Five Net Worth Benchmarks You Should Know

Americans have a funny relationship with money. We, as a society, celebrate the ostentatiousness with which the Kardashians live their life on TV. They are famous because they are rich, have cameras, and show a little vulnerability so people feel like they can relate.

TV is entertainment. It’s an escape. It’s fun. I don’t begrudge that or them.

But it becomes dangerous when you start internalizing that, confusing net worth for self-worth, and bringing that thinking out of the experience.

Your net worth is a lot like your weight.

It’s a single number that does an adequate job of capturing your financial health but it’s not the most important.

You can calculate it quickly, especially when using a free tool like Personal Capital, and accurately with much work.

But you can’t compare yours with someone else’s without knowing a lot more information. The average lineman in the NFL is over 300 pounds – is that a healthy or unhealthy weight? Now factor in their average height of 6′ 5″. And how quickly they can cover 40 yards (around 5 seconds).

Your net worth is valuable to know, net worth benchmarks are valuable to compare against, but it is just one metric. A valuable metric but not the ultimate one.

Table of Contents
  1. The One True Benchmark
  2. 1. Positive Net Worth 10 Years After Graduation
  3. 2. Net Worth by Age and Income
  4. 3. Net Worth by Age
  5. 4. Average Savings Rate
  6. 5. F.T.I.- F&*% This Index

The One True Benchmark

Before you see these five net worth benchmarks, I want to share the only true “benchmark” that matters.

We all start at different points. I was fortunate that my parents emigrated to the United States, were well educated and employed full-time for my entire life, and were able to provide financial assistance in college. I graduated with $35,000 in student loan debt but that’s nothing compared to some of my peers.

I had it good.

When I point to my net worth in my twenties, that’s a function of my good luck. I chose a degree that was in demand (Computer Science), got a good job in a strong industry (defense), and my net worth improved each year.

And that’s the one true benchmark – me vs. last year. Me vs. 5 years ago.

Understand your own financial progress. Over a five year window, your net worth should increase. Year to year it might fluctuate, especially if you’re investing in the stock market, but the trend should be moving upwards. And tracking my net worth keeps me grounded.

That’s it. That’s the one true benchmark. Yourself.

Also, home equity plays a role in net worth but it’s not always clear how you should value your home. I set it to be the purchase price and never touch it. It’s not ideal but it’s simple. Here are a few other ways to determine how much your home is worth.

Now, onto these benchmarks.

1. Positive Net Worth 10 Years After Graduation

(I say graduation but I mean 10 years of “full earning potential” — so if your career involves relatively low paying residencies or internships before “full earning potential,” take that into account)

This first net worth benchmark is more about managing your debt than anything else.

That first year you’re out in the real world is an expensive wake-up call. If you rent an apartment, expect to put down the first and last month’s rent plus a security/cleaning deposit. If you don’t yet have a car, expect to get one to help you get around unless you’re fortunate and live near mass transit. Depending on your level of fiscal prudence in school, you may have some credit card debt too.

All that will result in a negative net worth. Aim to get that to a positive within ten years of graduation.

The wildcard in this benchmark is student loan debt. Like a car loan, it’s an enabling debt. With a degree, you’d expect to get a higher paying job than without. It’s also like a car loan, buy too much car or too much college and you’ll be paying for it.

This benchmark is meant to be a target – push hard for this. You are not a failure if you don’t achieve this. You are not a success if you do. It’s merely the beginning.

2. Net Worth by Age and Income

The Millionaire Next Door has my favorite equation for how much net worth and it’s based on your pre-tax income (excluding inheritances and other one-time events):

Net Worth = Age X Pre-Tax Income / 10

It’s very simplistic but benchmarks are supposed to be simple. It has a tendency to be high early on (the first 5-10 years of full time work) and doesn’t account for geographic costs of living. Or fluctuating income. Or a million other things.

If you are 25, make $50,000 a year pre-tax, then you “should” have a net worth of $125,000 according to this equation. If it’s your first year working, that’s unlikely. It’s also unlikely if it’s your third year working and you live in Manhattan!

It’s still a good measuring stick because it accounts for income and age.

3. Net Worth by Age

This chart comes from the Federal Reserve Bulletin’s Survey of Consumer Finances from 2019 [PDF]:

Table 3. Holding and values of assets, 2016 and 2019 surveys

If you want to know how you’re doing compared to your peers, it’s on the chart!

Age of HouseholderMedian Net Worth
Under 35 years old:$9,773
35 to 44 years old:$73,560
45 to 54 years old:$125,400
55 to 64 years old:$194,800
65 to 69 years old:$236,900
70 to 74 years old:$302,300
65+ years old:$251,000
75+ years old:$237,900
Source: U.S. Census Bureau, Survey of Income and Program Participation, Survey Year 2018

The ranges are very wide, a lot can happen in 9 year range, but they give you an idea of where the population is.

4. Average Savings Rate

If your net worth is equal to assets minus liabilities, assets play a pretty big role, right? How do you get those assets up without incurring liabilities? Saving money!

The average savings rate of Americans, according to the Federal Reserve Bank of St. Louis, is around 5.5% at the time of the original publication in March 2017 (it’s since risen to 7.0% in early late 2019, early 2020 – but it spiked during the pandemic). That means for every $100 earned, only $5.50 goes towards things like a savings account, retirement accounts, etc. This is a pre-tax figure, so savings is income minus “outlays” (expenses) and taxes.

Of course, how much you make matters too. The more you make, the more you save…. right? Generally, but not necessarily.

From the Report on the Economic Well-Being of U.S. Households in 2015:

More income doesn’t always mean more savings!

To recap – the average is 5.5% but you should adjust for income too. 31% of all respondents saved 0% and 27% of all respondents saved between 1-5%, but that leaves 41% savings 6%+.

Then, plug that into the average savings balance of Americans, and you have a situation where the median balance needs to get much higher if we want to be in a stable financial situation.

5. F.T.I.- F&*% This Index

I first saw this equation on Quora and I love it for it’s simplicity. I also like how it gives you a finish line.

When your FTI > 1,000 – tell your boss to … pound sand.

He retired with an FI of 1435 – at the age of 41 with a net worth 35 times his expenses. You are financially ready to retire when your FTI is over 1,000 so he had plenty of breathing room.

At it’s core, it’s an expenses driven ratio with a nod towards your mortality, represented by your age.

This only applies to the money side of readiness. If you enjoy your job, it’s low stress, it’s not a bad way to live to keep working. I like to work because I enjoy learning, being productive, and growing through challenges. Removing the financial stress and pressure makes it all the more enjoyable.

Just because you can retire doesn’t mean you must retire.

It’s also a more conservative “FU number” figure than the 4% safe withdrawal rule (which is arguably not all that safe anyway).

Other Posts You May Enjoy:

How to Use a Health Savings Account: Understanding How HSA Accounts Work

The Health Savings Account is a tax-advantaged health cost savings plan used with your employer's high deductible health plan. Also known as an HSA, it can help you cover healthcare expenses, save money on taxes, and even save money for retirement. Find out how to use a Health Savings Account to your advantage.

About Jim Wang

Jim Wang is a thirty-something father of four who is a frequent contributor to Forbes and Vanguard's Blog. He has also been fortunate to have appeared in the New York Times, Baltimore Sun, Entrepreneur, and Marketplace Money.

Jim has a B.S. in Computer Science and Economics from Carnegie Mellon University, an M.S. in Information Technology - Software Engineering from Carnegie Mellon University, as well as a Masters in Business Administration from Johns Hopkins University. His approach to personal finance is that of an engineer, breaking down complex subjects into bite-sized easily understood concepts that you can use in your daily life.

One of his favorite tools (here's my treasure chest of tools,, everything I use) is Personal Capital, which enables him to manage his finances in just 15-minutes each month. They also offer financial planning, such as a Retirement Planning Tool that can tell you if you're on track to retire when you want. It's free.

He is also diversifying his investment portfolio by adding a little bit of real estate. But not rental homes, because he doesn't want a second job, it's diversified small investments in a few commercial properties and farms in Illinois, Louisiana, and California through AcreTrader.

Recently, he's invested in a few pieces of art on Masterworks too.

Opinions expressed here are the author's alone, not those of any bank or financial institution. This content has not been reviewed, approved or otherwise endorsed by any of these entities.

Reader Interactions

Leave a Comment:

Comments

About the comments on this site:

These responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

  1. Jabadu says

    It’s critical to distinguish between net worth comprised of liquid/readily available investments/cash, and net worth inclusive of retirement accounts & home equity/fully paid home. For example, i could have a net worth of $2M at the age of 45. But that’s $200k in liquid investments/cash readily available, $1.4M in retirement accounts not available for penalty free withdrawal until 59 1/2, and home equity/fully paid off home at $400k. That’s $2m net worth at 45 years of age. If my expenses were modest at $45k a year, I’d blow through the $200k in 5-6 years. Then at the age of 50 I’d have to start tapping into my retirement accounts which I’d get hit for a 10% penalty for withdrawal under age 59 1/2, plus the impact of taxes on the withdrawals (assuming it’s not a Roth), which would rob from future compounding. Important to consider, and any novice financial planner would point that out in 30 seconds.

See More Comments

As Seen In: