It’s natural to wonder how your financial situation stacks up against your peers. This article provides data-driven insights into net worth percentiles and averages by age group, allowing you to benchmark your financial progress. We’ll explore total net worth, investable net worth (excluding home equity), and the role of home equity in overall wealth.
Understanding Net Worth Benchmarks
The data presented here is based on a Federal Reserve survey, offering a snapshot of household net worth across different age brackets and percentiles. Remember, these are averages and percentiles, not prescriptive targets. Your individual financial goals should be tailored to your unique circumstances and aspirations.
Net Worth Percentiles by Age
This table highlights the significant difference between average and median net worth. The average is often skewed higher by the substantial wealth held by the top percentiles. For instance, the average net worth for those aged 35-39 is considerably higher than the median (50th percentile) net worth.
The graph above visually demonstrates this disparity, showing how the average net worth significantly exceeds the median across all age groups. This disparity underscores the concentration of wealth at the upper end of the spectrum.
Investable Net Worth: A Deeper Dive
Investable net worth excludes home equity, providing a clearer picture of liquid assets available for investment and generating potential returns.
As this graph illustrates, the difference between average and median investable net worth remains substantial. However, excluding home equity reveals a more conservative view of readily accessible financial resources.
The Impact of Home Equity
Homeownership plays a significant role in building wealth, especially for those in lower net worth percentiles.
This graph shows how home equity contributes to overall net worth at the average and median levels. The relative importance of home equity generally declines as overall wealth increases.
This final graph visually represents the diminishing role of home equity as a percentage of net worth as wealth grows. The peak home equity percentage also shifts to younger age brackets for higher net worth percentiles.
Using Comparisons Wisely
Comparing your finances to your peers can be motivating or discouraging. Financial advisors offer varying perspectives: some see it as a benchmark for improvement, while others caution against the potential for unhealthy comparisons.
The key is to use these comparisons as a tool for self-reflection and informed decision-making, not as a definitive measure of success. Focus on developing sound financial habits and pursuing goals aligned with your individual needs and aspirations. Consulting with a financial advisor can provide personalized guidance tailored to your specific situation.
Disclaimer: This article is for informational purposes only and should not be considered financial advice.
