What Should Your Net Worth Be? Breakdown By Age

What should your net worth be? I admit, I too struggle with this question. It is hard to tell whether or not you are on track to a sustainable retirement and building wealth!

This article will provide a clear road map, with benchmarks, so you can retire with dignity and no governmental support.

Retire Inspired

“Most men live lives of quiet desperation and die with their song still inside them”. This is my favorite quote of all-time, and yet, I find it all-too tragic.

Humans have lost their sense of awe-and-wonder, the trait that mounted our place as the greatest species ever.

Fatalism has taken over the spirit, and there is a soul-crushing cycle of self-defeating behavior.

The future belongs to those who believe in the beauty of their dreams. Most people have the wrong approach to retirement.

You need to first start with your “why” and reverse engineer action steps to arrive at the target. Saving today, for an uncertain tomorrow, will undoubtedly take sacrifice and grit.

Without a clear “why”, you will not sacrifice and work towards that goal!

The only reason people save today is to enhance future consumption. Consuming everything you produce today robs you of greater consumption in the future.

Chris Hogan talks about this in his book, “Retire Inspired”.

what should your net worth be according to chris hogan
Chris Hogan

“Failing to plan is the same as planning to fail. You’ll never get where you want to go if you don’t plan your route. That’s true for road trips and retirement.”

I want you all to visualize what your dream retirement looks like. Then, and only then, will you be able to put forth the necessary sacrifice and effort to achieve your goal!

Retirement Is A Number

It’s a common misconception that you must be a certain age to retire. In fact, it is quite the contrary, and there has been a recent uptick with people in their 30’s (even 20’s) retiring.

This myth partially arises from the notion that you cannot tap into your IRA’s or 401(k) until your late 50’s. Ultimately though, retirement is a number, not an age.

There are two main methods to calculate your number discussed below!

4% Rule Applied

The 4% rule states that so long as you never cash out more than 4% of your investment portfolio each year, your investment income will last for the rest of your life.

As an example, this means if you have $1 million in retirement assets, you can cash out $40,000 every year, and you will never run out of money!

To calculate how much money you need, take your annual expenses multiplied by 25.

Passive Income Goal

A much better approach to retirement planning is achieving a passive income goal.

An individual can retire once their passive income each year is greater than their yearly expenses.

The passive income goal is a much more sustainable retirement method, but it will require a larger amount of capital or upfront work.

This is because you are only spending the earnings, and never the principal!

Time is EVERYTHING! I encourage everyone to get started as soon as possible. Compounding interest has the ability to transform your life.

Don’t Count On Your Pension

Government and corporate pensions are grossly underfunded. The following is a story from the Detroit Free Press after Detroit declared bankruptcy, and pensions were slashed.

“Roots moved to a smaller home on the city’s west side about three years ago in order to downsize.

Like other retirees covered by the general system, the bankruptcy agreement cut her pension by 4.5 percent, eliminated future cost-of-living adjustments and led to higher health-care expenses.

You know and expect the cost of living is going to go up. But you don’t expect the money you’re receiving to go down, Roots said.”

The Detroit bankruptcy provided a severe litmus test for future pension bankruptcies.

The writing on the wall shows that a lot of workers will not receive the paychecks they were promised by lying politicians!

According to the charts below, California and Colorado don’t even have 75% funded pensions. This is amidst the biggest stock bull market ever!

Source: WSJ

Social Security Untrustworthy

The Social Security reserves are going to be insolvent within the next 15 years.

Social Security was originally termed Old Age Survivor’s and Disability Insurance (not grandma and grandpa’s retirement piggy-bank).

As life expectancy in the US rose, Social Security started paying out much more in benefits than it brought in through tax revenue.

56% of baby boomers have less than $50,000 saved for retirement, so the problem will only be exacerbated.

Almost all economists believe that the government will raise payroll taxes to offset the increasing costs. This, however, will only keep current and near-retirees afloat.

The Balance wrote a great piece about the uncertainty of future benefits for millennials.

“80 percent of Millennials are concerned that Social Security funds will not be available to them when they retire, according to the 18th Annual Transamerica Retirement Survey, published in 2017.”

If you’re a Millennial, it would be difficult at this point to determine exactly what Social Security benefits would be available to you.

Considering this, it’s safe to assume that you should not rely on Social Security entirely for your post-retirement income.”


There must be some ground rules to avoid confusion within the analysis.

  • This analysis is for anyone under 35. Anyone above this will likely receive Social Security, which skews the analysis.
  • Inflation is removed from net worth and investing returns. This allows an apples-to-apples comparison.
  • Retiree will utilize the passive income goal, and spend $70,000 each year.
  • Passive income will be earned with a 2.5% dividend yield.
  • Investments earn 7% annualized (remember, no inflation is included).
  • This means you need $2.8 million to achieve this goal at 65.
  • Home is not included in your net worth. Your net worth must be liquid.
  • Invest $10,500 annually. No longer will saving 10% of your income get you to retirement without government help.
  • Investments held within Roth IRA and Roth 401(k) for no future taxation.

Home prices are not included in net worth because you need to sell the property to access any of the capital.

You could access a HELOC, but then you just create an asset and a liability. Personal residences are not investments, nor should they ever be viewed as one.

Net Worth: 21

Ah yes, you just graduated college, and you are ready to take on the world. Hopefully, you did not get rocked by student loans and join the $1.6 trillion mess!

Granted, you’re reading this article, so you’re moving in the right direction. This is the one point in your life where it is okay to have a negative net worth.

I wrote an entire article about graduating without student loans, but as long as you earned a valuable degree all will be okay.

Honestly, an ideal net worth for 21 is actually somewhere above -$30,000. You have nothing, but you also have your whole life still ahead of you.

For the purposes of moving forward with the article, we will assume a net worth of $0.

Net Worth: 30

You’re starting to progress in your career, and hopefully, this means you are making more money. Saving and investing any extra money is critically important in your 20’s and 30’s.

This analysis shows that you would ideally have a net worth of $126,000 by the time you reach 30 to be on track for retirement.

Remember, this time junction is crucial for ensuring you can retire with dignity.

Any further delay in investing creates a massive opportunity cost that is hard to make-up later in life.

Net Worth: 40

The average net worth for families between the ages of 35 and 44 in 2016 was $288,700.

The median was reported at $59,800. A lot of financial planners recommend having twice your yearly salary saved by age 40.

However, this is with government social security, and younger generations cannot rely on that uncertain trainwreck.

A net worth of $392,500 keeps you on track for the $2.8 million ultimate goal.

Net Worth: 50

So close to becoming a millionaire with a net worth slightly below at $917,000.

It is probably becoming much harder to save with children heading to college, but you have done great foundational work in your youth!

Net Worth: 60

You are positioned beautifully for retirement with $1.95 million, and 5 years to go!

Crazy! You added over $1 million to your nest egg in 10 years! It took almost 30 years to gain your first million.

Net Worth: 65

You’ve done it! You have finally achieved financial independence with liquid investments of $2.8 million per year!

This is the gold standard and will allow you to live off dividends for the rest of your life. If you have a lower net worth, it is still okay as long as you don’t rapidly drain your principal.

This $2.8 million of principal is never touched for the passive income goal, but if you are working on the 4% rule, you can be okay with $1.75 million.

The passive income goal is far superior because it allows more wealth to be passed down to the next generation. This is changing your family tree!

Action Steps

  • Save early and often. Saving 10-15% of your income simply will not cut it anymore!
  • There are only two ways to save and invest more. Earn more or spend less. Simple as that.
  • Take advantage of employer-matches within 401(k) or 403(b).
  • Small steps make a huge impact. Make saving automated and systematic.
  • Don’t lock-up too much money in your home. This will make you house-poor.
  • Adjust the numbers to arrive at your individualized number. These numbers are designed for the average American.


Historical financial planning is no longer going to work in an environment with no pensions or social security.

Individuals are living longer than any point in history, and governments are failing. The best way to stop the bleeding is by looking at the person in the mirror.

So, what should your net worth be? You should have the answer!

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