Blog - How Wealthy Should You Be At Different Ages

How Wealthy Should You Be At Different Ages?

An interesting question that I’ve often been asked is about how much wealth should you have at different stages of your life.

Usually, it’s from someone in their late-20’s to late-30’s, who is past the post-college years and firmly in their wealth-building stage of life. In this timeframe, people are often comparing themselves to those around them and worried about if they are “falling behind” their counterparts.

The answer they are usually looking for is a specific number. They want me to say something like, “At age 32, if you have $100,000 of net-wealth you are doing really well. But if you are below $50,000 you are falling behind.”

But, like most things, it isn’t that simple…


In a society driven by “keeping up with the joneses,” it can be tough not to think about how you are doing compared to your friends and family.

Layer social media on top of this, with the endless barrage of pictures of friends on vacations, eating out, and buying new things, and you can quickly feel like your life isn’t living up to the “status quo.”

But that’s only because we tend to compare each other with imperfect metrics.

How often have you heard about a friend’s salary and quickly compared yourself to what they are making?

Or maybe you heard about how much someone has invested in such-and-such stock, and thought to yourself, “Man, I wish I had that much to invest?”

And I’m sure you’ve had friends invite you over to check out their new home, or see their new car, and your left asking yourself, “Why aren’t I able to buy those things?”

All-in-all, it makes us feel like we are falling behind in our wealth-building journey.

But there are better ways to understand how you are actually doing.


There is a seminal book in the world of finance called “The Millionaire Next Door,” that is worth the read, if you haven’t already.

In the book, the authors discuss research they conducted around the characteristics of millionaires throughout the United States.

This book was written back in the mid-90’s, but a lot of the info is applicable today.

What they found was that the bulk of millionaires (those with net-worth exceeding one million dollars) weren’t the people you’d expect. They weren’t the white-collar workers living in affluent neighborhoods and driving fancy luxury cars.

This was greatly due to the fact that these white-collar workers would neglect things like saving and investing, and rather spend their incomes on luxury goods and status symbols.

The piece of the book that is very applicable to the topic of this post is something the writers called their “Wealth Formula.”

The Wealth Formula:

Expected Net Worth = 10% x Age x Income

Example: If you are 40, and earn $50,000/year, you should have a net worth of $200,000.

10% x 40 x $50,000 = $200,000

And if you want to be what the authors call “Prodigious Accumulators of Wealth,” you should have twice the amount you get from the formula. If this is you, you’ll know you are doing quite well.

But, the authors admit that the formula works better for those nearing retirement, and not those in their younger years. So, all of the 20-somethings reading this, don’t feel bad if you fall below the equation number.

The authors also found that the average age of a millionaire was 57. So, this number could be used as another benchmark in evaluating where you stand.

But, in my opinion, there are better ways to gauge your wealth accumulation.


The problem with the “Wealth Formula,” or using a benchmark like being a millionaire by age 57, is that they don’t take things into context of YOUR life.

We all see the Forbes’ list of the wealthiest people, each year, and we can understand that someone with $1 Billion doesn’t have as much as someone with $50 Billion. But those figures are astronomical and not really relevant to most people.

But you might also be tempted to say that someone with $3 million is wealthier than someone with $600,000, and on a pure absolute basis you’d be right. But if you dig deeper into a person’s spending, wealth is a relative thing.

If you also knew that the person with $3 million in the bank was spending over $1 million per year, and the person with $600,000 was only spending $30,000, their situations might begin to look a bit different.

In these scenarios, the person with $3 million only has 3 years of expenses. And the person with “only” $600,000 has enough to last 20 years at their spending rate!

I don’t know about you, but the idea of having 20 years’ worth of living expenses sounds a whole lot more appealing than just 3.


There is a massively popular finance blog called Mr. Money Mustache, with some great stuff on it. I highly recommend checking it out sometime.

One of the pieces he created was a chart to help you understand the math around reaching early retirement.

I won’t get into the nitty-gritty, you can read the full post by clicking here.

But the gist of it is that when you save a larger and larger percentage of your income, you aren’t just increasing the amount of money you are saving, you are also decreasing the amount of money you spend. This means that you have a lower number to reach in order to have enough wealth accumulated for retirement.

It’s the same thing as my example above. You don’t need $3 million in the bank if you are spending much less each year.

Pretty cool!


At the end of the day, having a bunch of money shouldn’t be your goal. The goal should be to feel confident about your finances and not be stressed by money. After all, money is the #1 cause of stress for Americans.

The way to eliminate this stress, or, at least, decrease it, is to gain more confidence about your financial future, and your ability to meet your future needs.

Once again, having 20 years of runway is better than 3, regardless of the size of your bank account.

This will be greatly influenced by your income, but also the lifestyle you live.

So, the next time you are comparing yourself to someone else, make sure you don’t get caught up in using the same benchmarks everyone else is. Make sure you are using something more relevant to your life. Make sure it’s something you can be confident in.

Capably Yours,

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