In this seemingly perpetually bad economy, everyone is worried about their net income and what they are worth. Maybe it isn’t the best way to determine how everyone is doing, but here is a chart that tells us how Americans are doing generally by age.
The folks at Motley Fool have compiled a chart that helps us find out the net worth by age…
What is net worth?
An individual’s net worth is a financial snapshot that offers insight into how much money a person would have leftover if they sold everything they own of value and paid off every debt that they owed.
For the plus side of the column, the Census Department totals up all assets, including equity in a home, savings, investments, and retirement accounts. They even include what equity, if any, people have in their car or truck — but they don’t include things like jewelry or pension plans.
Next, they add up all the secured debt, such as home and auto loans, and unsecured debt, including credit cards, that are owed.
Once assets and and debt is calculated, total debt is subtracted from total assets to come up with net worth. Then that information is broken out across various age groups ranging from people less than 35 years old to people 75 and older. Finally, because averages can be significantly influenced by both those with no assets and those with billionaire status, the median, which separates the top half from the bottom half, is used instead.
What are the numbers?
It’s probably not too surprising to discover that older people entering retirement have more money than those who are just starting out. It may be surprising, however, to learn that the average American’s median net worth peaks in the year just following retirement, and then slides from there.
It may also be surprising to learn how much of a person’s net worth is tied up in his or her home. If you exclude home equity from the net worth calculation, then the median net worth drops significantly across all age groups. For example, the median net worth for a person age 70 to 74 years drops to $31,823 from $181,078 when home equity isn’t included.
Well? How do you measure up?