As we get older, there are certain milestones that we want to meet to ensure that we are keeping up with others. For instance, when we are in our teens, we want to graduate high school and have our first kiss. When we are in our 20s, we aim to finish college and start our careers and if we’re lucky, buy a house. Then, in the proceeding decades, getting married and starting a family as well as eventually retiring tends to be most people’s goals. Well, one often overlooked metric for progression is our net worth and knowing where you stand financially is key to making the best money decisions possible and as such let’s now get into what your net worth should be by age so you can see how you stack up against others!
Let’s face it, most of us can be rather nosy at times. I’ll be the first to admit that I’ve definitely looked up the net worth of my favorite athletes and movie stars before and chances are you have too. There’s just something about knowing how rich or poor other people are that can trigger a great sense of intrigue within us.
But, have you ever asked yourself why we do this in the first place? Well, I’m no scientist but my guess is that the intrigue to compare our net worth to those around us stems from what is known as the social comparison theory. If you’re unfamiliar, the social comparison theory was first proposed in 1954 by psychologist Leon Festinger and suggested that people have an innate drive to evaluate themselves, often in comparison to others.
This theory likely explains why we seem to be so captured by social media because we are constantly getting that dose of comparison when we open up our phones and see how our peers are faring in life compared to us. However, as you can imagine, there are a few issues that arise when comparing your financial progression to others online which I think is worth briefly discussing.
Net Worth Problems
The first issue is that a lot of what you see online is skewed from reality. For instance, it’s incredibly easy to see a picture of your old high school classmate standing beside a Ferrari and while you may perceive it as being his car, he may have just attended the local car show in his city. Alternatively, you may see others travelling around the world and take that as a sign of financial success but in fact they could be doing it on a shoestring budget or through maxing out their credit cards. In short, social media often doesn’t paint the whole picture that we need to make a fair assessment of how we stack up compared to others.
The other issue is that with social media, we are comparing ourselves to others every single day, often numerous times a day. Even with the best financial game plan in place, you can’t make the progression you need in that short of a time frame to ever feel like you are keeping up with others. As someone who’s definitely felt social media comparison degrade their mental health in the past, I urge you to remember that for the most part, social media is just a highlight reel and not reality.
Net Worth Upside
Now, the ironic part here is that I actually do believe that comparing your net worth to others is in fact a useful exercise to perform from time to time but to do that, you need to know what exactly a net worth is and how to calculate it so let me go over these two things right now.
Your net worth is defined as:
“the total wealth of an individual, company, or household, taking account of all financial assets and liabilities.”
For those who are unfamiliar, a few of the most common financial assets you may possess include cash, cars, homes, and investments like stocks, bonds and cryptocurrency. Liabilities on the other hand would be things like your student or credit card debts and if you own a home, likely a mortgage.
So, for myself, to figure out my net worth, I would add up all my cash in the bank, investments, property and then subtract the debts I have which is just my mortgage.
Once you have your net worth figured out, there are two things you want to do. The first, and the one I bet you will feel most compelled to do, is compare where you’re at to others so let me now share with you the average net worth by age so you can see how you stack up.
Net Worth: 35 and Under
Starting with people under 35, the median household net worth in the United States is $13,900. Now, there are a few reasons why people in this age range would have a rather low net worth with the first being what I like to call the up-start costs of life. As I already mentioned, one of the detractors in your net worth calculation will be the debts you carry and if you’re like one of a large group of 42 million Americans then you too are probably carrying some financial baggage from your college years. These days, the average college grad in the United States starts their adult life with just under $40,000 worth of debt and when compounded with the next factor we will get into, it’s easier to see why people in this age range would struggle in showing off an impressive net worth.
The second factor going against the millennial generation and younger is that they have yet to start making inroads in their careers. I think we can all agree that starting salaries these days are not anything to write home about and as such being able to make a dent in your net worth will be challenging during the early days of your career. Fortunately, things tend to look up as time goes on so let’s now get into the next net worth age range.
Net Worth: 35–44
The next age group are those age 35–44 who have a median net worth of $91,300. As you can see, this is a large step up from the last age group and when you peel back the layers, this financial feat is actually even more impressive. As you know, your net worth is all your assets minus your liabilities and if you have a net worth close to $100,000 that means that you are well exceeding the financial drag that comes with one of the most common assets people have at this stage of their lives which is a mortgage.
As of 2021, the average mortgage for a new home in the United States was just over $410,000, which means that taking on the role of a homeowner leaves you with a large liability that detracts from your overall net worth. However, fortunately, home prices have been rising steadily and if things continue this way then your home should start to allow your net worth to rise to greater heights over time. In fact, as we move into the next age bracket, you will see the results of this major financial decision in action.
Net Worth: 45–54
Moving on, the median net worth for people between the ages of 45 and 54 is $168,600. As you can see, people in this age group tend to be well into the six-figures in overall net worth and if you ask me this is the result of three financial factors being in place. The first is that many will have had some time for their homes to appreciate, leading to a greater overall asset base. Second, they would have likely paid off all their student loans by this point so that removes a large detractor from their net worth equation. Finally, at this age, people are usually near the peak of their incomes so saving more money every month should be feasible.
Net Worth: 55–64
The next group of individuals are those age 55–64 and their median net worth is reported as being $212,500. This rise in net worth is again a result of the three factors I just mentioned from the 45–54 group with one potential catalyst being an empty nest which as you can imagine can lead to saving a good amount of extra money every month.
If you ask me, the determination of your net worth is no more important than for people in this age group as these individuals are closing in on retirement and as such will soon be relying on the assets they have to keep them going throughout the course of their retirement years.
Net Worth: 65–74 and 75+
The final two groups are those ages 65–74 and 75 and above and their median net worth are $266,400 and $254,800 respectively. Now, you may be wondering why all of a sudden those who are in the oldest age bracket start seeing a decrement in their net worth and this is often the result of those in their later years realizing that you can’t take your money to the grave and as such spend the money they’ve worked so far to earn. Of course, they can’t go wild and blow it all in a year but spending a bit more than usual, especially if it doesn’t jeopardize their finances, is not necessarily a bad thing.
At this point, you now know what the median net worth across numerous age groups are and the question you may be asking is, so what? Well, besides scratching your itch to know other people’s financial states, being aware of these figures is a great starting point for your own assessment of how well you are progressing financially.
One saying that I constantly say to myself is “what isn’t measured, isn’t managed” and I believe that comparing your financial progression to the likes of others can be helpful. For instance, if you are well ahead of those in your age group, it can be a sign for you to keep up the good work you’re doing. Alternatively, if you are well behind, it may prompt you to pull up your socks and make the necessary changes required for you to make up for lost ground. In fact, after being presented these net worth figures, if you find yourself behind or if you just want to lap others in your age group more than you already are, then here are a few tips for doing just that.
Net Worth Expansion
The first and most important step you need to take to start improving your net worth is to make more money. I’m sure you thought I would tell you to cut up your credit cards or cut out coffees but those things won’t move the needle anywhere near as much as making more money will. For instance, if you can earn an extra $1,000 a month, which is easier than you think, eradicating your debt and saving more money every month will be a breeze.
For me, raising my income has come primarily through doing freelance work and running a few online businesses but making some extra cash can also simply mean taking on more hours at work or picking up a part-time job. Once you have access to this extra income, then you should start funneling that money towards your debts and then subsequently your investments so that your money and your hard work can combine to ensure your net worth continues to rise over time.
Therefore, as you’re coming to see, being aware of your net worth and the net worth of others is actually a very important part of achieving financial success. This figure is one of the best gauges of the quality of the financial decisions you’re making and by reviewing it regularly, I can guarantee that you will soon find yourself miles ahead of the competition!