Life's Earnings To Date vs Net Worth

[blue_green_sparks]

Just calculated my total life's earnings (wages) and was surprised to learn that the result is just about equal to my current net worth. I have no idea if that is typical, good or bad, LOL.

[YttriumNitrate]

On this forum, it's pretty common for people who have been working for a reasonably long time.

[YttriumNitrate]

Just for fun I did the same calculation (the social security website makes finding lifetime earnings pretty easy for some people). At 40 years old, I'm at 88% lifetime earnings with just financial assets, and 106% lifetime earnings if real estate equity is also factored in.

[AccidentialMustache]

Our NW, minus home is on par with post-tax earnings. However that ignores pre-tax savings (401k, pension). We aren't FIRE yet, but we are close. There is ... disagreement between the parties on what our target number is, because of the dumpster fire the US health care system is.

[AZryan]

Another crazy thing is if you can get to the point where you've spent all your lifetime earnings. From then on, you're spending money other people are earning for you.

[Dicey]

How many years have you been working?

[Jack0Life]

I went to my SS and added them up.
To date including 2020, I've totaled $1.37 million.
My NW is $1.12 million.
Moral of the story, I was stupid and not invest early in life.

[bmjohnson35]

This was an interesting exercise.  I picked up some insights as well:

1. We were more wasteful than I had realized. 
2. Although I experienced a significant bump in pay midway through my career, staying at the same employer probably cost me more than I realized.  Multiple pay freezes due to the company's poor performance and standardized corporate pay adjustments, the adjustments didn't kept up with inflation over the last 10 years.......it cost me quite a bit.

Between the accumulated vacation days, the increasingly rare pension plan and my own complacency, it became more and more difficult to move on. 

I'm retired at 50, so I guess it's all good.

[pdxvandal]

Same here. My net worth is slightly more than my lifetime earnings. I expect the gap to gradually increase until I FIRE.

[uniwelder]

From the SS website, I did the same earnings addition as most here.  As a married couple without any significant savings until the last 8 years and living somewhere without much real estate appreciation, we're at the low end so far from those reporting, but still pretty respectable I think--- about 65% NW to lifetime earnings.  We're not FIRE'd yet, but slowing down with workload.

[ericrugiero]

From the SS website, I did the same earnings addition as most here.  As a married couple without any significant savings until the last 8 years and living somewhere without much real estate appreciation, we're at the low end so far from those reporting, but still pretty respectable I think--- about 65% NW to lifetime earnings.  We're not FIRE'd yet, but slowing down with workload.

You are slightly better off than me.  I'm estimating a NW of about 60% of earnings.  Like you, very low real estate appreciation.

My guess is the population reporting here is self selecting on the high side.  Also, in another 10 years we could/should both be closer to 100% due to compound growth. 

[Mr. Green]

We didn't save well in our 20's and didn't know how to invest smartly either so our net worth still hasn't reached our career earnings after 3 years of FIRE! And that's with all the market gains we've had the past few years. Yeesh. I cringe when I think about how much longer I worked than I would have had to if I'd had a decent financial education coming out of college, especially knowing how I hated my job.

[pdxvandal]

I've never had a salary over $75,000 in my working career, but have been fortunate with buying real estate young (first SFH at age 26) and leveraging each permanent residence into short-term rentals that were eventually sold before capital-gains taxes took anything. But paying a premium for housing in the PNW has likely hurt how much I can plow into 401ks and other investments. Someday, I'll move to a MCOL area.

[FR2000EE]

A few years ago, I was about 100%, but a few years later and some good market returns lately have propelled me to 124%. It quite shocking to see this math. I think it would really surprise non savers that you can have more than you have ever earned from your job.

[Much Fishing to Do]

I was at about 100% then had what for me was an abnormally HUGE year, which actually hurt this number b/c of the high taxes paid that year, but looks like I'm up to about 115% now.

[Bateaux]

Been casually tracking this for a few years.  I don't think we are there yet.  I can say with confidence that our networth is higher than our lifetime spending. 

[Rdy2Fire]

I've looked at this before, net worth was about 900k over lifetime earnings, guessing it's slightly more now

[rmorris50]

Wow, we are spendy pants, we are at 50 percent. Interestingly enough, we have earnings over 33 years, and half was earned in the past 7 years.


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[2sk22]

Wow, we are spendy pants, we are at 50 percent. Interestingly enough, we have earnings over 33 years, and half was earned in the past 7 years.


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I did an interesting exercise recently. I took all of my earnings (I have saved every W2 for the last 25 years :-)) and applied the inflation calculator to my annual income. To my surprise, although the nominal amount went up rapidly in recent years, applying inflation adjustment, I had a lot of really good years even in the late 1990s. For example, my salary topped 200k (in 2021 Dollars) as early as 1998.

[norajean]

Recently retired with NW=220% of lifetime earnings, approx.

[BoonDogle]

Did a poll on this a few years back to see if I could come up with averages by age since this should rise as you get older.  Didn't get as much participation as I had hoped (36 entries) but the averages are below:

Updated averages:

         -25 - 7.3%
26 to 30 - 29.5%
31 to 35 - 42.3%
36 to 40 - 66.8%
41 to 45 - 55.8%
46 to 50 - 68.0%
over 50 - 101%

[SwordGuy]

I went to my SS and added them up.
To date including 2020, I've totaled $1.37 million.
My NW is $1.12 million.
Moral of the story, I was stupid and not invest early in life.

I think the SS numbers only include the SS taxable amount, not the actual gross income.   So, 401K contributions would be subtracted from that, as would income that wasn't wage income.    Works for a lot of folks, but not everyone.

I could also be remembering wrong, it's been a long time since I looked at them.

[2sk22]

I think the SS numbers only include the SS taxable amount, not the actual gross income.   So, 401K contributions would be subtracted from that, as would income that wasn't wage income.    Works for a lot of folks, but not everyone.

I could also be remembering wrong, it's been a long time since I looked at them.

There is a column in the social security earnings record called "Your taxed Medicare earnings" - this appears to be the raw salary before 401k is deducted.

[Dicey]

I did an interesting exercise recently. I took all of my earnings (I have saved every W2 for the last 25 years :-)) and applied the inflation calculator to my annual income. To my surprise, although the nominal amount went up rapidly in recent years, applying inflation adjustment, I had a lot of really good years even in the late 1990s. For example, my salary topped 200k (in 2021 Dollars) as early as 1998.

I did this exercise by hand using an IRS worksheet about seven years ago. I didn't have meaningful income until after college and even then was never a high wage earner. There are a couple of early years when I worked sporadically during college which, due to FIRE-ing in 2012, are still included in the calculations. I had slways thought it would be easy to knock those numbers out with random post-FIRE gigs. How hard could it be when those year's income was < $5k? Except that when adjusted for inflation via the IRS worksheet, those piddling years are far more valuable than they seem. Sure, knocking off a few low earning years would improve my lifetime average, but it would take a lot more income/effort than I would have guessed. For me, the effort is not worth the reward. Any Social Security income the furure holds is just gravy anyway.

[2sk22]

I did this exercise by hand using an IRS worksheet about seven years ago. I didn't have meaningful income until after college and even then was never a high wage earner. There are a couple of early years when I worked sporadically during college which, due to FIRE-ing in 2012, are still included in the calculations. I had slways thought it would be easy to knock those numbers out with random post-FIRE gigs. How hard could it be when those year's income was < $5k? Except that when adjusted for inflation via the IRS worksheet, those piddling years are far more valuable than they seem. Sure, knocking off a few low earning years would improve my lifetime average, but it would take a lot more income/effort than I would have guessed. For me, the effort is not worth the reward. Any Social Security income the furure holds is just gravy anyway.

A very good point! I realized after I did my calculations that the seeds of my fat FIRE were laid in over twenty years ago :-)

[Loren Ver]

Pretty easy to pull this number out since I had all but the 2019 numbers (retirement year) in an excel sheet.

All investments 2019 compared to married income were at 76.5%. (earned more than our investments had brought in).

The next year, once we started pulling money out but the markets were good, we jumped to 114%.  We should just keep climbing from here since we don't plan on any more income coming in. 

I was rather surprised by this, as I thought our income lower and our investments higher, but the data are, what the data are.


 

[norajean]

Seems like once one achieves 100% of gross lifetime income, one could have enough saved for another lifetime especially given that gross was previously reduced by taxes and savings. In other words, if you have net worth of 100% of 20 years wages, you may have enough to live on for 30 years assuming you invest it to mitigate inflation and assuming it is not all tied up in real estate or other nonsense.

[blue_green_sparks]

I did manage to reach the max SS benefit with my best 35 years. Never worried about working extra years to kick my lower income college years out of my average... so I guess that was just luck.

[soccerluvof4]

I dont have to go to SS to know that I'd be lucky if we are even at a 1/3 of what I made over the years. But were Fire'd and doing fine but I do find myself when preaching to my kids or the right situation comes up thinking about some stupid things I did over the years. Fortunately though I was conservative enough to be in the position we are in. But if I would of stumbled upon MMM or something similar a lot earlier things would be different for sure.

[Laura Ingalls]

Wow, we are spendy pants, we are at 50 percent. Interestingly enough, we have earnings over 33 years, and half was earned in the past 7 years.


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I did an interesting exercise recently. I took all of my earnings (I have saved every W2 for the last 25 years :-)) and applied the inflation calculator to my annual income. To my surprise, although the nominal amount went up rapidly in recent years, applying inflation adjustment, I had a lot of really good years even in the late 1990s. For example, my salary topped 200k (in 2021 Dollars) as early as 1998.

Both DH and I have the best earning inflation adjusted earnings in the late 1990’s and early 2000’s.  DINKS too.  Then in 2014 we semi-retired the numbers got way less impressive but we have more time for fun.

[EricEng]

Currently sitting around 2 times lifetime earnings now in my mid 30s.  I was a super cheapskate in my 20s.

[Much Fishing to Do]

Currently sitting around 2 times lifetime earnings now in my mid 30s.  I was a super cheapskate in my 20s.

Wow, that's takes some serious savings rates and/or returns to mathematically pull off without an inheritance.  Nice job.

[EricEng]

Currently sitting around 2 times lifetime earnings now in my mid 30s.  I was a super cheapskate in my 20s.

Wow, that's takes some serious savings rates and/or returns to mathematically pull off without an inheritance.  Nice job.

Had a few years with 6 figure job during the 2009 recession where I had 0 expenses (deployed with military) and it was 100% investment at a market low.  This was followed by a period of lower salary and 55-65% savings rate.  So those early earnings and investments weighed heavier than recent savings.  Investment returns have outperformed sp500 by a lot.  Thank you Nvidia shares bought at $12 for instance.

[Sid Hoffman]

I'm mid 40s, SS website added up shows my total lifetime earnings at $2.2M and my NW including home equity is about $1.17M, so 53%. However that's with a divorce a few years ago, which was a divide by two event for me. I'll need a few more decades or so to see my NW reaching up near whatever my final earnings works out to be when I FIRE. That said though, I'm planning to FIRE around age 50, which if I live to 85 or so gives me 35 years for market gains and perhaps 18 years of SS income. I guess if I wanted, I could figure out at what age my total income would have exceeded my actual taxed SS earnings, but one way or another it's a lot farther off than my FIRE date.

[Greystache]

Our total earnings equal around $3.5 M. When we retired 6 years ago, our total net worth was about $1.6 M plus $650K home equity. Now, after 6 years with no income, our net worth is about $1.8M plus $800K home equity. So we are still nowhere close to net worth equaling total earnings, but we are gaining on it!

[ender]

Only about 50% if I exclude my wife's income/investments in her name.

Probably a lot higher if I include hers as we saved almost all her income over the years and so it's in accounts in her name :)

[Monocle Money Mouth]

It looks like my net worth is 54% of my lifetime earnings. I think the other 46% was left at gas stations buying over priced danishes, candy bars, and energy drinks when I was younger :D

I never carried a credit card balance or anything, but my spending on food and hobbies back then was super sloppy. I also didn't take advantage of 401(k) plans at my old jobs, so I left a lot of money on the table.

[epritch7]

At 40 and still earning, I've had 24 years of earnings and have 64% of those earnings covered by my NW.

[zoro]

I just ran out numbers - FIRED this year.  Lifetime earnings (not including rent from real estate etc) is 37% of our net worth.  I would like to calculate what I have spent out of that, but that is more involved
Most of it has come from appreciation of stocks, and real estate over time.

[PhysicianOnFIRE]

A few years back, I realized that our current net worth was very similar to our post-tax earnings over the previous 15 years or so.

My investments have earned quite a bit more than I have in the meantime, and I imagine we're closing in on net worth matching our pre-tax earnings. It's comforting to see investment returns cover not only what we've spent but also the taxes we've paid. Of course, more taxes will be paid on a portion of our net worth when the money's withdrawn, but that's another topic.

[jiimmy]

Did a poll on this a few years back to see if I could come up with averages by age since this should rise as you get older.  Didn't get as much participation as I had hoped (36 entries) but the averages are below:

Updated averages:

         -25 - 7.3%
26 to 30 - 29.5%
31 to 35 - 42.3%
36 to 40 - 66.8%
41 to 45 - 55.8%
46 to 50 - 68.0%
over 50 - 101%

I fit the data
Age 33
Lifetime pre-tax earned income $470k
Net worth $205k
43%

[boarder42]

34 and currently Fi. We're at 130% our combined life time earnings compared to networth.

[uniwelder]

34 and currently Fi. We're at 130% our combined life time earnings compared to networth.

If you're young and FI, is it possible you got that ratio mixed around--- net worth is 130% of earnings?

[Bateaux]

I think we've easily surpassed our take home pay in net worth.  If you subtract taxes and what went into investments, it's a no-brainer.  We're well into our third million now.

[boarder42]

34 and currently Fi. We're at 130% our combined life time earnings compared to networth.

If you're young and FI, is it possible you got that ratio mixed around--- net worth is 130% of earnings?

ya thats what i meant our NW is larger than our combined lifetime earnings.