Opinions expressed are author’s alone, not those of any bank, credit card issuer, or other entity. This content has not been reviewed, approved, or otherwise endorsed by any of the entities included in the post.
Most people associate net worth with the rich and famous, but it’s important for everyone to know. Think of your net worth like a snapshot in time, highlighting how you’re faring financially. It’s calculated by adding up the value of all your assets and subtracting your debt.
Average net worth increased by 23% between 2019 and 2022, according to the Federal Reserve. But there are pretty big differences in net worth depending on your age.
Curious about how your net worth compares to others your age? Having a benchmark can help you see where you stand and develop a plan to grow your wealth. Here’s a look at the average net worth by age.
What is net worth?
Your net worth is the total value of your assets minus your liabilities. Assets include things like cash, investments, real estate, and personal property. Liabilities include debts like student loans, credit card balances, and mortgages.
Calculating your net worth is an important step in understanding your financial health. It gives you a snapshot of where you stand financially and can help you make better money decisions.
Average net worth by age
Now, let’s look at the average and median net worth by age, according to the Federal Reserve’s October 2023 report.
Remember, median net worth is generally a more accurate representation of the typical American’s financial situation. That’s because the net worths of the ultra-wealthy — billionaires like Elon Musk and Jeff Bezos — tend to skew the averages.
| Age of head of family | Median net worth | Mean net worth |
|---|---|---|
| Less than 35 | $39,000 | $183,500 |
| 35-44 | $135,600 | $549,600 |
| 45-54 | $247,200 | $975,800 |
| 55-64 | $364,500 | $1,566,900 |
| 65-74 | $409,000 | $1,794,600 |
| 75+ | $335,600 | $1,624,100 |
As you can see, net worth tends to increase with age. This makes sense, as people have had more time to accumulate assets and pay down debts as they age.
However, it’s important to note that these are just averages. Your net worth may be higher or lower depending on your income, location, educational background, and more.
How net worth changes over time
Most young adults are starting to build their careers and establish their financial foundation. During your 20s, your net worth may be low or even negative, especially if you have student loans or other debts. This is a crucial time to start developing good financial habits, such as budgeting, saving, and investing.
As you enter your 30s and 40s, your career may start to take off, and your income will likely increase. This is often when people accumulate assets by purchasing a home or investing in the stock market.
In your 50s and 60s, your net worth may grow as you approach your peak earning years. At this stage, you may focus on paying off any remaining debts, like a mortgage, and ramping up your retirement savings.
As you enter retirement, your net worth may decline as you begin drawing down your savings to cover your living expenses.
Remember, these are general trends — everyone’s financial journey will be unique. Factors like your career path, lifestyle choices, and unexpected life events can all impact your net worth over time.
Why track your net worth?
Tracking your net worth gives you a clear picture of your financial health. It helps you understand where you stand and provides a baseline for setting financial goals.
“Many times, folks look at how much money they make, or how big their bank or investment accounts are, to gauge how financially healthy they are,” says Leland Gross, certified financial planner and founder of Peacelink Financial Planning. “But the problem arises when you have a high income but are riddled with debt.”
Only focusing on tracking your assets fails to account for how much your liabilities (or debt) may drag you down.
Additionally, tracking your net worth can help you make better financial decisions. When you clearly understand your assets and liabilities, you can focus on spending based on your long-term goals. This can help you avoid overspending, reduce debt, and build wealth over time.
If you see your net worth rising over time, it suggests you’re making smart decisions in saving and managing your debt. A net worth moving in the wrong direction can provide clues about what might be going wrong.
How to calculate your own net worth
Now that you know the average net worth by age, you may wonder how to calculate your own. Here’s a simple formula:
Net Worth = Total Assets – Total Liabilities
To calculate your total assets, add up the value of everything you own, including:
- Cash and cash equivalents (checking and savings accounts)
- Investments (stocks, bonds, mutual funds, retirement accounts)
- Real estate (your home, rental properties)
- Personal property (cars, jewelry, art, etc.)
To calculate your total liabilities, add up everything you owe, including:
- Mortgages
- Student loans
- Credit card balances
- Car loans
- Other debts
Subtract your total liabilities from your total assets, and voila! You have your net worth.
Here’s an example of what that would look like. Let’s say you have:
| Assets | Liabilities |
|---|---|
|
|
You’d subtract your total liabilities ($225,000) from your total assets ($375,000) to find your net worth ($150,000)
Tips to grow your net worth
If your net worth isn’t where you want it to be, don’t worry. There are plenty of things you can do to grow it over time. Here are a few tips:
- Create a budget: Track your income and expenses to see where your money goes. Look for areas where you can cut back and redirect that money toward savings and investments.
- Pay off high-interest debt: Credit card debt and other high-interest loans can eat away at your net worth. Focus on paying these off as quickly as possible. “If your savings account will credit 4% but your credit card interest is 20%, then your credit card is hurting your net worth more than your savings is helping it,” Gross says.
- Save and invest consistently: Make saving and investing a habit. Set aside a portion of your monthly income and invest it in a diversified portfolio of stocks and bonds.
- Increase your income: Look for ways to boost your earnings, whether through a side hustle, negotiating a raise, or switching to a higher-paying job.
- Live below your means: Avoid lifestyle inflation and live below your means. This will allow you to save and invest more of your income over time. Here are some tips to save money on a low income.
The goal is to have more money coming in so you can save and invest. This can help you grow your assets, increasing your net worth.
Bottom line
Knowing the average net worth by age can be a helpful benchmark, but it’s important to remember that everyone’s financial journey is unique. Don’t get too caught up in comparing yourself to others. Instead, focus on creating a solid financial plan and taking consistent action toward your goals.
Opinions expressed are author’s alone, not those of any bank, credit card issuer, or other entity. This content has not been reviewed, approved, or otherwise endorsed by any of the entities included in the post.