Here's the net worth you need to start getting ahead in your 20s, 30s, 40s and beyond in the U.S.
Here's the net worth you need to start getting ahead in your 20s, 30s, 40s and beyond in the U.S..
Nearly three out of four households in the U.S. fall short of having "essential wealth," or enough money to weather financial shocks; support their families' physical and mental health; and access such opportunities as education, homeownership and retirement savings that can build even more wealth over time, according to a new report by the Aspen Institute.
While many workers focus on their salaries, achieving financial well-being requires another "cushion that income alone cannot provide" — it requires wealth, including savings, investments and other assets, according to the report.
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"Wealth is not a luxury," said Joanna Smith-Ramani, co–executive director of the Aspen Institute Financial Security Program. It is the foundation for people to buy a home, pay for college, invest in their families' future, prioritize their well-being, choose meaningful careers and spend time with their families, she said.
The median net worth for households led by people in their 30s is about $100,000. Those in their 40s have a median net worth of $179,000, and, in their 50s, $285,000, according to a recent Investopedia analysis of 2022 federal data.
As most people build net worth over time, researchers at the Aspen Institute, a left-of-center think tank, developed benchmarks for essential wealth by age. On average, every age group fell short of Aspen's threshold, despite the benchmarks being lower than the rules of thumb recommended by some other financial experts.
Nearly half of all households fell into a tier "above the asset poverty line," meaning they "have escaped acute fragility but do not currently have a foundation for resilience and growth."
"Most Americans just don't have what they need to thrive," said Steven Brown, director of insights and evidence for the Aspen Institute Financial Security Program and an author of the report. Improving financial well-being doesn't just require addressing income,but challenges on "both the asset side and the debt side."
MarketWatch's breakdown of net worth by age — from the 25th percentile to the top 1% — is available here . Some financial experts told MarketWatch that reaching a net worth in the top 10% surprisingly only buys a "middle-class wealthy" lifestyle, meaning a household that can mostly do what it wants but not live lavishly.
The Aspen Institute's "essential wealth" metric assumes that at each age a household has cash savings equal to six weeks of pay — less than the rule of thumb to have three to six months of expenses saved in an emergency fund.
Related: Many Americans now need $20,000 in an emergency savings fund. Yes, really.
In addition to these savings, essential wealth for a household in their 20s means having net worth (which comprises assets minus debt) equal to 10% of the area's median home price. Aspen's research, based on national data, estimates this to be roughly $40,000. The figure may be higher now, as the median sales price of existing homes nationwide just reached a record high of $440,600 last month. Only 22% of U.S. households in this age group actually meet this net-worth standard, according to the report.
By their 30s, a household's essential wealth increases to the equivalent of 30% of the area's median home price, plus emergency savings — roughly $120,000 in net worth, according to Aspen estimates of national data. Just 26% of these households have amassed this level of wealth.
For households in their 40s, essential wealth means having net worth equal to three times the household's annual income on top of emergency savings. For many at this age, net worth includes home equity minus mortgage and other debts. Based on the median income for this group, essential wealth at this age is roughly $265,000 in net worth, a benchmark reached by just 28% of these households.
Fidelity, meanwhile, recommends having three times your income in retirement savings by age 40, and six times your income by age 50.
Households ages 50 to 64 should have essential wealth worth six times their income, plus emergency savings. Based on median income, that would be a net worth of $530,000 for those in their 50s, a level reached by 24% of households in this age range.
This trajectory should leave a household with enough wealth to achieve retirement stability at age 65, meaning "this amount of wealth could suffice for the rest of their lives, while making space for some of the uncertainty that comes with that phase of life." For a couple with no mortgage, this would be roughly $775,000 in net worth. Yet, even among retirement-age households, only 29% meet this standard of essential wealth.
