Let me guess how much you have saved

[SnackDog]

I estimate that, with reasonable assumptions, one's total savings should equal savings rate times years of saving.  This might sound high after quite a few years working (with increasing pay and savings rate), but it works out as stock appreciation adds to principle.  There are a thousand exceptions to this (school loans, divorce, fluctuating income and savings rates, etc) but as a general rule I am proposing it.

This works for me and for a buddy who has worked 30 years.  Does it work for you?

E.g. if you have worked 10 years, currently save 25% and earn $100K, I estimate you have $250K saved.  Am I close?

[MVal]

Ha, no but I wish...I've been working full time for 8 years but I've only been able to save for the last 2-3 years.

[forummm]

I estimate that, with reasonable assumptions, one's total savings should equal savings rate times years of saving.  This might sound high after quite a few years working (with increasing pay and savings rate), but it works out as stock appreciation adds to principle. 

I estimate that you'll usually be accurate within an order of magnitude :)

There are a thousand exceptions to this (school loans, divorce, fluctuating income and savings rates, etc) but as a general rule I am proposing it.

The fluctuations are huge though. I used to make $7.50/hr. I was working while in school for a long time. My savings rate has changed from negative whatever (occasional times in school without a job) to being pretty high now as my income has grown and my expenses decreased. And I've been working a lot longer than DW.

So in my case, you are off (overestimate) by about 300%.

[MonkeyJenga]

Worked about 10 years, save > 75%, make > $100,000.

Hey, I'm rich!

(Look at net worth spreadsheet.)

Oh. I'm still rich, but not that rich.

[zephyr911]

I've massively increased my SR over the last 2 years, from 10-20% to 70% or more at times. My NW is only about 3-4 years worth of savings at my current rate, even though I've been gainfully employed almost continuously for 16 years.

Factors: 2 divorces, dumb spending, bad investments, list goes on. Crushing now though. Semi-FIRE next year. Full retirement, well, not long after.

[Metric Mouse]

I saved almost nothing last year. I also didn't work last year. So 0x0 would not give you my network within reasonable accuracy...

[Zikoris]

Well, I've been working on and off since I was 13 (yay for minimum wage farm labour!), but didn't start focusing hard on savings until I was 24. At that point I was shipping boxes in a warehouse for around $11/hour. Now I'm 29, make nearly double that, and save around 60%-65%. My individual net worth is just over $100,000 now.

I think you'd need to do the calculation on that yourself since I'm not sure what numbers to use.

[BlueHouse]

No. my earnings have been so erratic over my 25 years of working, I can only imagine that my savings rate was equally erratic
 

[neo von retorch]

If my darned income hadn't risen (somehow it was always this high, as if my wife was supplementing my income for a decade before we met...) and I'd always saved as well, let's see, I'd have over a million dollars! Yay! Wait...

[dreams_and_discoveries]

Nope, doesn't work for me. I've only in the last few years earned megabucks, and initially spend them on home improvements (some essential, heating that works, electrics that are not over 50 years, others more frivolous...like a kitchen and bathroom and floors..).

However from when I went all in MMM (earlier this year) onwards the formula would work beautifully.

[KarefulKactus15]

The millionaire next door book has a nifty "what your net worth should be" calculator.     It kinda depresses me,  I want to be a "prodigious accumulator of wealth" but I cant seem to make it lol.



http://www.savemillions.com/plan/expectnetworth.htm

Here is a calculator.

[sisto]

The millionaire next door book has a nifty "what your net worth should be" calculator.     It kinda depresses me,  I want to be a "prodigious accumulator of wealth" but I cant seem to make it lol.



http://www.savemillions.com/plan/expectnetworth.htm

Here is a calculator.

That is a really cool calculator and I found it really cool that if I add my emergency cash and invested assets together I'm only about $20K short of what it says I should have. I have more than that in equity in my house so I guess I'm doing ok.

[Zikoris]

The millionaire next door book has a nifty "what your net worth should be" calculator.     It kinda depresses me,  I want to be a "prodigious accumulator of wealth" but I cant seem to make it lol.



http://www.savemillions.com/plan/expectnetworth.htm

Here is a calculator.

Hmm... our household is apparently a below average, in our late 20s with a combined net worth of just under 200K. If we want to retire early, according to them we should have over 400K right now. Math doesn't really add up. We are absolutely kicking ass compared to our peers, and are looking at maybe 8 more years of work.

[ender]

The millionaire next door book has a nifty "what your net worth should be" calculator.     It kinda depresses me,  I want to be a "prodigious accumulator of wealth" but I cant seem to make it lol.



http://www.savemillions.com/plan/expectnetworth.htm

Here is a calculator.

Grad school apparently guarantees you are at most an AAW for quite a few years.

[Jim2001]

The OPs formula doesn't work for me, no matter what amount I used for income, current or average income over 36 years of work.  On the SaveMillions calculator, I'm about 6% short of being a PAW. 

[mm1970]

It's actually really close for our family.

If you average the # of working years between the two of us, use our current % savings rate (though it was higher % before we had kids), and our current income.

[Captain FIRE]

It's actually really close for our family.

If you average the # of working years between the two of us, use our current % savings rate (though it was higher % before we had kids), and our current income.

Likewise.  We're surprisingly *very* close when averaging working years & using current % of savings (though it's higher than it had been) & salary (which has fluctuated quite a bit).  I didn't include part-time years in high school or college.

[rubybeth]

E.g. if you have worked 10 years, currently save 25% and earn $100K, I estimate you have $250K saved.  Am I close?

No, I've been working since age 17 in low paying jobs, and I'm now 35. Didn't get a good paying job until after grad school in 2009. Even if you only figure I've been 'saving' since 2009, it doesn't work.

[sol]

There was once a long and detailed thread here about various formulas for calculating what your net worth "should" be based on your age and income.  I'm not going to look it up on my phone.

The key disagreement was that some people started working and saving at age 18 (like tradesmen) and others at age 35 (like professors), so a 40 year old person might have 5 years or 22 years of income history.  But interestingly, for people who continued to work, their net worth seemed to eventually converge on a number very close to their total lifetime earnings.

[neo von retorch]

And then there is this thread: http://forum.mrmoneymustache.com/share-your-badassity/positive-monthly-net-worth-increase-(87-months)/

Net worth increases per month, averaged...

Past 106 months (since home purchase): $2573
Past 12 months (d'oh, me and cars, oh but marriage!): $6327
Past 3 months (buying a house, but not quite yet):  $8684

It's increasing. And that's a good thing, I think. It shouldn't be static!

[FIRE me]

This works for me and for a buddy who has worked 30 years.  Does it work for you?

E.g. if you have worked 10 years, currently save 25% and earn $100K, I estimate you have $250K saved.  Am I close?

Nope. In my case it is far too optimistic. It's off because the past couple of years my savings rate is very high, over 50% of my gross.

[JLee]

Not even remotely close - my income tripled in the last 3.5 years and my savings rate has also gone way up. If I try hard enough, my 2016 savings could exceed my gross income from 5 years ago.

[BudgetSlasher]

The millionaire next door book has a nifty "what your net worth should be" calculator.     It kinda depresses me,  I want to be a "prodigious accumulator of wealth" but I cant seem to make it lol.



http://www.savemillions.com/plan/expectnetworth.htm

Here is a calculator.

Grad school apparently guarantees you are at most an AAW for quite a few years.

I was just noticing the same fact; I suppose you could subtract the number of years you were in grad school from your age to get adjusted targets, but without knowing the backend assumptions it could be that something else goes wonky.

[KarefulKactus15]

Not even remotely close - my income tripled in the last 3.5 years and my savings rate has also gone way up. If I try hard enough, my 2016 savings could exceed my gross income from 5 years ago.

Funny how that works.

If you spend 30k a year and your gross income doubles from 50k to 100k   you have 3.5X more money to save, not 2x more.  Or from 50k-150k you have 6X more money to save, not 3x. 

Seems like alot of people I talk to dont realize how dramatic a large margin between gross income and expenses is. 

[JLee]

Not even remotely close - my income tripled in the last 3.5 years and my savings rate has also gone way up. If I try hard enough, my 2016 savings could exceed my gross income from 5 years ago.

Funny how that works.

If you spend 30k a year and your gross income doubles from 50k to 100k   you have 3.5X more money to save, not 2x more.  Or from 50k-150k you have 6X more money to save, not 3x. 

Seems like alot of people I talk to dont realize how dramatic a large margin between gross income and expenses is.

It's unreal! My net worth has gone up by 50% since I started this job last September, and I even moved to a HCOL area to get it.

[KarefulKactus15]

Up until 2 weeks ago, the idea of going to a HCOL had never crossed my mind.   But if the pay is high enough, it doesnt really matter if rent is 3k a month lol.   Im now looking for jobs even in HCOL to boost my overall savings amount.

[JLee]

Up until 2 weeks ago, the idea of going to a HCOL had never crossed my mind.   But if the pay is high enough, it doesnt really matter if rent is 3k a month lol.   Im now looking for jobs even in HCOL to boost my overall savings amount.

I rent a furnished bedroom for $750/mo and rented my master suite to a friend (all bedrooms in my house in AZ are individually rented now, so it is now generating income).  Given the additional rental income that is offsetting the increased rental cost, my housing costs went up roughly $300/mo (for a $36k+bonus raise).

It is possible to live fairly inexpensively in HCOL areas - just don't expect to have your own house, haha.

[BlueHouse]

Not even remotely close - my income tripled in the last 3.5 years and my savings rate has also gone way up. If I try hard enough, my 2016 savings could exceed my gross income from 5 years ago.

Similar situation here.

[icemodeled]

Ours is actually a little higher then your guess. Our income changed so many times in the 10 years of working though, our savings rate was normally 10-25% and we are now closer to 50%!

[arebelspy]

I estimate that, with reasonable assumptions, one's total savings should equal savings rate times years of saving.  This might sound high after quite a few years working (with increasing pay and savings rate), but it works out as stock appreciation adds to principle.

Huh? Why would this sound high?  If anything, it sounds low, because if one's earned 100k for 10 years, and saved 25% of that, they should have 250k just from savings, and it doesn't count any investment growth in there.

There are a thousand exceptions to this (school loans, divorce, fluctuating income and savings rates, etc) but as a general rule I am proposing it.

This works for me and for a buddy who has worked 30 years.  Does it work for you?

E.g. if you have worked 10 years, currently save 25% and earn $100K, I estimate you have $250K saved.  Am I close?

We worked 8 years.  Average combined gross pay over that 8 years ~80k/yr.  Savings rate ~75%.

That has us at about 480k net worth.  We ended with more than double that, though that IS (as I said above), approximately the amount we contributed.  Then the investment growth accounts for the rest.

Maybe I'm missing something in regards to your formula?

[happy]

I agree.. The formula only works for me if I had had >50% savings rate over my 35 years of post grad work. But I know that for most of my working life it was more like 25-30% after tax, and so the difference would be ROI.