Net Worth by Age

If you search the term Net Worth by Age you are sure to get lots of results, both for articles that address the topic – usually in terms of how Americans stack up against each other – and calculators to help you determine where you should be at a given age.

Check Your Piggy Bank

If you have been reading this blog for a while, you know that I’m not really a fan of thinking in terms of net worth, particularly with respect to retirement planning. In fact, one of my most viewed and discussed blog posts is Net Worth is a Useless Metric. In the post, I make the case that people are better off focusing on marketable assets (financial wealth) and developing multiple streams of income when they engage in retirement planning.

Pink Piggy

However, there is no denying that most are familiar with the term and more importantly, like to use net worth when evaluating their financial health. With that in mind, I thought I would share a basic formula to give people an idea where they might aspire for their net worth to be with respect to their age and income. The formula is as follows:

(Age x Annual Income) / 10

As an example, let’s assume the following for a fictional couple. The 37-year old husband earns $38,500 annually and the 34-year old wife earns $61,250 annually. That gives us an average age of 35.5 and $99,750 annual household income. Using our formula …

35.5 x 99,750 = 3,541,125 / 10 = $354,112.50

The table below provides a quick guide to various ages and incomes …

Net Worth - Age and Income

If a 65-year old couple retired with an annual household income of $100,000, this formula suggests they should have a $650,000 nest egg. Furthermore, if we used this formula/table in conjunction with the 4% Rule, we would calculate that their nest egg would generate an annual retirement income of $26,000.

Of course the Age/Income formula doesn’t account for any defined benefit plans (pensions) or Social Security benefits. While that $26,000 isn’t a lot of money on its own, combine it with other sources on retirement income – perhaps our 65-year old couple enjoy a $25,000 pension from the wife’s previous employer and the couple receives a combined $35,000 from Social Security – and they are looking at $86,000 annually. Not too shabby.

Final Thoughts

The formula presented here is just one tool to use, one guide to consider, as you determine where you’re at and where you would like to be as you conduct your retirement planning.

Blogger-in-Chief here at RetirementSavvy and author of Sin City Greed, Cream City Hustle and RENDEZVOUS WITH RETIREMENT: A Guide to Getting Fiscally Fit.


  1. Thank you, James, for a very handy new worth “rule of thumb.” Measuring tools never hurt. They help you gauge your progress–or lack there of. And thank you all for pointing out the primary flaws of net worth calculations. Net worth is important, but retirement income streams are more so. Once the latter adequately addresses your expenses, you’re all set.

    • Indeed. The primary focus has to be on retirement income streams.

  2. This is an interesting breakdown, James. I agree with the above commenter commending your focus on multiple income streams over net worth. Thanks for the post.

  3. Thanks for sharing this neat little framework James. This is a great way to ballpark (especially combined with the 4%) rule. That said, I tend to agree with your comment that income streams are more important than net worth.

    • “I tend to agree with your comment that income streams are more important than net worth.”

      Indeed. Multiple, and diverse, streams are key. Strictly from a tracking (where am I?) perspective, I suppose net worth as traditionally calculated, and this quick guide/formula, has some value. However, for retirement planning, it’s all about what are you sources of income, where are they coming from – i.e. passive [e.g. pensions, Social Security] and portfolio [e.g. brokerage accounts, 401(k)s, IRAs – and the tax category for each.

      Thanks for stopping by, my friend.

  4. Very cool. Nice little “status checker” to see if we’re on track. First I’ve heard of that formula, but I like it. Simple.

    • Indeed. It’s a good tool for a quick spot check, which hopefully leads to more detailed analysis.

      Thanks for stopping by, my friend.

  5. I won’t lie. This made me so nervous. I jumped into the equation before I finished the post…and before I thought through my situation. I used our pre-tax annual income, but then I forgot about our pensions! We both have 10% of our salaries put into pensions, and I don’t calculate those in our net worth. Phew! Breathing a bit easier now 😉

    Thanks for laying this all out so carefully.

    • You hit on one of the key points I make in the Net Worth is a Useless Metric post. While investable assets (becomes portfolio income) is one component of net worth, the other important aspect is passive income, such as defined benefit plans and Social Security (pensions), which are not a part of the net worth calculus. The other components of net worth, values of automobiles and homes, aren’t really relevant for retirement planning. Ultimately, retirement planning is about developing your sources of passive and portfolio income.

      • James, good point about the downsides of Net Worth, and a good example of why you can’t compare net worth (between bloggers, for example) and make any meaningful conclusions. What matters is how much income can you generate from your assets, and how does that compare to your spending needs in retirement.

        If you have a pension that covers 100% of your spending needs (extreme example, to make a point), you could theoretically have a Net Worth of $0 and still be fine. On the other hand, you could have $1M, but if you need to generate $80k of living expenses you’re in trouble.

        You’ve raised a good point, and one I hadn’t thought about prior to this post.

        • “What matters is how much income can you generate from your assets, and how does that compare to your spending needs in retirement.”


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