Single person vs couple's net worth

[Digger1000]

I didnt know which forum to post this on and I went with this forum since retired couples normally dont have kids at home.

I've googled this a few times over the last few months and cant find an answer, years ago I saw info on this but I dont remember the facts.

Anyways how do you compare a single person's net worth vs a couple's net worth?

I am a single early retiree.

I am sure this has been talked about on here many times in the past.

 

[USGrant1962]

When the Census Bureau publishes net worth and similar stats it is invariably "household" net worth. So they don't really distinguish. If you are trying to check out how you are doing at your age compared to others, household is probably a good enough comparison.

 

[disneysteve]

how do you compare a single person's net worth vs a couple's net worth?

What would be the purpose of that comparison? What is it you're trying to figure out?

 

[Which Roger]

A rule of thumb I heard is that annual expenses are proportional to the square root of the size of the household. So, for example, and family of 4 has double the expenses of a single person. And a single person has about 70% of the expenses of a couple (1/sqrt2).


So it would follow that a single person with 70% of the net worth of a couple is on equal financial footing. Of course this is a generalization and all kinds of caveats apply and your mileage may vary.

 

[braumeister]

A rule of thumb I heard is that annual expenses are proportional to the square root of the size of the household. So, for example, and family of 4 has double the expenses of a single person. And a single person has about 70% of the expenses of a couple (1/sqrt2).


So it would follow that a single person with 70% of the net worth of a couple is on equal financial footing. Of course this is a generalization and all kinds of caveats apply and your mileage may vary.

That's probably not a bad way to look at it.
Contrary to the old bromide "two can live as cheaply as one", it has often been calculated that in fact the expenses for a couple are generally about 1.6 times the expenses of a single.

 

[Car-Guy]

Anyway you want too.... But, IMO, I think it makes sense for "most" married couples to consider their NW together... In general I would not include the NW of anyone else living under the same roof. Some may have parents, kids, relatives, etc living in their house that may have their own NW... So the term "household" may or may not apply.

 

[Chuckanut]

I figure a single person needs 67% of a couple's income to live an equivalent lifestyle, all else being even.

Why 67%? There are plenty of fixed costs that don't go down with one person.

This is purely and educated guess on my part. I have no stats to back it up.

 

[Gumby]

A rule of thumb I heard is that annual expenses are proportional to the square root of the size of the household. So, for example, and family of 4 has double the expenses of a single person. And a single person has about 70% of the expenses of a couple (1/sqrt2).


So it would follow that a single person with 70% of the net worth of a couple is on equal financial footing. Of course this is a generalization and all kinds of caveats apply and your mileage may vary.

That's the method the Congressional Budget Office uses to normalize household income for comparison purposes; the square root of the number of people in the household.

Because households with identical income but different numbers of people can differ in their economic status, CBO adjusts income for household size by dividing household income by the square root of the number of people in the household.

Source https://www.cbo.gov/system/files/2019-12/55941-CBO-Household-Income.pdf Appendix A, p. 27

 

[Digger1000]

Thank you to everyone who answered so far. I am interested in 1 person vs a couple with no kids at home in retirement.

That 67% makes sense to me.

Since most people I know are married I'm just interested in finding out where I stand at compared to them.

 

[tmm99]

That's the method the Congressional Budget Office uses to normalize household income for comparison purposes; the root of the number of people in the household.

Interesting. I didn't know that. I'm married, but we got married in our 50s (second marriage for both of us), so I always just count my own money, but that's good to know.

 

[Amethyst]

Bear in mind that a single person's tax burden tends to be heavier than that of two married people.

 

[Digger1000]

So if I would use the 67% mentioned above would that mean a couple with no children at home with a net worth of 1.5 million would be comparable to a single person with 1 million? Or am I not doing it right/misunderstanding?

 

[Digger1000]

Nevermind, I see where the 70% posted above being the correct amount we think.

Thank you!

 

[Digger1000]

Bear in mind that a single person's tax burden tends to be heavier than that of two married people.

Luckily for me I pay Uncle Sam and Uncle Dewine $0 in income taxes.

 

[OldShooter]

... Since most people I know are married I'm just interested in finding out where I stand at compared to them.

Probably a better comparison would be withdrawal rate as a % of liquid net worth or of investable net worth. Not considering primary residence or personal property IOW.

 

[disneysteve]

All things being equal, my NW would be far higher if I was single. For most of our marriage, we've been a one-income household. Had I never married, and especially not had a child, my expenses would have been way lower and my savings way higher. So if you compare me to a single person, they should have more than us. Now if it's a two-income household, that would change the outcome.

 

[skyking1]

For us it is an exact flip. DW has always worked and her constancy has bridged those times my employment was seasonal. We did ( and do! ) make a good team

 

[stepford]

It's interesting when the couple has "asymmetric" finances. In our case my savings are about 10x DW's, but her pension is worth 3x mine. Together I just call our NW "enough".

 

[Gumby]

When the young wife and I got married, we had nothing. Everything we have done over the past 37 years, we have done as a team. So our money is "our" money, regardless of its original source.

 

[jollystomper]

When the young wife and I got married, we had nothing. Everything we have done over the past 37 years, we have done as a team. So our money is "our" money, regardless of its original source.

+1

What DW has earned in her lifetime I have exceeded in more than one of my working years. But I would not have achieved that without her support.

 

[Dtail]

My stash is larger than DGF's, but she is already collecting SSDI, so it all works out in the end.

 

[Ready]

I think it's more relevant to compare your net worth relative to your expenses if you really want to compare how you are doing. A single person living a very luxurious lifestyle will need more money than a frugal family. So a family with $2M net worth and $50,000 in expenses is really the same as a single person with $2M net worth and $50,000 in expenses.

 

[Digger1000]

I've got the being frugal and paying $0 in both federal and state taxes nailed down. We good there.

So using the 70%.
$1,428,000 for a married couple(with no children at home) equals 1 million for a single person.

2 million for a couple(with no children at home) equals $1,400,000 for a single person

 

[LarryMelman]

There are way too many variable factors to make a simple statement like "a single has 70% the expenses of a couple." Any rule of thumb there would be just as useless as so-called rules like "you need X% of your pre-retirement income, or you should not retire."

The OP has not said why he thinks this comparison is important.

 

[disneysteve]

I've got the being frugal and paying $0 in both federal and state taxes nailed down. We good there.

So using the 70%.
$1,428,000 for a married couple(with no children) equals 1 million for a single person.

2 million for a couple(with no children) equals $1,400,000 for a single person

Which tells you what, exactly? I'm still not sure what purpose this comparison serves.


What if the single person's NW is largely in stocks but the married couple's NW is largely in home equity? What if the single person lives on 3K/month and the married couple live on 8K/month? What difference does it make how their NWs compare?