What Should Net Worth at 40 Be?

[LargeOrangeFont]

We don't have to get into specific numbers because that is different for everyone. But what would you say ones net worth should be at around halfway into their career?

Let reflect this as percentage of retirement net worth. Easy math - If you desired a $2M net worth in retirement, what percentage should you have at 40? 20% (400K)? 30% (600K)? 50% (1M)?

Thoughts

 

[Canuck 1]

Kind of an impossible question as there is way too many variables to factor in IMO

 

[LargeOrangeFont]

Kind of an impossible question as there is way too many variables to factor in IMO

Agreed, but just wanted to hear thoughts, planning and experiences.

 

[DarkJuJu]

at 40 my fam was still paycheck to paycheck mostly but I think I had 200k socked away in my 401k and maybe 60k in equity in my home (Phoenix) and 10k in savings

 

[STV_Keith]

Whatever it is, I missed by a long way.

 

[2Driver]

If you think 2M is enough for retirement you better like an old mobile homes and cat food.

 

[LargeOrangeFont]

If you think 2M is enough for retirement you better like an old mobile homes and cat food.

That example was for the math challenged.

 

[Fun Times]

Would what state one lives in reflect on this outcome too?

 

[Your ad here]

Net worth is tough to determine because of all the variables. Discussion of financial goals to achieve by age 40 would be interesting.

 

[LargeOrangeFont]

Would what state one lives in reflect on this outcome too?

Probably. That is why reflecting it as a percentage is more important than an actual number I'd think.

 

[LargeOrangeFont]

Net worth is tough to determine because of all the variables. Discussion of goals to achieve by 40 would be interesting.

That is a good spin on it as well.

 

[4Waters]

Whatever it is, I missed by a long way.

^^^^This^^^^

 

[Your ad here]

That is a good spin on it as well.

I edited it to financial goals. Keeps with the net worth topic.

 

[Mandelon]

As I recall if your investments return 7% a year they double every ten years assuming the dividends are reinvested. So I assume you would need 25% of your retirement number.

 

[Flatsix66]

Interesting video discussion -

 

[LargeOrangeFont]

Some general net worth goals I have found are 2X your salary by 40 and 4X your salary by 50.

 

[941Punk]

46 and this is the story of my life.

 

[HTTP404]

3 mil in property and assets minimum.














And 2 Speed UTVs.

 

[Flatsix66]

How much retirement income is needed to live the RDP lifestyle (Two houses, Boat, RV, Speed Car..)? Maybe $200k a year?. If you use the 4% rule you would need $5m in wealth saved and generating income. $1M at 40, $2M at 50, $4M at 60...retire at 64 with $5M.

 

[LargeOrangeFont]

View attachment 1079050
Interesting video discussion -

That is a great video and discussion.

 

[bowtiejunkie]

Typically I see it as a multiple of your salary/income. 10x @ 60yo, 6x @ 50, 4x @ 40.

I don’t count home equity in my net worth. I don’t much care about the net worth number myself, I just wanted to track my assets and liabilities in a balance sheet format.

I think those who have a defined pension are going to have a different approach to net worth. Likely a different mix of investments than a person with no pension. Possibly some pension participants having little/low savings, and spending there money. Not sure, I don’t have a pension.

 

[LargeOrangeFont]

3 mil in property and assets minimum.














And 2 Speed UTVs.

At 40 or in retirement?

 

[LargeOrangeFont]

This is a great exchange of ideas so far!

 

[wash11]

Not sure on the math but I'm fairly confident that by doing the exact opposite of everything I have ever done financially; you'd be close to being on track for a successful retirement.

 

[YeahYeah01]

Probably at least 4 used 2012 F150's worth.

 

[LargeOrangeFont]

Typically I see it as a multiple of your salary/income. 10x @ 60yo, 6x @ 50, 4x @ 40.

I don’t count home equity in my net worth. I don’t much care about the net worth number myself, I just wanted to track my assets and liabilities in a balance sheet format.

I think those who have a defined pension are going to have a different approach to net worth. Likely a different mix of investments than a person with no pension. Possibly some pension participants having little/low savings, and spending there money. Not sure, I don’t have a pension.

So you are tracking essentially your invested or liquid investments against salary as 4X @ 40, 6X @ 50 and 10X @60?

 

[LargeOrangeFont]

Not sure on the math but I'm fairly confident that by doing the exact opposite of everything I have ever done financially; you'd be close to being on track for a successful retirement.

 

[Xtrmwakeboarder]

At 40 I'd say $1MM is a solid goal.

I think the mix is important as well, though. I'm guessing if you've had a house in So Cal for 10+ years you'd have to be at $1MM if you're remotely financially responsible.

 

[farmo83]

Depends on other variables as well.

Are your kids close to being off the payroll ?
You on a 15 year or 30 mortgage on your house ?

I'm 39 and by most standards am killing it. Personally I'm a little behind where I would like to be but we're on a good track now.

 

[Bpracing1127]

1$ Bob

 

[havasujeeper]

A lifetime pension bypasses a savings account.

 

[farmo83]

For perspective median net worth for USA at 40 is 91k.

 

[ONE-A-DAY]

Hard to say, has alot to do with the lifestyle you live and the lifestyle you want to live at when you retire. My wife just retired and took the cashout option on her pension of 1.2 million which we have invested and can start using when she is 59 in three years. I have about 500k in iras and in the 401k that I have set up for my company. That plus medicare and no real bills or mortgage I think we will be fine. My plan is to be broke when I go teets up, I have done enough for my kids, they need to start planning their futures instead of sucking off of my teet.

 

[Javajoe]

I think it really depends on how you want to live in your later years when you retire. Some want to live very simple while others want to travel etc. Wife is retired with a pension and SS. I may or may not retire. I may go crazy trying to keep busy. I still will at least work another 15 years probably. I enjoy what I do

 

[JB in so cal]

I bet the responses would be different if this was canIsleeponyourcouchforaweekDave.com

 

[2Driver]

I like having the peace of mind of multiple income streams

Portfolio growth gain for keeping up with inflation
A dividend portfolio for dependable income- paying bills etc
Some hard money loans for some accelerated income - fun money
A small pension as a base income covering healthcare expenses
Social security as a nice cost of living increase.

All this allows to leave our principal to grow and not be used for expenses and be left behind in our estate for others.

 

[YeahYeah01]

So I've been fairly fortunate most of my adult like of making above the medium average income, and my wife has a solid career as well. I dont think I've made much of any terrible financial moves (I'm 34), but also never really did anything to crazy to help myself either.

I had not put much thought into my net worth until I set up the life insurance policy and that question was asked about 10 times for some reason.

This is the 1st year I really set some goals for us. I set up a solid life insurance policy, set up a managed investment account to roll over old 401ks and maxed out current 401k's, paid down auto loans and we do not carry any CC debt. In a few months the cars will be paid off and I think ill start investing that into the investing accounts. The cars are newer and in great shape, if we feel the need to upgrade we will have solid equity in those to where we most likely wont need to finance much of anything car related again. I think I am doing okay but not hitting some of the numbers used in the standard formulas. But I feel like these last couple years my money is starting to work for me now, I just need to keep helping it along lol.

I watched that video, and it seemed great! I don't think I will hit there liquid 7 figure idea by 40, but I am definitely investing way more then $800 per month they discussed. Ill see what the next 6 years do for me.

 

[HBCraig]

We don't have to get into specific numbers because that is different for everyone. But what would you say ones net worth should be at around halfway into their career?

Let reflect this as percentage of retirement net worth. Easy math - If you desired a $2M net worth in retirement, what percentage should you have at 40? 20% (400K)? 30% (600K)? 50% (1M)?

Thoughts

Given somewhat of a normal profession and not a physician, lawyer, etc I would think 150K in equity in your home 80K-90K in 401K and about 25k in checking.

 

[HBCraig]

Depends on other variables as well.

Are your kids close to being off the payroll ?
You on a 15 year or 30 mortgage on your house ?

I'm 39 and by most standards am killing it. Personally I'm a little behind where I would like to be but we're on a good track now.

The whole kids in college thing isn't making it easy. Daughter is a freshman in college and the boy is a junior in HS. I am estimating paying about 60K per year when they are both in college

 

[badgas]

@LargeOrangeFont Lot's of variables here !

The average American millionare has roughly 30% of their net worth in their primary residence. I suspect in So Cal it is much higher.

You could have 1 million equity in your home and 1 million in your 401K/IRA for a net worth of 2 million but really unless you are selling the house and downsizing you really have only 1 million to use for spending.

How much you plan on spending in Retirement is different for everyone. I know some early retirees (late 40s and early 50's) who are living a life they enjoy at $55K per year. They have paid off homes ( not in So Cal ) and Do not own boats. They hike, mountian bike, fish , camp etc and live a great life to them. To feel safe with the 4% rule 25x your annual income would in 99% of the cases never run out and that includes inflation. So for them $1,375,000.00 would be a good nest egg.

I know many people here would think that is crazy but we spend $40K on SXS and $100-$200K on boats and don't bat an eye.

It all depends on what you are going to spend but 25X your annual spending is good rule of thumb.

 

[mjc]

If you think 2M is enough for retirement you better like an old mobile homes and cat food.

Not necessarily, I didn't have that much when I retired 4 years agoand we are doing fine. All these numbers sound good until the wife wants to be an ex wife and then you get to start all over.

 

[JUSTWANNARACE]

Should I go take a pic of all the pop/beer cans I have saved in my shed? I just hope it is enough

 

[SCHIADATROUBLE]

A lifetime pension bypasses a savings account.

Only if you live long enough. The pension doesn’t roll to the kids. I am a pension guy but there are pros and cons.

 

[cofooter]

I think in the 40's most are just hitting the stride in their careers/income. With a family, house, hobbys, obligations, and other distractions, its hard for the average guy to pay down debt or save. If you are 20% or even 10% on your way to your retirement goal I would say that you are doing really well. Late 40's/50's is where it should accelerate with good career/investment choices and assuming kids are off the payroll and you've wiped out most debt.

 

[Your ad here]

A lifetime pension bypasses a savings account.

Only if you live long enough. The pension doesn’t roll to the kids. I am a pension guy but there are pros and cons.

I know nothing about pensions and have some questions. Where (what account) is that money and who is in control of it (the account)? Is it secure?

 

[SCHIADATROUBLE]

I have a pension so net worth is complicated. You can’t factor in your normal 401k in my case but I will say I believe in two things: pay yourself first meaning invest in yourself down the road. Whether it’s 401k, IRA, or in my case deferred comp. Second, buy real estate and don’t sell it. I buy and hold and only refi if it’s makes enough sense with interest rates. Never pull money out and just slowly save and buy more. I know it’s easy for me to say because I have a great job but the same principals can work for everyone to some degree.

 

[Singleton]

Not an easy answer.
I don’t judge anyone by what their bank account has or does not have.
My goal is x amount in liquid and x in non-liquid accounts when I retire. X is different for everyone. My goal is to live off the interest in those accounts, or only eat 2% of principle each year. At 46, I have 40% of x. Would like to have closer to 60%, but getting married, purchasing a house, putting 2 kids through college and enjoying life slowed down the allocation. Don’t plan to retire until youngest kid (currently 10), hits 30.

 

[Bobby V]

I know nothing about pensions and have some questions. Where (what account) is that money and who is in control of it (the account)? Is it secure?

I have 2 pensions. One I get a set dollar amount for ever year I have enough pension credit / years. This year I will have 40 pension credits. There is a fund manager company in Maryland that over sees it. The other is a 401 type pension. 40 years ago they started taking out 25 cents a hour. Now its $10 a hour. This fund has snowballed to big $$$ over the 40 years. John Hancock oversees this fund and I can move the $$$ around to 6 different investment groups. In 7 months I will be able to collect SS at about $2400 a month.

 

[farmo83]

I know nothing about pensions and have some questions. Where (what account) is that money and who is in control of it (the account)? Is it secure?

Your company manages it. They are highly regulated and usually offer a lower return then you get in the market. The main feature is your benefit is defined. IE if your pension based on what you select and put in is 1000 a month it will always be that. If the market sky rockets your still at 1k a month, if it burns down your at 1k a month

They are rare now as they are expensive and compa is don't want the liability.

 

[fmo24]

I think the scariest question our financial adviser asked was how long do you think you will live. Every thing is based off that. We both have pensions and part of my retirement is medical for us. We both have 401K’s as well. No kids so I hope to spend it all otherwise my nieces will be sitting pretty if we both go. My pension pays 75% to my partner if I go first.
I retired in ‘18 my partner was only 50 so basically stopped working. LOL. Partners pension is waiting and can be rolled as a lump sum.