The New Wealth Scoreboard

[NW-Bound]

Yeah, it's tough to keep up with those "go-getters", particularly when you retire early.

I myself dropped out early, meaning working part-time for quite a while, and my wife retired early. Meanwhile our peers keep clocking the time, and look how their net worth keeps increasing until their age of 60-69. Well, there's the price for goofing off. One must learn to eat american ham instead of Jamón ibérico. It also helps that I drink Folgers instead of Kopi Luwak.

 

[5971]

Thanks for posting. Interesting numbers. Certainly makes me feel better about our financial situation. It's interesting to me how little in assets most Americans accumulate in their lifetime. I can only assume it's only going to be worse for the next 10-20 yrs give the current recession.

 

[NW-Bound]

OK, here's a comparison to my situation.

This made me look at our record.
We were age 45 in 2000.

In 2010 at age 55, when we retired, our net worth had gone up by a factor of 4.5.

In our case, the year 2000 saw our 2nd, and last, child go off the payroll, plus we were both earning the most we'd ever made and saving aggressively.

2000 - 2010 was hardly an impressive period in the stock market so if we had been in the same position in 1990 I think we'd be flying First Class now.

We started later, so my 2nd just finished college last year. My wife quit working 5 years ago, and I have been having iffy income since 1998. Some years, near zero. The next, AMT!

Yet, our net worth almost doubled since 2000. It is difficult to say because from 2000 to 2002, my portfolio dropped by 1/2, then more than tripled since, so it all depends on where I count. Also, we went from 1 home to 2. So, I don't think I have done too badly for a guy who goofed off early.

 

[photoguy]

Just above the graph, it does mention "Because the figure is the median--- half have more, half have less--- for each group it is not a "threshold" figure; actual net worth can be less to be in each group."

I really wish they'd show the threshold figures in these types of charts, rather than just medians. As for me, I fall just above the median in the top 10% of my age bracket. So, does that mean I'm really at the lower end of the top 5%?

Thanks -- that makes sense. It seemed a lot less clear to me when I was reading it last night.

Agree with you that threshold numbers would be simpler to interpret and more what I would expect when presenting percentile information. I guess the last column "median" is really the median and not the median of everybody above the median...

 

[FIREd]

Yeah, it's tough to keep up with those "go-getters", particularly when you retire early.

True dat.

I myself dropped out early, meaning working part-time for quite a while, and my wife retired early. Meanwhile our peers keep clocking the time, and look how their net worth keeps increasing until their age of 60-69. Well, there's the price for goofing off. One must learn to eat american ham instead of Jamón ibérico. It also helps that I drink Folgers instead of Kopi Luwak.

Also, we went from 1 home to 2.

Sell the second home and then you can eat all the Jamon iberico and drink all the Kopi Luwak you want...

 

[NW-Bound]

Well, I have been thinking that if I sell both places and cough up some additional cash, I might, just might be able to get a place with a waterfront lot on the Puget Sound.

That way, I can row a canoe out to my crab trap to get my dinner every day. I like crab more than jamon iberico and Kopi Luwak anyway, and am willing to spend the time to catch my own. In fact the cost of living like RE taxes is higher there that catching my own dinner may not be a choice.

 

[NW-Bound]

I stopped surfing the RE Web sites a couple of years ago, because everything was so expensive around the sound, particularly waterfront lots.

Just now, look again out of curiosity, and what do you know, looks like there's a lot more on the market than earlier. What happened? The prices have come down quite a bit too. Looks like the recession finally caught up with the RE market there.

 

[Grainiac]

Based on a quick calculation I can make it to the 1% club pretty easily. All it takes is that I keep my current job and maintain annual over-inflation salary increases until I'm 80.

 

[Nords]

Because we are early retirees, perhaps our net worth peaks even earlier than the stats show, and goes downhill earlier too. Darn!

I think of that as flying below the radar, and never coming to anyone's attention.

I would think having your children grown and out of the home would be a huge factor in starting to accelerate net worth in that timeframe.

... and out of college...

 

[urn2bfree]

The link is not leading to the same article anymore.

 

[Brett_Cameron]

The link is not leading to the same article anymore.

Try this: AssetBuilder - The New Wealth Scoreboard - AssetBuilder Inc., Registered Investment Advisor

 

[dmpi]

Thanks -- that makes sense. It seemed a lot less clear to me when I was reading it last night.

Agree with you that threshold numbers would be simpler to interpret and more what I would expect when presenting percentile information. I guess the last column "median" is really the median and not the median of everybody above the median...

I agree. The numbers as presented are confusing. It would have made much more sense to present threshold numbers into each of the categories.

 

[rescueme]

Seriously, though, I'm not a big fan of "net worth" as a barometer of financial security or retirement security unless the actuarial "cash value" of income streams like pensions, annuities and Social Security are included. Otherwise it's apples and oranges; someone with $10,000 in the bank and a $40K COLA'd pension may well be more financially secure than someone with a million bucks in the 401K.

While we disagree on the value of defined pension plans and SS (which value is lost when you die) I'll agree that it is a difficult artifact to measure. BTW, we agree on annuities, since DW/me have an SPIA with a guaranteed payout rider, regardless if we're alive or not.

Do you look at "your assets", as in the case of a married (or partnership) couple, and divide by 2?

Do you look at assets at their current value, minus "claims" (such as taxes on a TIRA account) or do you look at the "gross amount"?

These articles may have value to some folks and that's fine for them.

As for me (including DW), it dosen't matter where we are as compared to other folks. There will always be those who have more/less.

The important thing IMHO, is that we have "enough" to life the lifestyle we wish, for the remainder of the limited time we have on this earth...

 

[NW-Bound]

Why do we like to compare to our peers? Could it be simply for some personal assurance that when bad things occur, they will happen to our neighbors first? For example, in my home, when the rain is pouring, I feel smug knowing that I am on higher ground than my neighbors, although I myself may not be high enough.

It's just a human thing.

I think of that as flying below the radar, and never coming to anyone's attention.

It's worse than flying below the radar. In the Great Recession of the 2007-2009, didn't we feel more like flying a nap-of-the-earth mission? And at night, even squeezing between trees?

In fact, some of us didn't make it, like the following pilots.

Pilot: Think I can make it between there?
Copilot: Nope!
Pilot: Oh ye of little faith. Look how big that is.
Copilot: Oh sh*t!
Pilot: Damn!
Copilot: Mayday! Mayday!
Pilot: I've got it, I've got it...​

Oh Ye of little faith AH-64 Apache Crash - YouTube

 

[ziggy29]

While we disagree on the value of defined pension plans and SS (which value is lost when you die) I'll agree that it is a difficult artifact to measure. BTW, we agree on annuities, since DW/me have an SPIA with a guaranteed payout rider, regardless if we're alive or not.

My point was simply that "net worth" isn't the most accurate barometer of overall financial security because it doesn't factor in the real value of income streams that have no actual cash value.

 

[aida2003]

Given that we only started working in 2000-2001, it's amazing that DW and I managed to be where we are after 2 recessions, [-]multiple employer bankruptcies[/-], 2 spectacular stock market blowups, and [-]one unprecedented real estate market meltdown[/-]. We rank very high within our age group (30-39). But I think that, as we will soon transition to the next age group (40-49), it will be challenging to hang on to our current percentile. It's a pretty big step up from here, even with DW still working. It would require some decent return on assets and that looks unlikely in the current environment.

We're almost like above except that luckily we didn't experience layoffs personally and our mediocre house didn't really have much to lose in the housing meltdown.
With regards to the age groups, I guess we have to average age of the spouses. I'm in the 30-39 group, and my DH is in the next elder group. It feels great that we're doing quite fine...but only for a moment. All that wealth is on the paper anyway and who know what awaits us in the future (though hoping for the best certainly).

 

[Mulligan]

Why do we like to compare to our peers? Could it be simply for some personal assurance that when bad things occur, they will happen to our neighbors first? For example, in my home, when the rain is pouring, I feel smug knowing that I am on higher ground than my neighbors, although I myself may not be high enough.

It's just a human thing.

It's worse than flying below the radar. In the Great Recession of the 2007-2009, didn't we feel more like flying a nap-of-the-earth mission? And at night, even squeezing between trees?

In fact, some of us didn't make it, like the following pilots.

Pilot: Think I can make it between there?
Copilot: Nope!
Pilot: Oh ye of little faith. Look how big that is.
Copilot: Oh sh*t!
Pilot: Damn!
Copilot: Mayday! Mayday!
Pilot: I've got it, I've got it...

Oh Ye of little faith AH-64 Apache Crash - YouTube

I am glad its a human thing and not just a self centered Mulligan thing. My first thought was, Im not doing so well compared to others. Then I smugly thought I bet most don't have as good of pension as I do though. Unrelated, your "smug" comment reminded me of last night when I was walking outside with GF. A dog was lose from his house and came charging and barking at us. She was getting nervous and I smugly commented that I didn't have to outrun the dog, I only had to outrun her.

 

[NW-Bound]

You are supposed to keep that in thought, and not commenting out loud. You are in trouble now, my friend.

But then, some animals may have an instinct to give chase. Next time, run and see what the dog will do.

 

[obgyn65]

I agree with this.

The numbers as presented are confusing. It would have made much more sense to present threshold numbers into each of the categories.

 

[Huston55]

My point was simply that "net worth" isn't the most accurate barometer of overall financial security because it doesn't factor in the real value of income streams that have no actual cash value.

+1

For example, DW and I are in the top 10% according to these tables but, I estimate that almost half of our retirement income will (at some point) come from SS and a pension. And, these COLAd income streams are the only reason that FIRECalc and Fido RIP tell us that we can retire; because our "assets" alone would not support a financially stable retirement at our desired income level.

This is illustrated by the data in Fed Survey. Comparing the median net worth of percentile groups or age groups reveals that they (even the top 10%ers) have no where near the assets required to support their respective median income.

For example, comparing median NW to median income for the 80-90%, the 90-100%, and the 55-64 yrs groups, shows that their NW is only 3-6 times their income. Crudely saying the prospective retirees need only 50% of their preretirement income (a stretch) would result in NW/income ratios of 6-12 - which is still 2-4 times less than required for a 4% SWR.

I know that this NW/income comparison is somewhat influenced by high late-in-life income compared to actual expenses (higher % going into savings) but, even factoring that out doesn't make it mathematically possible for these well off groups to live solely on their assets.

Some conclusions:
1. Thank goodness for SS, and even a small DB pension if you have one.
2. A stable retirement is difficult at "normal" age, much less early, even for those in top income brackets.
3. Joe Dominguez was right - LBYM is the only way.

 

[gerntz]

Nice info. Better than earlier posted links on wealth statistics.

I agree 100% with this statement from the article:

While many people can get into the top 10 percent through high wages as employees, diligent savings, and fortunate real estate choices, the odds are that you will need to be a business owner--- or an employee blessed with good stock options--- to make it into the top 1 percent.
​

One thing I noticed is that across all net worth groups, people's wealth maxes out at the age group of 60-69, then declines as people get older. I guess that's because they stop working in the 60s and start to spend down.

That plus I'd guess gifting to charity & heirs vs. gifting to Uncle Sam when you die plays into it. Look at Buffett & Gates giving to Gates Foundation.

 

[gerntz]

It's interesting to me that for all age groups, to be in the top 1% you need at least 5 times what it takes to be in the top 10%. Wonder what this scorecard would have looked like 30 years ago. Would the gap between 1% and 10% be so high?

NW growth with age and percentile is quite exponential.

 

[NW-Bound]

Yes, the growth of net worth in the age group of 50 through mid 60 is very high. It all makes sense when we think of how much money people can put aside in those years, when their children have left the home and college tuition is done with, their houses paid for, all the toys already purchased (and gotten tired of even). And yet, this is the time when people are at the peak of their careers, commanding highest salaries in their work life.

It is tough to walk away from all that money! I have had much deliberation with myself, much soul searching. And I had the luxury of easing into retirement, so I can get used to it, and not like most people who had to quit cold turkey from the steady cash flow from their employers.

No, ER is certainly not for the faint of heart.

 

[Grainiac]

Yes, the growth of net worth in the age group of 50 through mid 60 is very high. It all makes sense when we think of how much money people can put aside in those years, when their children have left the home and college tuition is done with, their houses paid for, all the toys already purchased (and gotten tired of even). And yet, this is the time when people are at the peak of their careers, commanding highest salaries in their work life.

Makes sense alright, but only if it makes sense to w@rk past 50.

 

[HillCountry]

Is this the first time net worth is profiled with age?

I am not sure people in 40 today can grow their wealth to that level of 60 after 20 years.

The early baby boomers have better economic environment for them to grow wealth.