Have you completed your net worth statement yet in our most recent class? I hope you found it useful!
What does your net worth mean? Or does it mean anything at all? The biggest dividing line is whether your net worth is positive or negative. If your net worth is negative, you owe to others more than what you own and that in and of itself would be considered “bad” net worth. On the positive side of net worth, there is no set number that is a “good” net worth. If you live a life where material possessions aren’t your focus as I explain in my recent post Money Can Buy Happiness, you can have a very low net worth and be completely financially stable for your stage of life.
Think for example of a young family that lives well within their means, doesn’t have any debt, rents a home, owns inexpensive used cars, has $5,000 in an emergency fund and is just starting to save for retirement. Although their net worth may be less than $10,000, they likely have a lot more peace of mind regarding financial matters than someone with 10 times their net worth, yet significant amounts of debt and property to take care of.
That being said, it’s still fun to look at the numbers and see what net worth statistics look like in the U.S.
The most recent U.S. Census data is from 2010 (it’s taken every 10 years). All of the information I’ve compiled below is based on the Census data which you can find here.
NET WORTH BY AGE
First, let’s start by looking at some charts that break out the percentages of net worth based on age. Now that you’ve calculated your own net worth (or if you haven’t just estimate it quickly):
- Go to the chart that shows your age group and find the section of the pie chart that includes your net worth. This will tell you the percentage of those in your age group with similar net worth.
- Then add up that percentage in your section and all of the sections with net worth greater than yours to find out the percentile rank that your net worth falls in based on your age. For example, if you are a 32-year-old with net worth of $30,000 you would go to the first chart below and find that 8% of those 35 years and younger have the same net worth range as you. Then you would add up 8% ($25-49.9k) + 10% ($50-99.9k) + 10% ($100-$249.9k) + 3% ($250-499.9k) + 2% ($500k) = 33% percentile. This means that you are in the top 33% of people for net worth for your age.
NET WORTH BY TYPE OF ASSET
Another interesting thing to look at in this data is WHAT assets people in different net worth categories own. This is presented in the chart below. If you look at your net worth range, you will see the median value of the assets held by those in the same category as you. To use the same example above (32-year-old with $30,000 net worth), this person could compare the amount they have in interest-earning bank accounts to the median value ($1,500), their IRA and 401(k) accounts to the median value ($9,100 & $19,652), their home equity to the median value ($26,000), etc. Again, this doesn’t necessarily mean anything, it’s just interesting to compare. The most surprising statistic from this chart to me is the low retirement balances (IRA, KEOGH, 401(k) and Thrift Savings Plans). The least surprising is the ranges of real estate equity in comparison to overall wealth.
NET WORTH BY EDUCATION
The following chart shows net worth by education level. Although there is a significant portion of people with graduate or professional degrees with zero or negative worth (I would assume these are newly graduated students with lots of student loan debt!), the three highest net worth ranges from $100,000 to $500,000+ net worth show that education does correspond with higher wealth. This also would suggest to me that student loan debt can indeed be an investment in your future.
THE REAL MEANING (of life…)
Don’t forget that the important thing is that your net worth is positive and also that it is growing and not decreasing. Keep planning and working toward your financial goals and you’ll create a great life for yourself free of financial worries no matter what the numbers say!