Author Topic: Life's Earnings To Date vs Net Worth  (Read 5603 times)

blue_green_sparks

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Life's Earnings To Date vs Net Worth
« on: December 09, 2020, 07:01:05 PM »
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

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Re: Life's Earnings To Date vs Net Worth
« Reply #1 on: December 10, 2020, 07:27:47 AM »
On this forum, it's pretty common for people who have been working for a reasonably long time.

YttriumNitrate

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Re: Life's Earnings To Date vs Net Worth
« Reply #2 on: December 10, 2020, 07:51:21 PM »
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

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Re: Life's Earnings To Date vs Net Worth
« Reply #3 on: December 10, 2020, 09:21:11 PM »
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

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Re: Life's Earnings To Date vs Net Worth
« Reply #4 on: December 14, 2020, 09:40:16 PM »
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

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Re: Life's Earnings To Date vs Net Worth
« Reply #5 on: December 15, 2020, 12:14:49 AM »
How many years have you been working?

Jack0Life

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Re: Life's Earnings To Date vs Net Worth
« Reply #6 on: December 15, 2020, 11:53:57 AM »
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

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Re: Life's Earnings To Date vs Net Worth
« Reply #7 on: December 19, 2020, 05:39:44 PM »

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

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Re: Life's Earnings To Date vs Net Worth
« Reply #8 on: December 20, 2020, 01:46:19 PM »
Same here. My net worth is slightly more than my lifetime earnings. I expect the gap to gradually increase until I FIRE.

uniwelder

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Re: Life's Earnings To Date vs Net Worth
« Reply #9 on: December 20, 2020, 02:45:08 PM »
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

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Re: Life's Earnings To Date vs Net Worth
« Reply #10 on: December 21, 2020, 12:51:15 PM »
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

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Re: Life's Earnings To Date vs Net Worth
« Reply #11 on: December 22, 2020, 08:29:36 AM »
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

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Re: Life's Earnings To Date vs Net Worth
« Reply #12 on: December 22, 2020, 12:03:25 PM »
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

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Re: Life's Earnings To Date vs Net Worth
« Reply #13 on: March 13, 2021, 03:01:57 PM »
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

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Re: Life's Earnings To Date vs Net Worth
« Reply #14 on: March 16, 2021, 09:59:07 AM »
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

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Re: Life's Earnings To Date vs Net Worth
« Reply #15 on: March 16, 2021, 01:17:26 PM »
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

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Re: Life's Earnings To Date vs Net Worth
« Reply #16 on: March 18, 2021, 06:30:06 AM »
I've looked at this before, net worth was about 900k over lifetime earnings, guessing it's slightly more now

rmorris50

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Re: Life's Earnings To Date vs Net Worth
« Reply #17 on: March 18, 2021, 08:12:43 AM »
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

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Re: Life's Earnings To Date vs Net Worth
« Reply #18 on: March 18, 2021, 09:50:31 AM »
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

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Re: Life's Earnings To Date vs Net Worth
« Reply #19 on: March 18, 2021, 11:10:16 AM »
Recently retired with NW=220% of lifetime earnings, approx.

BoonDogle

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Re: Life's Earnings To Date vs Net Worth
« Reply #20 on: March 18, 2021, 11:26:42 AM »
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%
« Last Edit: March 19, 2021, 06:36:03 AM by BoonDogle »

SwordGuy

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Re: Life's Earnings To Date vs Net Worth
« Reply #21 on: March 18, 2021, 05:23:31 PM »
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

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Re: Life's Earnings To Date vs Net Worth
« Reply #22 on: March 20, 2021, 04:53:50 AM »

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

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Re: Life's Earnings To Date vs Net Worth
« Reply #23 on: March 20, 2021, 07:21:10 AM »
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

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Re: Life's Earnings To Date vs Net Worth
« Reply #24 on: March 20, 2021, 07:36:40 AM »
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

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Re: Life's Earnings To Date vs Net Worth
« Reply #25 on: March 22, 2021, 04:45:33 PM »
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

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Re: Life's Earnings To Date vs Net Worth
« Reply #26 on: March 22, 2021, 09:55:41 PM »
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

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Re: Life's Earnings To Date vs Net Worth
« Reply #27 on: March 25, 2021, 04:44:37 AM »
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

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Re: Life's Earnings To Date vs Net Worth
« Reply #28 on: March 27, 2021, 04:55:43 AM »
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

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Re: Life's Earnings To Date vs Net Worth
« Reply #29 on: March 27, 2021, 02:16:49 PM »
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 1990ís and early 2000ís.  DINKS too.  Then in 2014 we semi-retired the numbers got way less impressive but we have more time for fun.

EricEng

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Re: Life's Earnings To Date vs Net Worth
« Reply #30 on: March 29, 2021, 04:45:20 PM »
Currently sitting around 2 times lifetime earnings now in my mid 30s.  I was a super cheapskate in my 20s.
« Last Edit: March 29, 2021, 04:48:23 PM by EricEng »

Much Fishing to Do

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Re: Life's Earnings To Date vs Net Worth
« Reply #31 on: April 01, 2021, 11:43:46 AM »
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

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Re: Life's Earnings To Date vs Net Worth
« Reply #32 on: April 05, 2021, 11:52:52 AM »
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.
« Last Edit: April 05, 2021, 02:09:26 PM by EricEng »

Sid Hoffman

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Re: Life's Earnings To Date vs Net Worth
« Reply #33 on: April 05, 2021, 05:52:28 PM »
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

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Re: Life's Earnings To Date vs Net Worth
« Reply #34 on: April 09, 2021, 08:07:57 AM »
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

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Re: Life's Earnings To Date vs Net Worth
« Reply #35 on: April 09, 2021, 10:53:39 PM »
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 :)

mies

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Re: Life's Earnings To Date vs Net Worth
« Reply #36 on: April 10, 2021, 08:02:00 AM »
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.