Summary Findings – Net Worth Comparison USA

[Retire52]

I can't tell you the number of times friends or relatives would say to me "why don't you buy X (a new Mercedes for example)? You can afford it." And I would always answer "the only reason I can afford things like X is because I haven't bought them." For me, happiness is the security that comes from having money in the bank, not having a bunch of stuff.

Right, it is harder for someone to understand if you are not used to valuing long term financial freedom and security over short term gratification with spending on something you want now. Many in this forum got to FI by embracing this concept. My sister and I learned the lesson vicariously from watching our parents' life long financial struggles. If not for them, I'd could still be W*rking and driving the latest Tesla and rolling with a Rolex [emoji16]

 

[Rustic23]

"According to the latest figures from the Bureau of Labor Statistics, the typical U.S. household spent $60,060 in 2017 and had an average income of $73,573 before taxes."

$1m at 3% $30,000 annually
Avereage SS $1,500 a month. $18,000 rounded annually (your state may vary)
Couple $36,000 + $30,000 = $66,000

I am not sure how taxes plays into the the $60,000 annual expense needed, but while many feel $2.4m is needed, It appears the average american can retire on $1m.

As posters on this board are far from average, the $2.4m or higher may be necessary for our friends on here.

Sources:
https://www.cheatsheet.com/money-ca...on the government,as pretax incomes fell 1.5%.

https://finance.yahoo.com/news/here...timated 2.8,year — below the national average.

OK, this is statistics and I am not so naive as to think many can find fault with this simplistic approach.

 

[USGrant1962]

Doesn't it seem like that $11 million figure is being inflated by the inclusion of households of Bill Gates, Warren Buffet, Jeff Bezos, and other multi-billionaires? IOW, the NW of the poorest household in the top 1% isn't really $11MM... is it?

...

Yes it is. That is exactly what 99th percentile means. Bill, Warren, and Jeff have nothing to do with it other then setting the UPPER boundary. Percentile is not an average, it is a ranking. About 1.25 million households are between ~$11M and those guys.

 

[teetee]

Covid or not, the net worth chart of the US shows pretty bad net worth inequality. Dont get me wrong, I am sure many frequent this forum are in good financial standing and should be proud of yourselves. I do believe the social and financial problems of this country will get worse with the worsen wealth inequality.

I was reading the Android phone reviews earlier on Wired and Google Pixel 4A, priced at $350, is reviewed as the "Best Cheap Phone". And less an hour later, I listened to one of the WoPo podcast about a young man who has no phone, no job, and couldn't get the unemployment benefit. He couldn't even take the public transportation to go home to live with his 68yr old father in a one bedroom apartment.

I am in no way an expert on the social economic field but I am going to hold onto everything I own longer (reduce spending) and give more to charities.

 

[dunkelblau]

Some pundit....

https://www.thekickassentrepreneur.com/net-worth-percentile-calculator-usa/

But it compares favourably with others I have seen.

From https://dqydj.com/net-worth-percentile-calculator-united-states/

USA household net worth deciles 2016 Fed SCF in USD
-962 10%
4798 20%
18753 30%
49132 40%
97225 50%
169550 60%
279594 70%
499263 80%
1182390 90%

The ratio of the top 10% threshold to the median based on your numbers is 830,000/507,000 or ~1.6x. By comparison this ratio using the numbers above is significantly different: 1182390/97225 = ~12x. IMO these two sets of numbers tell very different stories about the degree of wealth inequality that exists within the US.

 

[11522914]

I can't tell you the number of times friends or relatives would say to me "why don't you buy X (a new Mercedes for example)? You can afford it." And I would always answer "the only reason I can afford things like X is because I haven't bought them." For me, happiness is the security that comes from having money in the bank, not having a bunch of stuff.

+1000

 

[RobbieB]

I like to have lots of dough in the bank and also lots of stuff.

The dough is my security blanket, but I needs my stuff to play with.

You can tell the men from the boys by the price of their toys!

 

[ut2sua]

Doesn't it seem like that $11 million figure is being inflated by the inclusion of households of Bill Gates, Warren Buffet, Jeff Bezos, and other multi-billionaires? IOW, the NW of the poorest household in the top 1% isn't really $11MM... is it?

I read the data as exactly that: the poorest in the top 1% has > 11M$
That would work out to be roughly 1M households. The US is by far the richest country in the world by GDP and other things (natural resources, intellectual properties, etc.). This is not to say we don't have lots of problems with large part of the population living pay-check to pay-check, but that is another discussion. One thing I would assume (without any data to back up) is that many/most contributors to this forum are self-made millionaires. Without multi-generational wealth, it is a bit difficult to exceed the 7 figures NW even though some of folks here made that happened.

 

[Car-Guy]

I like to have lots of dough in the bank and also lots of stuff.

The dough is my security blanket, but I needs my stuff to play with.

You can tell the men from the boys by the price of their toys!

Absolutely...

 

[ut2sua]

I can't tell you the number of times friends or relatives would say to me "why don't you buy X (a new Mercedes for example)? You can afford it." And I would always answer "the only reason I can afford things like X is because I haven't bought them." For me, happiness is the security that comes from having money in the bank, not having a bunch of stuff.

Totally agree. Looking from another angle.... because you can afford to get X anytime, X became a bit less desirable. It is a great feeling seeing things from that angle. But the best icing on the cake for me is from yet another angle:
DW and I don't define ourselves by things we can show we have. IOW, we feel no pressure what-so-ever "keeping up with the Jones". This allows us to do whatever things that please us rather than getting pressured to get things that may impress others.

 

[Winemaker]

I can't tell you the number of times friends or relatives would say to me "why don't you buy X (a new Mercedes for example)? You can afford it." And I would always answer "the only reason I can afford things like X is because I haven't bought them." For me, happiness is the security that comes from having money in the bank, not having a bunch of stuff.

+1001!

 

[Sunset]

We are not in the top 1%, it would be nicer.

One thing I do believe, is most folks in the top end finished high school.
Folks in the bottom end, (IMHO) have a smaller percentage that finished high school.

The rare time I talk to a child, I emphasize it's important to finish high school, and consider College or trade school, as education and financial success often go together.
It's super tough to be a high school dropout and a success.

 

[rk911]

We are not in the top 1%, it would be nicer.

One thing I do believe, is most folks in the top end finished high school.
Folks in the bottom end, (IMHO) have a smaller percentage that finished high school.

The rare time I talk to a child, I emphasize it's important to finish high school, and consider College or trade school, as education and financial success often go together.
It's super tough to be a high school dropout and a success.

i believe graduating HS (and a lot of other common sense things) was part of Paul Harvey’s list on how to be successful later in life.

 

[Mr. Tightwad]

Right, it is harder for someone to understand if you are not used to valuing long term financial freedom and security over short term gratification with spending on something you want now. Many in this forum got to FI by embracing this concept. My sister and I learned the lesson vicariously from watching our parents' life long financial struggles. If not for them, I'd could still be W*rking and driving the latest Tesla and rolling with a Rolex [emoji16]

All my life I focused on long term financial freedom. It worked out so well, I stopped working at 45 and bought a Tesla (actually 2 of them).

Sometimes you can have both.

 

[Major Tom]

I can't tell you the number of times friends or relatives would say to me "why don't you buy X (a new Mercedes for example)? You can afford it." And I would always answer "the only reason I can afford things like X is because I haven't bought them." For me, happiness is the security that comes from having money in the bank, not having a bunch of stuff.

Agreed. To me, money represents potential. If I spend a large portion of it, much of that potential has disappeared.

Also agree with your earlier comment about thinking of a large sum of money in terms of the income it can provide. Sure, a million dollars is a nice chunk of change. However, if you blow it all on houses, cars, and vacations, you have just given up the chance to draw somewhere in the region of $25K - $40K a year for the rest of your life. I prefer option B.

 

[Badger]

Totally agree. Looking from another angle.... because you can afford to get X anytime, X became a bit less desirable. It is a great feeling seeing things from that angle. But the best icing on the cake for me is from yet another angle:
DW and I don't define ourselves by things we can show we have. IOW, we feel no pressure what-so-ever "keeping up with the Jones". This allows us to do whatever things that please us rather than getting pressured to get things that may impress others.

+1


Cheers!

 

[Andre1969]

It's a few years out of date now, pulling from 2016 data, but one site I've used in the past is this: https://personalfinancedata.com/networth-percentile-calculator/

It has fields where you can put in your age range, your net worth, and it will give you an estimate of your ranking. According to it, a net worth of $100K would get you into roughly the top 50%, using the default age range of 18-100. A net worth of $1M would get you into around the top 12%.

I was thinking that $507K for the top 50% seemed awfully high, considering how many people have nothing saved, or are in debt. You can have a high paying job, a nice house, and a nice car, but if you have no savings, are paying off college loans, and upside down on the mortgage and car, you might look successful, where people would presume you're in the upper echelons, but the reality is, you're broke, son!

I could buy that $507K number as being a mean, or even median, for the top 50% rather than the point-of-entry. But, then the other numbers for the top 10%, 5%, etc seem low, like they'd be the point-of-entry, rather than a mean/median.

Regardless of the number disparities though, it definitely drives home the point that a dollar doesn't go as far as it used to. I can remember when I hit the $1M mark, back in 2015. At that point, the site I referenced above was pulling from 2012 data, I think, so it was still off. But, at the time, it put me in roughly the top 10%. My first thought was that this, THIS, is the top 10%? It's really not so hot, and maybe this country really is worse off than we've thought.

It also started making me think about how the rich are often demonized, and the cries to make them pay "their fair share" of taxes. Umm...wakeup call...there aren't enough rich people to go around, to pay for all of that!

Of course, there are also big disparities in cost across the country. Where I live, in the DC area, $1M is no great shakes. But out in some of the more rural areas of the midwest, it would probably let me live like a king.

 

[mrfeh]

i believe graduating HS (and a lot of other common sense things) was part of Paul Harvey’s list on how to be successful later in life.

I would argue schooling after HS is likely a must in today's world.

It's certainly possible to become well-off w/ only a HS diploma, but it ain't easy.

 

[Andre1969]

Comfortable VS Wealthy.... In Schwab's opinion...

https://www.usatoday.com/story/mone...t-does-take-rich-less-than-before/5521307002/

"They now believe that, on average, it takes $655,000 to be financially comfortable, down from $934,000 in January, according to Charles Schwab’s 2020 Modern Wealth survey. And they think the minimum benchmark to be considered wealthy is $2 million, down from $2.6 million in January. The survey of 1,000 Americans was conducted for Schwab by Logica Research June 25-July 2."

I think it's interesting that those numbers actually went down, over that timeframe. I would think just the opposite, because of that feeling of financial security getting yanked out from under us. I briefly crossed the $2M mark earlier in the year, topping out around $2,048,000 on February 19. By March 23, I was down to about $1,362,000. I'm mostly recovered now, at around $1,948,000. But, seeing just how quickly that net worth can just vanish is a disturbing though. Even though it's mostly come back though, I feel less secure now, than I did back in January. Even though logically, this was a good exercise in staying the course, not doing any drastic sell-off, and seeing that the market always comes back eventually.

But, at this point, I'd say it would take more like $2.5M or so for me to feel secure, whereas in the past I was happy with $2M, and actually starting to think about retiring. I'd never think of $2M, or even $2.6M, as being "wealthy", though, although I guess "wealthy" means different things to different people. If you're a long ways from it financially, it probably does look like a lot of money.

 

[Tiger8693]

Totally agree. Looking from another angle.... because you can afford to get X anytime, X became a bit less desirable. It is a great feeling seeing things from that angle. But the best icing on the cake for me is from yet another angle:
DW and I don't define ourselves by things we can show we have. IOW, we feel no pressure what-so-ever "keeping up with the Jones". This allows us to do whatever things that please us rather than getting pressured to get things that may impress others.

For me (and wife), having an extremely high NW is mostly about leaving a large bounty for heirs. I think there can be a happy medium. Since their was a corporate bankruptcy that wiped our my retirement savings in 2000 (it was not invested that way by my choice, but by corporate plan), I became resigned to the fact that it can all go away at any time. I also knew then that I was not going to be doing the "ER at 45, or even 55" thing, and decided then I was not going to live like a pauper now, to live like a king later. Who wants to live like a king at 70 and beyond when you can least enjoy it. We are not living like kings now by any means, but we are living a good life at mid to upper 50's while we can enjoy it and our kids/grandkids.

Our goal is to save to be able to supplement SS and a small"ish" pension to provide what we consider to be a healthy income in retirement hopefully a little bit earlier than the norm, while possibly leaving a little bit of stash for our heirs.

What number we can "claim" as NW and leave to others after we have sat around for decades is not appealing to us. We also enjoy DOING things with our adult kids while we can see and enjoy it with them.

I guess everyone has their own plan and priorities. This is just ours. I know this will be blasphemy for a lot of the extreme LBYM'ers.

 

[retire202052]

For me (and wife), having an extremely high NW is mostly about leaving a large bounty for heirs. I think there can be a happy medium. Since their was a corporate bankruptcy that wiped our my retirement savings in 2000 (it was not invested that way by my choice, but by corporate plan), I became resigned to the fact that it can all go away at any time. I also knew then that I was not going to be doing the "ER at 45, or even 55" thing, and decided then I was not going to live like a pauper now, to live like a king later. Who wants to live like a king at 70 and beyond when you can least enjoy it. We are not living like kings now by any means, but we are living a good life at mid to upper 50's while we can enjoy it and our kids/grandkids.

Our goal is to save to be able to supplement SS and a small"ish" pension to provide what we consider to be a healthy income in retirement hopefully a little bit earlier than the norm, while possibly leaving a little bit of stash for our heirs.

What number we can "claim" as NW and leave to others after we have sat around for decades is not appealing to us. We also enjoy DOING things with our adult kids while we can see and enjoy it with them.

I guess everyone has their own plan and priorities. This is just ours. I know this will be blasphemy for a lot of the extreme LBYM'ers.

Amen brother:

 

[Time2]

Of course, there are also big disparities in cost across the country. Where I live, in the DC area, $1M is no great shakes. But out in some of the more rural areas of the midwest, it would probably let me live like a king.

I think "live like a king" is a stretch, $1M generates $40k, so even with a pension or SS, you are still only living near the median US income. But, I get your point that living costs are higher in many areas.
This made me wonder about low income areas. I see lots of small US cities with a median income below $15,000. Poverty levels of 40% to 60%.
https://en.wikipedia.org/wiki/List_of_lowest-income_places_in_the_United_States

 

[Dtail]

I think it's interesting that those numbers actually went down, over that timeframe. I would think just the opposite, because of that feeling of financial security getting yanked out from under us. I briefly crossed the $2M mark earlier in the year, topping out around $2,048,000 on February 19. By March 23, I was down to about $1,362,000. I'm mostly recovered now, at around $1,948,000. But, seeing just how quickly that net worth can just vanish is a disturbing though. Even though it's mostly come back though, I feel less secure now, than I did back in January. Even though logically, this was a good exercise in staying the course, not doing any drastic sell-off, and seeing that the market always comes back eventually.

But, at this point, I'd say it would take more like $2.5M or so for me to feel secure, whereas in the past I was happy with $2M, and actually starting to think about retiring. I'd never think of $2M, or even $2.6M, as being "wealthy", though, although I guess "wealthy" means different things to different people. If you're a long ways from it financially, it probably does look like a lot of money.

Perhaps your allocation of stocks is just too high at this point of your life. It appears that your March 23rd loss starting from Feb 19th mimics a close to 100% stock allocation, unless you have lots of individual stocks which did poorly.

 

[Dtail]

I think "live like a king" is a stretch, $1M generates $40k, so even with a pension or SS, you are still only living near the median US income. But, I get your point that living costs are higher in many areas.
This made me wonder about low income areas. I see lots of small US cities with a median income below $15,000. Poverty levels of 40% to 60%.
https://en.wikipedia.org/wiki/List_of_lowest-income_places_in_the_United_States

That's why many folks work in high cost cities to earn high levels of income. If one is in certain fields, the high income more than offsets the HCOL, plus maximizing SS payments as much as possible.
The moving to a lower COL area in retirement can take advantage of this strategy in this next phase of life.

 

[Fermion]

Hindsight is 2020, but based on the stock price of Microsoft, had we not retired in 2015, we would likely be in the 8 figure club.

Then again, you could die of COVID in 2020 and all that time working was for nothing. We have had a great, fun, stress free 5 years so far.