Are you rich? The average net worth by age can help you benchmark your financial success against your peers and aid in retirement planning. But when most people hear the term net worth, their thoughts turn to the world’s richest people — billionaires like investor Warren Buffett or superstar singer and songwriter Taylor Swift. However, regular folks with 401(k)s, investment portfolios, and real estate holdings have a net worth, too. There’s a lot you can learn about your financial strength by calculating your net worth and seeing where you stack up versus others around the same age or stage of life. Think of your net worth as a scorecard.
Net worth isn’t just about tallying up assets you own, such as a retirement savings account, shares of a publicly traded stock, or the Ferrari parked in your driveway. You must plug your debt into the equation. Net worth is the difference between your assets and your liabilities. Put another way, it’s what you own minus what you owe. Both inputs give you a more complete picture of your financial situation.
For example, if you have $500,000 in your 401(k), own a home worth $500,000, and drive a BMW worth $100,000, it means you have assets totaling $1,100,000. But if you owe $400,000 on your house, $50,000 on your car, and $10,000 on your credit card, that adds up to $460,000 in total liabilities. When you do the math, you realize your net worth isn’t $1.1 million, but rather $640,000.
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Average net worth stats
Below, we highlight net worth statistics through 2022 from the Federal Reserve’s “Survey of Consumer Finances” (the most current data available). The net worth data show both average as well as median (a midpoint with half higher and half lower).
Let’s start with the big picture. The median net worth of all Americans in 2022 was $192,900. The average net worth (which skews to the upside due to folks with extremely high net worths) was $1.06 million, according to the Fed. You may want to focus on the median net worth number, as it is less affected by those who are extremely rich.
As the table shows, older Americans tend to have higher net worth, as they have had their entire lives to accumulate assets, such as 401(k)s, IRAs, real estate, and equity in their own business.
| Age Range | Average Net Worth | Median Net Worth |
|---|---|---|
| Younger than 35 | $183,500 | $39,000 |
| 35 - 44 | $549,600 | $135,600 |
| 45 - 54 | $975,800 | $247,200 |
| 55 - 64 | $1,566,900 | $364,500 |
| 65 - 74 | $1,794,600 | $409,900 |
| 75 or older | $1,624,100 | $335,600 |
| All ages | $1,063,700 | $192,900 |
Source: Source: Federal Reserve “Survey of Consumer Finances (2022).”
Knowing your net worth can offer useful insights into your money habits and future goals, says Tim Steffen, director of advanced planning at Baird Private Wealth Management. Net worth offers a window into your investments and the assets you own and also highlights all the financial liabilities, such as money owed on mortgages, student loans and credit cards.
“Knowing how all your assets and liabilities fit together is a big part of understanding your net worth,” says Steffen.
Not only can knowing your net worth help you budget better, but it can also help you better estimate when you’ll be able to retire.
“You may have a good handle on what you spend every year, what kind of lifestyle you want to live, but you have to know if you have the resources available to support that during your retirement years,” says Steffen.
Key factors that impact net worth include education level and whether households own their home or rent. Homeowners can build home equity with each mortgage payment they make and benefit from price appreciation. The average net worth for holders of a college degree was $2,003,400 versus $413,300 for Americans with a high school diploma, Fed data show. Similarly, the average net worth for homeowners was $1,530,900 compared to $154,900 for renters.
What makes up net worth?
As you can see from Kiplinger's Net Worth Calculator, your net worth is comprised of various financial assets and liabilities.
Assets may include the following:
- Cash (checking and savings accounts, CDs, savings bonds)
- Retirement accounts (IRAs, 401(k)s, Keoughs and Pensions)
- Life insurance
- Investments (stocks, bonds, mutual funds, etc.)
- Home (market value of any homes you own)
- Property (cars, jewelry and other collectibles)
Liabilities. On the other side of the ledger, liabilities include money owed on mortgages, home equity loans or home equity lines of credit, credit cards, and installment loans, such as money you borrow to buy a car or pay for college tuition.
So, how does net worth differ between actual age groups? To find out, we looked at proprietary data supplied by Empower.
| Age by decade | Avg. net worth | Median net worth |
|---|---|---|
| 20s | $110,241 | $7,522 |
| 30s | $309,736 | $35,309 |
| 40s | $776,880 | $124,509 |
| 50s | $1,389,297 | $287,482 |
| 60s | $1,689,144 | $439,050 |
| 70s | $1,617,721 | $367,231 |
| 80s | $1,514,349 | $343,661 |
| 90s | $1,289,391 | $293,432 |
*Anonymized user data from the Empower Personal Dashboard a/o Nov. 4, 2024.
It’s no surprise that younger people have a lower net worth. They’re just starting their careers, typically don’t earn as much as older workers, and have yet to start accumulating assets such as stocks and bonds or real estate. Net worth tends to swell when people hit their 40s and 50s, as they’re more apt to be moving into their peak earning years and are starting to benefit from the appreciation of assets in their workplace retirement accounts, their homes, and other investments. Net worth tends to peak when people hit their 60s, largely due to the compounding of savings over their lifetimes and the fact that they are just reaching retirement and just starting to take withdrawals from their investment accounts.
How to build your net worth
Not everybody can become a billionaire trading stocks and buying companies like Buffett. Or scale a business as large as Jeff Bezos’ Amazon. Nor does everybody have the capital to become a real estate investor or the entrepreneurial skills to become their own boss.
But just because you’re not one of the world’s 2,781 billionaires, according to Forbes, doesn’t mean you can’t build a sizable net worth.
Here’s some tips to help build your net worth.
Wealth isn’t built overnight. For most people, “slow and steady wins the race,” said Steffen. Building wealth and growing your net worth is about consistent savings, investing in a diversified portfolio, and staying invested over the long haul. And while you might make a killing by buying a single hot stock or going all-in on a cryptocurrency like Bitcoin, you’re better off spreading your money out among several investments. “A big part of growing net worth is having a diversified portfolio,” says Steffen. “Putting all your eggs in one basket can be a great way to create wealth if you can hit a home run. But it’s a horrible way to keep wealth because that home run can turn into a strikeout the next day.”
Buy assets that appreciate in value. You can’t build wealth by playing it safe and hiding your money under the mattress, earning a zero return. “Your money’s not going anywhere, but it doesn’t do anything for you, either,” says Steffen. “The first part (of growing your net worth) is you’ve got to save your money. The second part is you have to invest your money. The third part is you have to stay invested.”
If you want to grow your net worth, invest in things that make money for you when you are sound asleep. Think stocks, bonds, real estate. Make sure your money is working hard for you. “Finding assets that appreciate is really the key to building wealth,” says Tara Lawson, a senior wealth planner at US Bank Private Wealth Management. “It’s that compounding interest, that compounding growth. You’ve got to outpace inflation. Whatever your risk tolerance is, make sure your money is performing for you.”
Take advantage of workplace retirement plans. Your 401(k) can quietly build your net worth over time. The winning game plan of consistent savings from payroll deductions, the benefits of growth, taking advantage of employer matching contributions, and benefiting from the tax-advantaged perks of retirement plans can’t be overemphasized. “It’s not a sexy strategy, but investing for the long term works,” says Lawson.
Don’t load up on debt. Since debt is subtracted from your assets to determine your net worth, the less debt you have, the better, notes Steffen. “I often get calls from advisors who say that they have a really high-net-worth client with X millions of dollars, and they’re going to be fine for retirement,” says Steffen. “I counter, ‘Well, how do we know that?’ Maybe they have a lot of money, but maybe they spend a lot, too.” Net worth is not just about what you have, but what you owe, he stresses,
Own your own business. In 2022, nearly half of the families in the top decile of net worth owned a privately held business, according to the Fed. Not everybody, of course, will be as successful as Elon Musk. But starting a business that you can scale and make money while others work for you is another path to a high net worth.
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