What Should Be My Net Worth At Age 35?

Are you wondering what should be my net worth at age 35? At age 35 you should either have made it in your career or business or are on the right track to making it. This post will go through what I believe your net worth should be at age 35 to live a good financial and retirement life.

35 is an age where life starts getting serious because you're finally seeing momentum in your earnings power. You're senior enough at work to garner respect. Meanwhile, you're also likely thinking about settling down, getting married, and starting a family if you haven't already.

At age 35, the average American only has a net worth of around $35,000 according to the latest Federal Reserve's Consumer Finance Survey. Given the average person spends too much and doesn't save or invest enough for the future, you don't want to hover around the average.

Instead, the above average person has an average net worth of roughly $150,000 at age 35. An above average person is one who works hard, starts work right after high school or college, and saves and invests regularly.

Further, as a personal finance enthusiast, the above average 35 year old subscribes to the free Financial Samurai newsletter to stay engaged, financially. The more quality financial content you consume, the more you will care about your money.

Median net worth in America - What Should Be My Net Worth At Age 35?

At age 35, your net worth should equal roughly 4X your annual expenses. Alternatively, your net worth at age 35 should be at least 2X your annual income. 

Given the median household income is roughly $68,000 in 2021, the above average household should have a net worth of around $136,000 or more. A household is defined as either a dual income earning family or single income earning family.

Let's look at the methodology to see how we get here.

Pre And Post Tax Savings Guide For Net Worth At Age 35

Savings Guide By Age 35

I recommend everybody start off with 10% and raise their savings amount by 1% each month until it hurts. If you've ever had braces, you get the idea. Keep that savings rate constant until it no longer hurts, and start raising the rate by 1% a month again. If you make more than $200,000, certainly shoot to save more if you can. You can theoretically achieve a 35%+ savings rate in two short years with this method!

Please note that I am making 401K and IRA contributions a priority over post-tax savings. The reasons are: 1) we have a tendency to raid our post tax savings, 2) tax free growth, 3) untouchable assets in case of litigation or bankruptcy, and 4) company match.

Obviously you need some post-tax savings to account for true emergencies. Ideally, my goal for everyone is to contribute as much in their pre-tax savings plans as possible and then save another 10-35% after tax.

The maximum 401k contribution for 2021 is $19,500, and will likely continue increasing by $500 increments every 2-4 years if history is any guidance.

401k savings targets by age by age 35

Once you've maxed out your 401k or other pre-tax retirement contribution plan, it's important to save and invest as much as possible after taxes.

The below chart is an expense coverage ratio chart that follows someone along a normal path of post college graduation until the typical retirement age of 62-67.

I assume a 20-35% consistent after tax savings rate for 40+ years with a 0-2% yearly increase in principal due to inflation. The other assumption is that the saver never loses money given the FDIC insures singles for $250,000 and couples for $500,000.

Once you breach those amounts, it's only logical to open up another savings account to get another $250,000-$500,000 FDIC guarantee.

Expense Coverage Ratio = Savings / Annual Expenses

Expense Coverage Ratio Chart For Financial Freedom

Your 20s: You're in the accumulation phase of your life. You're looking for a good job that will hopefully pay you a reasonable salary. Not everybody is going to find their dream job right away. In fact, most of you will likely switch jobs several times before settling on something more meaningful. Maybe you are in debt from student loans or a fancy car.

Whatever the case, never forget to save at least 10-25% of your after tax income. You should also be working to pay off your debt. If you have the ability to save 10-25% after tax, after 401K and IRA contribution up to company match, even better.

Your 30s: As you can see in the chart, the above average 35 year old should have a net worth of at least 4X in annual expenses or 2X income. 

You're still in the accumulation phase, but hopefully you've found what you want to do for a living. Perhaps grad school took you out of the workforce for 1-2 years. Or perhaps you got married and want to stay at home.

Whatever the case may be, by the time you are 31, you need to have at least one years worth of living expenses covered. If you've saved 25% of your after tax income for four years, you will reach one year of coverage. If you saved 50% of your after tax income a year for five years, you will have reached five years of coverage etc.

Net Worth Growth In Middle Age

Your 40s: You're beginning to tire of doing the same old thing. Your soul is itching to take a leap of faith. But wait, you've got dependents counting on you to bring home the bacon! What are you going to do?

The fact that you've accumulated 3-10X worth of living expenses in your 40s means that you are coming ever close to being financially free. You've hopefully built up some passive income streams a long the way. Your capital accumulation of 3-10X your annual expenses is also spitting out some income.

Your 50s: You've accumulated 7-13X your annual living expenses as you can see the light at the end of the traditional retirement tunnel! After going through your mid-life crisis of buying a Porsche 911 or 100 pairs of Manolo's, you're back on track to save more than ever before! You are 100% in tune with your spending habits. Therefore, you raise your savings rate by another 10% to supercharge your final lap.

Net Worth Growth In Retirement

Your 60s: Congrats! You've accumulated 10-20X+ your annual living expenses and no longer have to work! Maybe your knees don't work either, but that's another matter. Your nut has grown large enough where it's providing you hundreds, if not thousands of dollars of income from interest or dividends.

Full Social Security benefits kick in at age 70 now (from 67). But that's OK, since you never expected it to be there when you retired. You're also living debt free since you no longer have a mortgage. Social Security is a bonus of an extra $1,500 a month. You're budgeting a couple thousand a month for health care as you plan to live until 100.

Your 70s and beyond: Sure, you've been spending 65-80% of your annual income every year since you started working. But now it's time to spend 90-100% of all your income to enjoy life. They say the median life expectancy is about 79 for men and 82 for women.

Let's just bake in living to 100 just to be safe by taking your nut, and dividing it by 30. For example, let's say you live off $50,000 on average a year and have accumulated 20X that = $1,000,000. Take $1,000,000 divided by 30 = $33,300. Y

ou're getting another $18,000 a year in Social Security, while the $1 million should be throwing off at least $10,000 a year in interest at 1%.

More Aggressive Net Worth Targets By Age 35

Here's another net worth target chart for the most enthusiastic person to help keep you motivated. At age 35, you should strive for your net worth to be equal 5X your gross annual income.

Your ultimate goal is to get to 20X your average annual income before you can consider yourself financially independent. This guideline is more aggressive than the above guideline, which focuses on a multiple of your annual expenses.

Suggested net worth targets by age, income, work experience - Net worth target at age 35
Suggested net worth targets by age, income, work experience

Age 35 is an important time for me because it was when I decided to negotiate a severance and be free from the corporate grind forever. I was sick of working in investment banking (equities) for 13 years. Instead, I wanted to travel more and write on Financial Samurai.

The severance bought me 5-6 years worth of regular living expenses. Therefore, it was like me leaving work at age 39-40 instead. Time is our most precious asset, especially the older we get. Therefore, having a strong net worth by age 35 is an important goal.

The Average Net Worth At Age 35 Is Important

The only way to reach financial independence is if you save and learn to live within your means. National average money market accounts are yielding a pitiful 0.1%. Meanwhile, the average US personal savings rate is still under 6%!

For the money you are comfortable risking, actively invest the rest of your after-tax savings. Main asset classes include: stock market, bonds, and real estate crowdfunding. Basically, invest in anything else that matches your risk tolerance.

The point is to gradually expand your savings into investments where you feel most comfortable. Many people, including myself, love real estate because we can see what we are buying.

I think investing in real estate is the best way for people to build wealth. Real estate is a tangible asset that provide shelter, utility, and income. Get neutral inflation by owning your primary residence by 35.

My favorite two real estate crowdfunding platforms are:

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

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

I've personally invested $810,000 in real estate crowdfunding since 2016 to diversify my investments.

It's nice to earn income 100% passively as I spend more time taking care of my children. The spreading out of America is real and second-tier cities should benefit.

Stay On Top Of Your Finances

Now that you know what your net worth should be at age 35, It's important to track your investments like a hawk. I highly recommend signing up for Personal Capital, a free online wealth management tool. It is a great way to easily monitor your finances.

Before Personal Capital, I had to log into eight different systems to track 28 different accounts. Now, I can just log into one place to see how my stock accounts. I can see how my net worth is progressing. I can also track my budget.

One of their best features is their 401K Fee Analyzer. The free tool is saving me more than $1,700 in portfolio fees I had no idea I was paying. They also have a fantastic Investment Checkup feature that screens your portfolios for risk.

Finally, they came out with their incredible Retirement Planning Calculator. It uses your linked accounts to run a Monte Carlo simulation to figure out your financial future. You can input various income and expense variables to see the outcomes.

Retirement Planning Calculator

What Should Be My Net Worth At Age 35 is a Financial Samurai original post. I've been helping people reach financial freedom since 2009. There's no re-wind button in life. By age 35, you really should have your head on straight!