Wealth At Every Age Group (USA)

[BicycleB]

Federal survey of Consumer Finances breaks out average and median household wealth by age group in USA; summary article in cincinnati.com linked below. Could be useful for calibrating how a mustachian household compares to the average and the median.

https://www.cincinnati.com/story/news/2024/01/19/how-much-does-the-average-20-year-old-make-breaking-it-down-by-decade/72257094007/

My own household wealth is above the median but below the average for my age group (late 50s, net worth 480k). That means I'm kind of normal for my age, at least if you consider my single status comparable to a household. The difference is that I am already "retired" for 10 years, and am fairly happy at the lower-than-median expense rate that comes from more or less just living off of the modest investments.

Maybe the biggest difference between Mustache and normal is being efficient / satisfied on the spending side, so that "ordinary" becomes "wealthy/ plentiful" rather than "struggling/worrying".  Thoughts? Comparisons?

[Michael in ABQ]

Odd that the median drops from late 30s to early 40s

Median net worth:
$89,801 (ages 30-34)
$141,200 (ages 35-39)
$134,730 (ages 40-44)
$212,800 (ages 45-49)

We're in our late 30s and beating the median by a decent amount at around $250k, but nowhere close to the average of $501,289 (ages 35-39). But I think about one of my best friends who is the same age as me and has a net worth of at least $3-5 million. He was a tech executive and got a lot of stock options that did very well. His wife is a nurse practitioner and they bought a condo in San Francisco several years ago and made a few hundred thousand flipping it. On the other hand I've been the sole source of income for our family for 15+ years and we've had 6 kids with all the expenses that go along with that. We also never bought a house so didn't get to enjoy a bunch of real estate appreciation over the last few years.

[Heckler]

if you want the technical analysis:  https://earlyretirementnow.com/2023/12/03/we-are-all-millionaires/

[GilesMM]

Frugal super-savers should be significantly higher than the American averages or medians.  We are many multiples as I would imagine most of you are.  But, since the MMM is mostly wage-slaves as opposed to entrepreneurs, you won't see many of us at the top of the curve with net worth driven by outrageous income or business ownership.

[Chris Pascale]

Odd that the median drops from late 30s to early 40s

Perhaps parents paying college tuition for those having a kid between 22-26.

[ixtap]

Frugal super-savers should be significantly higher than the American averages or medians.  We are many multiples as I would imagine most of you are.  But, since the MMM is mostly wage-slaves as opposed to entrepreneurs, you won't see many of us at the top of the curve with net worth driven by outrageous income or business ownership.

We didn't become Prodigious Accumulators of Wealth (Millionaire Next Door thing) until DH downshifted. We were saving more than we were spending (inclusive of taxes) most years, but still couldn't quite meet those standards. I bet there are various reasons even a mustachian might not exceed the averages, including chosing to stop accumulating before getting to the amounts listed of the older groups.

[Michael in ABQ]

Odd that the median drops from late 30s to early 40s

Perhaps parents paying college tuition for those having a kid between 22-26.

Maybe, but most people don't start having kids until their late 20s so they wouldn't start paying for college until mid-late 40s.

My wife and I started having kids within a few months of graduating college and we'll still be in our early 40s before our oldest is in college.

[Morning Glory]

Odd that the median drops from late 30s to early 40s

Perhaps parents paying college tuition for those having a kid between 22-26.

Maybe, but most people don't start having kids until their late 20s so they wouldn't start paying for college until mid-late 40s.

My wife and I started having kids within a few months of graduating college and we'll still be in our early 40s before our oldest is in college.

Some kind of lingering cohort effect from the great recession? ERN's graph had a flattening around age 40 as well. I lost a little money on a house i bought in 2007 but was lucky to be in an industry that didn't get hit hard, plus I didn't buy more house than I could afford. Those in variable rate mortgages or who had to restart careers and compete with younger graduates fared much worse.

 Kid ages I think are too spread out to make much difference in average net worth.  Mine are still in grade school but I know others the same age who are already grandparents, plus plenty who don't have kids at all.

[cannotWAIT]

It's important to note that this data is from the 2022 survey, which is the most recent survey conducted, so you need to compare your 2022 NW to these numbers, not your current NW.

But still, I'm so confused at how close I am to the average (average! not median!). Usually the articles you see are about how much Americans have saved for retirement and I mentally discount them by assuming that they're only looking at one institution's formal "retirement" accounts and not capturing all institutions, types of accounts, income-generating real estate, etc. But this survey is very thorough. Let me tell you, I am a very average person of perhaps below-average ambition, maybe sliiiiightly above average financial astuteness but that's not really saying very much is it, and have done a lot of dumb shit in my life, and also got divorced in middle age, which put a huge dent in things. So I am having a lot of cognitive dissonance here!

[Turtle]

Average for the entire USA includes several billionaires which skews the math significantly.

[LD_TAndK]

Some pointless pedantry about the first line: "Sometime around age 50, the average American can now expect a household net worth exceeding $1 million". I'd say the "average American" means looking at the single American in the middle of the wealth distribution, a.k.a. the median. Meaning that average American can expect a household net worth around $300k in their 50s. Agree or disagree?

[Tigerpine]

I think the problem is that in everday use, average means something more akin to typical.  However, mathematically it has a very specific meaning which is really not the same.  I agree that the mathematical mean is more useful for these conversations.  And maybe the best way to say it is "the typical person has about $300k in their 50s".

[maizefolk]

Some pointless pedantry about the first line: "Sometime around age 50, the average American can now expect a household net worth exceeding $1 million". I'd say the "average American" means looking at the single American in the middle of the wealth distribution, a.k.a. the median. Meaning that average American can expect a household net worth around $300k in their 50s. Agree or disagree?

To be pedantic I think the wording they use communicates exactly why the value they are describing is higher than the one you are describing.

1) Average will most often be read as being synonymous with "mean" which is going to be substantially higher than the median for right skewed distributions like net worth.

2A) And specific call out of "household" net worth sure sounds like they are counting married couple's wealth for each person. Assume 100 single people, each with a net worth of $500k. Now 50 of those people get married, forming 25 households with net worths of $1M each. 50 households with a net worth of $500k, and 25 households with a net worth of $1M. The average household net worth increases from $500k to $667k without any new money.

2B) But the specific terminology they use is "average American can now expect a household net worth" which results in an even higher number. In the same scenario above, while the average household net worth increased from $500k to $667k, the average person's household net worth increased from $500k to $750k. Because 50 people live in households with net worths of $500k, and 50 people live in households with net worths of $1M.

Can argue about what the most informative statistic to calculate is, but I think the sentence clearly communicates the decisions made to generate just a high number.

[Tigerpine]

I think the problem is that in everday use, average means something more akin to typical.  However, mathematically it has a very specific meaning which is really not the same.  I agree that the mathematical mean is more useful for these conversations.  And maybe the best way to say it is "the typical person has about $300k in their 50s".

Sorry, I meant to say
I agree that the mathematical median is more useful...