Have you ever wondered how you stack up against other people financially?
It’s not uncommon to want to measure our financial situation with others who are in a similar age range or stage of life.
These comparisons are often made on an income basis. In other words, how much money do you make compared to other people your age or in your life stage?
But it’s often more revealing to make the comparison on the basis of net worth, including net worth by age.
Average Net Worth by Age
Personal Capital conducted proprietary research to determine the average and median net worth of the American investor.
It’s worth noting that people who use the Personal Capital Dashboard tend to adhere to smart money practices: maintaining a comfortable emergency fund, contributing regularly to their retirement accounts, and optimizing their investments for tax efficiency. As a result, these people tend to have a higher-than-average net worth.
Following are the average and median net worths of Personal Capital Dashboard users, broken down by age.*
Age by Decade
Average Net Worth
Median Net Worth
Get a Different Take: What Is the Average Net Worth by State?
How is Net Worth Calculated?
Net worth is simply everything you own, or your assets, minus everything you owe, or your debts. It is calculated by subtracting what you owe to creditors from what you currently own. Or put another way, it’s the value of your assets after you’ve subtracted all your debts and liabilities.
Let’s consider John. He owns a home currently valued at $300,000. His current mortgage balance is $150,000, so John has $150,000 in home equity that counts toward his assets. In addition, John has an investment portfolio worth $150,000 and outstanding debt of $180,000 in the form of credit card debt, a car loan, and his mortgage.
To calculate John’s net worth, we’ll subtract his total liabilities (outstanding debt) from his total assets (home equity and investment portfolio). Not counting possessions like his car, furniture, electronics, jewelry, etc., John’s current net worth is $120,000.
$150,000 home equity + $150,000 investment portfolio – $180,000 outstanding debt = $120,000
You can get a quick look at your net worth using this calculator.
Tip: Track your net worth over time using Personal Capital’s free money-management tools.
What Makes Up Your Net Worth?
Your net worth is the total value of your assets minus your liabilities. Following is a look at what the Federal Reserve Board considers to be assets and liabilities.
Cash within bank accounts, such as checking, savings, money market accounts, etc.
Prepaid debit cards
CDs and savings bonds
Health savings accounts
Investment accounts including 529 college savings plans and individual taxable investment accounts
Retirement accounts, including IRAs, 401(k)s and 403(b)s
Life insurance policies with cash value
Annuities with equity
Value of vehicles including cars, RVs, motorcycles, boats and helicopters
Value of real estate, including rental homes and primary/residential homes
Home equity lines of credit or home equity loans
Credit card balances
Installment loans, including personal loans, auto loans and student loans
How Do You Build Net Worth?
Now that you have an idea of what your net worth is, you might want to take steps to build your net worth.
Here are a few ideas to get you started.
Set up an automatic savings program. When your money is automatically transferred into a savings or retirement account each month, you don’t need to think about it. As your income grows over time, increase the amount of money that’s transferred into savings.
Pay down debt, especially high-interest credit card debt. Once you are consumer debt-free, consider paying down your home mortgage if you have one.
Watch your spending. The less money you spend, the more you’ll have to save and build your net worth. For example, cut down on eating out at expensive restaurants, pare back your vacation budget, and eliminate streaming services that you rarely use.
Building Net Worth by Age
Remember that building net worth is a gradual process that occurs over the course of a person’s lifetime.
As the data shows, net worth tends to increase over a person’s lifetime until the 60s. At this stage, net worth gradually begins to decrease, as income falls during retirement and funds from investment accounts are withdrawn to meet living expenses.
Read More: Your Guide to Retirement Planning
Here are some tips for building net worth during each decade of life.
In Your 20s
For many people, the 20s are the time in their life when they are starting their professional lives and possibly a new career. Their earning potential may be somewhat limited, which might make it seem difficult to build net worth during this decade. The key is establishing good financial habits and disciplines that will help you build net worth over the rest of your life, such as setting aside a certain percentage of pay each month to save and invest.
Read More: How to Use Personal Capital for Budget Goal Tracking
In Your 30s
One of the keys to building net worth during this life stage is continuing to prioritize saving and investing. It can be easy for higher earnings to get swallowed up in mortgage and car payments, child-rearing expenses and splurging on a few luxuries like nice vacations and fancy dinner. Instead, it’s important to maintain the saving and investing disciplines that were established in the previous decade and even increase the percentage of income saved, if possible.
Read More: How HENRYs (High Earner Not Rich Yet) Can Reclaim Their Financial Potential
In Your 40s
Growing financial responsibilities can make building net worth especially challenging during the 40s. One way to meet the challenge is to avoid falling into the trap of what’s sometimes referred to as “lifestyle creep.”
As income grows, some 40-somethings are tempted to try to “keep up with the Joneses” by moving into a bigger home, joining a country club, driving exotic cars or going on expensive vacations. It’s OK to enjoy the fruits of your labor, but keeping expenditures like these in check will go a long way toward building net worth during this life stage.
In Your 50s and 60s
The 50s and 60s mark the beginning of the “stretch run” toward retirement for many people. The time window for building net worth during the wealth accumulation stage of their life is starting to shrink as retirement draws closer. Given the shrinking window before retirement, the most important net worth-building step for many people in their 50s and 60s is to max out their retirement accounts. It’s also critical to start paying down outstanding debt during this time.
Read More: The Average 401k Balance By Age
In Your 70s and Beyond
During this life stage, the focus usually shifts to budgeting and portfolio withdrawal. Retirees can either withdraw a set amount of money each month or withdraw a percentage of the portfolio balance each month. With the first strategy, the amount of income is more predictable, which makes budgeting easier. But you generally have more control over the portfolio’s overall drawdown and potential longevity with the percentage method.
Read More: 4 Key Retirement Income Strategies
Why is Net Worth Important?
Your net worth is a key indicator of your financial health. Personal Capital can help you plan strategies to build net worth during each stage of your life.
Personal Capital’s free and secure financial technology centers around the Net Worth Tracker: a tool that securely aggregates all of your financial data to determine your true net worth.
You can quickly calculate your net worth with the Personal Capital Net Worth Calculator, and then sign up for your free financial dashboard for a real-time overview of your entire financial picture.
Sign Up for Personal Capital’s Free Financial Tools