Average net worth by age and August 2019 update
In this post, I wanted to look at the average net worth by age in more detail and provide you with an update of my net worth as of August 2019.
Let’s start by reviewing some basics.
The average net worth for an American to consider wealthy is $2.27 million according to Charles Schwab.
Net worth means assets minus liabilities, this is a picture of your total savings, including the value of your home, 401(k) and any other assets you may have, minus any debt.
Your net worth is the total amount of your assets minus your liabilities.
- Assets include savings and things like your car, home, and investments.
- Liabilities are all debts you carry, including any that are deferred, such as student loans.
Median Value of Assets for Households by Age
The average net worth of all U.S. families is $692,100, according to The Federal Reserve’s Survey of Consumer Finances, based on data from 2013 to 2016.
If you look at the median or those at the 50th percentile, the amount is significantly lower: $97,300.
See the below chart for a graphical representation.
However, the average net worth by age is significantly higher. Why is that?
Average net worth by age:
| Age of Householder | Mean Net Worth | Median Net Worth |
|---|---|---|
| Under 35 years old: | $76,200 | $11,100 |
| 35 to 44 years old: | $288,700 | $59,800 |
| 45 to 54 years old: | $727,500 | $124,200 |
| 55 to 64 years old: | $1.17 million | $187,300 |
| 65 to 74 years old: | $1.07 million | $224,100 |
| 75+ years old: | $1.07 million | $264,800 |
Source: CNBC
One of the most probable reason for the higher average net worth is due to the top richest Americans skewing the statistics.
Furthermore, this is the result when we break down the net worth by education attainment.
Median and average net worth by education
- No high school diploma: Median net worth: $22,800 (average net worth: $157,200).
- High school diploma: $67,100 ($249,600).
- Some college: $66,100 ($340,600).
- College degree: $292,100 ($1,511,100).
As you can see above, it pays to get a higher education. Although, this all depends on what you majored in college.
According to Bankrate, STEM (science, technology, engineering, and math) usually does well. For example, naval architecture and marine engineering made the top of the most valuable degree.
On the other hand, drama and theater arts are the least valuable.
The Fed’s survey results subsequently break down net worth according to these sub-categories.
According to the Federal Reserve, the average net worth of a homeowner is $231,400. Which is an increase of 15% from 2013 figure of $201, 500
For renters, the average net worth is roughly $5,200. This is 5% less than their average net worth of $5,500 in 2013.
The difference in net worth from a homeowner to a renter is approximately $226,000. This is perhaps due to home equities that homeowners get from their houses.
City dwellers have an average net worth of $99,000. In 2013, the average was $87,300 – that’s a 13% increase over 6 years.
People living in rural areas have an average net worth of $87,900, a 25% increase from the $70,100 average in 2013.
Source: Credit Donkey|MarketWatch
What factors can affect your net worth?
There are two main ways to increase your net worth:
- Increase your assets
- Reduce your debts
Strategy to boost your asset includes:
Pay yourself first
You can pay yourself first by setting a portion of money aside automatically, preferably to a high-yield savings account and other investment accounts (both tax-sheltered and taxable).
You can’t spend what you don’t have!
Acquiring an investment real estate
Alternatively, you can use your savings to buy your first investment property.
Another way is to buy a house, pay it off, buy a second house to live in and put your first one for rent.
Lastly, you can buy a property with some minor cosmetic problems. Buy this property, fix and flip or fix and make it a part of your rental properties.
Reducing debts
It’s obvious that you have to pay off your debt in order to boost your net worth.
That’s why it’s key to eliminate credit card balances, tackle student loans and reduce mortgage balances as soon as possible.
Keep in mind that paying off high-interest debts is usually the best option.
May 2019 net worth recap
Now that we’ve gone through what the average net worth by age is, let’s take a look at my own net worth.
My first and only net worth update was back in May 2019.
Here are my net worth numbers at the end of May 2019.
- Total assets: $414,450
- Total debts: $173,000
- Net Worth: $241, 451
August 2019 Net Worth Update
Let’s fast forward to the end of August 2019 and dive into the makeup of my latest net worth calculation.
What are my assets?
My total assets at the end of August 2019 totaled $416,505.
Compared to assets from May 2019: $416, 505 – $414,450 = $2,055.
That is an increase of $2,055 or a 0.49% net increase.
Let’s break down my assets:
My house value decreased from $250,308 to $245,856 per Zillow.
My investments increased from $101,692 to $116, 431. That’s an increase of $14,739 or 12.7%.
Back in May 2019, I didn’t have any savings. since I drained all of my previous savings to pay off my student loan back in July 2019.
I am happy to report that my savings have now increased from $0 to $1,404!
The two vehicles that I own decreased in value, according to Kelly’s Blue Book. Perhaps this is why some personal finance bloggers do not include car valuation in their net worth calculations.
I am still going to include it in my calculation though. An asset is an asset, right?
What are my liabilities?
My total debts at the end of August 2019 is $156,000 compared to $173,000. In three months time, my liabilities decreased by $17,000.
During this time, I paid off the remaining amount on my student loan and any outstanding credit card balances.
Of note, I didn’t include any credit card balances in my net worth calculation because I pay off the full balance at the end of each billing cycle.
At the same time, I was able to bring my mortgage down to $144,000 from $146,000. And I set a plan in motion to pay off my mortgage as soon as possible.
As of right now, I am looking at approximately 5 to 7 years in order to be mortgage-free!
Since my last update, my car loan has decreased from $14,000 to $12,000.
I pondered about paying off the $12,000 I still owe but decided against it since the car loan only has a 1.9% APR. I will pay off my car loan in July 2021.
What is my net worth in August 2019?
My net worth as of this writing on 9/8/2019 is $260,505!
Compared to a net worth of $241,451 by net worth increased by $19,054.
That’s an increase of 7.3%. Overall, this is not bad at all. I am very happy with my progress.
Final Thoughts
September, my wife and I have implemented our accelerated mortgage pay off plan.
I only have a car payment of $12,000 and a mortgage of $144,000 to take care of because I can officially declare that I am debt-free!
It was a good feeling when I was student-debt free.
Beginning in August 2019, we no longer have to pay PMI toward our mortgage, another plus to a good quarter.
I am still trying to save enough money to open my first backdoor IRA and I am very much looking forward to completing that task.
Finally, according to the average net worth by age chart, I am still a little behind my peers. For my age group of 35 to 44 years old, my net worth should be over $288,000.
Instead, I am currently sitting at $260,505.
Still got some worth to do!
Thank you for reading this post and making it all the way to the end.
I do plan on posting my next net worth update in 3 months.
Until next time,