Personal Finance 

Average Net Worth of an American Family

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Do you know what the average net worth is in the United States?

Every three years the Federal Reserve Board does a survey of consumer finances, which looks at a wealth of financial information, including income and net worth. They even have statistics of the percentage of people who use the Internet to find financial data broken down by the age of the head of household (did you know that in 2007, 16.5% of families with the head of household above 75 years of age used the internet?)

Well, that’s where I turned to find out the average net worth of an American family.

FRB Net Worth Data

The Federal Reserve Board slices and dices the net worth data better than the CNN Net Worth calculator, which I’ll talk about next. They discuss it as a value of income and age (of the head of household), but they also do it based on family structure, education of the head, race, work status of head, occupation of head, region, urbanicity, housing status, etc.

Across all groups, the 2007 median net worth was $120,300 and the mean was $556,300 (guys like Bill Gates and Warren Buffett really mess things up).

Here are a few of the more interesting ones (2007 median data, 2007 dollars):
Current work status of head:

  • Working for someone else: $350,100
  • Self-employed: $1,961,300
  • Retired: $543,100
  • Other not working: $124,100

Race or ethnicity of respondent:

  • White non-Hispanic: $692,200
  • Nonwhite or Hispanic: $228,500

Housing status:

  • Owner: $778,200
  • Renter or other: $70,600

How can you use this? It’s important to remember that you can’t make broad conclusions based on this data. Owning a home can help you get a higher net worth, but it doesn’t guarantee one. On the flip side, renting doesn’t mean you’ll always have a lower net worth. The same is true for your race or ethnicity and your work status (though I would imagine “other not working” will likely have an impact in improving your net worth).

The FRB has packaged up their data into a nice 56-page document called Changes in U.S. Family Finances from 2004 to 2007: Evidence from the Survey of Consumer Finances. (25.2% of people without checking accounts gave this reason for not having one: “Do not like dealing with banks.”)

CNN Net Worth Calculator (Age, Income)

The easiest way to see how you stack up is by using CNN Money’s Net Worth calculator. I don’t know how fresh the data is, they only cite Nielsen Claritas as their source (with no date), but it’s good enough for our entertainment purposes. They offer two median net worth charts, one based on your income and one based on your age (the two charts are independent).


  • < 25: $1,475
  • 25 – 34: $8,525
  • 35 – 44: $51,575
  • 45 – 54: $98,350
  • 55 – 64: $180,125
  • 65+: $232,000


  • < $25K: $1,250
  • $25K – $49K: $34,375
  • $50K – $74K: $168,500
  • $75K – $99K: $301,475
  • $100K – $124K: $301,475
  • $125K – $149K: $644,100
  • $150K+: $1,122,900

How can you use this? It’s tough, which is why I don’t spend too much time with these things. It’s good to know where you stand based on your age and income but it doesn’t give you a good path forward. It would be more useful to know how the net worth was distributed between the different asset classes. For example, if you’re 45 with $125,000 of income, where are your assets? Do you have a home in which you have $100,000 in equity and a stock/retirement portfolio with another $250,000? Are you the $644,100 net worth person (based on income) or the $98,350 (based on age), and where is that net worth?

This is like knowing your credit score relative to the national average of credit scores, without a path forward the information is useful only for entertainment.

Average Net Worth Dropped 23%

Did you know that between the fall in the stock market and the housing market, the average American net worth fell 23% in the last year? It was reported in February in an AP story published on CBS News and while there has been a bit of a market recovery, it’s stunning to think a quarter of all assets held by Americans were wiped off the accounting books. The median net worth fell 17.8%.

How can you use this? Knowing the average went down 23% can really help you psychologically. If you saw your net worth fall by 10%, knowing nothing else, you’d probably be devastated (I know I would). It’s like seeing your retirement account fall 40% last year, it’s very painful. However, knowing that your net worth fell 10% when the rest of America, on average, fell 23%, means you’re better off than most. It means while you may have lost some, you dodged the bullet somewhat because you didn’t fall as much as the average.

Average Net Worth of Congress

A study by the nonpartisan Center for Responsive Politics revealed that the median net worth of the incoming members of Congress is about $1.8 million, compared to the median net worth of the re-elected incumbents, which was $815,000. An executive director then says Congress “remains short on lawmakers who can personally relate to what the average American is going through financially,” which I think is an unreasonable statement when you consider $815,000 – $1.8M is not a ridiculous sum for someone who has worked as a professional and been prudent with their money for thirty or forty years. I’m not saying they’re pinching pennies or in the poorhouse, but to say they can’t personally relate is a bit inflammatory.

I’m always hesitant to put too much stock in “average” or “median” values for anything (I think net worth by age is meaningless), whether it’s net worth or average credit scores, but it’s always good to know where you stand relative to everyone else.

So, how do you stack up? 🙂

{ 100 comments, please add your thoughts now! }

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100 Responses to “Average Net Worth of an American Family”

  1. I have a substantially higher net worth for my age. However I think net worth is somewhat misleading of a number.

    For instance, while a house can increase your net worth, it can also potentially be the cause of financial ruin if your debt to income ratio is high and you lose your job.

    While net worth is an indicator of your financial health, it shouldn’t be the sole indicator.

    • thomas says:


      About the difference between homeowners and renters – what do you think the social differences are? I strongly believe not everyone is cut out to own a home. Homes carry a huge amount of responsibility that not everyone seems to want.

    • Ken says:

      I thought net worth is calculated after all debt is considered, ie: total assets minus debt equals net worth.

  2. eric says:

    I have never wanted to be a median so much in my life. 🙂

  3. ian says:

    I think that many people will agree with Wise Money Matters that Net Worth should not be the only indicator of financial health, but is there a good dashboard or collection of indicators that can give a pretty good view?

    If you were to only see ~5 statistics on a person and asked to judge their financial health solely on those statistics, which 5 would you choose to give you the best view?

    examples: Net Worth, Debt to Income Ratio, Total Debt, Total Income, Credit Score, Monthly Expenses, etc

    I’m interested to read what everyone thinks.

    • Rick says:

      Net worth is the acid test trumps everything
      as the old saying goes “not what you make, what you keep’ BOTTOM LINE REST IS BS

  4. Madame X says:

    The disparity between owners and renters is surprising– I wonder how different that will be for 2009 vs. the 2007 number they give?
    But I can at least be glad I am above median by age, and maybe income level– but is there a typo there?
    # $75K – $99K: $301,475
    # $100K – $124K: $301,475

  5. @Ian – you bring up something that is close to my heart (and work). If you were to give me five statistics, I’d also want them on a trailing 1, 3, 5, and 10 year scale. This is so we can not only guage where you are today, but also the trajectory of where you’re likely to go tomorrow.

    The key stats vary in importance based on stage of life, but ultimately, the top five you need are:

    1. Net Worth
    2. Investable Net Worth
    3. Income
    4. Expenses
    5. Total Debt Outstanding

    There is no utility in credit score, debt-to-income ratio, and many other credit related issues. With the five pieces of information above, I can very quickly assess where someone is financially. Many of the other metrics tossed around in finance are created for lenders, not individuals. This distinction is critical to remember in understanding your own relative succes or failure in personal finance.

    By the way, instead of thinking in terms of debt-to-income, I think we would all be much better of focusing on expenses-to-net worth. That’s the number that really counts–at least if you want to retire or reach some level of financial security.

  6. Revanche says:

    Hm, the differences between the median NW for my age group vs. income are wildly different. So I took the mean and median of the two numbers, and I’m above both. I guess I should be shooting to be above the median for income level, though. 🙂

  7. I think that the CNN net worth comparison tool doesn’t present a valuable picture on what individuals should compare themselves to. It is widely known that individuals have been poor savers since the mid eighties. Taken that and factoring in the poor stock market over the past decade and you get people with low net worths.

    The best net worth comparison is using the Prodigious Accumulator of Wealth (PAW) calculation from “The Millionaire Next Door.”

    PAW formula:

    Multiply your age times your realized pretax annual household income from all sources except inheritances.

    Divide by ten.

    This, excluding any inherited wealth, is what your net worth is expected to be.

    If your net worth exceeds the value obtained from this formula then you’re doing great!

    • ian says:

      This formula definitely does not work for young workers. A 25yr old just out of college with a 40k/year job has no way of having 100k net worth. Anything pre-30 seems to be a stretch.

      Expected NW ($k)
      30 40 50 60 70
      40,000 $120 $160 $200 $240 $280
      60,000 $180 $240 $300 $360 $420
      80,000 $240 $320 $400 $480 $560
      100,000 $300 $400 $500 $600 $700
      120,000 $360 $480 $600 $720 $840
      140,000 $420 $560 $700 $840 $980
      160,000 $480 $640 $800 $960 $1,120
      180,000 $540 $720 $900 $1,080 $1,260
      200,000 $600 $800 $1,000 $1,200 $1,400

      • Andrew says:

        Perhaps that 25-year-old received an inheritance.

      • Beth says:

        I agree. I tried it out with my age (early 30s) and I would love to know how I was supposed to have accumulated more than $150,000 by now. Even if I hadn’t done extra schooling, I don’t think I could have accumulated an average of $15K per year.

        Mind you, I’m in Canada so I don’t think these numbers apply to me at all. (Our taxes are higher, and most of us don’t have employers to match our retirement savings contributions).

        • @Beth – since you’re a Canuck with a rather robust retirement pension system compared to your southern neighbors, to get a good yardstick of where you are, do the following:

          Current Expenses – Expeceted Pensions = Income Needed from Investments

          Take your net worth and divide it by the ‘income needed from investments’ and this will give you a multiple. When you get somewhere around 20 to 33, you’re ready for a solid retirement.

          As for where you are on a timeline, it really doesn’t matter except for ego’s sake. The bottom line is that if you continually move your net worth-to-expenses multiple up each year and are tracking to get to 20 to 33 by your desired retirement age, you’re way ahead of the game. As an FYI, if you get to 20 to 33, you’ll be wealthier on a relative basis (lifestyle wise) than over 90% of your peers.

          • Beth says:

            lol. I’m not sure I’d call the CPP “robust”. (I’m not even sure it will still be around by the time I retire!)

            Thanks for the formula. I tried it out, and I’m glad to see a number that doesn’t require me working until I’m 80!

        • Tom says:

          I’m in my early 30s and my NW is significantly north of that, without an inheritance. I earn a slightly-above-median income (though after the dot-com crash, I was out of work for a year, save for some freelancing). But I’ve leveraged what I got. I bought a fixer-upper house in a decent neighborhood in 2000, totally remodeled it, doing a lot of the work myself, and sold it in 2005 for double. I’ve also been investing in primarily energy and precious metals companies since 2002, which even after the crash last autumn, have still done spectacularly. In 2003 I bought some vacant farmland for only $3k/acre, and now with a house on it, it (the land alone) is worth three times that. And the off-grid home I built is worth triple what I put into it as well. For the past decade, I’ve seen little of my income directly — most if it went directly to investment accounts or to pay debt. Thus, I’ve lived humbly and my money is always kept working. Now those debt payments are starting to get smaller and I’ve got ample assets to back up that debt. My total assets are bordering on $1 million, with my debt and net worth about half of that. The best part is that my off-grid home is a capital asset, making me more money (or rather saving me from having to pay utilities), which means I can pay down my debt even faster.

          • dilbert69 says:

            When you say you sold the house for double, was that after accounting for the cost of remodeling, including the market value of the work you did yourself? What about the interest on your debt (tax-adjusted, of course)? If so, congratulations! You earned just under 15% annualized return. That is far better than the S&P 500 Index does over most five-year periods, though it might or might not be better than what the S&P 500 Index did over _that_ five-year period (2000-2005). If the “doubling” did not take into account those things, how much did you really make? 75%? That would be an annualized return of 12%, still fairly impressive. 50%? That’s just under 9%, quite competitive with the stock market. And you did a lot more work and took on a lot more risk and debt.

      • Anonymous says:

        you forget that some have inheritance

      • Doubt Buster says:

        At 30 I’m within $5000 of the target $220k according to this calculator so it can’t be too far off.

        I think a lot of it depends on how well previous generations in your family managed net worth. If you’re starting from zero with zero assistance along the way, then yeah, you’re probably not hitting the target. That’s a reality that folks need to get a grip on and realize that it’s not a flaw in the simple calculation listed above.

    • Kate Kashman says:

      I like the simplicity and the sense of this indicator, but I still have a lot of questions about it. First, are we looking at individuals or families? If we’re breaking it down, it says that my husband should be worth almost a half a million dollars and I should be worth $40,000, because I’m primarily a stay-at-home parent right now. I’m assuming that we combine them to make our single economic unit. But what if I’d just given up some well-paying job to stay home – shouldn’t we have significantly more assets than this year’s figures show.

      I’m not saying that it isn’t a useful tool, but nothing is perfect.

      • Jim says:

        I think they looked at households but I wouldn’t look tooooo much into it because of the variance you talk about. You’re a stay at home parent probably in part because you are married and because your husband is working/worth that amount. If you were single, you might not be a parent and you might not be a stay at home anything… so it’s difficult to compare things like that. However, in the end, these numbers are just useful to know but not THAT useful, right?

  8. Lamar says:

    these numbers seem high, like they’re counting home value as net worth when they should be doing (equity in home-mortgage, leaving many if not most people negative here).

    the median under 25 net worth is positive? impossible.
    the median retiree is worth $543,000? good lord.
    median white dude is worth $692,000?

    something’s fishy.

    • Andrew says:

      I think you mean home value – mortgage, which equals equity. Net worth means value of assets – total amount owed.

      • @Lamar – the stats listed at the top of the article are means and not medians. As Jim points out, there is a big difference. The median net worth of retirees is $161k…err…broke.

        • trep says:

          Those are actually median numbers, mean for a household age 35-45 in 2007 was $325,600 (you can check out the statistical abstract for yourself at These numbers are quite a bit lower than the ones shown on the census website, but may reflect newer, post-crash, data. There is a huge wealth gap in this country, start looking into the numbers and you will be shocked.

    • MoneyMaster says:

      under 25 with a positive is nowhere near impossible. Most rent after coming out of college or going into trade. The ones who go into trade help enormously with this number as they have no (or little) immediate debt to pay off. A significant amount of American students have college paid for by plans like college Illinois and other college savings plans. Others have wealthy parents who can afford to pay for their children. I just turned 25 and dont plan on buying a house for quite some time and have expenses of about 20% of my income, if you include taxes i am able to save about half my salary. my NW is actually quite a bit higher than the median posted. I am a financial planner so i guess i have a slight advantage in knowing how to live beneath my means. but I truly believe most people could accumulate a positive net worth by 25

    • Don K says:

      I’m 55. Retired at 50. Owned home for 25 years. Saved but didn’t leave cheaply. Worked as a cop then a few years for local government. Did I say SAVED?

      Net worth exceeding $700k excluding the house. The key is saving and not living too lavishly. Didn’t buy the really big house or the Mercedes. Did own BMW, Maxima, Peugeot, Firebird, but kept them for many years. Traveled once or twice a year after things got comfy.

      Some Americans just live too lavishly, and don’t plan for their retirement years.

  9. Those numbers sound fishy to me too. I mean, its very possible here in the San Francisco Bay Area, but is this supposed to be the average for the rest of the country (sans NYC, etc)?

    • trep says:

      not sans-anything, it is a median value for the entire U.S. including SanFran, NYC, and as stated Warren Buffet, Bill Gatesm etc.

  10. Lucy says:

    Regarding the net worth drop, a co-worker of mine used to work for a company that went bankrupt late last year. About 60% of his retirement portfolio got wiped out due to his having invested in company stock that became worthless.

    Compared to his unfortunate situation, even the average of 23% net worth drop doesn’t seem too bad.

    • Andrew says:

      That is unfortunate. I don’t own any shares of my company’s stock, but 60% seems like putting too many eggs in one basket.

  11. A majority of people do not exceed the Prodigious Accumulator of Wealth formula value. Thus, it’s a significant accomplishment when somebody does.

    As for my household, I think it will take us another 3-5 years to achieve PAW status.

  12. The age statistics, especially under 25, are probably very imprecise. Especially as many entry level employees come out of college with loans and negative net worth, but decent paying jobs.
    But nevertheless the other statistics are very interesting, especially the self-employed vs. working for someone else. Definitely encourages you to be an entrepreneur.

  13. Patrick says:

    It’s tough when you are just starting out to build up net worth. These are interesting numbers, but it really dependent on your current situation, whether you have huge loans from college or gained an inheritance.

  14. That’s a great chart Jim. I am not paying any attention to the net worth ( which btw I am 10 yrs ahead according to the chart), as the most important thing is having enough income, be it alternative, passive,investment, employment, you call it. If you have assets generating income, you are ok. These assets could be a dividend stock, a condo rental, a CD or even yourself. That’s right, your abilities to generate income are important as well.

    • Andrew says:

      The higher your net worth, the higher the income it can generate, and the more risk you can tolerate. If two people are equally risk-tolerant but one has $100K to invest and one has $1M, the one with $1M can afford to put at least some of it in investments which have a high potential payoff but a high potential downside. The one with $100K might not feel as comfortable doing that. Of course, if both people are not willing to undergo any risk, the point is moot.

  15. @Andrew – while your point makes complete sense mathematically, it is often the reverse that is true. Investors repeatedly choose a higher risk portfolio with lower dollar figures than with higher dollars. An investor with $100k is far more likely to have a high risk portfolio than an investor with an extra zero at the end. I forget the name of this phenomenon, but it’s been researched a great deal. One factor in this is that a $1mm portfolio will typically be managed by the investor and and advisor whereas the $100k portfolio is much more likely to be managed alone (if managed much at all).

    • Scott says:

      The real secret is starting to invest in quality equities as soon as you get out of school ie 401-K. Get with your spouse, who hopefully has the same long term goals as you. Put all you can in the 401-K with the minimum in your employers stockn oo bonds or momey markets. XOM pays about 3% cash yield same goes for the 30 treasury. Big difference XOM and the like will go up over time and it is a proven fact that quality divident paying common stocks are the very best investment you can make over the long term. If you both want a family retire all debts you can instead of going on a nice vacation every year. Instead go visit grand parents and other loved members of your family. You have limited time to do this and by the time you can max out your 401-K and visit family chanches are you will begin to loose some of the older members of your family you loved so much. I cannot speak any but myself but the company of a nice elderly person is something I appreciate. They have been through life and are great consultants and to let them hold their first grandchild seems to make their life complete. Those vacations you do take to see your familiy members will become priceless.

      Both spouses should agree to the plan including when you want to start a family. Forget the concept of a starter home and wait until you can afford a home suitable for raising 2-3 kids in it. NEVER take out anything over a 15 year fixed rate mortgage.

      Take pictures of the kids when they are young with their grandparents. Payoff all credit card debt and purchase your ” kid raising house”. The payment will not be that much higher and you have hedged your exposure to increasing interest, which is sure to come. The real benefit from this you will own your house outright before any of the children start college. You will also have a period of time to build up college savings. When the mortgage goes the funds start to out folw for college. Sit down with your mate and graph this sceniro and see what you think. This will smooth out your cashflow requirements during the rev up years when the parents need all the cash they can get. I learned through mistakes like everyone else. I am a banker that retired after 30 years and in the energy belt. I have seen two bust and many people go into an economic tailspin. Don’t worry about a targeted number our society values so much and the lable of millionaire. If you fund your retirement as soon as you can and your housing needs are taken care of when you start your family everything else starts to fall in place and the millionaire label will knock on your door.

      Our learning instituions do not teach financial literacy and as a result financial problems are the biggest cause of U.S. divorce. That pretty much wipes out everyone but yhe lawyers. I do not care to feed buzzards. If anyone indicates an intest please respond to my post and I will explain the rule of 72 if you like. It is a great way to plan your retirement and consist only proven math. If all this information helps just one couple the time it took me to type this post with two fingers is well worth the time.

      Good luck to all those who plan to raise the next generations financially successful leaders my time has been well spent. I married and my wife and I had education, box springs, a few plates and other essentials only. All the memories of that have passed. Furthermore my wife and I did this on our own and that sort of teamwork very much solidifies a marrige for life.

      God bless you all


      • Brad says:

        Scott, that has to be one of the best posts I have read in months. I passed this along to my wife to read and talk about later. Thank you for your wise words and God bless.

        • senita says:

          Scott, If only all of the young and middle aged couples and singles would read this strategy and of course I feel its never too late to get it right, as long as today is the first day! I absolutely love this posting…

  16. Nice post!

    I love eye opening info like this!

  17. These numbers must come from surveys of readers of Money Magazine! The numbers are impossibly high. And I mean impossibly!

    Think about it logically. If medians or averages of net worth were truly this robust, then why is the country in the tank over the CREDIT crisis??? No credit=no money–not possible if the average person has this much money. The credit crisis has come about precisely because the average Dick and Jane don’t have any money. Point of evidence: the perponderance of frugality blogs!

    These surveys give the impression that there are armies of people with six figure bankrolls (median means 50% of the population are above the number indicated).

    I spent many years working in a business in which I not only took financial information from people, but also had to verify it’s accuracy. While there was an occasional household who had more money than they knew about, the vast majority overstated their assets, and understated their debts by a wide margin.

    If you poll people by phone interview in regard to their finances you will turn up numbers that are much healthier than reality. Far more people are in denial about their finances than these surveys will ever reveal.
    Take the numbers with a very large grain of salt!

    • @Kevin – the numbers provided look fairly accurate to me. If you look at page 11 of the .pdf government report, you’ll see that the breakdown by age doesn’t show anyone as being rich when looking at the median net worth. The highest net worth by age at $253k isn’t much money at all. Considering the median household income is about $50k, this would equate to a 5x net worth-to-expenses multiple. That said, without social security or other income, this group would have a short lived and rather meager retirement–which is exactly what is happening.

      Some data points that were interesting were the declining net worth from the 55-64 group to the older groups. One can infer that this group is either retiring too early, living above their means, healthcare is pinching wealth, and/or are finding it difficult to gain employment. I’d say all of these are true to some extent.

      Regardless, a $253k retirement nest egg is far from robust.

    • Scott says:

      A vast majority of your clients are in denial. An affluent person is one that makes more than they spend and invests the rest. They got themselves in that position by living beyond their means and are now in a tailspin.

      I mentioned the rule of 72 and here it is.

      72divided by the long term rate of an asset class gives you the time it takes to double your money in a IRA or 401-K. An example. John has $20,000 in his Ira at age 25. Quality dividend paying stocks have an averaged return of app. 10%. Seven years later he will have app. $40,000 with reinvestment of dividends and no additional investment. Run the numbers out to age 62. Also consider the additional money he will be investing through his 401-K. Run the numbers above and then run the numbers as if he had started investing at age 32. The math speaks for itself.


  18. lazikiwe says:

    Reading this piece makes me want to worked harder to establish a positive networth, based on my age and income i am no way near the expected Networth that is stated, bad financial decisions will do that to you

  19. kitty says:

    I agree that they should combine the factors rather than list by factor e.g. age and income and profession and education etc. rather than this is median for that and this is median for this.

    @Madame X and Lamar — there are a lot of people out there, especially baby boomers as well as retired people who bought homes long before the bubble. Anybody who bought a home in the 90s and didn’t take any equity loans has a lot of equity. Those who bought in the 70s even more so. Especially in the areas which weren’t the centers of sub prime activity. Not to mention that those who moved in the 90s and rented out rather than sold their old property made a lot of money.

    For example, here in Southern NY state, the condos that cost around 100K in mid-90s (one bedroom condos) are still selling a little under 300K now. Townhouses like mine that you could buy for 180K around 97 as the prices only started to pick up from the 90s lows are selling for close to 400K. Sure it is below the top, but it is still a lot of equity. Even if it is down to say 380K now, it’s still plenty. Houses that you could get for 240K, you could sell even now for over 500K, maybe even 600K. Those who bought at the right time and just lived in their homes and paid mortgages and didn’t use their homes as a piggy bank have a lot of equity.

    When you add all this equity, you easily get to high net worth. One reason I don’t like to include the value of my home or anything that I don’t consider an investment in my calculations.

  20. kitty says:

    @kevin: “Think about it logically. If medians or averages of net worth were truly this robust, then why is the country in the tank over the CREDIT crisis??”
    Hm… Maybe because businesses need credit too? Because banks need credit as well? Maybe because some shipping companies, for example, only earn money after they deliver the goods, but heir crew wants to be paid upfront. Do you know that ships of even some stable shipping companies as far away as Greece had ships stranded in ports because they couldn’t get loans to pay their crew?

    Do you know that last September you could get bonds of American Express with AA credit rating and get the same double digit yield as on junk bonds? Even some Johnson and Johnson bonds had very high yield.

    You do realize, that most corporations don’t just keep cash in vaults and cannot match the timing of their revenue precisely to your paycheck. No credit = no money to pay salaries = layoffs.

    It was even worse for interbank lending. Banks normally don’t keep your deposits in a vault; otherwise, they wouldn’t make any money, right? They keep some percentage, they lend the rest. If too many depositors come to withdraw, they may get a quick loan from another bank, then return in a few days. This interbank lending stopped. There was a panic, people started to withdraw money from banks. There were runs on money market funds – it may seem unimportant to you, but a lot of corporations and institutions and funds keep their cash in money market funds – and they were in danger of collapsing.

    I am really surprised that there are still people around here who don’t understand that credit crisis was about businesses and jobs a lot more than about individuals.

  21. ltk says:

    There is a mistake in the article. The $120,300 is median net worth. The rest of the 2007 figures are described as medians, but they are actually the means.

    Which is obvious, because the “white, non-Hispanic”, and the “nonwhite or Hispanic” figures are both greater than the overall median. This would be impossible. Check the FRB article (which they link to) for the real numbers.

    • scott says:

      I feel we are raised in a country that places too much on being wealthy. There is nothing wrong with accumulating wealth but I define it in different ways as written below.

      One can be cash rich and family poor ie he did not start a family and chased girls. He had money lost it all and regained it again. He was a poor man with lots of money but no family.

      Another friend married a girl that was well grounded and had grown up in a family that had to to budget and save what money they could. They raised three great children and are now retired and live on app. $50K pa. They live on 50 acres in a three bedroom house. They are debt free. All the kids learned from their parents and have great children of their own. In my opinion the grandparents are extremely rich with moderate means. I consider the grandparents to be extremely rich with limited means. Money magizine is a rag that values many of the wrong things. Furthermore they push products that are not in their subscribers best interest. Always want you to by a mutual fund that returnded 45% last year. When you read the small print the fund averaged 7% over the last five years. People buy into it and wind up taking a beating and selling after a 20% loss. This creats people that are cash poor and hopefully family rich.



  22. Mike Hunt says:

    Finance Junkie,

    I like the PAW formula- I’m 36 with a salary of about $250k per year. NW is about 1.7 M so I am double that of the PAW formula.

    Expenses are $36k a year so according to Michael Harr I am at a ratio of 50 or so…

    Not ready to retire just yet!


    • @Mike Hunt – You might not be ready to retire yet, but you certainly could. Although, I’ve never met someone with those stats who would actually consider retirement so early. Their responses were always, “Well, what would I do then? Be bored?” Most PAWs will work until they physically or mentally cannot whether their chosen work be paid or unpaid.

  23. plusaf says: is MY indicator….

    basically, you can retire at ANY age if your total savings [include or exclude your home per your preference] can generate enough income to cover your TOTAL living expenses, which i usually call my “burn rate.”

    allow for a few market dips for your investments over your life and into retirement, and the numbers on that link tell you VERY well how much “net worth” you “need to retire,” at least from the view of investments.

    it also assumes that you won’t draw down the principle as you live, too. that’s nice, because you probably won’t know when your passing date is, so you won’t be able to accurately forecast when your money should be driven down near zero, eh?

    • Andrew says:

      You also have no idea how your investments will perform in the future. I plan to work until I’m physically unable or no one will pay me to do what I do. Then I’ll retire and hope I have enough. It sucks, but it’s capitalism.

  24. richard says:

    The chart is somewhat misleading,, I am 63, retired (wife is still working) own my home, and have minimal debt (about 4%) of assests.

    According to the chart I am ahead of the curve; however there isnt anyway I can save more than 10% of our current joint income (and still live in NJ) Also with returns at their lowest in a decade it is even more difficult to acheive an increase net worth.

    I would just state I have found it is best to try whenever possible to live debt free, unless the return on your investments are higher than your debt rate, if not take out your debt as quickly as possible

  25. Jeff says:

    I’m 23. Salary after income taxes is ~55k. (max out my 401k). I have a 4-plex (I own ~100k worth of it while the rest is under a mortgage). 401k at 50k. Stocks, CDs, and cash at ~75k.

    Net worth – ~225k
    PAW – 126k

    I inherited nothing…

    So, it’s possible to beat the PAW under 25.

    • Anonymous says:

      at 23 making $55k a year. Ok, I understand the 401k number but how did you accumulate $75k in stocks, bonds and CD’s- – Come on Man!

    • Iowa says:

      I can relate to Jeff here; at the same age I owned 90% of my own house with mortgage remaining on the rest (rent shared w/ good friends- which by the way is a great way for a younger individual to start out), a 3-plex (~40k owned), 401k & investments as well, w/ a salary around 60k. Overall, debt/equity was about 35% at the time. This was all started from scratch, no inheritance and I refused to accept $ from anyone for college, except from grants or scholarships- which were minimal anyway. I’m 27 now and glad I made the decisions I had starting out…and understand with my age now that I am still ‘starting out’.

    • SomeOne says:


      In order to have $55k after tax, your income is about 80k-90k (fed tax rate is about 20%+, and state tax rate is about 4%-9%), or am I too far off here?

      Since the 401k max contribution is about 15k a year, then either your company provides a very good match program, you’ve worked more than 3 years, or your 401k performance is out of the world. But with the last 2 years of the stock market trend, I highly doubt the latter. Let’s be honest about your age or the 401k #s here.

      About your 4-plex, it’s considered a commercial investment, which requires mins of 25% down. Without helps from some one or some where, where did you come up with that down payment? If that the $100k is truly your own savings, then your 4-plex was priced at around $400k (400*25%), that means you’ve been saving more than 2 years, at 55K a year. Which means, you’ve been working since you were 21, at the latest. Sure it’s possible to make 80-90k a year at age 21 or earlier, but other than being working IT, a code monkey, or Real Estate (a lucky one), I really have a hard time believing your cash+CD+Stock saving, or the whole posting in this matter.

    • Dean says:

      Let’s nor forget to remove at least 30% of those investments for taxes and the cost of liquidating that property (up to 6%) on top of any capital gains when sold and recapture of depreciation. You also have to factor for inflation if the investments are held.

      I learned early on that cash is KING and your primary residence comes next. If you have any “investments” on paper, you are nowhere near where you think you are when judgement day comes.

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