Net worth vs lifetime earnings.

[Steelpony]

I started investing and later added an IRA during Stagflation at about DOW 750 and added to both each year. Everything was on reinvestment. Look at the DOW now. Starting in a terrible cheap market worked wonders also.

I adjusted our growth oriented net worth to an income centered portfolio about 8 years before retirement. So one major change 30 years out.

Another key is value gains should outpace income raises. Personal raises may be inflation adjustments. Market value accelerators are inflation plus increased earnings over time. A greater rate.

Answering the question than on average net worth should be higher then lifetime earnings because of the larger accelerators provided by markets if you prioritized savings and/or an IRA first. Evidently though it seems most don’t.

 

[INTJ10]

NW is a bit more than lifetime W2

 

[HI Bill]

My NW is about 5X my lifetime earnings.

 

[NW-Bound]

It’s apple to orange comparison. NW is in today’s dollar while earnings are in yesterday’s dollar.

I have always been curious about comparing our lifetime earned income to the present net worth. I have kept all the 1099 tax records over the years, but as you pointed out, I would need to account for the inflation over my working life.

It's all doable in an hour or so with a spreadsheet, but I have not found the time to do it.

What is it for? Nothing other than to find another reason to pat myself on the back.

 

[CalBird]

I have always been curious about comparing our lifetime earned income to the present net worth. I have kept all the 1099 tax records over the years, but as you pointed out, I would need to account for the inflation over my working life.

It's all doable in an hour or so with a spreadsheet, but I have not found the time to do it.

What is it for? Nothing other than to find another reason to pat myself on the back.

It may give you an idea what is your lifetime earnings in today’s dollar, and after all the expenses to maintain your life, with your disciplined savings and investing, what still left. Many people here have seen NW are multiple times of earning. It says savings and investing contributes more than earnings for long term wealth growth.

 

[FlyingCircus]

Curious as to whether your net worth is more or less than your lifetime earnings. Ours (wife and mine) is but not by much.

That's quite a strawman. Our net worth is about the last 10 years of our lifetime earnings. The math works out to living below the poverty level for 40 years of working, but somehow investing it well enough, or, making a whole lot of money for a short working time and investing it well / successful business and cashing out.

 

[indiajust]

since I put everything in quicken... my lifetime w2 comes in just under 1M. If you add in cash work, unemployment, dumpster diving, working on my own house as job, and parental gifts, I get to 1.3M Meanwhile networth has climbed to 2.1M. So I am roughly double my wage slavery.

 

[SnowballCamper]

If it's just W2 income to net worth, W2 is much lower...I suspect it would still be lower if I took time value of money into account. The gap continues to grow. It's easy when you start out poor.

 

[1242Vintage]

Early on young wife and I slowly acquired distressed residential properties, fixed and rented. Thanks to the ever increasing value of CA real estate and our sweat equity, that portfolio of rentals we built up over 40 years is valued at approx 4 times my lifetime earnings as a construction engineer.

We were destined to do this! When we got married in 1987, unbeknownst to us until the rehearsal the afternoon before we married, the church was undergoing major renovations. Have awesome pictures of the two of us all dressed up at the alter with plastic sheeting, scaffolding and plywood in the background!

 

[Perryinva]

NW much less than Lifetime earnings, even w/o inflation. Get divorced a few times and see how that works out. Wage Earnings for both of us were around $4M, rough enough estimate. But like some others, not including the $62k value of our pensions, which would close the gap considerably and maybe beat it eventually. We also have more than $60k/yr in SS, so that helps the NW a bit too.

 

[PatrickW]

Was always told that I was kinda worthless...

Celebrated when my net worth reached my (at the time) debt level, at which point I acknowledged that I was indeed "worthless".

My net worth today is about the same as my lifetime income.

 

[hesperus]

Curious as to whether your net worth is more or less than your lifetime earnings. Ours (wife and mine) is but not by much.

Usually less. Over a lifetime most people earn far more than they end up keeping because taxes, housing, food, kids, and normal living costs eat a huge part of income. Net worth mostly reflects what you managed to save and invest after all those expenses. If someone’s net worth is close to their lifetime earnings it usually means they saved and invested very consistently.

 

[srblanco7]

Our NW is roughy 33% higher than our lifetime earnings. Did not adjust earnings for inflation.