Average Net Worth for Your Age: From a Financial Advisor

Net worth shows the total value of your assets minus your debts. It gives a quick view of your financial health at any time. Tracking your net worth can help gauge your progress toward financial goals. For instance, paying off debt increases your net worth by reducing liabilities.

What is Net Worth?

Your net worth reflects the value of what you own after accounting for what you owe. It’s a useful indicator for understanding financial stability and is often reviewed by lenders when evaluating loan eligibility.

To calculate net worth:

1.     Add up the total value of your assets, such as savings, investments, and property.

2.     Subtract your liabilities, including debts like credit card balances, mortgages, and loans.

Some items, like a home or car, can be both assets and liabilities. For instance, a home is an asset, but the mortgage on it is a liability. The net contribution to your net worth is the home’s market value minus the outstanding mortgage balance.

If your assets exceed your liabilities, you have a positive net worth. Conversely, a negative net worth indicates that your liabilities are greater than your assets.

It’s important to understand that income does not directly decide net worth. A person with a modest salary can have a high net worth if they own valuable assets. On the other hand, a high-income earner with big debts might have a low or negative net worth.

Net Worth Trends by Age

As people progress through their careers, their net worth typically grows. This increase is often linked to higher incomes, lower debt, and the benefits of saving and investing early. Net worth usually peaks around retirement age when individuals begin drawing on their accumulated savings.

Average Household Net Woth By Age

Age of Reference Person                   Average Net Worth

Under 35                                             $183,50035

35-44                                                   $549,600

45-54                                                  $975,800

55-64                                                   $1.57 million

65-74                                                   $1.79 million

75+                                                      $1.62 million

Median Net Worth

Median net worth gives a clearer view of financial health for most households. It shows the middle point of all earners. This measure avoids being affected by extreme cases of very high or very low net worth. Comparing your median net worth to your age group can offer valuable insights into your financial progress.

Median Household Net Worth By Age

Age of Reference Person                   Median Net Worth

Under 35                                             $39,000

35-44                                                   $135,600

45-54                                                   $247,200

55-64                                                  $364,500

65-74                                                   $409,900

75+                                                      $335,600

Strategies to Build Net Worth

Regardless of your current financial situation, these tips can potentially help to boost your net worth:

Cut Expenses and Stick to a Budget

Identify areas to save money and create a budget that prioritizes necessities while leaving room for occasional indulgences. A disciplined budget can be especially helpful early in your career or during retirement when income is fixed.

Establish Emergency Savings

Build a cushion for unexpected expenses to avoid relying on high-interest debt. Aim to save at least 3 to 6 months’ worth of expenses in a separate account for accessibility.

Manage Debt Effectively

Reducing high-interest debt frees up funds for savings and investments. Pay off debts systematically, starting with those that have the highest interest rates.

Invest for Retirement

Put money into retirement accounts like a 401(k) or IRA. This helps you get tax benefits and possible employer matching. Increase contributions annually to maximize savings over time.

Explore Health Savings Accounts (HSAs)

If eligible, contribute to an HSA to save for medical expenses while enjoying tax advantages. These accounts can also serve as a supplemental retirement savings tool.

Invest in Other Goals

Brokerage accounts, while not tax-advantaged, offer flexibility for non-retirement goals, such as buying property or funding education.

Leverage Employer Benefits

Consider job offers that include benefits like retirement contribution matching, student loan repayment assistance, or health expense credits.

Plan Retirement Withdrawals Strategically

Develop a withdrawal strategy that minimizes tax implications. Spreading taxable income evenly in retirement can reduce taxes on Social Security benefits and Medicare premiums.

By managing your spending, saving smartly, and investing wisely, you can help grow your net worth. This will help you build a strong financial foundation for the future.

Sources:

https://www.fidelity.com/learning-center/smart-money/average-net-worth-by-age

Disclosures:

This information is an overview and should not be considered as specific guidance or recommendations for any individual or business.

This material is provided as a courtesy and for educational purposes only.

These are the views of the author, not the named Representative or Advisory Services Network, LLC, and should not be construed as investment advice. Neither the named Representative nor Advisory Services Network, LLC gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.