Your net worth is a key measure of financial preparedness for retirement, reflecting the wealth you’ve accumulated to support yourself after work. While factors like income and gender affect net worth, age is a major determinant, with net worth typically increasing as you grow older. Comparing your net worth to averages can help you gauge your progress and identify adjustments needed for a secure retirement.
Sit down with a financial advisor for tailored guidance on reaching your net worth goals.
Understanding Net Worth
Your net worth is simply your assets minus your liabilities. Assets include your retirement accounts, home equity, savings accounts and investments. Liabilities are debts you owe including mortgages, credit cards, student loans and car loans. To calculate your net worth, first add up the current value of all your assets. Then total the balances of all your debts. Finally, subtract your debts from your assets to get your net worth.
Tracking your net worth over time shows whether you’re progressing financially. A higher net worth means you have more assets supporting you. A lower net worth suggests you may need to reduce debts or increase savings. Checking your net worth annually or when major life events occur can help you course-correct if needed.
Net Worth and Retirement
Your net worth matters for retirement because it represents what you have accumulated to support yourself. In retirement, you stop working to earn income, but living expenses such as those for housing, food, healthcare and transportation continue.
Your net worth can provide income to support your lifestyle through retirement account withdrawals, investment earnings and proceeds from downsizing. Many factors such as income can influence net worth. Age also affects net worth, as net worth typically climbs as you grow older.
Knowing your average net worth at retirement gives you a benchmark to assess your preparedness. Similarly, figures for net worth by age can tell you how you are doing on your retirement plan. If your net worth lags behind your peers, you may need to reevaluate your savings rate or retirement timeline. If you’re ahead of the curve, you can confirm that you’re on the right track.
Typical Net Worth at Retirement
According to the Federal Reserve’s Survey of Consumer Finances, here are the median and average net worth figures for near-retiree and retired households:
| Age Range | Median Net Worth | Average Net Worth |
| 55-64 | $364,500 | $1,566,900 |
| 65-74 | $409,900 | $1,794,600 |
| 75+ | $335,600 | $1,624,100 |
The median represents the middle. That is, half of the households had more and half had less. The median better represents a typical net worth since averages get skewed upward by high-net-worth outliers.
Net worth declines after age 75 according to the Fed figures. This may be due to retirees spending their net worth to pay for living expenses. Also, note that the Fed does its survey every three years, and the results of the most recent survey completed in 2022 may show a different picture due to the effect of the pandemic and other factors.
For context, in its How America Saves report, Vanguard provided figures specifically for households with retirement accounts:
| Age Range | Median Account Balance | Average Account Balance |
| 55-64 | $71,168 | $207,874 |
| 65+ | $70,620 | $232,710 |
The Vanguard figures indicate that a saver’s gender as well as age also affects current balances. Men’s average and median balances were 43% higher than women’s balances in the previous year, although these differences had narrowed from previous years.
What Your Figures Mean
These averages provide reference points, but your target net worth depends on your unique situation. If your net worth falls short of your peers, it doesn’t necessarily mean you’re behind. For example, if you expect an inheritance, life insurance settlement or other windfall at or after retirement, a shortfall in your current net worth may not be a major concern.
It could well be a prompt to look closer, however. If you’re unsure about whether your net worth is likely to be adequate, here are some questions to ask yourself:
- Do I have other income sources like a pension?
- What will my spending needs be?
- How long do I need retirement savings to last?
Get clarity on your income, expenses and goals before concluding your net worth is insufficient. If, on the other hand, you have a net worth well above average, this may still not be an excuse to coast. Consider if you could retire earlier or budget bigger if you keep building your net worth. Look for opportunities to maximize your assets, like downsizing or optimizing investments.
Boosting Net Worth
Boosting your net worth requires a combination of financial planning, disciplined spending, smart investing and leveraging income opportunities. Here are practical tips to help you build wealth:
Create a Budget and Stick to It
A budget is the cornerstone of financial success. Begin by tracking your spending to see exactly where your money goes. Use apps, spreadsheets or a simple notebook to categorize your expenses. Once you have a clear picture, differentiate between needs (essential expenses) and wants (discretionary spending). Allocate a portion of your income—ideally 20%—toward savings and investments. A well-planned budget ensures you’re living within your means while steadily increasing your net worth.
Increase Your Income
Boosting your income is a powerful way to accelerate net worth growth. Invest in yourself by acquiring new skills, certifications or education that qualify you for higher-paying jobs or promotions. Beyond your primary job, consider starting a side hustle or taking on freelance work to generate additional income. Don’t shy away from negotiating your salary; research industry benchmarks to confidently advocate for fair compensation. Every extra dollar earned can be directed toward investments or debt reduction.
Pay Off Debt Strategically
Debt can erode your net worth, especially if it carries high interest. Develop a plan to pay off debts strategically, starting with those that have the highest interest rates, like credit cards and personal loans. This minimizes the amount of interest you pay over time. You might also consider consolidating your debts to secure lower interest rates. Using methods like the snowball approach (paying smaller debts first for psychological wins) or the avalanche method (prioritizing highest-interest debts) can help you stay motivated and make progress efficiently.
Build an Emergency Fund
Unexpected expenses can derail your financial goals, which is why having an emergency fund is critical. Aim to save three to six months’ worth of living expenses in a high-yield savings account. This fund provides a safety net for unforeseen circumstances like medical bills, car repairs or job loss, preventing you from dipping into investments or taking on new debt when life throws a curveball.
Invest Wisely
Investing is key to growing your wealth over time. Diversify your investments across asset classes like stocks, bonds, real estate and alternative assets to spread risk. The earlier you start investing, the more you benefit from compound interest, where your earnings generate additional returns. Utilize tax-advantaged accounts such as 401(k)s, IRAs or Health Savings Accounts (HSAs) to maximize growth while reducing your tax burden. Consistent investing, even in small amounts, can lead to significant wealth accumulation over the long term.
Acquire Appreciating Assets
Investing in assets that grow in value over time is a key strategy for increasing net worth. Real estate is a popular choice, as it can provide both appreciation and rental income. Similarly, equity investments in the stock market, mutual funds, or exchange-traded funds (ETFs) offer opportunities for long-term growth. If you have an entrepreneurial spirit, starting or investing in businesses with growth potential can also yield significant returns over time.
Cultivate Financial Discipline
Financial discipline is the foundation of sustainable net worth growth. Set clear short-term and long-term financial goals and regularly review your progress. Adjust your strategies as needed to stay on track. Commit to lifelong learning about personal finance and investment trends to make informed decisions. By consistently prioritizing your financial goals and avoiding impulsive decisions, you’ll build habits that lead to lasting wealth.
Bottom Line
Your net worth is a scorecard for financial success, so it’s worth monitoring as you near retirement. Compare your net worth to benchmarks, but understand your situation, needs and resources first before concluding you must take action. What is adequate for one retirement saver could be more or less adequate for another.
Retirement Planning Tips
- If you’re unsure how your net worth stacks up to what’s needed for retirement, schedule time with a financial advisor. An advisor can objectively assess your net worth, expected retirement income and spending needs. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Use SmartAsset’s Retirement Calculator to forecast your net worth when you reach retirement.
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