio apartment, it would be at least double that, and I’d have HOA fees and tax on top of it, plus the cost to fix everything that goes wrong. I can’t see how owning would make any sense when in my area that average cost of a one bedroom is $650,000. I’ve been toying with the idea about renting forever — more cash to invest — but at some point if I have kids I might want to own, not for financial reasons, but for stability for my kids. If you’re single and in your 20s, renting is really the best option, unless you can buy a triplex and rent out some of the units to make your lost money back.
Admirable of you to rent and live with roommates to save and invest. After 3 years of working, I got sick of living with roommates and decided to buy. Fortunately, it worked out 9.5 years later and build about 450k in wealth over this time period.
To each their own I say.
I think the next 5-10 years is really going to be good for property owners.
See this post. https://www.financialsamurai.com/2012/10/16/real-estate-is-my-favorite-investment-asset-class/
Sam
Samurai – just found your website, very informative. Couple adds from me on your “Recommended Actions For Increasing Your Net Worth” – “Bet on Yourself” and “Be Mobile”
Bet on Yourself – Strive and get that top MBA, or get your CFA, or whatever to propel you to the next level. Those items will yield a poor return if you dont do anything with it but if you are willing to “bet” (invest money) on yourself, you will do very well. But sounds like most of the people here are doing exactly that! My personal example – I graduated at age 29 with an MBA from a top 5 school along with an negative $50k net worth! But it doubled my comp and I took off from there, all because I bet on myself and knew I would succeed even though the near term financials were a drag.
Be Mobile – in my opinion, if you buy a home when you are under 30 you are nuts. NOT because a house can lose value, but rather because the mentality it creates when propelling your career. Maybe you bought a place in Atlanta and no longer “look around” to other cities for job opportunities because you feel “settled”. This reluctance really limits people. My example – I lived in 4 different states during the first 7 years after undergrad because I kept looking for the next big opportunity and nothing was going to hold me back, which lead to my success today.
So where am I today? $5mm net worth at age 38. Time of your life, huh kid? (quote from my favorite movie)
JG
This model doesn’t really work well for me. I’m a young doctor starting out in residency, I spent my whole life in school so that puts me about 250K in debt when I finished medical school last year. I’m 27, my income is 48K as a resident, no 401K or other benefits and will see very little growth over the next three years. I have a car but that’s about my only asset in value. My income strategy has been to take advantage of loan forgiveness and make minimum payments, I weighed this against making higher loan payments and living on a tight budget but really high loan payments when your pre-tax income is 1/5th of your principal debt isn’t much.
Once I graduate my income will grow to around 300K a year, which will afford me more investment opportunities rather than merely holding down living expenses and loan payments. In the meantime, I’m probably going to cap my Roth IRA and spend the remainder on a few stocks that I find promising.
I’ll call it the catch-up model for doctors who should have done something else with their life rather than spending 8 years accumulating debt :)
Hi Mate, makes sense. This is why I provide a “years worked” column as well. With your future earnings power, you should do great provided you worked enough years. Good luck!
I am a 46 y.o. married male with $236K in retirement accounts, $900K in liquid investments (extremely conservatively invested – about $250K in index funds, $250K in bond funds and $400K in moneymarkets) and $100K in illiquid private company security. I make $280 +15% bonus but I work in a volatile industry where the job is always uncertain. I pay about $2500/month in rent (houses in my neighborhood exceed $1M, and I just had my first kid, but the schools in my area are pretty crap despite the high cost of housing. I max my 401K which is 80/20 stocks to bonds, but overall I just don’t trust the market.
Any thoughts as to how to transition to a more aggressive investment stance and whether it makes sense to buy rather than rent?
Johnny,
With your income, it must feel great to only pay $2,500 in rent. I’m a big advocate of ownership at income above $200,000. I also fear renting because it provides no return and leaves nothing to the kids.
Here are a couple articles you might like:
https://www.financialsamurai.com/2013/01/04/the-real-estate-investors-mindset/
https://www.financialsamurai.com/2013/01/28/the-proper-asset-allocation-of-stocks-and-bonds-by-age/
Sam
Great post! Really enjoyed reading up on this article and the comments. Although after reading some of your personal stories and comments I feel slightly inadequate!
I am a 24 year old living and working in Shanghai as a design instructor. This is my first full time post graduation and I make only about 30k a year from my full time position and 9k from freelance work at a publishing company. I have a total of 6,000 in savings and my student loan debt total is about 13k which is reasonable from what I hear (compared to other fashion design students).
I do plan on going back for a business degree within the next three years.
My parents own property both in the US, paid my first years tuition in full, and I attained scholarships which peeled of the bulk of my tuition costs.
Just wondering what else I could do to make make a smarter investment for my future especially since I will be going back to school. Any suggestions? Especially since I am clearly on the low end of the savings guide.
Thanks,
FinancialSamurai,
I am a 25 year old making approximately $200k annually. Combined household this year should be ~$240k. My income has increased greatly since entering the workforce, $51k to $$57k to $88k to $135k to $200k. It looks like income will continue to increase for the next 2-3 years and will end up averaging between $250-300k annually for 5-10 years thereafter. My wife and I have a current combined net worth of just over $100k and I’m wondering what your recommendations are for investing extra cash. I’ll max my 401(k) this year and am also participating in ESPP. My wife contributes to employer match in 401(k) and has contributed to a Roth IRA for about 6 years. AGI this year will put us over the Roth IRA limit and other than our mortgage we have little debt. We just bought our first house in the DC area for about $550k and are interested in both real estate and the stock market. Thoughts on how to keep up with your “Above Average” charts and where to invest?
I am a 58 years old PhD , married with two grown children. Retired from State Government with a pension of $ 54,000 a year with medical at age 55. Started working again 2 years ago ~ $ 75,000/yr and we bought another house (our final) for 138k which is now supposed to be valued at 165k , we owe 100k and I am making double morgage payments. No other debt except normal bills. We have about $ 180,000 in savings. Some regrets about taking on too much risk at times, and since 2008, way too little risk, with our investments “but” took care of our son and daughters educations. Always felt I could keep pulling rabbits out of my hat but lately have been nervious about a sustainable future for no other reason than that I am starting to own my age. From your perspective, how do we look financially at this point? Are there obvious things we should do to further secure our future? Thank You in advance for your response.
Hi There,
First of all, you are doing great because you have a $54,000 a year pension for life! All you got to do is take your expected life expectancy age (e.g. 85 for example), subtract from your current age of 58 = 27, multiply by $54,000 + COLA, and you’ve got your capitalized value right there. Or you can take $54,000 and divide by 3% to get $1.8 million as a rough estimate.
To minimize regret and stay on top of your finances, I recommend you sign up with the free wealth management online tool, Personal Capital. I’ve aggregated all my accounts so I can get an idea of where my money is going and where I need to adjust my assets. Personal Capital tracks your net worth and gives you a bird’s eye view of your finances to make better decisions. The tool is already saving me over $1,000/year in portfolio fees from my 401k I had no idea I was paying thanks to its “401k Fee Analyzer” tool you can run once you’ve linked your 401k account. It’s free, secure, and easy to sign up.
Good luck!
Sam
These numbers seem a bit high to me. I’m 29 and make $65k in Los Angeles now. I had a net worth of NEGATIVE – $32k at 22, right out of college, and have been very frugal and diligent with my savings since then. I currently have $170k net worth, mostly in after-tax accounts (Roth IRAs, mutual funds, etc…). Living in Los Angeles makes it difficult, however I am looking at putting $100k of my savings on a down payment for a condo, as I do plan to stay here for the next 3 – 5 years. I save about 50% of my income each month… I can’t imagine how people could save more.
Hi samurai, Great site by the way just found it. Will be learning a lot.
Im, 21 and make 30k in California been working since 15, dropped out of highschool jr yr. Bought a house at 19, (have excellent credit, down/closing cost was 3500, had 12k in the bank at the time, mortg pay 610) selling it for 60k profit. I have 2k in bank, 8k in stocks, no credit card payments, do have car payments. My plan is to buy property again, but day trade as my daily job. I will quit my job, go to online school, and get federal financial aid to pay for school and my expenses. My smal business will easily keep me at 24k a year. I learned I need a college degree if Im going to make it to that million by 30.
My question to you samurai, is what would be a 21 year olds best move, after selling this house, to be the super above average rockstar? My plan in 2 months is take 40k and trade. Hopefully net 35% yearly on that 40k. My gains are crazy when I actually have the time to day trade, have 10% daily gains on 5k. I think thats where I should take this big lump sum i’m about to make. What do you think Samurai?
Thanks Financial Samurai, best Believe Ill be reading every single one of these blogs. Knowing all of it is helping me to my financial future. :-)
Hi Paul,
I like your enthusiasm. Is there any chance of you going back to school to get your degree? Perhaps go part time to have a backup?
I’ve day traded plenty of times before and if you do it long enough, I’ve found the losses even out the wins. Trading a $5,000 portfolio is different from trading a $40k portfolio due to risk loss pain.
I’d start trading a smaller portfolio of $20,000 and see how you do for 3 months and then move on while have a steady afternoon or night job.
Best,
Sam
Hi,
You have a great site with interesting comments!
I just wanted to say that accruing a high net worth is definitely doable! I am a 32 y.o. female who worked making mid 30’s for 6 years in insurance after college. That whole time, my husband was “climbing” the ladder but didn’t make more than $56k when he left his job 2 years ago.
While we were being severely undervalued ;) we were amassing rental properties (duplexes), fixing them up, flipping them and putting the money towards more. We did everything ourselves and one property at a time. We even rested for about a year before continuing. We never took a honeymoon or vacation but still managed to have a great quality of life.
Our family, on both sides who are serious consumers of luxury goods, think we are low income because we still live in a 2bed, 1 ba house but long story short, my husband started a business (online) from home at the same time I decided to stay at home as a Mom and go to school part-time. Our net worth before the sale of his business, I know this today because we just did our financial statements to apply for the apartment building, was $1.2M.
I am actually taking a break packing for our first vacation together since getting married 6 years ago! We are going to about 4 different golf courses and stay at some awesome (priceline purchased) hotels.
I just want to say that it’s part luck, part visualizing and staying with your plan from day 1 but also being flexible and knowing that you are the only one who is going to look out for you because money is energy and everyone else will take it if you let them!
Good luck to everyone out there!
Going into college I had saved up around 15k in mutual funds from gifts and summer jobs (yard work, retail). While in school I worked part time for 12-15 $/hr for 4 years and full time during the summer. During that time I lived in an office basement owned by my dad and he didn’t charge me rent utilities or internet. School was basically free because of the work-study tax breaks at the time. I graduated in 7 years but was able to save about 30k altogether by the time I finished and bought a duplex through a short sale using an FHA loan once I was hired full-time(started at 67k). I rehabbed it and it has appreciated a lot. My net worth is now ~240k with about 2/3s in the duplex.
I’d say that real estate is where it’s at for those that are not geniuses (like me). It’s relatively easy to understand and doesn’t take much skill. I knew nothing about fixing houses before I started but learned as I went. It’s almost as if the government knows this and wants to give the opportunity to grow wealth to the common man. 3.5% down for FHA loans make it incredibly affordable to most people with jobs. It’s also a great investment due to inflation and if you get a multi family house it’s like getting a single loan for 2 places.
I find it hard to see how someone can have a net worth of 80k after 3 years of working. That’s saving 26k a year. I save 24k a year and am very frugal.
It’s hard, but it’s doable. With the help of a rising market, things get even better. Did you enjoy school hence the 7 years? I wished I did a 5th year, but I was anxious to graduate and start a career.
Absolutely right on real estate Sam. I’ve made life 10x harder for myself by not buying for one reason or another (wasn’t always a wrong decision, sometimes it wasn’t possible due to starting a business etc).
US property looks a screaming bargain right now. All US readers should buy ASAP if they haven’t already, especially if outside of the few slightly bubbly markets (e.g. Washington, New York).
Great to hear from you mate. It’s been at least a year!
US property does look like a screaming by especially from a Londoner’s eyes. Rents have been rising strongly in my US describable cities and now prices are following suit. I’m tempted to sell one primary rental prospect to simplify my life, but should probably hold on for the next 5-10 years.
Hope all is well!
21y, graduating from college, have a job lined up for me when I’m done. 50k salary starting, here in Canada. Should I look for rental place or should I go into real estate and buy a house. And for saving and tfsa accounts, and RRSP, what should. Be the percentage of income allocated to those areas.
42 years old. 12 years ago, I was a newly divorced, single mom bringing in $2000/mo, including child support. Luckily, I left the divorce with no debt other than a mortgage on a starter home that I was living in. The mortgage was $535/mo, which was cheaper than rent on a small apartment. I was pretty much starting over – the only difference was that I was able to build equity in a home (we only put $8000 down on it, so it didn’t have much equity at the time of the divorce) instead of paying rent. Four years later, I built a house and rented out the one I was living in. The rent on that house covered the mortgage on my new house, so out of pocket housing costs were essentially the same as it had been. Three years later, I refinanced my house, pulled out cash and bought another rental property. Four years after that, I refinanced the original house and pulled out cash to purchase another rental property. Currently, the income from the three rentals covers all four mortgages and all are on 15 year notes. So, by age 57, all will be paid off. My current net worth is $440,000. Once the properties are paid off, it will increase to $750,000 (assuming the values of the property remain at current levels). Sure, it could be less, but it could be substantially higher. I plan to continue working, though, until I hit a net worth of $1,000,000 (which shouldn’t take long since the properties will all be mortgage-free by then). Then, will quit work and live solely off of the rental income. My daughter should inherit about $1,000,000 when I die and four properties. And, I’m still working the same job I was 12 years ago. It is all about starting early, making wise decisions, and not wasting money on unnecessary items, especially late fees, bounced check fees, high credit-card interest, etc. Those can really hurt you in the long run. That $35 bounced check fee may not seem like much now, but when you look at what that $35 could have earned over the years or saved you in interest had it been applied to something else, it can be substantial.
I’m not really sure where all the people on this site come from. My husband and I make a combine income of about 60k. We just bought a house with nothing down thanks to the VA loan. Because the government sells a pack of lies to the kids in the military, we have 60k in student loans. We’re lucky to pay the minimum to get the loans paid in 10 years and our mortgage. Where is everyone finding jobs where they are making 50k+ a year while under 30?!
Anyone who thinks these numbers are unrealistic is simply doing it wrong. I started out making 43k and now make mid 50’s, just turned 30 years old a week ago and have a networth of $375k and should pay off my house by the end of next year.
The only thing holding you back… is you. The key to having “above average” networth or savings is controlling and prioritizing your spending. I don’t live like a miser, I travel abroad every year for several weeks, I kayak and go rafting, mountain bike, go backpacking. But I stay in hostels, I ALWAYS buy used equipment at a fraction of the cost and most of make a profit when I sell it. The reason more people don’t have high networths is because they don’t want to cut out all the “little crap” they spend money on: coffee in the morning, going out to lunch, going out to dinner, going to a movie, buying that thing you will never use, letting your food spoil, having to pay interest on your credit card… congrats, there goes your earnings.
Your attitude has a lot to do with being above or below average. Below average people make excuses for their results, above average people look for solutions. Which are you?
35 yo single male, annual income $160K (140K salary, 20K stock dividends), have $410K in stocks, $10K in savings, $240K in retirement accounts, so I’m in good shape based on your table. Targeting net worth growth per year of $100K (assumes conservative 3% asset appreciation), would like to retire with $2 million by 45. For better or worse I’ve always been 95%+ long equities as I just can’t stomach having a lot of cash sitting in the bank earning 0.1% interest. I didn’t crack the $100K net worth mark until I was 30, but thankfully b/t raises, prudent investing (I stick mostly to large cap blue chips with 3.5%+ dividends) and keeping my costs in check (I pay $900/mo for a cozy 1/1 apt and drive a 10 year old car), I’ve seen nice asset growth the last few years.
I think cost containment is a biggie, it takes a lot of discipline to not fall into the lifestyle trap when your assets increase (especially when your peers are living large), why drive a 10 year old Camry when you can easily afford a new BMW5? I have basically the same annual budget now than I did 10 years ago when my annual income was half as much, and is a big reason why I’ve been able to rapidly grow assets the last few years as I’ve been able to put that excess income into investments.
The one asset class I’m light on in Real Estate, I’m impressed how many of you have gotten into RE at such an early age, obviously this is a place where you can make a lot of money since RE is a leveraged asset so if prices go up, your returns are enormous if u only put 20% down. I’m a content renter, and since I’m single I don’t need much space, but I’m considering buying a single family house and renting it out (looking at Las Vegas), if anyone can point me to a website listing all the things first time buyers/landlords should be focusing on I’d really appreciate it.
You are crushing it! Nice job! Here’s a post I wrote that you’ll like: Recommended Net Worth Allocation By Age And Work Experience with some further links to relevant articles on real estate.
Were you 90%+ in equities during the 2008-2010 time period? If so, did you simply hang on and buy more? I started this site then as a way to deal with the economic crisis.
I also recommend you sign up with Personal Capital to get a good holistic view on your money with your kind of assets. Check out my overview post here.
Good luck and welcome to my site!
Best,
Sam
Thanks for the real estate links, I’ll definitely check out Personal Capital, looks great, much more elegant solution to tracking my various accounts than doing it all in Excel.
Yeah I was full throttle in equities when the market collapsed so didn’t have much free capital to buy when it hit bottom, but I held on to my positions and plowed almost every excess dollar I’ve made in the market since then.
I really didn’t get serious about my finances until my late 20s (didn’t max out my 401K until I was 29), hopefully more 20-somethings (or even teens) find this site and heed your advice, since the earlier you focus on money, the sooner you’ll be able to hit your retirement bogey.
Keep up the good work!
No prob. I did all my financial tracking through an excel spreadsheet as well until I found Personal Capital. Free and easy to use and I met up with several of them here in SF. They’ve got new product rollout a this year too so I’m excited.
I just turned 40. My Excel sheet today says my net worth is $644,00, which is almost exactly what is estimated in the chart above. So there’s one data point.
I agree that your numbers especially for pre-30 year olds are next to impossible. In order to generate $17500 in home equity within the first two years of ownership (with no appreciation and assuming a 30 year fixed at 3.25%), the original mortgage would have to be $400,000. This is a long ways off of $200-250K which you assumed. For a 30 year old to afford that size mortgage, fully fund a 401K, save ~$10,000 in after tax dollars, and actually live, they would have to earn at least $100,000. I’m not saying it is impossible, but few 30 year olds make that much, and many that do live in places where they couldn’t buy a garage for $400K. I’m looking at it from a single person’s perspective so a couple with dual incomes would be a different story.
Wow all I have is a 52000/ year job and live with my parents, have one daughter and just paid 7000 to a divorce lawyer and have no savings. My ex husband got the house in the divorce. I must really be behind in saving. I’m 30 years old.
Drinking wine at home this nice Friday afternoon, as I work 4 hours on Friday and 9 hours the other 4. Came across your website and it seems like interesting, real world practical number crunching advice.
I’m 48 years old, married with two kids – 9 an 13. Wife works too. Combined annual family income is $200K. Zero debt and we buy everything in cash, although we use credit card for the gift points.
My assets are: $250K in 529 plan for kids, $650K home, $60K cash, $80K Roth, $210K tax free investments, $140K 401 plan, $200K 457 plan. Net worth is $690K excluding the 529 plan as that will pay for 8 years of college expenses in CA for the kids, and excluding the house as it does not give me returns.
My yearly savings and net worth total returns are estimated at $100K per year. I plan to retire at 62 latest. Will have pension of $90K annually. I estimate I will have net worth at least $2 million by 62.
How am I doing? Any advice?
What a great site, great niche. Nothing like this online. Well done. I am always trying to find out how I’m doing. I’m 34 years age. I got 245,000 in cash. I own one rental that I owe 379,000 that is worth 375,000. I’m renting at a loss of 500 a month based on me not paying any property tax for the first 5 years. Got a penalty on back tax that runs out next year of 315.00 a month. Once thats paid the rent i get will cover the mortage. Always wondering if I should bail or hang on. I rent with my girlfriend right now . Income bounces from year to year 80,000 grand to pre tax 280,000 ( small business owner) have no debt, own my car out right and have no money invested in any stocks, retirement. This year I will make 290,000 pre tax. Have little baby on the way. Any advice would be awesome. As I have no idea.
Hi James,
Nice to hear from you! Did you find my site on Google? Great job accumulating a nice chunk of cash. Is it possible for you and the GF to move into our rental instead? If not, that’s fine. I would try and hold on to the rental as long as possible, especially if it no longer bleeds cash. Things are getting better.
I would open up a SEP 401k or IRA to shelter some cash and built that tax-free retirement nut. You can potentially save and shelter up to 50K a year tax free. I’d also sign up with Personal Capital, a free wealth management tool that will help you track your net worth and help keep you on financial track. It’s a great way to stay on top of your finances.
Cheers,
Sam
Hi Sam,
I agree with others who have stated this is a great site – I’ve been reading PF blogs for about a year now and was looking for more in depth articles instead of the surface-level stuff that PF bloggers seem to duplicate over time. You have really unique articles in comparison and for that I’m glad I stumbled across Financial Samurai!
I, too, just wanted to share my personal net worth because I’ve been so interested in reading about others. Fortunately, my parents were able to cover 100% of my college expenses that weren’t covered by scholarship dollars. This was all a result of my father’s hard work in a lucrative career and my mother’s frugal management of our household. It is a gift that I vow to return to my future children one day. That being said, I have no debt, which I understand is uncommon at 23.
I have been working for two years as a communications/organizational change contractor at a large insurance corporation, grossing 45K per year. I currently have 6.8K in my 401K, 4.6K in a Roth IRA, and 5.4K in a high-yield savings account. It looks like my savings are matching up with your chart, however, I have flip flopped the pre-tax and post-tax savings goals. (The reason being that I’m saving up for a property down payment.) Regardless, I will have a net worth of 20K in July, a month shy of my 24th birthday. Keep in mind, this is without debt and after two years of working, so I don’t know if I can keep up with your chart goals next year without reducing my lifestyle or getting a promotion/pay increase (working on it though!)
Hi G$, welcome to my site. That’s great you graduated debt free. Don’t waste the golden opportunity to pursue your dreams without an anchor!
I’m glad you’re focusing on buying a property. I recommend you read the the following two articles:
https://www.financialsamurai.com/2013/01/04/the-real-estate-investors-mindset/
https://www.financialsamurai.com/2013/02/11/recommended-net-worth-allocation-mix-by-age-and-work-experience/
Good luck and hope to hear from you more on my site.
Best,
Sam
Like the articles on this site – including the opinionated stuff – while my gut feel doesn’t match your estimates, I don’t have the financial brain-muscle to argue :) I happened on this site because I was refinancing my 5/1 ARM to a 30-yr fixed and was not sure if I was making the right decision. While I may not live in this house for more than 10-12 yrs, I hope to keep it as a rental after I move out, hence the 30-yr fixed. Thought I’d add my data-point to the set.
My stats:
Age 38 : Pre-tax savings – 200K, Post-tax – 100K, Real estate equity – ~600K
Living in CA explains the above skew :) Though I’m a bit concerned about it, given our earthquakes !
Anyway, thanks for the article – was getting tired of ‘average numbers’ since they seemed quite unrealistic for me (living in place like CA Bay area – can’t rely on national averages for anything !)
Hi SP,
Welcome to my site! Hope you stay on and share your thoughts on future posts.
Your stats look pretty good to me. I recommend signing up with Personal Capital with that kind of money. It’s free and helps you keep track of everything in one place. I’d run your portfolios through their Investment tab which highlights how much in fees you probably had no idea you are paying. I ran mine through the 401k Fee Analyzer and found I was paying $1,700 a year! I signed up in 2012 and it has been awesome, and a relief in retirement as I go about doing my own stuff.
Don’t be concerned about earthquakes. Be concerned about annual storms our brothers face on the East Coast!
Best,
Sam
Great read….great discussion…keep up the good work…
Hi there, I read almost every single entry here! I am happy that many are doing so great here, and those that are just starting you guys have the right tools to get where you need to be in the coming decades.
Currently I have a lot of cash assets and not enough investments.
I am 29 years old now with a 789 credit score. No debt(always pay credit card in full every month). No car loans, no home loans.
Checking- $5,375.00
High yield Savings/CDs- $171,818
roth IRA- $8,133
Vanguard Brokerage account- $85,863
Total- $271,189
I also own a car, motorcycle, several high valued items. That if I sold I would get around 20k to 25k. But I do not account for these things since they are more depreciating assets and or can’t be liquidated quickly or instantly.
For me overall, I never started off making tons of money, I have no college degree. I made do with what I had and focused on saving and not trying to keep up with my peers. I did not start of with a lot of money from parents, at age 19 I had about 2000 dollars to my name and then joined the Army as a Enlisted soldier. I left the Army in 2011 and now I am currently working a contract overseas. Last year was my highest earning year in my life, about 160k after taxes. This year will be a less since I think I won’t be getting extra over time and bonuses. I expect still bring in about 130k to 140k.
The reason I have been able to save a lot is, I have always been very frugal. I do not buy things I don’t need. I keep my expenses extremely low. Currently I save most months around 90 percent or more of my income. Since I am overseas, my company provides the housing and 3 meals per day. The only thing I pay for things that I need personally, clothes, personal hygiene items, other food items that I prefer to eat and buy out of pocket for those things. When I was in the Army, only making around 14k my first year, most of my peers would go out every weekend and blow their entire pay checks on partying and alcohol. I always kept it low key and rather stay back or do things that wern’t to expensive or I enjoyed. Its all about you, your expenses and what you choose to do with it. I am also single so that helps. After 8 years in the Army I had about 90k saved up, most my peers always lived pay check to pay check. After coming back from a year in Iraq most soldiers would go out and buy that new truck they always wanted or something. I personally didn’t care for the flashy things and still don’t.
Last year I still took two nice vacations. Did a scuba diving trip. Spent at least 5k on each trip, stayed in nice hotels and ate good food on a exotic island. So when I want to do things I do them, but I am not wasteful, I pick and choose, if I got a good hobby that I like I’ll set aside some money for it. But sure I could be like peers who have condos in SF paying 4k or more on rent or mortgages, have a 1000 dollar payment on a expensive sports car and live the “high life” in a big city sure adds up. I just choose not too. I am happy with my 13 year honda accord for now:) knock on wood its never broke down on me.
Also I tend to take advantage of credit card offers for the points and airline miles. I have also never paid a dime in interest. I have gotten 2 iphones from points over the years, gift certificates for clothing stores, airline tickets. I love taking advantage of whats basically free money to me for things that I would buy anyway.
I would appreciate any advice. I really have a goal of about 3 million by the time I am 50 to 55. Sounds doable if I play my cards right. I am looking to open another roth or traditional IRA too. When it comes to investing I do not know much, I have my vanguard account, but its pretty much setup in target funds, index funds, mutual funds that sort of thing. I do not have the skills or knowledge to actively be managing it. So for now its just been on “auto pilot”.
Hi Mate,
You are doing great! $160K after taxes is a very handsome income and you saving 90% of your income is incredible. At 29, I’d like to see no more than 30% of your net worth in high yield savings/CDs, especially with your income.
In order to get to $3 million by 50-55, you need to run scenario analysis. With your assets and your mission, I’d sign up with Personal Capital and link up your accounts so you can get a holistic view of your net worth. Then I’d click the investment tab on the top right and play with the different return and savings scenarios to see how you’ll do. The program is free and easy to use.
Let me know how your assumptions look after you’ve run the scenarios.
Best,
Sam
I will definitely get started on that with Personal Capital. Thanks for the quick reply, I see that your very active on your blog replying to most posters.
The extra cash flow was a shock to me. I went from making 35k to 45k a year in the Army to mid 6 figures. I definitely need start investing more of my income into my investment accounts and other things.
I will continue to read all your other investment postings as well. I am still learning a lot, as for my Vanguard account, its been pretty much running on “auto pilot”. Been sticking to mostly index funds, mutual funds and a few stocks of my liking.
Thank you again!
I just found your site earlier today and my eyes are so sore from reading, I have not read an article I have not enjoyed. Most of my peeps are married with kids and are not on board with any freedom 45 plans so they don’t read PF blogs like I do. The conversations here are so informative. I’m glad your analysis is on the individual level and I’m also grateful you detailed your definition of an above average person. I am an “aap” and despite one costly divorce I am very happy to learn I’m on par with your net worth calculation for my age!
Our calculations/tax laws are slightly different here in Canada, however owing a condo in a big city like Toronto has good rental potential like SF. So thank you again Sam, your hard work here is appreciated!
Hello,
Great site and information. I appreciate all that have contributed. It has really got me thinking. I would appreciate some advice on my current situtation, and future goals.
I am 37 years old, and currently working as an expat overseas. I put myself through school using student loans, of which I have paid off. I do not have any debt right now, but also do not have any investments or real estate. I have worked hard to save around 600K, in a savings account. I regret not taking advantage of 401Ks and other investment opportunities over the years, but am hoping that it is not too late. It seems a waste that my money sits in a savings account, earning little to no interest.
What types of investments are avaialble for someone in my position, and what do you recommend? Maybe I need to hire someone to help me invest and diversify.
Anyway, great information and thanks for your comments.
Scott, $600K in a savings account is a great nut by 37! I would diversify into real estate and dividend paying stocks. Theoretically, your $600K invested in a diversified dividend portfolio could spit out $18,000-$22,000 a year in income. Most importantly, do everything to protect your financial nut! I’d sign up for a free account with Personal Capital in order to manage your money and see where it’s going.
Here are some other posts you might like:
https://www.financialsamurai.com/2013/02/11/recommended-net-worth-allocation-mix-by-age-and-work-experience/
https://www.financialsamurai.com/2013/01/28/the-proper-asset-allocation-of-stocks-and-bonds-by-age/
I do financial consulting btw if you would like a 1X1 session. Click the link to find out more.
Cheers,
Sam
I’m 38, Married, 2 young kids, and currently the only earner in the household. I earn about 170K in base salary and and an avg 18K bonus (this year will be 36K though – which is nice but not the norm). Net worth after this year (waiting on a land sale to close) should be in the 600K range – with about $275K in 401k accounts, 92K in stock options, 25K in an emergency fund, about 160K in land sale proceeds, 12K in brokerage accounts, and probably 40K in home equity (figuring in a 6% realtor fee if we were to sell). We are hoping to retire early at 60 or so on the family farm (no land cost). Question is how best to invest the 160K? Thinking about doubling the emergency fund and investing the rest. Perhaps a rental property?
Interesting site.
I agree with many people’s assessments that the equity in the home is hard to believe. Those with the bank of mom and dad are quite lucky. I go round and round with an individual I work with who tells me I am an idiot for investing in the Roth 401k (no matching) while he owns four properties, only one with a mortgage (his parents’ have a net worth in the 100’s of millions). Naturally, in the same field as me, only a few years ahead, he did not acquire these homes with our sub 100k/yr salary– he also spends 25k/yr just vacationing.
I personally have been working for 3 years (25), never had any student debt due to scholarships and make about 75k at the moment. Bought an entry-level luxury car about 2 years ago (foolish I know) so that’s a big ding on me (owe 25k on it at a sub-inflation interest rate). Currently, I have about 80k in 401k/IRAs (about 25k is tax deferred, the rest is Roth). I own a 100k property I rent making around 3000/yr, but have close to zero equity at the moment. Not sure I am doing great, but I maxed the 401k and will max the IRA by EOY— plan on doing it again as long as I can. I also have a 12k unsecured loan with a sub-inflation interest rate. So my net worth is only 43k (feeling a bit insecure now)
So back to original argument– am I missing these huge opportunities my well-born friend claims by dumping my money is tax-advantaged accounts? (We also both have pensions that will pay out about 60k/yr immediately after retirement (today’s dollars) which includes medical if we stick around for two decades or so.) At my current debt-to-income ratio I would never be approved for another mortgage at the moment, so I am not sure what I could do better with that 23k/yr than I already am.
Kudos to anyone who guess what we do.
Chad, the NASDAQ has gone up over 21% this year. I can guarantee your rich friends returns are no where near that, especially considering the 401k would be pretax money. Max your 401k, max your ROTH, trust me on this one.
Hi – for me – a scary site. I am not proud to say I am very different to the average poster here. I am 32 and spent the first 10 years after graduating with a degree in fine arts – then travelling and trying to be an artist whilst working part-time in a teaching job – extremely irresponsible – I know. Anyway, maybe in the last couple of months I have “woken up” to my situation. I will not make it professionally as an artist – I am now living in a country with no family whatsover, just holding down part-time casual employment teaching English as a second language – have $2000 in cash to my name and $30,000 in the equivalent (I think) of a 401k. I started to save 20%/month of an approx $40,000 salary just 2 months ago. I have a car which I bought in cash for $17,000 last year (another bad decision) and not much else. I am renting, sharing with one other which currently costs $775/month (26%) of current net salary. Just wondering if you have any advice for those completely out of the ballpark like me?
You lived your life on your own terms and had experiences no dollar amount can buy. Remember that things work out in the end so keep following your gut.
44, married with 2 kids. My wife and I have 800k in our Fidelity accounts, 400k in home equity,
and own some farmland in Illinois worth around $250k. No debts, house nearly paid off. So our net work is currently around $1.45 million. I feel good about where we are but still find myself worrying about whether we’ll have enough to retire on. Yearly income is around 100k.
I’m currently investing using the trendtimer.com software (which I recommend) and also subscribe to the Motley Fool stock advisor newsletter.
Is this income passive or from your career? I’m going to assume it’s not passive since 800k couldn’t reasonably generate that much based on a safe withdrawal rate. Is your house your only debt? At your age, I would look into “slicing up the pie” a little and move into bonds for a more predictable and reliable income stream. If the cost of living isn’t too bad where you live, I’d say you could comfortably try to take on less hours as it is right now.
I feel like you could definitely retire right now if you made some lifestyle changes and cut out the excess, but at any rate you are definitely well on your way and are almost there.
So, what percent of the US population would achieve these numbers by age 60?
I believe the majority of people will reach such ranges by age 60 if they continuously max out their pre-tax retirement accounts and diversify their savings while building alternative income streams.
Here is a good post on net worth target based on income to help you and others get some guidance from a different perspectice: https://www.financialsamurai.com/2013/08/22/how-much-should-my-net-worth-or-savings-be-based-on-income/
> I assume that the above average person buys a $250,000-$500,000 piece of property at 27.
Sam,
Why should one wait until 27 to purchase property? When you rent, you piss away your money with no exchange in equity. Especially out here in the bay area where rent is ridiculous, you’re pissing away money even faster by renting. The only thing I can think of is that there’s probably a bubble.
Because it takes time to save up for a downpayment?
Share your story. Thx
Turned 24 earlier this year and graduated nearly 2 years ago/in the work force for almost 2 full years. Just crossed the $100k net worth mark and it felt great (dipped below a bit last month from a little volatility, but just tipped over the scale again). The net worth scale is one I don’t mind having a very heavy number on!!
Around 70/30 in investments/cash. Right now I’m investing a little less than normal so I can save up some cash and hopefully have some left over if I can find a good investment property in the next year. It sure feels good to start feeling a bit more relaxed about my financial future, but I definitely have a long way to go. I can’t wait to have enough property so I don’t have to work any more or find some job to just keep me occupied without working like a dog.
Love the site, Sam. Glad to know there are others out there with similar goals and that I’m not the only one in my twenties who saves like a bear eats before winter.
Welcome Ravi! Looks like you got your head on straight so good work! Just takes time. Sam
Pretty good article. I like your assumptions here. There is one thing to consider that you have not addressed. And it’s a big one – TAXES!! You can not assign the same value to savings in an after tax account and a deferred tax account. One needs to consider the deferred tax liability that will be realized when distributions are taken from a 401k or similar plan. I personally assign a factor of 75% to my retirement savings when claculating my net worth.
Okay. I’m not on the above average track, which is perturbing, because I consider myself above average.
36 years old. 120K in 401K, 50K in Roth IRA, 77K in personal brokerage account. Negligible student loan debt at 2%. No other debt. Person net worth is therefore $247K.
Going through a year and a half of unemployment in 2009/2010 did not help. But that was mostly my fault. I was burnt out from being an office slave Now, I have an infant and a wife and a couple of step kids and that has been OUTRAGIOUSLY expensive.
Trust me, if your be all end all is accumulating assets, do not, I repeat, DO NOT get married and have kids. Especially the later. But it is true that I would not change anything. But still. If I were not a serious overachiever I would be poverty stricken at this point and eligible for Obamaphone, Obamabucks, Obamacare, Obamafood, Obamahouse, etc.
Those are pretty good asset figures. Why not just marry wealthier than? Problem solved!
Here’s a good post for finding a rich husband: https://www.financialsamurai.com/2013/09/11/how-to-get-a-rich-man-to-be-your-boyfriend-or-husband/
But I am a man, Samurai, and I already have a wife. See above. My point is that I would have an extra 100K over the past three years alone if I had not gotten married and had a baby. But I had to pay off wife’s post-divorce debts, pay her back due property taxes, pay for full time nanny for baby, buy a minivan, pay for the wedding and a nice ring, etc. Even the childbirth itself was 5K when it was all said and done- no gratis healthcare unless you fall into a demographic group I am not in. But her family is rich so it might all pay off financially speaking in 20 years. But I don’t count on any of that.
HI:
I seem to be the only person here over 65. I have solidly double your high end net worth for a 65 year old and I intend to continue working ’til 73. It’s the new reality and headed up. In addition, there is a pension. I always made very good money, but not stupendous amounts.
The secret is starting early and just keep on going. You need a good partner to ride the River of Life. Under 65 you should never miss a payment to your retirment plans and never take an early withdrawal or loan. Live for what makes you happy, not to compete with the neighbors. They probably have higher mortgages than you realize anyhow. The supposedly “richest” couple I knew lived high on the hog right up to their bankruptcy.
Spend what you can actually afford – whether it’s $1 or $1 million. Don’t lie to yourself about what you have and start saving for your kids as soon as they are born. They’re going to need help more than ever. You can’t put all your eggs in one basket and do the math to see that good steady returns on investment are the best road to reasonable comfort.
Money will not make you happy, but not having enough money to get through old age can really ruin your life and make you dependent. I’ve seen it and you don’t want it. So act young, live below your means and plan for the seemingly distant future. It’s here in a finger snap. Good Luck!
Based on my proprietary data, the average 30 year old who is “slightly above average” has a minimum net worth of 2.1 million dollars, and by 50 has a minimum net worth of 13.8 million. The “slightly above average” retiree at 65 should have, on my metrics, a minimum net worth of 28.7 million (each spouse of course if married couple).
I’d share the data but it is proprietary. Are my numbers too high? or are yours too conservative? Even with a 2% return a year, 10 million dollars brings in 200K, so for those saying it is hard to save I say “DO THE MATHS” – 200K a year i passive income is not chicken food!
have a blessed day y’all!
I know i am late, late, late in the game for commenting on this post… whatever. I am proud of my net worth and although I refuse to write specifically about it on my site, I will share ballpark figures here in the spirit of this discussion. I have been working since 2008 and had a starting salary of around $60K with $30K+ in student loan debt. Roughly five years later I have a net worth over $300K, and now make around $100K. I have lived in southern Connecticut, NYC, and Boston so all high expense areas. Strictly speaking, my net worth has climbed by over $330K in five years or around $66K per year. I am very proud of this, as at the current rate I am on track to being a millionaire in my mid-30s having never made significant income. I have still traveled, I compete nationally in snowboarding which is not an inexpensive sport, I own a 73-inch TV and a 2 year old car, and eat out once a week on average. When people state they can’t save significant amounts of money I am always baffled; when people judge my relatively frugal lifestyle I tell them their issue with it is their problem only–not mine. The benifits of my lifestyle and focused efforts on lifestyle design rather than career are bare facts, there is really no truely valid argument against them. I am shooting for a retirement (defined as not needing to work full time… I think I will always work less i lose my mind) at around my mid-30s. In all, I feel I am proof that it is possible to have a high net worth on a “modest” income (at least for my area).
Enjoyed the article and will definitely explore your site. I’d like to share my experience with your readers esp the younger guys and gals.
The thing is you can turn from a under achiever to an over achiever very quickly. In 1999 (age 39, 2 small kids) my total savings was 99K (I paid off my house by 2000). After that my net worth went parabolic. In spite of 2 major bear markets as on this date (1/2014, age 54) my liquid savings are $4.6 million. I am still working (good middle management job), but more out of interest than necessity. I credit my success to the principles of value investing. Its not so much how much you earn but how you save and invest.
I am 44. I never know how I am doing so this is great site. I have 260 in 401k, 190 in ira, 800 + equity in my home. 115 in money market saving. Make 150,000 a year and will have a pension worth 60% of my salary at age 55. How am I doing?
I am 33 years old. I’ve working at Samsung for 9yrs so far. My cash net worth is $6.6M (USD) and $245,000 in Euros since I travel a lot. I don’t have 401K but I do have a Swiss bank account. I usually keep $2.4 Million dollar in my checking account (Capital One) My annual salary is around$546,000 after taxes. My goal is to save at least $56M until I became age of 65. I still feel like I am making less money than most of people, cause Most of my colleague saved more than $35M (USD) not include their property just pure cash.
I’m curious what you do for a living?
hangs around and tell lies about how much money he makes via Starbucks wifi.
I’m the CFO of a 1.7 billion revenue consumer product company. He’s trolling. Not even our senior executives come close to that $. Margins are too low to afford that kinda money.
Hi guys, all of you are wrong, he is doing drug smuggling business :)
You are a douchebag for thinking you are making a lot less than most people! are you so self-centered to not look around the world and see how people struggle day to day just to have a decent meal on their table?!?
Your words will become your punishment… be humble you idiot!
Man, after reading all this I feel poor. I’m 31, and have been working for 8.5 years. My salary as an engineer was low for several years which finally drove me to get another job and move from my hometown. I earned $92k last year, which is pretty good for the area of the county I live in.
I have $30k in checking, $86k in 401k (I save 15% and get a company match of 4.5%), I have about $18k in home equity on my $158k house which is financed at 4%. I have three several year old vehicles. I do owe $3k on one but the interest rate is 1.99% and I owe $12k in student loans but the interest rate is 1.625%. Any time I can borrow at less than inflation I’m going to do it.
I recently got married after a very long engagement. My wife does not work and probably never will. I think this is a huge opportunity cost but health issues prohibit her from working.
Being married has changed my retirement strategy 180 degrees; before I was plowing all my money into tax deferred accounts, but now our marginal rate is 15% so I am going to switch contributions to my Roth 401k.
We don’t have big expectations – if I live in this house forever I don’t really care. If I never drive a new car, I don’t care. If in order to retire I have to sell this house and buy a decent mobile home out in the country, I don’t really care. What I am most worried about is what will happen with Medicare or how to pay for health insurance if I retire before 65. It’s worrisome so much that I am considering trying to get a Federal civil service job because they still offer retiree health benefits.
The Affordable Care Act is looking good for folks who make under 95K a year. Check out my post on subsidy amounts by income for the ACA. It’s a real gift for early retirees.
Very cool website. I’m thinking of checking out Personal Capital, just want to make sure its safe!
I’m in the above average pool. I own a business, eventually want to be able to live off passive income, don’t think I’m too far off, but right now not trying to really grow business much, more concerned with quality of life. Right now I’m single and 34. Cash of about $90,000. IRA and brokerage accounts of $115,000. Also have 3 investment properties, where I generate about $12,000 a year in passive income (while leaving plenty for repairs and other expenses). Have a primary residence with worth about $225,000, with a mortgage of $160,000. I have no CC or auto debt. Any ideas on how to get more passive income? I like real estate but looking for other options also.
Welcome to my website! Don’t forget to subscribe.
Personal Capital is safe. The CTO founded the encryption technology used by many of the big banks online now. After 1.5 years using the free Dashboard, I decided to take a part-time consulting job there for 3 months in 2014. I’ve met over 50 people there and talk to the CEO every week.
The other way for passive income is simply dividend stocks or munis. Just got to pick the ones appropriate for your risk tolerance.
Sam
Very nice website, I on above average on all the categories except the pre-tax 401k, me and my wife started late on 401k savings.
I’m 39 and my wife is 34 and our combined 401k is just over 450k (250 for me), our savings + investment (stocks) is 560k. Total net worth is 3.5M, plus 450k debt (properties). Our income on 2013 was just over 500k (still crunching final # for 2013 tax). Both of us have full time jobs with a online business.
My experience is setting a realistic short term goals and long term goals. And when if I met my ST goals within certain time period, I increased my next set of ST goals.
I use mint.com to monitor all my financial data and watch my budget and cash flow.
How is mint.com compared to Personal Capital?
My goal is to have net worth of 10MM at the age 50.
Mint is good for basic budgeting. Personal Capital is good for cash flow analysis and portfolio analysis (investing). I’d give Personal Capital a shot and at least run your investment portfolios through its free Investment Checkup feature.
A $10 million net worth would be great and a worthwhile goal. You can earn $300,000 a year from interest alone and live a pretty good life. Good luck to you!
I’ll definitely try out personal capital, I was tracking my finances with excel spreadsheet since 2007, and found mint last year. I bought quickbooks for my business but hated it.
29 yo, just stumbled on your website. This is awesome! I rarely find people to openly discuss finances with in my friends/co-workers.
Have about $90k in 401k (started maxing it out 3 years ago), 110k in cash + stocks (mostly cash) and 125k in home equity. So I would say I’m on track with a net worth of $325k. Got married 3 years ago and wife and I maintain separate finances. She has about 200k in cash & $70k in 401k (32yo) so nw of about 270k. I’m encouraging her to move more of her cash into inflation proof investments like index funds/ETFs but havent had much luck so far.
I’m so excited to discover this website that I think its blocking me for having too many comments under moderation ;)
Reading all the comments of all these rich people is really depressing. I am 28 years old and am in a transition phase of my life. I am bringing in about $2200/month in unemployment/rental income yet have a mortgage that is a couple hundred dollars shy of that. I’m hoping to find steady employment soon to get back on track and not fall into foreclosure. I started working at 23 and my net worth is currently around $180K. I have about $100K in retirement and investments, $20K in savings, and about $60K in home equity. I thought I was doing pretty well but some people my age already have 2-3 times this amount saved. That’s amazing. I initially was very bullish about the stock market in 2009; however, after being up about 30% in one year, I got very shy and pulled almost everything out. I did but a house but after a year it is only up about 5% from what I bought it for. Definitely an economically challenging time for me but I hope to find the light soon and start saving again. Good luck to everyone!
Why don’t networth calculations factor in value of a business?
I was going to ask the same thing. Almost all my net worth is tied to my business, which I know is a little too risky, but it is what it took to build a multi-million $ company with very little debt.
Now at 38, I am trying to diversify with real-estate and savings.
Diversify aggressively. Make it your mission this year. Bad things happen ALL THE TIME.
hi guys, glad i found this website.
i am like reading others experiences especially ones which show me where i am behind. i need to up my savings after putting 105k in an investment in 2012. though i have started maxing out my 401k recently i also am avid real-estate investor and feel like this is where my wealth will really stand out. i have an estimated 360k in equity over two properties which net about 40k in income. i think i can improve the performance to get that number up substantially. i am hoping to surpass my income with passive income in 5 yrs.
Sam, glad I found your site. I did a google search for “45 year old average net worth”. I get kind of depressed reading some of the posts above for someone my age (45). I only make 100K, sometimes a bit more with bonuses. I’m married with a kid and we only have one income now. I am on track only because I’ve inherited some money.
Retirement accounts $620K, Cash and stocks $259K, Real Estate $570K equity. That puts my net worth about $1.4M
I’ve been using SigFig and Mint, but am interested in Personal Capital. I will give that a try.
Thanks!
Hi J,
$1.4 million is nothing to scoff at at all! For someone 45, my chart is around $900,000 for the above average person’s net worth. How is it that you are depressed?
Sam
My main problem with this is the assumption of no student loan debt for the “above average” person. This seems more like the “had rich parents” person. I had a half tuition scholarship and worked part-time throughout college. However, my part-time wages only covered my housing and food – and that was a huge stretch that included additional money saved up over summers and in high school. Parents also contributed a lot towards college, but I graduated with around $35,000 in student loans. Add my car loan on top of that, and my net worth after graduating started out at a little below -40,000. I would guess that this is fairly normal.
Of course, there are other variables at play. Cost of living in the city where you attended college, for one thing, as well as whether or not you attended a state school or a private university. However, even for the above average person, I don’t think starting out at 0 net worth is average.
Very well written paper with solid math & statistics. Thanks for posting it. I will be sending this on to many others…
This is sort of a funny article in my eyes. There are so many variables. 1. How many 26, 27 year olds are maxing out their 401K’s when they have Student Loans, Rent or a mortgage to pay, and then factor in babies? None that I know of. I am 35 and am STILL unable to max my 401k.
Also, the chart on homeownership and equity is laughable. Has the author not seen the housing market decline? My house which I bought for 250k in 2007, now 7 years later it worth a Paltry 200k. And those numbers dont add up. I refinanced once and I still owe 240k.
I have a college degree, never been unemployed, and neither has my wife, who has 2 Masters Degrees. Low end on home equity is in the negatives. High end equity right now would maybe be your low end numbers. This is at least with what I see from myself, and my 35 year old friends. Unless you want to factor the one friend who is a 1%’er. Then yes, your assumptions would be right, except that at 35, he is worth $20 Million.
Maybe we just have different friends? I would say 80% of the 26-27 year olds I knew growing up and those I know today are maxing out their 401k.
I am also well aware of a very large nationwide housing recovery since 2012.
Where do you live and how much do you and your wife make?
My 401k has been maxed out since I got my first serious job at 19. I’m now 44 and I have $677k in my 401k.
I would not count home equity as part of net worth unless it is rental property that generates an income.
Fair opinion.
Please check out this post further on this topic on why counting home equity as a part of net worth is fine:
https://www.financialsamurai.com/why-its-ok-to-include-your-primary-residenc-in-your-net-worth-calculation/
I love places like this, and the comments that come in. People love to brag and spin tall tales in the comment sections. My fav might be the first guy (Jim?) This guy goes on about his millions, but writes like a 3rd grade dropout. LOL.
Interesting website. Good to hear where people stand.
Im 24, currently around 100k net worth all in cash besides mode of transportation (paid for)
no debts whatsoever, looking to put some money in an index fund. thinking vangaurd.
Any suggestions for investments to offset inflation?
This is a great site.
I’m a 50 year old, recent divorcee, who is a low wage earner to an ex who is a high wage earner.
Even after the divorce settlement, I am way behind, especially since I was out of the work force for almost 10 years; and am basically starting my career over.
At least this gives me a starting point to gauge my progress.
Thanks,
Why are you maxing out your 401(k)? It seems like quite a bit of money to put in a set plan designated by your company. Especially when you will be unable to use it until you retire. Wouldn’t it be better to contribute up to the matching maximum and put the rest , up to10% of salary, into a roth or traditional ira?
I’m 23 paid for college through federal loans and a moderate college fund. Still have student loans of about 20k but the rates are so low its not worth it to pay them off in full. Net worth is about 10k and I’ve been working almost a year. Half is in cash and half is in index funds and retirement accounts. Most of my money goes to rent living in a large city but there isn’t a way around that. Buying is actually more expensive than here once you consider interest, hoa fees, insurance, maintenance.
There are ways to access your 401k before retirement age penalty free if necessary. Look into rule 72(t) distributions. You can also avoid penalties if you retire at 55 (rule of 55). Both of these strategies involve strict restrictions. Consult your financial advisor.
Here is a statistic for you kids . . .
I would say 80-90% of you are LYING!! The author included.
Now if even half of these are true then it was CLEARLY a case of “mommy and daddy are rich and gave me everything.”
DON’T KEEP LYING TO YOURSELVES!!
I have multiple friends whose families have net worth in the millions and they have good jobs right out of college and aren’t even CLOSE to these numbers.
It seems like you just made this up to make yourself feel better. I would highly doubt if you are making that much you would even bother to write an article like this. . .
This is obvious. . .
You people are in reality, just trying to make yourselves feel better.
It’s true, really reality check yourselves and maybe you’ll see that living in a fantasy world is NOT the same as a basis in reality.
Trust me, and I am in the top end of your “average.”
BUT I HAD ZERO HELP FROM FAMILY ZERO!!!
NO ONE HERE CAN SAY THE SAME!!!
Thanks for your kind comment.
Can you share where your anger is coming from, even as you say “I am in the top end of your average”? Are you saying that it’s OK for you to be in the range, but not everyone else? If so, why do you think you are more special?
There’s a lot more money out there than people think. People are just practicing the Stealth Wealth Movement (link).
Sarcasm noted, thanks for trying to “act like the bigger person” by deflecting the negativity with a “positive” comment, textbook psychology.
I am just saying most of these posters are lying about their TRUE LIQUID net worth, home equity is not stable as we all have seen from the last decade and the same is true for stocks. But of course this is common knowledge for all of you “20s millionaires.”
ETFs, mutual funds, bonds and other supposedly “stable” investments are at an all time low return, and unless you have at least a cumulative 1 million in one of these type of accounts accounts, after taxes, you make little to no meaningful money. (Still better then nothing.)
I am just saying that if even half of these stories are true there was OBVIOUSLY A HELP FROM THE PARENTAL SIDE OF THEIR LIFE and I would guess that zero to no one came from “nothing.” Yet everyone of these “success” stories, no true logistics are mentioned, just random numbers.
If these stories are indeed accurate then your “net worth of the above average person” should read “the net worth of daddy and mommies money helped me.”
As I stated previously, all of my friends whose parents I would consider “well off,” aka 2+ million in worth still graduate with debt, even if it is just a little bit, and MOST of them immediately continue the lifestyle their parents success afforded them their entire lives, meaning your “goals” are pretty much unreachable unless you started out with a substantial nest egg right out of college and forgo having children until your 30s or later.
I was looking for a real article with some depth and strategy and instead I find a generic “shift your assets from A>B>C (early in life) to C>B>A (late in life).
This just feels like a jack off thread where people can come to sniff their own excrement and try and make others, who might actually be looking for some real guidance, feel bad.
Articles like these are pretty worthless, and I would have not been angered at all if I was not just looking for something you can learn from common sense.
Like I said, the fact that you still try and maintain an active posting thread in such a retarded article I would guess that your TRUE net worth isn’t even over 200k and your age is much older then you imply.
If I am wrong then go ahead and feel good about yourself, but I seriously doubt your current job writing “feel good about lying to yourself” threads pays the bills, let alone allowing you to build any kind of meaningful wealth.
Can you share with us where your anger is coming from? I’m sincerely curious as to how this post is making you so upset. Perhaps you’d like to share your story in a guest post (minus the cuss words).
If it makes you happy if I say what my true net worth isn’t even close to 200K, and I’m older, then that’s fine. But please, tell me where all the angst is coming from.
I think you’ll enjoy this post, “How To Build Passive Income For Financial Independence” (link)
You’ll also like this post, “How Does It Feel To Be Financially Independent?” (link)
I’d love to hear your perspective in a comment from each specific post.
Weird how this guy is in your net worth range, yet is so upset Sam. Must be some 20-something year old who is really insecure with his life.
James, and what’s wrong with parental help? You can’t fight reality. If you are destined to serve people who are wealthier than you, then just be comfortable with your situation in life.
I’m 37 years old and have a net worth of $2.8 million. My parents paid for my public school college. The rest, I made myself.
Hey, I am 34 and have a net worth of 8.2mm, not sure what makes you so skeptical of people on here. It’s nice to have a forum to share this information anonymously since it’s such a taboo subject in real life. Good luck and stay positive!
Thank you for the pointer about Personal Capital. It is a great site and app, too.
We did the fee analysis and were surprised at how much it came out to be. I think this single change could bring retirement in closer by one year. I had been lazy about tracking these fees, and that was an expensive mistake.
Hey Jim Morrison, (nice name by the way!)
Don’t be a hater! People read these blogs to learn not put people down! Perhaps maybe learning something will help you increase your net worth! Putting people down for achieving financial independence early is beyond stupid! Grow the hell up!
People are strange! (get it?)
@sarah
To your 401k question, if you include contribute anything to a retirement plan (just to get employee match) as you suggest, and make good money, you will be limited and usually not allowed to take any deductions for a traditional ira (no benefit) and be disallowed from contributing to a roth. Therefore your better off maxing your 401k if employee matches. Mine doesn’t, so I max out ira for wife and myself and invest myself.
These numbers are only possible with a far above average paying job beginning at age 22. And no student loans, car loans, or spousal debt.
I’m age 25 and just began working after finishing my masters degree in a feild that pays above average. My student loans are near the average and are all from undergrad since I earned a full scholarship for my graduate degree. I still owe some on a modest used car I bought out of need in graduate school. Through loans work and scholarships I paid about 80% of my education costs and my parents helped with the other 20%.
The numbers from age 22-30 make sense for someone who got their bachelors in petroleum engineering and makes 90k out of school.
I would say a good above average measure would be 15k or less in total debt (combined student and car loans), makes $60,000 a year starting out (mostly engineers; average BS starting salary in most feilds is 30-40,000, so 60k is very good). If this person is an above average saver they may reduce expenses to 70% of take home and save the other 30% about 15,000/yr for retirement funds and debt payment. In 5 years assuming some invesent returns and salary growth and they buy a $10,000 used car in this time, I think a networth of about $100,000 is to be expected.
It is from this lint I believe froth accells as there is 5 years of career specialization to leverage raise work compensation and now a substantial amount allowing for business startup capital or home and real estate investment.
Since I’ve been working the last 6 or so months I’ve about cut my negative networth in half but it’ll be about a year before I really have a stable positive networth. It may be even longer if you factor in getting married and shared student loan and vehicle debt, or that could possibly speed things up by sharing living costs.
I think the early wealth progression theorized in this article is too rapid even for above average (they are more like birth rights, having zero debt, low expenses, and a completed education and earning a high income by age 22… Very very rare), and the wealth growth in later years too slow but also more realistic.
I’ve set some aggressive goals for myself regarding wealth building and expect to at least double these figures God be willing.
Reading about others success gives me motivation to keep working hard to become financially independent. I just want to build enough wealth that I won’t be dependent on an employer or the government.
I agree with another poster some
of the success touted in these comments is hard to believe. I’m sure there are the rare successes out there, but they are indeed rare.
Home owning is not the investment it once was and people are a lot more transient than they once were so buying and selling a home every 5 years and the associated costs make renting more desirable, but home owning in the long run is still probably the better choice in most cases if one has the means.
Fortunatley, wealth building for the above average has become easier than it was a generation ago.
BM,
It’s great you’ve got a good attitude on your hands. I would say if one can start earning $50,000/year +/- $5,000 out of college, then one can achieve these figures with normal raises, promotions, and aggressive savings habits.
There’s more difficulty achieving these charts the first 10 years, then the rest of the years. With six months of work experience under your belt, you should look at these charts as a guideline. I think you will SURPRISE yourself at how much you can build.
Good luck! Sam
I got my first real job at age 22 and it only paid $32,000/yr. I don’t have an engineering or business degree, just a BA from a liberal arts college, so I was never going to start out with a huge salary. But that doesn’t mean that I didn’t excel at my job, get raises/promotions and eventually make over $100k/yr before I turned 30. I didn’t start a successful business like many others here, so I’m not a millionaire, but I still consider myself an above average saver and investor since I’m ahead of the charts above. To those who doubt Sam and other success stories, maybe you should reevaluate your own lives and choices instead of assuming everyone else is lying, exaggerating, born with money, etc.
Love it Emily! Great attitude and best to you!
“These numbers are only possible with a far above average paying job beginning at age 22. And no student loans, car loans, or spousal debt.”
There are lots of ways to make these numbers work, and lots of people who make them work. I graduated in 2006 with student loans, and bought a brand new car immediately (in hindsight not the wisest choice). I started out making $40k a year and with regular raises I hit the 6-figure salary mark just last month. My wife makes much less. We both make good salaries, but not “far above average”. However, our net worth is nearly double the upper end of the range for our age. How? By living fairly modestly (having a good sense of what does and doesn’t add value to our lives), spending well below our means, saving and investing constantly, including all sorts of unusual investments, and most importantly, giving generously out of a recognition that we have been blessed with abundance.
I call BS… on Jim
https://www.glassdoor.ca/Salary/Samsung-Engineering-Salaries-E318434.htm
And I will add, My wife is an Aerospace Engineer (P.Eng, 17+yrs) specializing in Propulsion Systems for spacecraft, now more to the Program Management of technical resources… I was an R&D Engineer (P.Eng 15+yrs) specializing in Quality / Reliability with Stanley Black & Decker… I’m just say’in but I know many who work throughout the world in many global industries in highly specialized industries, some of whom own their own companies… again I call BS. At 42/41 our NW is 1.4M, and we are pretty conservative with our conventional investments (self directed retirement funds, non-registered stock accounts and 2 owned properties (home and recreational). At 1.4M NW we are probably in the top 5-10% of households at our age… So Jim, if you feel it necessary to just type, many of us on these sites would rather you do it somewhere else…
To JamesM – chill man… My wife and I both were not privileged, but worked hard to achieve what we have achieved. Yes, some have a helping hand, and well, what’s wrong with that? we both wish we had… Unfortunately I can remember trying to balance my 3 part-time jobs with passing 1st year exams… That’s probably why it took me a couple of extra years to get through…
As to other commenters in this thread especially BM, Sam’s NW guidelines are pretty accurate for those I associate with, who have University degrees (I’m Canadian), or who own their own small businesses The key to financial success, live on less than you have coming in, and learn how to invest the rest. Every goal is achievable with a realistic plan, and the right education – Cheers.
Sammy My Boy — Your points #6 through #10 seem to all be grounded in having a positive mindset. What are your favorite books on this topic, if you have any?
Its nice to see how others are doing (if for no reason other than as additional reference points), some appear to be doing better/worse than I am. Some of the posts do not appear economically feasible, but maybe a little luck was a part of the equation.
My numbers appear relatively close to the above benchmark, income/net worth:
24: $59,000 / $32,488
25: $63,000 / $64,584
26: $72,219 / $89,830
27: $104,275 / $141,245
28: $140,166 / $185,969
29: $224,150 / $277,220
30: $265,731 / $447,443
31: $246,295 / $571,356
Projected Net Worth (assuming saving 50% of projected gross earnings, 1% interest on cash, 6% gains on investment portfolio and 2% appreciation of rental property that will be mortgage free in 2016):
35: $1,093,712
40: $1,977,062
45: $3,289,926
50: $4,751,967
The single greatest blessing in this long journey towards financial independence was my willingness to take a leap of faith and accept a job opportunity overseas (this accounts for the large jump in income when I was 29). I now work in a country with no income taxes, and after considering all the US tax deductions/credits I only pay US federal income taxes on amounts I earn over ~$160K. This has led to a situation where I can still save over 50% of my gross income, while not only living for the future (e.g. my wife and I take ~4 international trips a year now, we try not to spend too much on material things but find it sensible to ensure exposure to the many amazing things the world has to offer).
Nice projections, and glad you’re doing well. Where overseas are you?
I’m a consultant for Personal Capital and have been using their free software for two and a half years now. When I believe in a no-brainer, I’ll highlight it in relevant articles about investing, savings, and retirement. You’ve got to be proud of what you do.
Mint is great for budgeting. Personal Capital is focused on the mass affluent who have over $100K liquid to invest. PC has a good cash flow tool like Mint.com, but they’ve also got great risk and fees tools.
I currently live in Dubai, a place i would never have thought i would end up. But it’s a great hub (spend about 30% of the year traveling for work and leisure).
I think Personal Capital makes sense as an aggregator when investments are spread across various institutions, but i have close to 250K in various investment accounts that are all with Vanguard, and they have portfolio analytic tools that provide data like fee analysis and risk exposure. We use mint solely to monitor our expenses vs our budget (which when married is a huge factor in maintaining financial order).
I fit the “Above Average Person” definition but I tell you my equity, savings, and overall net worth are WAY WAY WAY below average. Because it’s negative. I managed to pay off my tiny student loan quickly but I started saving for retirement a bit late. But the biggest factor was that I bought my home right before the crash and now I’m $43k underwater :(
I keep pushing forward though and I hope that one day I can be on the low end of your above average estimates!
I am over high end for my age. Been maxing out since 22 in 401k cuz I get taxed a lot and do Roth IRA to diversify tax risk and cuz I can’t do trad Ira. No plans to buy a home. I am in the top 10 percent of earners. Came from middle class immigrant background. Full ride scholarship and I am a level 3 cfa candidate. Series 7 and 66. Now some education, home equity real returns is about 0 using shillers data that is over 100 yrs old. People in it made money due to the bubble that started in 90s and a ton of leverage. Equity real returns is about 7 percent using same data or 10 percent nominally. Now I am juss surprised that the people who have money under 40 keep so much in cash.Having said that the economic cycle is prolly in the back end and I would not lever up from your allocation. But the idea that you successful people kept so much cash with no liquidity expectations is retarded to me. I suggest getting an advisor to tell you what to do cuz frankly you may be rich but you have no idea what you are doing. Lastly, don’t time the market. No one can. I saw people up top who ditched the market completely because of a 30 percent gain. Right mind set, you derisk when it’s going up, but still retarded, you never leave the market altogether. Having said that great site.
If you can survive on Wall Street for 10 years, you will have it made, even in today’s somewhat compressed compensation environment. I did 13 years and got out to work on my online media business full time. Survive and you will be rewarded!
Hmm, I though I was doing extremely well! Maybe I am..
Also, I am guessing that most people ( who make less) feel afraid to comment after each person is making 100k or 500k a year.
My wife and I have a business that is growing each year.
Equity on the house is probably close to $160k
cash on hand $80+
cash on hand in business accounts $50k
Merchandise on hand (business) : about 120k that can easily turn into cash
I wouldn’t call the business actual money since it has to be sold first… but I probably have more than 500k there… but without counting business value.
then total NW should be around $410k
We are 26 and 25 yr old. I don’t know anyone my age making more than 100k a year … that’s why I think ( smaller city) we are doing really well in our area.
We probably start making $500k+ a year on 2015 if business keeps growing.
Right now, I know that we can easily get to 2-3 million NW… But, when I get to 35 I want to slow down.. I want to buy two rental properties this year, My idea is to be a landlord and not have a business at all ( to stressful we work 80 hrs a week easily, and the times we work 20 hrs, I look like teller marketer getting calls from employees 10 hr a day.. )
Goal: have 20 houses paid off… maybe when I get to 35-40 yr old. ( so is not much when you think about it, it be around 2.5 million dollars invested)
Your figures do look good. And if you stay on your path, there’s no doubt you’ll gain financial independence before 50.
Everything is relative in personal finance after all. Good luck!
Great website. Thank you.
Have been a single mom w/ no financial support from ex for 12 yrs- have a 14 yr old. (Lost half my 401k to him and got half of zero in return so basically had to start over.)
My current stats:
Age 52
Earn: $50,000. yr
Save 21% to 401k and Roth plus 9.9% company match (balance $235,000)
$30,000 in Savings and Checking acct.
Home value: $325,000. – owe $84,000.
Am I doing enough? Not sure what else I can do, I think I am already doing my best. Any thoughts? Thx.
Hi Margaret,
Given your circumstances, I think you are doing GREAT! Keep up the good work. Excellent home equity, good savings rates. I would try inching up your savings percentage 1% at a time until it starts to hurt. The pain will go away eventually, and you can try saving more.
Best to you!
Sam
Thanks Sam,
I try to be a mom, first and foremost. I struggle w/ the balance of live for today, but save for tomorrow. (I am a workaholic)
The 9.9% match is brand new only after my employer froze our pensions 2 yrs ago. Everything I have, I’ve earned the hard way.
We did just get a one dollar an hour raise so I did raise the 401k 1% to the current 21%. Sometimes I think I am working just to fund my retirement so know what you mean about the pain, but I’ve done it.
I do try to take a vacation every year to show my son the world-my reward for being a penny pinching, frugal single mom.
My mortgage interest rate is 2.75% so happy about that.
Thanks again for your positive words! :)
Margaret
you are managing your expenses and savings in a very smart and reasonable way. Inspiring.
I think you net-worth is on track to exceed $1m before you are in your mid-60s.
For your income, what is the best-case, worst-case, and most-likely over the next 15 years?
Hi Thomas,
Thank you for your encouraging words!
Was out 4 mos last year due to work related injury and surgery so only earned $43,000. (plus some tax free work comp wages) Really missed out on the employer match and my own contribution during this time.
This year on track for around $60,000.- if I keep up all my overtime.
Not much room for raises, a percent here and there but I am ‘topped’ out.
I have 26 years seniority so ‘safe’ as can be in today’s environment.
Worst: Taking another pay cut as I have done twice in 12 years.
Best: Getting some of it back.
Most likely: Pretty much the same as I’ve been earning…
Thank you again. Good to see I’m doing ok.
Hi Margaret,
Ok, back to your original question – about ideas on what more could be done.
From your summary, about half of your net worth is in your home’s equity. Homes can be emotional, so I understand if this idea won’t fly, but I’ll put it out there for you to consider.
If you were to sell your house, and buy a place for around $190k cash, you would be debt-free and double your liquid cash savings. You could then save even more at work, and you wouldn’t have mortgage payments.
I am thinking along the same lines, since we also have a lot of net worth locked up in our house. In a few years, we will also consider selling and buying something for cash.
Keep up the great work.
Thanks for reply Thomas,
Sorry out of town working. Do not have laptop, smartphone, Ipad, Ipod, etc..
I kept the home after my divorce for a stable home environment for my son-rented out 2 rooms to cover 1st and 2nd mortgages and get out of divorce debt. Ex has moved 5 times.
Just looked up the internet value (hmmm?) and says my home is $405,000. I live in CA so homes expensive and condo’s almost as much so not sure about down sizing. Emotional attachment yes but something to think about.
I’ve rented a room out for over 10 yrs, same man that I forget about that income but it does help. His rent has paid for my vacations, home improvements and car payments over the years. I do give up privacy though.
I asked my original question about doing enough as I always feel I am behind the ‘8 ball’ in trying to catch up after my divorce and what I lost- and now being 13 yrs from retirement. I think I will have to work at least to that age to accomplish my retirement goals.
You are on track to be a millionaire before 60. I think you are managing your finances well, and you are smart to seek opinions and ideas for improvement.
I would continue to reduce debt and build savings.
Like Sam said in this post, look into your annual fees for your funds. Ours were high, for funds that were not even outperforming the S&P500.
mad respect. you are basically in same position as my mom so here are a few tips. read your info and your home equity balance is good, really good cash reserves (maybe a lil too much), but your retirement is a bit low @235. Based on this, you shouldnt even contribute to anything roth related. You are most likely better off pre tax 401k investments and prolly want to focus on that until it reaches a million since you are prolly in the 15% to 25% marginal tax rate. At 21% contribution of salary thats ~12k/year. Assuming you are all in equity now, you’ll prolly hit millionare status at 65. Bottom line ditch the roth.
Another question is what type of mortgage is this. 30-year fixed, 15-year fixed, or is this a 5/1 ARM. At that balance, and at those rates, I would assume you are in an ARM, if so, move it to fixed. These are prolly the lowest rates we will see in decades to come. having anything adjustable is silly, unless you plan on selling your house in the next 3 to 5 years. So bottom line get a 30-year fixed mortgage at the same balance if you want to be conservative.
Now here is an optional portion. If I were you, with a steady job with seniority privelege, i’d classify you in the safe zone in terms of having a job in a market downturn which means you can take some risk, now add that you have financial sophistication and are willing to take risk. How to go about it? I’d monetize the house through a refinance, take that money and invest it in the market. You get a tax deductible plus you get the return on the market. You dont have to do this though, you are fine like that especially @2.75 interest rates.
Thanks Wallstreet25 for the reply!
My 2.75% is fixed for a 15 yr mortgage- have about 12-13 yrs left on that. (I did a no fee re-fi a couple years ago.)
Did look at my 401k- have 9% in 401k and 12% in Roth. I am in the 15% tax bracket w/ all my deductions.
I do realize my increased Roth is adding to my gross and possible move TO a higher tax bracket.
Are you telling me to contribute only to 401k, not any to Roth because of my tax bracket?
I was told to slowly start converting my 401k contribution to Roth the older and closer I get to retirement which I started doing hence the now 9/12 split vs. the 15/6 I had before. (Sorry if I ask a dumb question.)Thanks.
1st of lucky you. that mortgage you got 2 yrs ago was prolly 2012 when rates hit their all time low. I’d keep the mortgage.
2nd, If your marginal tax rate is 15%, you can choose either. But that’s good that you notice that your bracket increases when you contribute to a roth vs trad. Bottomline, avoid the 25% tax bracket by increasing trad contributions as needed.
As a general rule of thumb, you put money into roth when you are at a low marginal tax rate, or if you have a large tax deferred account (a 401k) already. But low marginal tax rates take priority.
personally i would never use a roth. i like to offset my income. i prefer to pay taxes later. I also prefer to share the risk with the taxing authority. Lastly, its pretty easy to keep investment taxes to a minimum even in a taxable acct. So a roth juss does not do it for me. But i see why others see the benefits.
Btw, I’m in the processing of getting a hellish mortgage now and I got 2.5% for a 5/1 ARM jumbo. Spreads have narrowed as competition has heated up.
https://www.financialsamurai.com/why-is-it-so-hard-to-get-a-mortgage-a-loan-officers-perspective/
Good article Sam!
My original mortgage was adjustable and about 5-7% w/ a cap of 11%, but oh so up and down and stressed me for 10 years. I no fee re-fied to 3.25%, twice bought down the margin (for 2 x $500.) to get me where I am today. Very happy now!
My ex is paying almost 2.5 times my mortgage (w/ insur and escrow). He never bought w/ all the money I had to give him. Not sure where all the money went, but he has continued to rent (a very nice house in a pretty nice neighborhood) cuz he cannot come up w/ the 20% down payment so understand what you meant in the above article link.
Best of luck to you!!!
Good luck w/
Hi Wallstreet25!
You all really make me think (a good thing..)
I went back and looked at my 401k account. $200,000. in Traditional, and $30,000. in Roth plus $6,000. from company match and bonuses. (Have another $8,000. in another acct) I did not realize this was my split. I did start Roth when it was first offered though.
As far as my taxable amount and looking at the 2014 tax table. I am well under the $49,400. My taxable was $33,000. in 2012 and $25,000. in 2013 due to my work comp injury and time off work. So far year to date I have $24,000. taxable income so think I am ok still w/ all my deductions.
This was a big reminder to keep an eye on my 15% tax bracket.
I ‘should’ be receiving during retirement (at current rate and working to (uugh) 65) about the same income I am earning now.
Thanks for keeping me on my toes!!
This is a great site! I came across a few articles in the past couple of months when I was doing research on investment properties, personal finance, etc.
I am 28 years old and have been working full-time for 6 years (salary range $70-105k) and worked part-time throughout high school and college. I lived at home for two years after college to pay off student loans (only had $15k in student loans) and saved over 50% after taxes. I did inherit about $30k in my early 20s which I saved for my first investment property. I currently own a couple of investment properties. My numbers are in the above average net worth:
Category Amount
401k $54,233.00
Cash/Stocks $94,426.50
Property Equity $151,610.00
Total $300,269.50
I didn’t max out my 401k because I’m always saving for down payment for investment properties. I’m considering purchasing another investment property but have to come up with 25% down payment for an investment property mortgage. I don’t want to sell my stocks and always keep at least 6 months of living expenses in cash. Do you think it makes sense to take out a loan against my 401k for an investment property?
Very impressive, YY. You are doing so well for someone so young.
I’m no expert, and have made plenty of financial mistakes – so please take this as an opinion and perspective to consider: Only borrow against the 401k for an absolute emergency.
I think it’s OK to slow down a bit… first max your retirement savings, eliminate all debt, and then save enough to buy more properties with full cash offers. You seem to be very good at real estate.
Hi Sam,
One thing to note about 401(k) contributions…..if one is considered “above average” then it also stands to reason that same person may be treated as a Highly Compensated Employee (HCE), in which case you may not be permitted to make the maximum $17,500 401(k) contribution. I find myself in this situation. Would you suggest contributing more to after-tax accounts to make up for the shortfall?
I am 32, my wife is 28 and we have around $128k in my 401(k), $45k in wife’s solo 401(k), $22k in SEP/back door Roth, $85k in taxable accts. and around $150k in cash equiv. (we are making a down payment on our first home soon). Our vehicles and her wedding ring are valued at $30k for a total net worth around $460k.
Seems we’re on track now but our income fluctuates substantially year to year and we are expecting our first child in 1 month!!
Great table, but slightly misleading title.
“Above average” implies anything above the mean or median net worth for the age bracket.
I’m willing to bet the lower range is the top 10% for the age group and the upper range is the top 1%.
Why? Aside from certain engineering fields, ibd + trading, and high end consulting, very few jobs make more than 70k pre tax after college.
Add on to that the debt load upon graduation. I graduated from a “need blind” school with 80% of tuition + board covered by need based financial aid since my parents are “poor” at 70k annual income and still ended up with 20k in debt after graduation (net 15k of summer internship money and 30k from parents). Not many people am as lucky as I was with finaid or being an only child with supportive parents.
In particular the first 8 years if your chart are very heavily tilted towards the top earners. After Bschool or med school I could see a lot more people definitely catching up to the above average definition. But even that debt for tuition isn’t built in at all. Even the would be entrepreneurs arnt striking it rich in the first 4 years.
To those who’ve commented here: congrats! Virtually everyone’s way ahead of the curve and can probably get a college building named after then by the time they die.
Even if your slightly below the curve your probably way above the actual average.
FanacialS,
I dont really want to retire anyways ( but I want to feel retired when I am 35 yr old) by then I want to have properties paid off that paid for everything in case I dont the same income now.
What is odd is when people comment about ‘being on track’ and then stating they have 1.4 million dollars in net worth. My question is, on track for what, you should already be retired!
Depends on where you live and what you count in your net worth.
https://www.financialsamurai.com/why-its-ok-to-include-your-primary-residenc-in-your-net-worth-calculation/
Good to see some numbers to compare my net worth with. I am 36 yrs old, have an engineering degree from a top school. I am married, but my wife is still in school and hasn’t started working yet. My numbers are as follows:
House equity: $400K-450K
Various retirement accounts(IRAs, 401Ks, etc.): 385K
Regular investment: 105K
Savings bonds: 25K
Savings account: 77K
Jewelry, gold, etc.: 25K
Looks like I just crossed my first million in last few months…hopefully, it’ll grow much faster once my wife also starts working.
Just so you understand if you have met these numbers you are an absolute financial superstar. I mean you are really doing great. Lightyears ahead of most of the country.
Let’s look at the 2010 data – the median household retirement account balance for workers aged 55 to 64 was $12,000. A third of households had no retirement savings at all! (“401Ks are a disaster” USA Today 3 April 2013.) 75% of Americans nearing retirement age had less than $30,000 in their retirement accounts, which Forbes called “the greatest retirement crisis in American history.
If you are 30 and you have $250K you are seriously crushing it. I just say this because if you are not at these levels don’t beat yourself up. I got crushed by the stock market collapse, and then again by the real estate collapse and then had to take care of a sick family member. These numbers are a great goal but unless you have your own successful business or a six-figure job that you planning on committing 30 years to I’m afraid it’s not going to happen.
Looking for a little guidance and insight from fellow posters on FS, as I have been impressed by the profound insight that has been offered. I am a recently turned 36 y/o married male, with a 220,000 fluctuating income in a sales positions. I have been fortunate that I have been in a relatively high income sales capacity since 26, however, the type of sales I am involved in is more of young man’s game than the middle age that looms in front of me.
My family’s net worth is as follows:
-Home is worth approx. $386,000- which we have paid off in full.
-Retirement is approx. $321,000-I max out every year, but do not have a company match ( yeah working for a start-up)
-Index Funds-$17,500 via vanguard
-529 plan: 22,000 for our 18 month old, and we have #2 due early August.
-Cash: 161,000 in various accounts due to real estate LLC’s
-Real Estate LLC #1: 2 properties combined value 290,000 that generate 2350.00 a month, I am a member of the LLC with 50% share.
-Real Estate LLC #2: 2 propreties combined value $280,000 and we owe $43,000. I am a member of a LLC, the properties generate 1925.00 a month. We have approx. 800.00 a month in combined mortgages.
Through in a few ancillary items ( an e-trade account, wifes wedding ring, and 2 mid 2000 family sedans), and our total net worth is $1.2 million (depending on the markets, etc).
My game plan was to buy 1-2 100,000 properties a year that would generate at least $1000,00 a month income. However, the property market in the Denver metro has gone nuts, and has most likely made this a pipe dream.
I like my job, but recognize that it is:
1. Volatile-you are only as good as your last quarter.
2. to some degree I have hit a ceiling.
3. As one would expect for the income, it monopolizes my time. With an expanding family, I would like to “live life a little more.”
I am highly disciplined, and have been able to follow a budget the last few years. As you can tell, I am debt adverse. What would be some strategies other readers of Financial Samurai might employ at this point to increase net worth and also create cash producing assets for the elusive passive income we all crave?
Thoughts, as the real estate boom, has forced me to look for other avenues?
You are kind of rich, so my advice to you is to get an advisor. why? easy, because if you dont hire ppl like my boss, then why would my boss hire people like me. Then if I dont get paid, then i dont get educated. Additionally, you seem pretty sophisticated with your llcs. go to barron’s find a legit one you like in the top bsds of the state. Most of them only go for ppl with a mill though meaning you are going to have to liquidate your stuff to even be considered, but juss sell them on your baller salary. Make sure their fees are reasonable at 1%. Anything more, i’d look elsewhere, they are likely charging you higher because they think your account is too small for them in which case find another. Having said that here is some short advice about real estate macro wise:
real estate prices are more stable especially ones that are not publicly traded like yours. You are also renting out these assets, so it is not like your cash flow is negative. If I were you, and I had your expertise in real estate, I would stick to it. Its a more stable game (excluding the last decade, this shit was just bubblicious). You seem to be a worrier who likes to make active decisions. So i advice you to continue what you are doing. Your Real estate is pretty concentrated though, which is a big concern. I like the idea of having multiple 100k real estate assets, dats kind of diversified if you have a mill. Additionally you could buy reits, but they are almost equivalent in volatility to equity markets. I’m going to guess your sales job is correlated to equity markets, so your diversification to real assets is a huge positive, since everyone needs shelter. You are right to have concern though as I am for sure that real estate is going back to its regular crap 3% nominal returns in no time. I dont care how fast the economy picks up, rates will rise with it, and it will hold house prices from goin up, but I doubt it will go down as well since it is a renting asset that you can raise rents from. So as people become richer via higher wages, you can juss collect it through higher rent. Lastly these renters are cash starved and their credit may not close that deal. At the same time, interest rates will rise making their payments higher while banks gobble up their higher income. Meaning: they aint going to buy a home anytime soon meaning your rent income is safe.
In any case, i have no idea about denver specifically, but if you are concerned, then you need to start divesting slowly. Try to get get good prices you dont have to get out right away. Federal reserve will not notch them rates until next year (this is consensus, i think), additionally they are only targeting short term rates, not long term rates, we could end up with a flatter yield curve, meaning short term rates equal long term rates. If you worry this much about the real estate market, then you are not going to be happy with equity markets. That being said equity markets have the highest rate of return at ~10%. Not gonna get a cap rate like that. Anyways good luck! I personally dont think I can hit your number at your age so mad props.
I consider myself above average. I started out of college with a good IT consulting job making $42k in 1998. Consistently have made 10% per year raises until now. I took your numbers and one would have to save 26% of pre-tax income and make 7% yearly on that to make it work. Thats fairly aggresive I would think. I would put myself in the top 20% of my peers from an income standpoint based on what I know. Perhaps “Above Average” isnt the right description. I would call your numbers probably a top 10% or top 5% scenario.
Sure, that’s a reasonable proposal. How much do you make now, and do you think you have been saving the maximum you could? If not, would your numbers change?
I’m 42 years old and feel pretty good about myself until I read this site. I have a 100k year job (plus 20k or so in bonuses) but am a bit behind on the 401k balance. A lot of that has to do with aggressively paying on my house because it makes me feel good to have a a mortgage free house.
My wife who isn’t a saver makes considerably less: around 40k.
Our house is easily worth 300k with no mortgage.
We just paid off a condo worth around 130k (for a college residence–I intend to try to rent it out afterwards, or sell it).
350k in 401k (I’ve recently bumped up my contributions to start maxing it out)
Around 68K in Roth IRAs
Around 80k in 529 plans
Around 50k in an e-trade type of after tax account–this is where I want to start aggressively building up passive income investments, with dividend stocks and REITS.
Around 30k in cash savings.
Both of our jobs currently have defined benefit pension plans in place, both of which we are vested in–I don’t put a dollar figure on those but figure those will provide 3k to 4k in retirement income when we retire, depending upon when we retire and then when we choose to draw it.
I generally don’t count 529 plans in my net worth. Without those Quicken is telling me I’m right at 950k . . so approaching one million. I’ve probably been too conservative and skittish when it comes to 401k savings rates and investment choices.
Which ought to be pretty good. But this site makes me feel poor.
The upshot: I have no mortgage so maybe I can double down on the retirement savings.
What do you think?
I don’t think you should feel “poor” :-)
You deserve credit for how well you’ve done, and you seem to have potential to save even more. When I read many of these posts, I feel motivated and inspired to see how I can improve.
Be inspired.
This article is bs about saving $17,500 a year into 401k for people who just got out of college.
An average American makes $45k a year.
If you were to put $17.5k into the 401k plan, that leaves you $27.5k before tax. After tax, the take home is $21k thats $1,700 a month.
How could you survive on a $1,700 a month with the most basic requirements below?
Rent: $800
Food: $300
Gas: $150
Phone: $50
Internet: $50
Student loan: $150
Car insurance: $100
Utilities: $150
Entertainment: $200
Car maintenance: $100
Household items such as toilet paper, toothpaste, shampoo, clothing, …$200
You also need to get a life by having friends, families, vacations, dating,…
This article is too bs
The title says Above Average Americans. Why are you using the average?
And yes, I can live off $1,700 in a non major metro area in the US.
Great article. I’m 40 and my husband is 44. He lost his job one year ago and started his own business – which he loves – but now makes about half of his former salary.
Our home is valued at $350,000. Neighbors (comparable) just sold theirs for $372,000. We owe $70,000 and plan to pay off entirely within two years. I’d like to sell – move into a doublewide – and get my cash out, but the husband and three kids love it here..
Other than that we drive a 10 year old mini-van and 10 year old truck (both paid for). No credit card/student loan debt or any other nonsense like that.
So, according to this information I surpass the “average” Joe my age with $280,000 home equity.
However, Retirement accounts are only at $330,000
Cash, DRiPs, savings bonds, 529 plans, and Brokerage accounts total $120,000
Grand total of $730,000 net worth.
Even though my husband lost his job and employer matching 401k – we both contribute the max to our Roth IRA’s ($5500 each). I also have a pension, and contribute an additional $9600 annually to a 403b.
I can’t believe some of the people wanting 10million or more to be happy! I don’t want to work past 50 or 55. My husband is already semi-retired and loving it. I guess the question for each of us is when is “enough” enough? With no mortgage, I can live comfortably on about $30,000 a year – but that’s me – low maintenance and frugal.
Gotta love low maintenance and frugal people. I experienced two years of early retirement and I must say, you need much less than you think to be happy in retirement.
Save on!
I am 59 YO with 896K in 401K/IRA and 65K in pensions. I have 516K equity in my move that is worth 600K. I figure my net worth is $1.3M- how does this line up with the above average?
I’m 27 years old, work in the financial services industry making about $70K a year. I have $120K in home equity, $37K in stocks, $27K in 401K (contributing 10% with 6% match), $4K in cash just for expenses. Only debt right now is a car that I’m paying down, about $14K. I’m frugal and don’t need material things at all to be happy, just give me my kindle with my books and I’m set. Any suggestions? I think I just need to find a way to make more money! Let the applications begin.
I see a lot of people doubt you can make a decent amount of money and be relatively young. I am not from a wealthy family and yet I made it just fine. At 34 I am pretty well off and that was due to a lot of HARD work. If you really want something you will find a way to get there. Take it from this single parent who became financially independent in five years without a dime of child support. I still do work because an opportunity presented itself that I just had to take, it was directly in line with what I wanted to do with my life and I thoroughly enjoy what I do. Save, invest (in the market and in yourself) and develop some kind of discipline.
Net worth 7 figures :)
Wow that’s awesome good for you!
My family is below average based on these calculations, but by lifestyle choice (even though we meet the ten definition points listed above). My husband, at 35, works on average 70-80 hours a week at a non-profit (yearly salary of $37k) and I am a stay-at-home mom to 2 young children (formerly worked as an engineer, with a master’s degree, which is how we managed to save as much as we have). So, I think we have a difference in priorities compared to many of the individuals on this board. We manage to max out our Roths each year, as well as put enough into my husband’s 403B to max out the employer match. So, we are not close to the numbers presented here, but I think we do pretty well all things considered. We have just over $200k in net worth, mostly in mutual funds. We’re also on track to retire by age 65, maintaining our current lifestyle. I say that only to encourage others on the board who may feel “behind”. I think it’s all relative…we choose to live with less, and even though we live frugally and save all that we can, we are still nowhere near the recommended numbers here. Regardless, I was wondering if home equity is supposed to be included in one’s net worth calculation, as shown above. We were hit hard by the housing market crash, and even though we supposedly had over $100k of equity in our home (previously valued over $200k, mortgage of $100k), we still had to bring $20k to the table when we sold several years after the crash…in any case, I have never included our home equity when calculating our net worth. What are your thoughts on this?
Home equity can be calculated into your net worth. It’s the same thing as your mutual funds, if the market crashes, your 200k might be worth half of it or even less.
Yes, but it’s not liquid like a mutual fund. I never really “see” that money. Even if I sell it, I would have to start paying for rent somewhere else, so I wouldn’t actually realize that gain. When I retire, my home equity isn’t something that I can spend to live off of. Unless, of course, I am planning on selling to downsize, then I would be able to pocket the difference between the sales price of the existing home and the new home purchase price.
I would count investment properties as assets in a net worth calculation, because they are generating income, and I could sell them and realize a cash gain. But if I sell my primary residence, that money will then go to rent or to another house purchase. I can’t really “use” that money for retirement.
Pretty good site. I, too am, a bit skeptical about some of the numbers people quote here, but I am pretty sure that a lot of folks here were more disciplined or more lucky than me.
For me, all these posts from people who have higher net worth than mine (true or not) just inspires me to set more aggressive goals for myself. Would love to get thoughts on how to do better.
I am 39, married, no kids (planning to have one soon) and an immigrant. Engg. degree + MBA – no parent help. I have had various salary ranges in the US:
– $50K for first 5 yrs
– $75K for next 4 yrs
– $100K for next 3 yrs
– $160K currently for ~3 yrs (new employer is a Bank)
Here is the breakdown of my Net Worth ~480K, which I believe is low for someone my age and current salary:
* Cash: $40K
* Stocks: $95K (pre-tax)
* 401K: $200K (started maximizing only 3 years ago, contributed ~6% before that. New employer match is 7.5%)
* HEquity:$90K
* Other Home: $70K
Minus Debt: Car loan of $15K
Note that I paid off ~$130K in student loan debts thanks to an expensive Ivy League MBA, which is almost break-even from a salary jump/investment viewpoint.
My wife works and makes ~$150K, and has ~$150K in 401K but still has ~$60K in student loan debts and is mostly using her excess income to aggressively pay that down. We both do love to travel (1-2 international, 1-2 domestic trips /yr), have nice cars, eat out quite often – and are not likely to change our lifestyle drastically. I do maintain my budget fairly reasonably. My wife, not so much, and we keep separate accounts for the most part.
So this is as genuine of a post as it gets, for all the skeptics who want to compare and benchmark for what it’s worth.
Welcome to my site Ab, and thanks for sharing!
Could you share some of the reasons why you didn’t start maxing out your 401k before the age of 36 given you were making at least $75,000?
Wow, I must be your ‘average’ Guy ;)
Started work at 23, bought a house at 26.. the only difference is the tax-free retirement savings accounts and how they work here in the UK.
Total NW of just over $70k after 4 years of work so I’m a little behind on the target chart but not miles off.
FS,
TGIF!
nice post- becoming a fan. and kudos to you reaching financial independence earlier than most.
you’ve managed to create an atmosphere where its common to disclose some financial info- okay, i’ll play the game.
here are some of our long-term goals:
Comfy Retirement – My wife and I are maximizing our 401k. We plan to do so for 25 years earning 7% (adjusted for inflation) – not including the company match or increase in annual limits, the final value ought to do the trick (where we can simply live off the annual interest not including SS# (if any))
$1M Goal in liquid assets- it looks like we won’t break our 1st Million until 7-10 years from now (regarding our saving habits and req RoR) <– Our challenge is to continue to save the same amount, if not more, when we start to have a family. The cost of raising a kid is (gulp) not cheap, and we'll shoot for a hat trick – 3 kids is our capped # (oh gawd).
Our only liability is our mortgage which is 12% of our net income, though we refinanced recently and pay more than what the monthly amount is to help bring the principal down.
Aside from increases in income, proactive budgeting, and our best efforts to remain balance-sheet affluent, any thoughts on how Gen X/Y ought to maximize their cash flow without compromising some of our major life goals? (raising/having a family; buying a new home; actually enjoying some of our income instead of feeling like we're always saving- 41% of our take home is a lonely fight).
I call it a "lonely fight" b/c ever since my wife and I got married we just feel like we're 'alone' in this fight to reach financial independence like you and the like.
we struggle 'mentally' to save while our peers have other sources of income (ahem ahem, still relying on their parents despite finishing college <– I know I'll get criticized for saying that, but hey, its how I feel). My wife and I take pride placing the onus of financial responsibility with us and only us.
In the meantime, our peers are quicker to spend their money on cars and homes (they can't afford). Bottom line, its frustrating. Sorry, I deviated from topic.
Seems to me, so long as you continue to earn more would be the first and only solution — but that too can get old don't you think?
thanks in advance for your thoughts,
DDH
Welcome to my site and thanks for sharing!
Bank of mom and dad is huge for adult children.
Check out this post I just wrote: https://www.financialsamurai.com/a-massive-generational-wealth-transfer-is-why-everything-will-be-ok/
Keep up the good fight. It’s worth it!
I’m sort of unique in that i’m an above average black male.
Income about 130k
38 yrs old
Never maxed out 401k. I’ve always pretty much done only enough to meet company match. Wanted my savings to be more evenly distributed therefore always saved more non retirement than retirement. I always figured I may have more pre 65 years on this earth than post 65 years. haha
Net worth of about 512k
33% Stock
32% 401k and IRA
25% Home Equity
8% Cash
2% Art collection
I like this.
I’m an Actuary and my wife is an Anesthesiologist and I’ve done numerous simulations which demonstrate that too much 401(k) money is a very real thing. I’ve consistently been above the upper end of your after tax ranges.
It is demonstrable that blindly contributing 17.5 to a 401(k) pre-tax is not necessarily in someone’s best interest, in particular for very young individuals with long investment horizons that face numerous tax legislation changes and possibility of death and large penalties on distribution to beneficiaries. Of course, the mutual funds would appreciate all they can get in expense fees and if you are strictly trying to increase your mint.com net worth number for bragging rights, it is fastest to do this pre-tax.
Hello,
I’m 29.5 years of age. I’ve been working for 6 years. My parents helped me pay for 2 years of college I paid for the last 3 years. I graduated with a total of 27K USD in debt. I got my first job making $31,200 USD after tax. I worked there for 1 year 2 months before I got laid off early 2010(during the recession, I was working in oil and gas). My first year of working I lived at home with my mother for 2 years to save extra cash and drove a 1995 toyota corolla that was fully paid off. The first year of working I focused on saving every dollar possible. I was able to stay on a budget of around $100 USD per week for food and gas. I didn’t eat out for lunch and ate before meeting up friends at happy hour. After I was laid off I had about 25K in Cash and stocks. Luckily I started making money as the market was crashing so I jumped into the market at the bottom.
I have been unemployed since. I first liquidated my stock account and started an online retailer that failed. I lost approx. $3,000 USD and about 5 months of time. Then I started a food business that didnt take off until early 2011. This business I kept for 2 years and solid it early 2013. After I sold the business I had approx $150,000 K in cash. I sold the 2nd business as I was starting a 3rd business(brick and mortar retail). It has now been a little over a year and I currently have about $125,000 USD in the stock market(managed by a financial advisor) and $75,000 USD in cash, no home equity. By 30 which is only 5 months away I should be worth close to $275,000 USD(business worth not included). I know I’m ahead but I still feel behind. I am currently looking to start a new business or looking to get into real estate. Any tips?
None of my friends want to open up about their personal finances. Its frustrating!! Why is it so taboo to talk about net worth?
note: I didnt start paying off college loans until last year because the interest was below 3%. I also found it difficult to get a business loan so instead of paying off college debt I decided to use the money to grow my businesses that luckily returned over 3%.
I use a simple excel sheet to track my net worth. I update it every week. I have tried mint but its not too accurate on labeling different purchases.
Tony
Great story Tony about starting at the bottom, taking risks, and working your way up! You’ve come to the right place if you enjoy talking about personal finances.
Your friends are probably a little embarrassed about their personal finances, hence why they don’t want to discuss.
I highly recommend signing up for Personal Capital to track your net worth. They are a free online tool which not only tracks your net worth and sends you a weekly e-mail on how it’s changed with some latest news on the markets, it also analyzes your investments for excessive fees and helps you keep track of your net worth. I found $1,700 a YEAR in investment fees I had no idea I was paying with their free tool!
I used to do Excel once a month for 10 years until I found them. It’s a great tool and a no brainer to use technology to help in growing our wealth.
Good to have you around and keep on saving!
Sam
You should be congratulated for focusing on net worth at such a young age. It is an interesting metric to factor net worth/dollar of income earned, which keeps you focused on both sides of the equation. My experience tells me you are light years ahead of your friends, which will pay huge dividends in terms of overall security later in life. Good job!!
Tony – I think you are doing great and I applaud your entrepenurial spirit in light of challenging economic times. I speak with some credibility as I do financial counseling for the poor. I encourage you to get your debt – school and business – paid down or paid off completely. Once you are debt free you will not believe the no-stress, financial freedom you will have. One book that has really helped me is Dave Ramsey’s “Total Money Makeover”. I do not work for Dave or his organization so am not biased. I followed the process in the book and over several years got completely out of debt – even mortgage debt and am building net worth as I get closer to retirement (I’m 52). But anyway – just wanted to encourage you – you are doing great. Keep under-spending and over-achieving! :)
Why is the delusional belief that grades matter needed to be considered above average. There is no significant correlation between good grades and higher salaries. When I completed my degree in Physics I had a 2.8 and had several job offers at graduation including Google where I ended up deciding to work.
Going to college is important. Choosing a major employers respect is important. Choosing classes that are challenging and relevant to your career goals is important. Grades do not matter at all. Nobody has ever asked me my GPA since I graduated. Employers do not care.
If anything focusing on grades encourages people to take easier classes and less classes per term. Only taking on as much as you can do perfectly may be a good way to keep your GPA up in school, but once you graduate you will be unable to adapt to the real world where that just isn’t practical.
Impressive you got into Google with. 2.8 GPA. Where did you go and how did you get your foot in the door? Of the googles I’ve asked, several have said they have a minimum GPA cut off,
To me, grades do matter. I work at a Fortune 500 company and when I interview people, I do look at their grades, but it’s only just one aspect of a person and would never hire on grades alone.
Why does a good GPA matter? It shows to me that the person was disciplined in getting their assignments done, on time, and did a good job to deserve the grade they were given. If I had to interview a person with a 2.8 GPA right out of school, they better be damn great in the other areas I look at.
I agree completely. Good grades to me help signal good work ethic and Multi-tasking skills potentially.
All else being equal, of course if rather have the person with a 3.8 vs a 2.8!
GPA in Science degree are generally overlooked in the industry… (have a 2.8 GPA in physics who have some understanding of advanced Calculus, optics, and eletronics are at far better position then folks who has a 4.0 GPA in humanities (which go back to you said “a degree that employers respected”). With good experience, a 2.8 phyical science or math graduate shouldn’t have too much trouble getting a job in a great company (but consider that they may not get into grad school which lower their chance of getting promoted).
I don’t know about that Ivan. If someone got a 2.8, that’s a C+ average. There must have been some heavy, heavy partying, irresponsibility, lack of focus or something else going on as a result.
If you were an employer, would you risk it over a candidate with a 3.3, all things being equal? There are tons of 3.0+ students out there looking for a job.
I’m going to disagree on this, to the extent of my experiences. I work for a fortune 250 company, and as a hiring manager have interviewed hundreds of candidates over the past 15 years. I put much more value on those that contributed to paying for their education and got a “C” average than one who got a 3.0+ but never actually had to work and whose education was paid for by parents. “Partying” is a part of most grads experience, but understanding work ethic is not necessarily understood by straight A students. Have never asked or cared during an interview…and upon post reflection have seen that our most successful employees not only had a sub 3.0 average, they are also amongst the hardest working and successful employees. That said..there are also those with above and below 3.0 that have failed… In the end, it’s about the whole person, their experience, and most importantly about their drive that determines their eventual success or failure.
Have you read this post? Grades Don’t Matter
I think it is GREAT that you accept sub 3.0 GPA students who may have partied too much. Someone has to, otherwise, there might be a lot of problems with a large part of the population in getting jobs.
Professions and grades are not related to each other so I’m not sure why you’d mix up the two.
Someone with a BA is most likely not looking for a job that requires a BS degree and vice versa. That’s downright foolish when the job says a B.S. degree required to do the job.
We already know that people with STEM degrees on average earn more than those with non-STEM degrees and that there is a higher demand for those with STEM degrees than non-STEM.
What I’m saying is when I’m interviewing a bunch of candidates for a particular job, they are usually candidates with the similar specializations/skills. for example, a bunch of chip designers. There’s not going to be a professional journalist, librarian, or teacher in those list of candidates when I’m comparing GPAs.
Financial Sameria, it sounds like you are more familiar with lower level colleges. At top schools, a 2.8 GPA in an engineering track or Physics is pretty good. I am sure if he chose Physics at a top university, he wasn’t interested in getting as much partying in as possible.
If you think William and Mary and Berkeley are lower level colleges, then yes.
But nobody with under a 3.0, more like under a 3.5 would even get a response at Goldman Sachs, where I started. The same went for places like McKinsey, Bain, private equity shops etc.
Why would a company bother interviewing a 2.8 in engineering when they have tons of 3.8s in engineering?
Where did you go to school, what was your GPA and what are you doing now?
@Financial Samurai: I had a 2.8 GPA in EE from a respected engineering school and had no problem getting offers. I was asked about it during interviews but I could show that I had a more practical grasp on problem solving than theoretical during the interviews – that’s the type of job I was applying for and the type of job I got. I had a physics professor once who said “it’s now what you know, rather its about knowing where to find it”… words I live by.
It depends on so many things beyond just GPA. Saying “all things being equal” is meaningless because no two people are the same, nor are all job requirements dependent on theory or book learning.
Having said that, I’d also like to say thank you for such an excellent article. It really helped me to understand where I should be at my age and gave me some peace of mind.
No problem Lockon. Glad you were able to get a good offer with a 2.8 GPA. When you’re in a hiring position, if not already, you will probably also give those with similar GPAs more of a chance, and that’s good.
Glad you found the article useful!
I had an 2.80 GPA in Electrical Engineering. I also worked my way through college working 30-40 hours a week. Compare me to someone who got a 3.8 is that they probably did not work and had enough time to study where I did not. Also most were born with a silver spoon in their mouth. Grades do not necessarily point to intelligence or worth ethic. I am in a position to hire engineers and techs and I can tell you I could care less about grades.
I think we tend to pivot towards what we know. If we didn’t do well, then we are more forgiving of those who also didn’t do as well.
Good you are giving other 2.8 GPAs a chance! The question is, would you let your kids get below a 3.0 GPA?
I help to hire and direct talent. I think, and agree with the posters that engineering (my discipline) is the misnomer. I lead my team, recommend whom we hire and don’t really consider grades. We aren’t looking at people for what a talking head nominated as their worth on a 4.0 scale – we want proactive problem solvers who can do the work we give them.
I would take a 2.8 in Physics and weigh that person equally the same as any other candidate. In IT we are looking for talent. Having good grades is sufficient but not necessary to explain someone is talented.
I 2nd Rob and add that grades are only a small part especially in Engineering. What you learn in school is only a fraction of what makes a person succesful. The smartest person in the world is useless if they can not work with people and cannot explain their thoughts clearly.
I would take work ethic and can do attitude anytime over somebody with grades.
You need to do your homework on the average GPAs at schools like Berkeley. The technical degrees tend to have much lower GPAs (there are very few 3.8s with everything graded on a curve). These same students had very high GPAs entering college. I could understand if you have a finance degree, then the average GPA is going to be (and needs to be) higher.
Where did you go to school: Georgia Tech
What was your GPA: 2.9
What are you doing now? CFO
Grade point is one of the few measures of success an interviewer has of a person who is just graduating college if that graduate has no other pertinent experience that applies.
That said, companies who use grade point as their main criteria for hiring are missing the boat big time IME. I’ve been hiring and working with technical types (mostly engineers) for over 30 years now. Some of the best “problem solvers” i’ve hired and worked with were not 4 points.
4 pointers tend to be good at theory that is already printed in a book somewhere. They usually fall flat on their face when they have to manipulate the formulae and/or the problem solving method beyond what they’ve memorized in a book. Which happens all the time in engineering fields.
Of course i’m generalizing here as i’ve also dealt with 4 pointers that were VERY good at application as well. It’s just been my experience that folks with lower grade points tend to be more open to the possiblity that they are not always right and tend seek out other, better solutions.
High grade point many times mean larger ego. Much larger! Which is a huge problem in technical fields.
Why can’t higher GPA mean a harder worker instead?
There are enough boats coming in with high GPAs.
Actually, technical degrees tend to have lower graduating GPAs than their humanities and social science counterparts. I speak from this personally as an ME grad and as a tutor. The engineering programs usually are at least 130+ units programs to be completed in 4 years as opposed to other degrees. Chemical Engineering may be a 150 unit program and kids are expected to graduate in 4 years as well. The school I went to, albeit an average college, has plenty of 1-unit lab courses for engineers which really ended up being 3-6 hours of lab/lecture per week.
Albeit dated, here are some results from a good college:
https://talk.collegeconfidential.com/uc-transfers/900945-average-gpa-of-graduating-students-by-major.html
The “average” graduating GPA for STEM is in the range 2.7-3.2 and about 3-4 for social sciences and business, and the top of the ladder is almost exclusively linguistics.
I’m so glad that the financial and tech titans of the world aren’t made of up of linguists since a 4.0 is always better than a 2.8 GPA ceteris paribus.
I too have conducted many interviews as an executive and have not one time discussed GPA’s during an interview. Its important to pass to obtain a degree, however, some do not test well and is not a good representation of a persons skills. Many tests are designed to have only one correct answer however there is a runner up with a minor discrepancy that determines the difference in a correct answer. So, it may better test some attention to detail but does not define a persons ability. Sure there are many opinions on the topic and quite frankly there is no right answer. The guy who made it into Google may have had to take some sort of engineering test at Google as part of the interview process so they could assess his skills which is a much more effective method than testing for correct answers….
As a business owner and also someone who’s worked in pretty high visibility positions, I know that grades don’t mean much. I understand that some people place more value on them than others, but it really is all about who you know and how well you know your stuff.
I beat out people with higher degrees and grades than me basically every single time I interviewed for a job because I was better than them. I don’t say that to be arrogant, but it was just true. I made it a point to do my own thing in school, and, in fact, just stopped going because I didn’t feel I was learning anything.
Is my situation common? Perhaps not. But attitude and skill mean more to most employers than a piece of paper. Granted, there are jobs that I would want someone to have gotten good grades and worked diligently (a doctor, or tax accountant perhaps), but in general, I don’t think as many employers as people think really care about grades at all. It’s about how you carry yourself, how well you can demonstrate your knowledge of the applied subject matter, how well you can communicate your skills, and who you know.
If the paradigm that grades and educational institution matter were true, there’s no conceivable reason why I should have beaten out people with masters degrees when I didn’t even have a bachelors degree. It’s about knowledge and confidence above most else. Fortunately, I only answer to myself as a boss now. So I make the rules. But if I were to go out into the “regular” job market again, I have no doubt I’d beat out most college grads because I have more experience and skill than they do…and it shows. I won’t lie, I go into an interviews with confidence. I’m not intimidated by interviewers. But again, I’ve been to war too, so I guess that prepares you for anything too.
I agree with Joeseph, grades do not matter. There is a known correlation between high gpa and life time W2… Where the same person who received a mid level gpa due to working full time during college while volunteering their time at big brothers big sisters, and starting their own company is clearly someone I’d rather hire/partner with/be friends with/trust. At my company gpa is the last thing we ask an applicant and only if we don’t find enough other impressive life experiences. Everyone is different, to stereotype is to overgeneralize, however guys like Joeseph with a 2.8 typically are more well read, have higher work ethic, are all around more socially adept, and think much more creatively, than their 3.8 gpa counterparts. This is a reflection of the work theory popularized and proved by Captain Christopher Lee who postulated the idea of heads down time vs heads up time. If anyone spends all their time buried in the books, they will do well with gpa but miss so much of life around them, and vice vs. 2.8 gpa’s make better workers, friends, entrepreneurs, inventors, and investors… On another note, I’d take the bet that the graduating class of Any state college vs any Ivy League school has higher mean net worth per student over their lifetime.
If you’re the CEO of your company and happier with hiring 2.8 GPA candidates that is great. I’d just rather own and invest in a company that hires 3.8 GPA candidates no matter where they went to school. Work ethic cannot be overemphasized.
A big 4 accounting firm won’t even look at someone with a GPA lower than a 3.0. I worked for one for 5+ years and was involved with recruiting during my employment. A good GPA is vitally important in that field.
I knew someone who got a job at Deloitte with a 2.6GPA. Her major was Aerospace Engineering. Sorry but Engineering and Business aren’t in the same realm. People who couldn’t hack it in Engineering went to the Business school.
Yikes, no wonder why Deloitte is having trouble competing in strategy consulting against McKinsey, Bain, BCG where they would never hire someone with that low of a GPA. 2.6 GPA out of 4.0 is literally kicking back and not coming into class.
So many of my classmates at Bschool were engineers because they were stuck in their jobs and wanted to climb, but couldn’t bc they were pigeon holed.
I’m not sure where Samurai is getting their information on Deloitte struggling with the likes of Bain, McKinsey, etc. Haven’t they been ranked #1 global consulting firm by Kennedy for aggregate revenue for the last 4-5 years in a row? Anyway, I think Spaztastic brings up a good point…a degree in Aerospace Engineering is a lot different than a BS in Markting etc.
Can we please drop the GPA nonsense. It’s getting absurd.
I don’t agree. I graduated summa cum laude in geophysics and I never once used my degree. What is did take away from college was fortitude. The fortitude to graduate with a 3.96 and a senior research paper that could have been published, was a great accomplishment. It showed me that I am a capable human being and that I can tackle anything I chose when I apply myself. That is invaluable in business, personal life, and all endeavors. You have to be kidding me if you don’t think reputable firms whose salaries are commensurate to success do not look at GPA and honorary decrees like summa cum laude as a basis for hiring. Trust me when I tell you, that when I see honors mentions I immediately take notice. I know how hard I had to work to make that happen, and no one escapes the effort when achieving honorary mention from a top IT school in this nation. It is a badge of grueling mental endurance. It is a worthy one. It is noticed.
It’s a good post. Essentially what your financial life *could be* if you have batted 1.000. At 35 I’m $100k behind the $418k bogey, due to some unlucky events (divorce), some lucky events (buying a foreclosed property at a $50k discount to fair value), and typical early 20s lifestyling. But I don’t consider the $418k completely unfair.
I’m with the author that grades often do matter. I’m shocked Google doesn’t have minimums, unless you’re a coding unicorn or data scientist PhD. On Wall Street, GPA minimums are the norm even for experienced hires at most mutual funds, hedge funds, sell side.
Jewie, that’s a great analogy and yes you are correct. Maybe not batting 1.000, but batting 0.700. I strongly believe many people can achieve these results.
I don’t believe grades should matter. I kept a 4.0 GPA and didn’t bother finishing college when I realized that employers don’t really care. I taught myself finance and did better than the people in grad school. Then again, I love playing with numbers so finance and accounting came with ease. No employer has ever asked me for my GPA and when they see I didn’t finish college and ask why, I am honest about it. I was able to sell myself, without the added padding. My current salary is six figures. My friends who went on to grad school don’t even make close to what I do and they have major debt still from school.
I have to imagine most of the people on here are full of it. How are you 24 with a net worth of $100k? Or these guys that are in their 30s saying they have $500k.. You have to all come from money, there’s just no way these numbers are even possible unless you’re making $250k a year.
My wife and I started bringing in about $110k a year after taxes starting 2 years ago (I’m 30)
our monthly bills come out to about $7,000 so that leaves us with $26,000 a year. When you figure nights out, gifts, extra junk, that leaves me with about $15,000 to put away each year. I currently have a net worth of about $50k, with $25k in my investments. (would have been more if I didn’t have to pay for an engagement ring and part of a wedding last year) Even if I continue to put $15,000 a year away, and average 20% returns I’ll still have under $175k by the time I’m 35… someone please tell me what I’m doing wrong? FYI I’m doing way better than most people I know. I do know one guy that has been maxing out his 401k since he was like 22 and has about $65k in there, but he still lives at home with his parents at age 29!
Eric, it’s glaringly obvious what you’re doing wrong – “our monthly bills come out to about $7,000”
I can’t even imagine how your monthly spending is that high. Presumably there’s some major student loan debt in there – but even so, those are some high expenses! You don’t mention children so I assume it’s just the two of you.
My wife and I are also 30, and make a bit more than you; however, we’re able to increase our net worth by nearly 50% of our incomes each year (mostly by saving…partly through asset appreciation) and give away about 25% of our income. Our basic spending each month is well under half of yours, even with a baby.
You need to track where your money goes. An average American household brings home less than half of what you and your wife make, you definitely can find rooms to trim your expenses. When I was your age my husband and I made about what you make. We lived in a one bedroom apartment, ate at home most of the time, walked the park as a recreation, did staycations instead of vacations, invite friends over instead of going out (invest in a good margarita machine). In two years we saved $100k, roughly half the take home and didn’t even feel like we didn’t have fun. Watching our nest eggs grow is fun.
Tracking where your money goes is EXACTLY what everybody should do! How many times have we withdrawn money from the ATM machine and then several days later we are wondering WHERE IT ALL WENT?! Now imagine if we don’t track our net worth and expenses, then that’s a disaster.
I recommend everybody sign up for Personal Capital, a free financial tools program that tracks your net worth for you, sends you an e-mail once a week with the latest net worth amount, and highlights your portfolio performance. You can manage your expenses and income and analyze your portfolios for excessive fees too. They’ve got their software as an app for the iPhone or Android too.
One we start knowing where our money is going, we can start optimizing our wealth. You saving $100,000 is awesome in two years, especially since it’s half your take home. Well done!
I made my money by living small in my twenties. When I graduated college, I used a VA loan to buy a triplex and lived in the middle crappy unit while I fixed it up and lived there essentially rent free. Once it was fixed up, I used the money I saved to buy another triplex and did the same thing. I bought another triplex and lived in the crappy unit while I fixed it up. At that point, I had $1000 in cash flow with a free place to live and I was 24 years old. I am 36 now and own a B&B, and own 30 units with a net worth about $650,000. It all started by living small when I was young. Would I be willing to live like that now? Hell no!! That is why I did it when I was 22 and used to the college lifestyle.
Wow, 30 units is a lot! Where do you own these properties? In SF, one unit would be at least $600,000, and a one bedroom, maybe.
You are exactly right about doing this stuff in our 20s, b/c we won’t want to hustle as much when we are older.
Not full of it, but definitely more frugal… Whatever you are doing to have a monthly budget of 7k means you haven’t yet recognized the difference between necessity and personal choice.
I started out of university with a salary of 30k, and prioritized putting the max in my 401k that I was allowed. I am now mid-30s and still make less than 6 figures a year (some of the sciences really don’t pay all that great!), but I have maxed out my 401k every year that I’ve had one (there were two years where my employer didn’t have one), and have invested carefully and consistently. I have lived in a tiny studio apartment for more than 12 years in order to save up enough cash to buy a home. While I don’t live in SF, I do in another high cost of living area in California where even a fixer upper starter home will run you around 500k. Not coming from a family with a ton of money, I wasn’t yet in a position to risk it all and purchase when the market here began to skyrocket back in 2001. Instead, I opted for sacrifice and a little extra patience while continuing to try to live like a starving college student. Family and friends have heckled me for years, but I finally got my break earlier this year when I managed to land a duplex in a good neighborhood in town as a result of having invested the difference I saved between living in luxury for the past 12 years (having a larger apartment) or scrimping a bit (living in my shack and sucking it up). Even after buying the property, I have 300k in my 401k, around 60k in stocks and bonds, and 20k in my savings/checking. The duplex came with tenants that get to finish out their leases, so I am still just renting a room in town (which definitely sucks), but I am saving up even more money in the meantime. Net worth clocks in at about 630k. Monthly expenses = about $1200. I worked to pay my own way through school (UC) and came out with, while perhaps not the GPA I wanted, 0 debt. I worked my butt off to do it, and I still do today. I don’t work at my ‘dream job’ – and I don’t make oodles of dough – but my job has survived the economic downturn and has provided me with a roof over my head, groceries and enough extra money to save for retirement and to indulge in my various hobbies (within reason). I have only owned 2 cars – both bought used and with cash (I splurged last year and upgraded from my 97 corolla to an 08 Honda fit). I eat out, but usually for breakfast rather than dinner, and while I love to travel, I usually only manage to take one big trip a year, and I always budget for it in advance. I don’t try to keep up with the Joneses or my more affluent friends. Those that don’t respect or understand that I can’t always eat out at the 5 star restaurant, take the cruise to Mexico, or hop a flight to go skiing in Colorado with them and still maintain my financial solvency/independence aren’t really friends (or prospective spouses/partners!)… and I learned early on to eventually distance myself from them. When I am tempted to waver from my long-term plan I just remembering/thinking about where I want to be when I am my parents’ ages. I have seen how their individual work ethics, investment strategies, personal life decisions (divorce, home purchases, relocations for jobs/homes – and timing of same) and plain old dumb luck (good and bad) have impacted them – often for the worse. Who knows if I’ll be able to ever retire? I don’t. Not sure I’ll want to anyway. BUT – I do hope to have the duplex paid off by the time I’m 55… and to move up a little bit from my backpacker’s budget when I travel. After that, who knows!
How long did it take you to get to 300k in your 401k?
about 12 years, and my employer does a 3% match.
7000 in monthly payments? Wow. That is crazy. Mine are 2200 on a tight budget, and 4200 if I allow for additional payments on the house, extra to savings, and extra spending for personal endeavors. 7000 is an extravagant lifestyle even for New York or SF. Seriously. And if you are those places you would be making way more than an extra 25k a year. And that is two people. Me think you need an honest reassessment of your financial life.
If he was maxing out his 401K for 7 straight years, his contributions would have been way more than $69,000… let alone all of his capital gains realized in that period. What has been the average annual returns in the past 7 years… conservatively at LEAST 10%.
I’d imagine he’d be closer to 150k than 69k. Just sayin.
I find your articles intriguing. Thanks for helping me think about the future. I’m 40 years old and worked for an HR Outsourcing firm for 14 years consulting on and working with DC and DB plans. I spoke with many clients and their employees and thought it was so sad so many 50+ year olds didn’t even have $70K or $80K in their 401(k) plans; these were also employees who were making decent money- $60K+/year. I always remember my Dad telling me to save as much as early as I can in my 401(k) plan. I feel that was revolutionary coming from an immigrant from Lithuania who never even finished middle school. I’m proud him and my Mom saved a decent amount for retirement. Unfortunately they have both passed away but left me with some good saving habits.
I’ve saved around $320K in my 401(k) plan so far and have another $50K in my old ESOP. My wife is a year younger and has $130K. I feel comfortable where we are, even though it’s low according to your “what should you have saved by XX chart.” I feel your chart is the ideal amount to save but not very realistic for many because of low earning potential out of school and debt. I was fortunate and saved a decent amount living at home but I was only making $26K out of school.
Regarding grades, my thought is the most important part is to graduate. I had a high 2 GPA from a state school in IL. I feel many more employers now ask for and take into consideration a candidate’s GPA, but I feel it doesn’t directly correlate to high job performance. The same goes with graduate degrees, especially when a candidate goes straight from their bachelors to their masters. I always recommend gaining true work experience before going back to school. The job market is saturated with many grad degrees with little experience. I still value experience but it’s unfortunate many just look at grades and degrees. As you’ve said and others have commented, it’s important to look at the whole person when assessing candidates.
My current role is an HR leader in health care making decent living financially (I know that’s relative though).
Thanks again.
EZ
What an incredible bunch of drivel.
I have a HIGH SCHOOL DIPLOMA (much like BILL GATES), and have a net worth of $2,000,000. I invested in real estate that I bought outright (NO MORTGAGES), have a steady rental income of $15,000 per month and an appreciating portfolio.
Hello! I have been reading this website for awhile but this is my first post! :) I think I’m on par for my age. 33, 350k net worth (290k in 401k and Roth IRA and 60k in pension) I plan on leaving my job due to military transfer in a few years and will be rolling my pension into an IRA since who knows if it will be there in 30+ years. My husband has another 150k in his 401k and Roth. We are working on early retirement. He has 8 years left in the military and I’d love for him to be able to relax after that. He is about to leave for his 5th deployment and we want to enjoy life after the military. Early retirement can be done with a little hard work and financial knowledge! I started work with a telecommunications company at age 19 and went to college while working. It was not easy but it gave me the ability to begin saving early (started my Roth at 19 and always contributed the max, contributed around 10% to 401k in beginning but just started maxing out a few years ago) I was fortunate enough for have my employer help with tuition reimbursement of 3k per year but I payed the rest myself as I went and graduated with no student loans. We have no car payments, only a mortgage. But our goal is to pay that off before he retires from the military in 8 years. No kids (it’s a little hard to do when he is constantly gone) but hopefully that will happen in a year or so. I also credit no children with the ability to save, although some people would have spent that money on nicer cars, homes, etc. This is not to brag but give my story and how I made it happen! )
I graduated from a lousy school with a 2.8 GPA. I skipped most classes because it was old guys teaching old stuff. Instead I learned how to identify challenges and solve them with critical thinking – a far more universal skill. Now I’m killing it at a prominent space industry distruptor, whose name I don’t care to mention. Prior to that I was at two successful startups in SV who are at the core of technology you use dozens of times per day.
Some jobs [most in finance probably] require people who can follow instructions. In which case, grades might be a good indicator of how well a person conforms and performs to standards. Other jobs, like those that are paving new ground for humanity, require people to invent things that can’t be graded on anything other than success. In which case, deviations from the norm combined with raw talent are probably a better indicator of success.
As a fellow above-average person I propose a change to bullet (1):
“A person who is assertive and can develop skills that deliver value to and assure success within his/her environment.”
Email/web/full name excluded for the sake of my employer(s)
We bought our first house at age 22 and had 10 by 30yrs old. We never over-spent when we were young. We took a lot of educated risks and now, in our 50’s, have a nw of 14mil. I handle the RE (20+ rentals) and my husband is a highly compensated executive. No one ever gave us anything. We did things outside of the 9-5 to get wealthy. My kid bought his first rental at age 20 and is worth about 200K at age 25. Yes – we did give him the downpayment. He is a smart kid and makes about 100K. You probably won’t achieve wealth from your 9-5. Your 9-5 allows you the opportunity to get in to other investments. You must not get so caught-up in the day-to-day that you lose sight of the real opportunities. Think outside the box and put some time in to it EARLY. We made sick $$$ in our 20’s, but not through the 9-5.
$14 million is big bucks! Congrats.
I do believe a massive generational wealth transfer is why everything will be OK, hooray! The help with your sons downpayment is a great example of this. Check out the linked post in the comment and let me know your thoughts.
I haven’t looked in to any studies regarding the generational wealth transfer that is expected. I expect about 500K (the minimum would be 350K coming from an insurance policy that I own) – not big bucks in the scheme of things. Nothing from my husbands side. In fact, we have been partially supporting my inlaws (and sister) for over 15yrs. I know that my 20 something will be getting a lot, albeit 25 yrs down the road. We are, however, going to start “gifting” the max this year and we have funded his Roth (since he was 16 and still do today). We paid cash for his Ivy education (at our Alma Mater). For comparison sake, we were making 200K at age 30 – 25yrs ago. I don’t know what that would be in today’s dollars. I remember computing nw at 33 and it was 850K. By our early 40’s, it was about 2.5mil. We consider ourselves upper-middle class (not wealthy or rich). On a side note, I find it interesting that many “younger” posters here separate what each spouse has. We never have thought in those terms, but, then again, we married 3 wks after college graduation (with a negative net worth – husband had college loans). We came out of school in 1980, making 14K and 12K.
Hi all,
Interesting article and comments. Would love to hear from those who got into real estate with little/no formal education in finance/real estate, because my degree is in something else entirely. Especially interested in which books or resources you used to educate yourself. Although not a genius (like many of you seem), I’m a bit of an autodidact and very interested in the passive income (even if only supplemental to my low six-figure income) that owning properties can provide. Eventually want to manage multiple properties and get out of corporate America, and start “living absolutely free” as Samurai puts it. I’d then be able to focus more on my creative/artistic endeavors.
Much appreciated,
AD
We went heavy into Real Estate right out of school and had 12 or 14 properties when I “retired” at 31 after our son was born. I still did a lot of buying (many at the Courthouse), selling, 1031’s, etc. and built the portfolio up to 20+. We also have 3 personal homes – buying our summer home at 29. I had no “formal” training (I was an Econ major in College and then went to Law School at night while working a 9-5). I did grow up with a mother who owned and managed small (4 or 5 unit) apartment houses and spent many a summer painting and cleaning those places. She was a School Nurse. I used to enjoy going with her to look at prospective purchases – but had no exposure to the actual “numbers”. I read everything I could get my hands on (“Nothing Down” comes to mind). These were years (decades) before any info was available on-line. Now, people can learn as much as they want by simply going on-line. I’d recommend a great web site (I have no financial interest in it), but I don’t know if that is allowed here. It’s free to join and everyone is friendly and helpful (from newbies to seasoned mega-investors). It’s only been during the past 5 or 6 yrs that my husband’s “outside” activities have caught-up with our RE NW.
I guess I would never work for FS since my gpa was oh let’s say less than most. I was working since I was twelve albeit illegally but making the bucks nonetheless. At 35 I am very well off and I don’t know the gpa of anyone who works for me. My team knows that a spiffy resumes and connections to big names don’t mean a thing to me. Results, work ethic, personal values and creative and analytical thinking are all that matters in my business. Everyone has their ideas as to what they look for in a worker.
And that doesn’t mean you can’t be successful. There are plenty of paths to success and wealth!
As a well-compensated ~28 year old HF professional in NYC from a prestigious top 10 school, these numbers look exactly correct to me and are actually slightly conservative projections of my last 6 years of net wealth. I know you’re taking a lot of flak from haters, FinancialSamurai, but my own experiences have aligned quite closely with your figures. And you are far, far too kind to some of these over-educated haters (i.e, Dustin Faeder) who are sore about not making the list because they chose to dick around with a Masters in Philosophy from Tufts. Dustin, I guarantee if you’d made it into Big Law you’d be well into this list by 30. Instead you’re a criminal defense attorney in Tennessee, lol. (https://www.oneshrewddude.com/)
Pride comes before the fall. Be careful.