Allworth Advice: What is your net worth?
Allworth Financial's Amy Wagner talks about net worth
Allworth Financial
At some point around age 50, the average American can now expect to have a household net worth of more than $1 million.
How did so many people in their mid-fifties become millionaires?
Household wealth grew at a record pace during the pandemic. Between 2019 and 2022, the median net worth of American families rose 37%, adjusted for inflation, to $192,900. This is the largest increase ever recorded in the federal consumer finance survey released last fall. Rising real estate values and increasing stock ownership fueled the upswing.
Some of the new numbers are shocking. The average household net worth of Americans in their late 30s is now over $500,000. For those in their late forties, the amount is over $750,000. For those in their mid-fifties, the amount is in the seven-figure range.
If you're in your 50s and aren't worth a cool million dollars, don't despair. These numbers are averages, and the super-rich drive them up.
The “average” American household — imagine the middle number in a long list of numbers — reaches a net worth of around $300,000 between the ages of 50 and 59, which is a far cry from $1 million.
Here's how net worth breaks down decade by decade
To illustrate how wealth trends over the years, here is a breakdown of net worth in America by decade.
At 20
- Average Net Worth: $120,896 (20-24 years), $120,185 (25-29 years)
- Median Net Worth: $10,800 (ages 20–24), $30,160 (ages 25–29)
In our twenties, most of us are just getting started. We work in our first jobs for relatively low wages. We're paying off student debt. On the bright side, we probably don't have many other expenses.
“This is your first time on your own,” said Liz Gillette, a certified financial planner in Edgewater, Maryland. “You have liabilities, like your first car, your student loans. And then you’re just building your path to saving for retirement.”
For people in their 20s, “debt is the biggest factor,” says Jonathan Swanburg, a certified financial planner in Houston. “You've accumulated a lot of school debt and haven't had a chance to work, so your net worth is often in the red. You’re just trying to get out of the hole.”
At thirty
- Average Net Worth: $258,073 (age 30-34), $501,289 (age 35-39)
- Median Net Worth: $89,801 (age 30-34), $141,200 (age 35-39)
Americans in their 30s may be just getting out of student debt, buying their first home and starting a family. Your income is likely increasing, but so are your expenses: think diapers.
“Let’s assume they’ve managed to eliminate most of their debt,” Swanburg said. “They start putting some money into 401(k)s. And that basically begins the process of going positive.”
Many people in their 30s are beginning to experience the wonder of compound interest: watching the investments they made in their 20s increase in value as interest accrues on both the original investment and the interest they've already earned .
Compound interest helps explain why the average net worth of people in their late thirties reaches $500,000.
“Maybe you started investing when you were 25,” Gillette said. “Now you’re 35. The money has had ten years to grow.”
At forty
- Average Net Worth: $590,718 (age 40-44), $781,923 (age 45-49)
- Median Net Worth: $134,730 (age 40-44), $212,800 (age 45-49)
As we reach our 40s, the home we purchased in our 30s builds significant equity as the balance of mortgage payments shifts from interest to principal. We are entering our best earning years. When we have children, they become more expensive.
“People probably got married, bought a house and had kids,” said Peter Lazaroff, a certified financial planner in St. Louis. “I would call that a full-fledged adulting.”
Home equity and appreciation help drive average net worth into the upper six figures, along with the aforementioned miracle of compounding.
“If you had a 30-year mortgage,” Swanburg said, “you’re probably halfway through it.”
Fifty
- Average Net Worth: $1,132,532 (Ages 50-54), $1,442,075 (Ages 55-59)
- Median Net Worth: $272,800 (age 50-54), $320,700 (age 55-59)
Welcome to Millionaires' Row. By their fifties, many Americans reach mythical millionaire status, with their household assets worth at least a million dollars more than their liabilities.
Our home may now be our most valuable possession, increasing in value as our mortgage lasts. If we started saving for retirement in our 20s, our 401(k) is a miracle, having generated returns of 5% to 10% for many years.
“When you're in your 50s, most of your retirement account is compound interest,” Lazaroff said.
Your children may be studying, one of the biggest expenses you and they will ever incur. But then they're done and your nest is empty. You begin planning for retirement in earnest.
“There seems to be something magical about turning 50 and saying, 'I better kick things into gear here,'” Gillette said.
Sixty year olds
- Average Net Worth: $1,675,214 (age 60-64), $1,836,884 (age 65-69)
- Median Net Worth: $394,010 (age 60-64), $394,300 (age 65-69)
This is the decade when the average net worth peaks, worth nearly $2 million for Americans in their late 60s.
In our 60s, many of us retire and begin to reduce the wealth we have accumulated.
“You ask [people] flip a switch and suddenly start spending their money,” Gillette said.
But wealthy households, with decades of investments to draw on, “live on their income,” she said. “You don’t even touch the headmaster.”
Seventy
- Average Net Worth: $1,714,085 (age 70-74), $1,629,256 (age 75-79)
- Median net worth: $433,100 (age 70-74), $341,300 (age 75-79)
In their 70s, Americans are watching their net worth finally begin to decline.
We are probably no longer working and are gradually depleting our retirement nest egg. Many expenses are falling, others are rising – especially in healthcare.
“You're in the expense reduction phase,” Swanburg said, “where you're reducing the 401(k) amount instead of increasing it.”
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Wealthier families may still earn more than they spend: a $1.5 or $2 million retirement fund can produce big returns. Less wealthy families may rely on Social Security.
Experts say anyone who is in their 70s and doesn't have a seven-figure net worth is not doomed to spend their lives in poverty: every budget is different.
“How much money you need depends entirely on how much you spend,” Swanburg said. “Someone who has less than average but doesn’t spend much can be very, very rich.”