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Is there a website resource that gives suggestions for how much savings or net worth I should have at any given age, based on my education level and salary?

I'm in my 30s, have no debt, and have been maxxing out my 401k and contributed other personal savings for the last 10 years since I left grad school. I would like to know how well I am doing, particularly if I should be saving more.

I found a reference formula from the book "The Millionaire Next Door" that your personal net worth should be:

  Ideal net worth = Age * Pretax income ÷ 10

but that seems to be biased against (i) graduate/professional school students who graduated relatively late and (ii) people who get frequent raises.

And there are other sites (e.g. the one mentioned in this question), but the suggested ranges, such as $25K to $250K for my age bracket, seem to be too low.

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    FWIW, many of the millionaires profiled in "The Millionaire Next Door" are professionals with advanced degrees. – Chris W. Rea May 12 '11 at 1:20
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    That formula is stupid.. According to it I should have over $100k in savings, which is more than I earn in a year, and I've been working for only a year, so it's simply impossible – Thomas Bonini May 15 '11 at 13:06
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    Seems that it would make a lot for sense for net worth to be proportional to Age - 22 instead of Age. – Dan B. May 15 '11 at 21:37
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    Good question; I'd love to see a standard benchmark as well (adjustable to cost of living). The formula you mention from the book, while interesting, seems to have a bias against younger and older workers and only appears appropriate for middle ages. – Question3CPO Jan 5 '14 at 21:06
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    They_ideal_ net worth, at any age, is infinite. The necessary net worth depends on your lifestyle, local costs of living, health... and is really a matter of what net worth is required to be on track for retiring with the necessary amount to let you sustain that income for the rest of your life. – keshlam Aug 27 '15 at 17:13
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You can compare formulas all you want, and you can compare yourself to your peers all you want, but that doesn't mean that the formulas are correct, or that the peers who are "losing" are actually any worse off than you are.

Consider yourself and your life. Consider how your assets would hold up against different stresses: marriage, children, medical problems, job loss, permanent disability.

Also, net worth does not equal income production. You'll need to consider what kinds of assets you own. $1 million in the bank might give you $15,000 of income per year, while $1 million in residential real estate owned free and clear could throw off several times that per year.

Being in the 90th percentile for net worth might make you feel good, but also remember that Americans as a whole don't save a whole lot.

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    +1 for peer comparison. The savings of the average retiree is pathetic. OP needs to focus on his own goals, and benchmark to where he wants to be. – JoeTaxpayer May 12 '11 at 12:58
  • Word. I have been staring at the formula the OP has - I cannot derive any meaning from it. – gef05 May 12 '11 at 14:30
  • I'm not interested in "the average retiree". That's why my initial post asked for some comparison based on age, salary, and education level. I also don't buy the idea of aiming for "where I want to be." When I was in grad school making $20K for five years, I was happy as a clam and blissfully ignorant of the world, but that doesn't mean I shouldn't strive for something better. – stackoverflowuser2010 May 12 '11 at 16:50
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    (1) I wasn't really aiming for "where you want to be" but more "how well protected are you against your particular future income stresses." (2) I was trying to make a comparison on age; my take is that you shouldn't put too much weight on that. (3) Speaking as someone with a PhD, education becomes less important the further out you go. Depending on the area of study (no I'm not going to say which areas) a PhD in "ABC" is almost worthless, and you could have been earning far more during those years without pursuing the degree. – mbhunter May 12 '11 at 17:09
  • I have a PhD in an engineering field and am fortunately earning much more than if I did not. I'm still looking for relevant information. – stackoverflowuser2010 May 12 '11 at 18:25
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I like Dr Stanley's work, "Stop Acting Rich" being my favorite. The equation above is lacking. A 20 year old can't have two years income saved, and by 50, one should have a bit more than 5 times. I wrote a brief saving spreadsheet, in which you can load your present numbers, saving rate and assumed rate of return. Part of the issue is how to decide on your end goal. If you start by assuming you'll need to replace 80% of your pre-retirement income, you'll need about 20 times your final pay to let you withdraw 4% per year. that may seem a lot, but after adjusting for social security, most people are in the 15x range (i.e. they need to save about 15 times their final earning by the time they retire). The spreadsheet shows this is an achievable number. Saving just over 10% from the time you start working and getting an average 8% return will put you there. (Obviously, the 8% is one man's guess, who can say what the next 40 years will bring?)

enter image description here

From a similar question What size "nest egg" should my husband and I have, and by what age? this is a snippet of the sheet I referenced. Keep in mind, it's more to illustrate the growth by age. It represents the numbers of years income saved at a given age. The income increases account for inflation. For the numbers I ran, the example shows at age 65, a savings of 15X final income which should replace 60% of final earnings. Social Security presumably will cover another 30-40% or so.

EDIT - A visit to Wolfram Alpha produced the graph above and its corresponding equation:

0.00739394x^2-0.303927x+3.44661

which, in my opinion, adds little value to the discussion. Although, it does show that the number isn't a straight line, and any attempt to produce an 'age minus X times Y' type of goal is going to be misleading. The spreadsheet approach, whether mine or one of your own creation, is going to be accurate and more important, tied to your own numbers.

  • Very good spreadsheet, but there are a few things that need fixing. (1) There should be a field for an initial lump sum that gets added to the first savings value. (2) The 3% yearly salary increases cannot go on indefinitely, as almost all professions have some practical ceiling (let's say, $185K for example). You should have a field to enter a max expected ceiling and then grow the salary up to but not over that value. – stackoverflowuser2010 May 12 '11 at 3:08
  • Agreed. The cells aren't locked. I know few people who graduate with any money in a savings account, but you can just add the number to the first year total. Also, choose where you want the yearly increase to level out and enter your numbers. The sheet was created to be as simple as possible, and its point was to offer an illustration that one's savings when measured as a multiple of income, isn't linear, it's on an exponential curve, so one reaches their halfway goal point in their early 50's or so. – JoeTaxpayer May 12 '11 at 3:19
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    (I put 3% to match what I consider the long term inflation number, but, again, when using sheet, put in your real pay and your own projection. My first 20yrs working saw increases well above that 3% and now, not as much.) – JoeTaxpayer May 12 '11 at 13:54
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    @bstpierre - If you look at the full sheet, the number is the multiple of the income at that age. so at 65, you have 15 times your 'final' income, but at 30, it's 1.25 times a much lower income. The sheet accounts for inflation by letting you increase income over time. And if one were to get a raise of say 5%, they'd drop from having 10X that year's income to 9.5X, and hopefully, the market makes up for that to catch them back up. – JoeTaxpayer Jan 5 '14 at 19:25
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    @CareyGregory Ok. I updated the link, to the original article. Let me know if you still can't see it. – JoeTaxpayer Jan 18 at 21:00
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This is great resource: https://www.networthiq.com/

You can see what many people of different income levels, professions, and age are worth on paper. Many users of the site make their profile's public and give their best advice of what they have learned. Some talk of their goals, some of the mistakes they made along the way, and lots of other useful tips.

It will give you a rough idea of many different types of people and their net worth. It will show you some of their debts/assets and where they place it. There are also graphs with net worth progress over the years.

  • That's a really neat website. The interface is pretty bad though, and it appears I can't search by multiple factors simultaneously (e.g. age and current salary), and the site doesn't report aggregate statistics like mean and median. – stackoverflowuser2010 May 12 '11 at 18:57
  • @stack Yes, the website itself is rather bad, but the information is great. – Troggy May 13 '11 at 7:25
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See also this answer: Saving for retirement: How much is enough?

One issue with looking at your current investment balance is that market fluctuations might be moving it up or down 50%. Before saving less, I'd chop your balance in half and see if you can still save less.

Also, as mentioned on that other answer, there is a big picture "ideological" question embedded in any "rules" on this, usually the assumption is that you want to smooth your income in order to spend as much as possible throughout life, while retiring at 65. So you want to move just enough income forward in time through savings to retire at 65 and continue to spend as you did pre-retirement.

While that's reasonable, it isn't the only choice; maybe you would rather retire before 65, or maybe you hope to spend more in retirement, or maybe you have a goal such as leaving a lot of money for your children, or maybe you only plan to retire if you become disabled and otherwise work forever. All that should be considered, before taking a boilerplate answer.

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The short answer: It depends.

How do you measure income? $250k in New York City buys a very different lifestyle than $250k in Albany, NY, about 3 hours north where I live.

What do you want to do? Do you want to retire comfortably and young? Or do you want to live an affluent lifestlye?

There's no single benchmark, because we're all motivated differently.

  • I measure net worth as others measure it: in US dollars. There is no "it depends" here. – stackoverflowuser2010 May 13 '11 at 21:32
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    @Stackoverflowuser2010 The point is that the utility of x US dollars depends on the location, so that is an important consideration. – Michael McGowan May 14 '11 at 0:58
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There cannot be such a formula for 2 reasons:

  • The ideal NW is $∞.
  • People want different things, so even "good enough" NW will be different.

I can think of three obvious intents you might have that would lead you to seek such a formula:

  1. You're planning to look at the formula, and spend/save more/less depending on what it says.
  2. You want to look at the formula and feel satisfied about your life.
  3. You want to impress friends with how successful you are.

All three are better addressed by other means.

For 1, you have to start by figuring out what your goals are. How much money do you need to have a lifestyle you're happy with? How much will you need when you retire? When do you plan to retire? Of the career options available to you, what of their income potential whether how much you would like doing them? There are many retirement calculators online that will help you crunch the numbers.

For 2, it is much easier to restructure your life philosophy so that you can derive intrinsic satisfaction from life, rather than to pick a number and hope that when you reach that number, you can let yourself be happy.

For 3, it all depends on who your "friends" are. If you live in a trailer park, even $0 NW might be really good. But don't expect that to draw any ahs at your local country club. If you mean showing off to strangers on the internet, usually comparing to nationwide statistics is good enough, since the baseline assumption is always that you're the "average person". If on a site with a certain focus, eg. leisure yacht owners, you would have to adjust for the user demographics.

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