Comments on: Average Net Worth of an American Family http://www.bargaineering.com/articles/average-net-worth-of-an-american-family.html personal finance blog with anecdotes, advice and commentary. Sun, 22 Nov 2009 06:04:27 -0500 http://wordpress.org/?v=2.8.5 hourly 1 By: Andrew http://www.bargaineering.com/articles/average-net-worth-of-an-american-family.html/comment-page-1#comment-331370 Andrew Sun, 15 Nov 2009 22:57:53 +0000 http://www.bargaineering.com/articles/?p=4564#comment-331370 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. 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.

]]> By: plusaf http://www.bargaineering.com/articles/average-net-worth-of-an-american-family.html/comment-page-1#comment-330753 plusaf Sat, 07 Nov 2009 21:57:19 +0000 http://www.bargaineering.com/articles/?p=4564#comment-330753 http://www.plusaf.com/bestof.htm 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? http://www.plusaf.com/bestof.htm 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?

]]> By: Michael Harr @ TodayForward http://www.bargaineering.com/articles/average-net-worth-of-an-american-family.html/comment-page-1#comment-329898 Michael Harr @ TodayForward Tue, 27 Oct 2009 12:30:47 +0000 http://www.bargaineering.com/articles/?p=4564#comment-329898 @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. @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.

]]> By: Mike Hunt http://www.bargaineering.com/articles/average-net-worth-of-an-american-family.html/comment-page-1#comment-329888 Mike Hunt Tue, 27 Oct 2009 09:17:57 +0000 http://www.bargaineering.com/articles/?p=4564#comment-329888 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 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

]]> By: dilbert69 http://www.bargaineering.com/articles/average-net-worth-of-an-american-family.html/comment-page-1#comment-328852 dilbert69 Fri, 09 Oct 2009 22:42:05 +0000 http://www.bargaineering.com/articles/?p=4564#comment-328852 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. 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.

]]> By: Tom http://www.bargaineering.com/articles/average-net-worth-of-an-american-family.html/comment-page-1#comment-328849 Tom Fri, 09 Oct 2009 22:00:16 +0000 http://www.bargaineering.com/articles/?p=4564#comment-328849 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. 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.

]]> By: ltk http://www.bargaineering.com/articles/average-net-worth-of-an-american-family.html/comment-page-1#comment-306444 ltk Sun, 21 Jun 2009 23:33:36 +0000 http://www.bargaineering.com/articles/?p=4564#comment-306444 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. 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.

]]> By: Anonymous http://www.bargaineering.com/articles/average-net-worth-of-an-american-family.html/comment-page-1#comment-306012 Anonymous Fri, 19 Jun 2009 00:22:20 +0000 http://www.bargaineering.com/articles/?p=4564#comment-306012 you forget that some have inheritance you forget that some have inheritance

]]> By: kitty http://www.bargaineering.com/articles/average-net-worth-of-an-american-family.html/comment-page-1#comment-305244 kitty Tue, 09 Jun 2009 02:40:55 +0000 http://www.bargaineering.com/articles/?p=4564#comment-305244 @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. @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.

]]> By: kitty http://www.bargaineering.com/articles/average-net-worth-of-an-american-family.html/comment-page-1#comment-305242 kitty Tue, 09 Jun 2009 02:25:02 +0000 http://www.bargaineering.com/articles/?p=4564#comment-305242 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. 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.

]]> By: Jim http://www.bargaineering.com/articles/average-net-worth-of-an-american-family.html/comment-page-1#comment-305212 Jim Mon, 08 Jun 2009 13:22:22 +0000 http://www.bargaineering.com/articles/?p=4564#comment-305212 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? 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?

]]> By: Kate Kashman http://www.bargaineering.com/articles/average-net-worth-of-an-american-family.html/comment-page-1#comment-305211 Kate Kashman Mon, 08 Jun 2009 13:11:37 +0000 http://www.bargaineering.com/articles/?p=4564#comment-305211 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. 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.

]]> By: lazikiwe http://www.bargaineering.com/articles/average-net-worth-of-an-american-family.html/comment-page-1#comment-305117 lazikiwe Fri, 05 Jun 2009 16:33:15 +0000 http://www.bargaineering.com/articles/?p=4564#comment-305117 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 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

]]> By: Beth http://www.bargaineering.com/articles/average-net-worth-of-an-american-family.html/comment-page-1#comment-305049 Beth Thu, 04 Jun 2009 23:55:51 +0000 http://www.bargaineering.com/articles/?p=4564#comment-305049 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! 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!

]]> By: Michael Harr @ Wealth...Uncomplicated http://www.bargaineering.com/articles/average-net-worth-of-an-american-family.html/comment-page-1#comment-305034 Michael Harr @ Wealth...Uncomplicated Thu, 04 Jun 2009 19:16:01 +0000 http://www.bargaineering.com/articles/?p=4564#comment-305034 @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. @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.

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