Average Net Worth by Age: Are You On Track?

by Lucy Oake on January 22, 2019
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Average Net Worth by Age

Learning about average net worth by age will help gauge your progress toward financial independence.

Once in awhile, I’ll hear someone mention how nice it would be to become rich and famous.

Famous might take a little luck and talent, but that “rich” part might be easier to achieve than you think!

Rich is a word our society has used for decades to describe someone with high net worth. The richest people in the world – the celebrities or CEOs – don’t typically have the biggest balance in their checking account.

Instead, they’re people who have a large number of assets. Becoming rich has very little to do with building up stacks of cash. It has more to do with strategically building a portfolio of valuable assets while eliminating as many debts as possible.

As you’re reflecting on the past year and planning for a successful 2019, make sure you’re taking a look at your total net worth. Focusing on just one or two pieces of your finances, like your debts or your savings account, won’t give you a full picture the way your net worth will.

Once you know your current net worth, you can use that as a benchmark for setting future goals. And yes, we’ll talk more about how fully understanding your net worth can help make you one of those rich people you’ve always dreamed of becoming.

What is Net Worth?

“Net worth” is a financial term that describes how much a person is worth.

It’s a fairly simple calculation because it all boils down to knowing what you have and what you owe. Calculating your net worth means that you subtract what you owe (liabilities) from what you have (assets).

Here’s a simple example:

imagine that you have a car that is currently worth $10,000. You bought the car with a loan, and you still have $2,500 of that loan left to pay. The asset value ($10,000) minus the liability value of the loan ($2,500) would be $7,500. So you could say the net worth of your car would be $7,500.

Calculating your own personal net worth is simple. All you need to do is add up all your assets and subtracting away all your liabilities.

Common assets might include any equity in property and cars or cash value you have in savings, checking, bonds, stocks, or other investments. Even investments you can’t use at the moment – like a 401(k) or IRA – still count as an asset.

Your total assets could also include money invested with platforms like Fundrise where you can invest in real estate.

Liabilities include anything you’re on the hook to pay. Common liabilities might include student loans, car loans, credit card balances, or a mortgage.

Keep in mind that “liabilities” isn’t the same thing as every line item on your budget. For example, groceries would never be considered a liability for calculating your net worth.

Let’s consider the case of Chelsea:

Assets:

  • Car: $12,000 current market value
  • Savings Account: $5,000
  • Checking Account: $2,000
  • Employer 401(k): $3,000
  • Health Savings Account: $750

Total Assets: $22,750

Liabilities:

  • Remaining Car Loan: $4,000
  • Credit Card #1 Balance: $500
  • Credit Card #2 Balance: $800
  • Student Loan Balance: $15,000

Total Liabilities: $20,300

Chelsea’s Net Worth: $22,750 – $20,300 = $2,350

If you want an easy way to monitor your net worth, Personal Capital is a perfect choice. Not only will it calculate net worth, but it can do so much more. You can monitor all your assets and liabilities and get valuable financial planning insights all in one place.

Why Does Net Worth Matter?

Now that you know how to calculate net worth, you can probably see the value in knowing that number. If you have a negative net worth, you would owe more than you could pay back at this very instant, even if you were to cash in all your assets.

There are times in your life when you may have a negative net worth for valid reasons. But in the long run, your goal should be to maximize your net worth.

Net worth is a number that gives you an even playing field. It’s easy to start comparing yourself to others and you may even feel like a failure. This is where net worth can come into play to reassure you that you’re on the right path.

Take the example of Nataly, a doctor fresh out of medical school. She just signed onto a job making $150,000 annually. Because she has over $300,000 of student loans, it will be a while before Nataly’s net worth swings to positive.

On the flip side, Jose is an electrician that makes $65,000 a year. He owes $25,000 on the truck he uses for work but doesn’t have any additional debts. Jose’s net worth is positive. Although there’s a big discrepancy in their income, it’s actually Jose who’s richer because his net worth is much higher.

The case of Jose and Nataly is just one example of how measuring your financial health depends on much more than your income. Net worth gives you the power of knowing how wealthy you are relative to yourself. This tends to be better than using just one lone number like income to judge your success. The more you invest and the less you borrow, the greater your net worth – regardless of your salary.

Using Net Worth as a Tool for Retirement Planning

With the case of Jose and Nataly, you can clearly see how net worth is a more valuable indicator of wealth than income alone. That’s why many financial experts recommend using your net worth as a tool for retirement planning.

Regardless of whether you’re decades or months away from retirement, your net worth can give you valuable insight. Ideally, the closer you are to retirement, the higher your net worth will be.

Most people continue to have the same level of expenses during retirement as they do during their working years. Checking your net worth will help you evaluate whether you’re prepared to meet those expenses during your retirement years.

Who measures average net worth?

You can use your net worth as a tool to decide whether your retirement strategy is on track. To give you some comparison, we’ll use the Federal Reserve’s statistics on both averages (mean) and median net worth.

Notice that the average is almost always higher than the median number. We’ll be showing you both; however, the median number is the more accurate number to judge yourself by. This is because the mean, or average, net worth is typically inflated due to the extremely high numbers of those in the wealthiest brackets.

So if you’re ready, let’s find out more about how to use net worth as a tool at any age!

Average Net Worth in Your 30’s

In 2016, the Federal Reserve reported that the average net worth for households in the US under age 35 was $76,200. However, that median net worth was $11,100. During this time, the average student loan debt was around $32,000 per person.

Based on these numbers, it’s not hard to see how student loan debt can greatly decrease your overall net worth.

Note: Are you looking to pay off student loan debt? Refinancing with a company like Sofi could help you save thousands in interest.

The best strategy to use to build net worth in the 30’s is to invest. It might seem counterintuitive to invest when you have so much debt, but in reality, the money you invest in your 20’s and 30’s has the most power.

This is because the earlier you invest, the more time your investments have to grow and build.

If you are looking for a place to start, look no further than Betterment. There is no minimum investment and fees are just 0.25%.

If you have a company 401(k) or similar plan, always make sure you’re investing enough to take advantage of any company match.

And if you don’t have a company plan, start by opening up your own IRA. Companies like TD Ameritrade or Stash offer great options for anyone who wants to open a retirement account without a huge lump sum to start.

You could even open an account with Acorns. Every purchase you make will be rounded up and the difference can be deposited into a retirement account. Not sure what’s best for you? We compared Stash vs Acorns to help you out a little.

Overall, your 30’s is a time to lay a strong foundation for a successful future. While income is important, it’s OK to take on “good debt” like student debt or mortgage debt as long as you also focus on building your net worth long-term through investing.

Average Net Worth in Your 40’s

Your 40’s is a great time to build momentum toward growing your net worth. Most people in their 40’s should have eliminated most if not all of their student loan debt. This allows you to focus on building wealth through investing.

Homeownership during your 40’s may initially require taking on some bigger debts, but owning property is a great long-term investment option because it generally retains or grows in value in the long run.

The Federal Reserve reported that in 2016, the average net worth for households between the ages of 35 and 44 was $288,700; however, the median net worth was $59,800.

Financial experts often recommend a goal of having a net worth of two times your annual salary by the time you’re 40. Unfortunately, the Federal Reserve’s numbers show that very few families achieve that goal. With good planning and wise investing, there’s no reason why a typical person shouldn’t be able to achieve a net worth that’s two times their income.

To build your net worth through your 40’s, it’s important not to take on more debt that you actually need. While it might be tempting to upgrade your home or take out a loan to get a flashy new car, these are choices that will drive down your net worth.

It’s not uncommon that you may need to save even more in your 40’s than ever before due to new financial burdens, like planning for your kids’ education or caring for aging parents.

Average Net Worth in Your 50’s

By age 50, you’re getting closer to retirement, which means you want to be the most aggressive toward building your net worth. If you’re not already, your 50’s are the best time to max out your 401(k) and an individual retirement account you have.

You should also consult with a tax advisor to see if you’re eligible to make special catch-up contributions to your HSA or other accounts based on age.

For 2016, the Federal Reserve reported that the typical American household between ages 45 and 54 has an average net worth of $727,500 and a median net worth of $124,200.

The financial advisor rule of thumb is that your net worth should be four times your annual salary by the time you’re 50. If your net worth is significantly greater than that, you may be one of those lucky folks who get to consider early retirement!

In addition to investing aggressively and tax-wisely, your 50’s is the best time to eliminate any remaining debts. Paying off your mortgage early can help you free up more money for investing and saving. It can also help you tackle any unexpected expenses that can creep up.

While no one wants to plan for it, you may be needed to help support your “boomerang” adult children or take on more financial responsibility for an aging parent.

Average Net Worth in your 60’s

Financial experts recommend having a net worth of six times your annual salary by the time you reach your 60s. This is where net worth becomes your most valuable tool because it will help determine when (and how) you get to retire.

Let’s face it: a lower net worth means you’ll have to consider working past traditional retirement age or significantly lowering your standard of living during retirement.

According to the Federal Reserve, the typical American household between ages 55 and 64 has an average net worth of $1.16 million and a median net worth of $187,300.

The median net worth indicates that most Americans won’t be ready to retire by the “traditional” age of 65. This just goes to show how important it is to plan for retirement as early as possible. There isn’t much time to catch up when you’re in your 60’s.

But there’s good news! Your 60’s is a great time to take a look at how you can start moving your wealth to further build your net worth and financial stability.

For example, many people in their 60’s downsize to a smaller house and invest their extra money. Lowering your cost of living, taking care of your health, and using tax-advantaged investment strategies are also great ways to increase your net worth.

The 5 Best Ways to Increase Your Net Worth

Regardless of your age, increasing your net worth is the most powerful way to measure your overall wealth and financial stability. Here are the best strategies to use for increasing your net worth and building a life of financial freedom that you deserve.

Invest in Yourself

This may seem counter-intuitive, but some of the best money you can spend is on your own personal development. This is why so many young people feel the need to go to college, or at least learn a trade, after high school.

In reality, formal schooling is probably the most expensive way to invest in yourself, so make that decision carefully. No matter where you’re at in life, there are certainly other great ways to spend on yourself without greatly increasing your liabilities.

For example, taking a course to get your real estate license may be a big short-term cost. However, in the long run, that knowledge could lead to a successful side hustle — or even new career!

Something less risky, like running an Etsy shop, could turn your favorite hobby into a stream of income you can use to either increase your assets or pay down your debts faster. No matter what it is, investing in yourself is generally a strategy that pays off in the long run.

Pay Down Debts (and avoid new ones)

Every dollar of debt you pay off directly impacts your net worth in a positive way. Some debts can’t always be avoided, like a car loan or a mortgage. But you can take charge of your debts and make extra payments whenever possible.

You can also make the commitment of being an educated borrower and taking out only the loans you need, rather than charging every little temptation to your credit card with the empty promise to pay it off later.

This strategy means sticking to a budget and eliminating debts whenever possible. If you’re someone with a lot of student loan debt or a sizable mortgage, you may want to look at creative solutions like refinancing through SoFi to get a lower interest rate. The lower interest rate won’t instantly get rid of your debts, but it will save you tons of money in interest over time as you tackle paying off those larger debts.

Hands off Your Retirement Accounts

This strategy is crucial at any age. If you withdraw money from your retirement account early, you’ll face tax penalties. Plus, you’re taking money away from the “asset” side of your net worth calculation.

If you withdraw money earlier than you need it, you’ll run the risk of losing out on the power of compounding interest. The longer you wait to spend your retirement assets, the higher your net worth will be.

I also recommend using a service like Blooom to make sure that your retirement accounts – especially employer-sponsored accounts – are balanced appropriately for your retirement strategy at any age.

Make Saving/Investing Automatic

You’ve seen now how saving and investing are important strategies to building net worth no matter your age! The best way to make investing a permanent part of your strategy is to make it automatic.

Sign up for automatic transfers to your employer-sponsored retirement account through your HR department.

For your individual accounts, like Roth IRAs or general investments through a service like Ally Invest, set a schedule for automatic transfers and increase it yearly. Making it automatic keeps it off your mind while ensuring you don’t accidentally forget and get off-track with your plan.

Plan, execute, and track

You’ve probably heard the saying “fail to plan, plan to fail.” This is true with everything, including your financials.

If you don’t set goals for yourself, how could you expect to achieve anything? The good news is that technology makes it easier than ever to plan, track, and achieve your goals. From budgeting to investing, you can do nearly everything on your phone these days!

If you’re just getting started, check out a budget tool like Mint and investment/saving tools like Stash and Acorns. As your strategy builds, I recommend incorporating a personal financial management tool like Personal Capital, adding in advisors like Blooom, and getting more involved with investing through TD Ameritrade or Ally Invest.  

Increasing your net worth is easier than it sounds! Check in with your progress on a regular basis to make sure you’re on-track and adjust your strategies as needed. And before you make any big financial decision, make sure you look at it through the lens of your net worth to make sure you’re making the right move. Your future self will thank you!


Do you measure your personal wealth by the amount of money you have in the bank? If so, you might not be getting the entire picture. To fully understand how rich you might be you need to calculate your net worth. We walk you through how to calculate net worth as well as give you benchmarks on your net worth by age. #PersonalFinance #PersonalFinanceTips #MoneyManagement #FinancialFreedom #NetWorthByAge #NetWorthCalculator
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Lucy Oake

Lucy Oake is a business analyst by day and a blogger by night. In her free time, she can be found sipping a drink at a local brewery, hiking the beautiful trails of Northern Minnesota, or competing in a karaoke contest. Her dream is to open and run her own brewery-bakery.

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