Average Net Worth By Age (The Sad Truth)

What's up, guys? It's Graham here. So, the other day, I came across an article which found that 60% of Americans are currently living paycheck to paycheck. That got me thinking: what is the average net worth throughout every age, and is that realistically enough to be able to one day buy a house, raise a family, or even retire? Not to mention, I was surprised to see just how big of a difference there was between the average and the top one percent throughout your 20s, 30s, and 40s.

So, I promise if you watch all the way through, you're going to know exactly where you stand, how much net worth you should have by every age, my own recommendations to make sure you stay on track, and then what you could do about all of this if you find yourself falling behind. Although, before we start, did you know that over 90% of YouTube viewers do not hit the like button and subscribe? That's right! If you immediately want to stand out from the rest, make sure to smash it for the YouTube algorithm. As a thank you, I promise to share everything I know about personal finance.

So, with that said, thank you so much, and now let's begin. Alright, so first, it's important to understand how to properly calculate your net worth because, despite what most people think, it has nothing to do with how much money you make, but instead how much you save. For instance, I've met people making five hundred thousand dollars a year who have absolutely nothing to show for it, while others have a million dollars saved up on a salary of fifty thousand dollars.

So, if you want to calculate your net worth, it's pretty simple. This just refers to your assets minus liabilities, or I guess more simply put, the value of everything that you own, and then subtract what you owe. What's left over is your net worth. As an example, let's just say you have a three hundred thousand dollar house, drive a twenty thousand dollar car, have thirty thousand dollars in your retirement account, and hold ten thousand dollars in cash. This means you have three hundred and sixty thousand dollars worth of assets.

However, your net worth would subtract the two hundred and fifty thousand dollar mortgage, the fifteen thousand dollar auto loan, and the five thousand dollars in credit card debt, leaving you with a ninety thousand dollar net worth. So, now that you know exactly which number we're looking for, here's the average net worth throughout every age. Oh, and by the way, before we start, I just want to forewarn you that there is a big difference between the average, the median, and the top one percent. Let me explain.

Anytime you look at the average, it's typically skewed by a few people who make a lot of money. Like, if you took the average net worth of ten random people and Elon Musk was one of them, the average number would be somewhere in the tens of billions, despite the other nine people probably being worth closer to zero. So for that reason, I think it's also important that we include the median net worth, which is the perfect middle point of someone's finances. That way, you'll not only see how much you stack against the high earners but also how you stack up against the majority of your peers, and it all starts here.

According to the Federal Reserve Consumer Finance survey, the average net worth of those between the ages of 18 and 24 is twenty-eight thousand seven hundred and seven dollars and thirteen cents. But before you get discouraged, just remember that this number is pulled up significantly by a few people who make a lot of money, like the Stranger Things cast, who earn an estimated nine and a half million dollar paycheck, or the top one percent in this age, who have a net worth of four hundred thirty-five thousand dollars.

Because of that, the median net worth in this age bracket is eight thousand two hundred and sixteen dollars, likely because most people of this age are either still in school, just beginning their career, or just starting to save. Not to mention, if you went to college, the average student loan debt is thirty-seven thousand five hundred seventy-four dollars, so it wouldn't even be uncommon at this age to have a negative net worth simply because you had very little to begin with.

That's why, if you want to put yourself ahead and make sure you're on track to doing everything you want to do throughout your 30s and 40s, here's what I recommend. First, go and get yourself a credit card with no annual fee. The point of this is to begin building your credit history, and since 50% of that score is based on your on-time payment history and how long you've had the card open for, the sooner you start on this, the better.

Second, make sure you open up a Roth IRA or contribute to a 401(k). These are both tax-advantaged accounts that you would be able to set up yourself or through an employer, and then from there, you'd be able to invest your money much more efficiently. Doing this is incredibly easy; it'll probably take you about 20 minutes, and ideally, you should aim to save anywhere between 10% to 20% of your income.

The third, try to have between two to six months' worth of your expenses saved up in cash. This is meant to be like your emergency fund so that you can have something to fall back on in case you need it. So, if you spend usually a thousand dollars a month, try to save up between two thousand to six thousand dollars and put all of it in a high-yield savings account.

Finally, fourth, get yourself invested in the markets. I think it's so important that you at least begin investing at this age, even if it's just a hundred dollars. That way, you'll be able to see what it's like, you'll get your feet wet, and I promise you, once you start, you're not going to want to stop. Not to mention, you could use the link in the description in our sponsor, public.com. We'll be giving you a free stock worth all the way up to a thousand dollars when you make a deposit with the code "GRAM." So hopefully, that should at least give you a bit of a head start.

Alright, now from the age of 25 to 29, there really aren't that many changes, with an average net worth of forty-nine thousand three hundred and eighty-seven dollars. Except, it's worth noting that the median net worth in this category actually went down to seven thousand five hundred and eleven, likely because this is the age you begin moving out on your own, getting adult responsibilities, stopping having fun, and having to pay your own cell phone bill.

However, if you're in the top one percent in this category, you're going to see your net worth increase to six hundred six thousand one hundred eighty-eight dollars and thirty-six cents. To be honest, at this age, your priority should really be about finding a good long-term career, building to your strengths and maximizing your income to be able to save as much money as possible. Ideally, you should also be tracking your expenses, keeping a budget, and understanding how much you're going to need saved and invested in order to retire.

I know it could sound really boring to start thinking about right now, but the truth is when it comes to investing, starting in your 20s could put you so much further ahead by the time that you're older. Just consider this: if you want to have one and a half billion dollars invested by the age of 65, you could do that by investing four hundred sixteen dollars a month, beginning at the age of 25, at an average of an 8% return. However, if you procrastinate and don't get started until the age of 35, you would need to invest almost a thousand dollars a month to reach that exact same goal. So, if the choice is yours, save four hundred sixteen dollars now or a thousand dollars a month later.

Speaking of your 30s, though, this is the age where you'll really begin to see the biggest differences. For example, the median net worth of those aged 30 to 34 is thirty-five thousand dollars. The average is one hundred twenty-two thousand dollars, and if you want to be in the top one percent of this category, you need to be worth about a million dollars. Although if you thought that was a lot, just wait! If we look at the exact same category for those aged 35 to 39, the median net worth jumps to fifty-five thousand dollars, the average more than doubles to two hundred seventy-four thousand dollars, and the top one percent have a net worth of more than four million dollars.

So, what just happened? Well, most likely, this is the time your income and career really begin picking up. This could also be the point where some people are fortunate enough to exit their business, benefit from an IPO, or have a few very well-timed investments that bump up the top one percent. Although, in terms of actionable steps that you could take throughout your 30s to dramatically increase your net worth, here's what I would recommend.

First, aim to completely get rid of any bad debt. This means you've paid off any loans above a six to seven percent interest rate; you don't have any outstanding credit card debt or personal loans, and besides the possibility of a mortgage, you have nothing else weighing you down. The second, you should try to save at least twenty percent of your income. My personal approach with this, that's worked really well for me, is that anytime I make more money, I just pretend that money doesn't exist, and I just automatically invest it—out of sight, out of mind—and I keep spending the exact same as it happened.

And third, if you want to stay on track for retirement, your net worth should be equal to four times your annual expenses or two times your annual income by the age of 35. When it comes to this, the blog Mr. Money Mustache has the perfect chart that shows you exactly how much you'll have to save in order to retire. For example, someone who saves 10% of their income would be able to retire after 51 years, while someone saving forty percent could retire in 22 years. By viewing everything from this perspective, it'll give you a much greater understanding in terms of exactly how much you'll need to save and for how long.

Now, by the time you're in your 40s, things really begin to speed up. The median net worth between 40 and 49 is one hundred sixty-four thousand dollars; the average is seven hundred sixty-one thousand dollars, and if you want to be in the top one percent, that'll be about ten and a half million dollars. Interestingly enough, though, one of the biggest drivers of net worth in your 40s isn't necessarily your savings, your income, or your expenses, but instead your home.

That means that at this age, buying a home is one of the largest factors that positively affects your net worth, likely because a mortgage forces you to automatically build equity every month. In general, homes tend to go up in value. Of course, you could also argue that those who have a higher income and more financial literacy are more likely to buy a home to begin with, which skews the data. But either way, at this age, number one, you should consider buying a home.

Now, this one's certainly not required, but buying a home is going to give you a lot more stability in the sense that you're not going to have to worry about your living situation in retirement. Once it's paid off, you're not going to be at the whims of a landlord, and values over time have generally gone up in value, depending on where you're buying. The second, if possible, you should also max out your retirement accounts. Interestingly enough, your 40s also coincide with what's called your peak earning years, meaning you've built up enough experience and momentum to command a significantly higher salary.

So ideally, if you're interested in retiring before the age of 65, you should be working to max out your Roth IRA and your 401(k) to make sure you're on track. Finally, third, if possible, aim to have between five and seven years of your expenses saved up. That's because for a 30-year retirement, you're going to have to have between 25 and 33 times your annual spending invested in order for that money not to run out. In your 40s, this is the number you should really be focusing on—not necessarily your net worth.

But then from there, we have your 50s, with a median net worth of one hundred seventy-one thousand dollars, an average net worth of one million one hundred sixty-five thousand dollars, and a top one percent net worth of seventeen million five hundred forty-five thousand dollars. By this age, most experts recommend that you have anywhere between five to seven times your annual salary saved up and invested in order to be on track to retire, which means the median person is very much behind and has a lot of catching up to do.

Just consider this: it was found that the average person spends fifty thousand dollars a year in retirement, which works out to be four thousand one hundred twenty-eight dollars a month. So, with an average Social Security payment coming in at two thousand four hundred eighty-four dollars a month, that means you'll need to bring in a monthly income of one thousand six hundred forty-four dollars to bridge the difference—assuming no major health complications, no Social Security issues, and no unexpected life events.

That means, following the four percent rule, which suggests that you could spend four percent of your portfolio every single year without running out, you would need five hundred thousand dollars invested—not including the value of your house, car, or anything else that isn't producing an income. That's why, first, you should absolutely track your expenses. This will give you a better understanding in terms of how much you'll need in retirement and will give you a blueprint for how much you'll need to save to get there.

This might also include moving to a cheaper location, cutting back on your expenses, or doing anything else that you can to plan for a time that you may no longer be working. And second, depending on your situation, you should be about halfway through or very close to paying off your mortgage. Hopefully, when that happens, it'll reduce your expenses dramatically and give you a lot of peace of mind that no matter what happens, you have a home that's completely paid off.

Now, remember that doesn't mean that you can't work or make money at all in retirement, but it is about giving you the option of not working, whether that be voluntary or out of necessity. Finally, we have the net worth in your 60s, which is where the numbers begin to peak. As you could see, the median net worth is two hundred seventy-one thousand dollars, the average is 1.25 million dollars, and if you want to be in the top one percent, it's a net worth of sixteen point four million.

Surprisingly, everything from this point on is kind of downhill. For example, every age bracket afterwards, from median, average, and top one percent, declines, likely as they begin working less and spending down their money. However, a few things in this age bracket will begin to happen, and no, I'm not talking about lower back pain.

Instead, first, you'll most likely have already paid off your mortgage. This will give you a paid-off asset that you could always sell in the event you want to retire in Florida. Second, spending actually begins to decline after the age of 65. Even though it might sound kind of depressing, research suggests that worsening health associated with aging reduces the need or desire for some types of spending, such as trips and vacations. So, at least the bright side is that you'd be able to save a little bit more if you haven't done that already.

And finally, third, now is the time that you could begin withdrawing from your retirement accounts without incurring a penalty. Remember, all the profits you made in a Roth IRA are completely tax- and penalty-free after the age of 59 and a half, so enjoy! You can also begin collecting from Social Security in your late 60s, along with cashing out of a 401(k).

So, go ahead and buy that Lamborghini you've always wanted. Just kidding! Anyway, all of this is meant to get you to realize that, at the end of the day, even though net worth is something to consider, a much more reliable indicator of financial independence is simply how much money you spend relative to how much you make. Just remember that it's completely possible for somebody to be worth twenty million dollars and be completely broke because they constantly spend more money than they make, just like it's possible for somebody to be worth five hundred thousand dollars and be financially free because they only spend twenty thousand dollars a year.

That's why I think what really matters the most is just how much money do you spend. It's all about realizing this as soon as possible and then working within your means to optimize your spending and saving as efficiently as you can. So, with that said, you guys, thank you so much for watching. As always, feel free to add me on Instagram, and don't forget that you could get a free stock worth all the way up to a thousand dollars with sponsorpublic.com down below in the description when you make a deposit with the code "GRAM." Enjoy! Thank you so much, and until next time!