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Net worth is what you have of monetary value (assets) after you account for what you owe (liabilities). As a simple example, if you have $1,000 in savings and owe $500 to your credit card company, you have a net worth of $500 ($1,000 – $500).
A positive net worth figure means that you have more assets with monetary value than debt.
When your net worth is positive and it keeps growing year by year, it’s telling you that you are doing well at increasing your financial assets, such as income, savings, investments, and maybe adding a house. You also may be reducing debt.
That’s a great message to receive. From a financial standpoint, you’re in good health.
A net worth calculation is like GPS for your various savings goals, especially retirement. It tells you where you are now and where you need to go to reach your destination.
So, calculating your current net worth on an ongoing basis can help you keep your retirement plans on track.
Key Takeaways
- Your net worth is the total of your assets minus the total of your debts.
- There’s no hard rule for what makes an ideal net worth amount.
- Monitor your net worth to be sure that it’s growing toward providing you with a comfortable future.
- If it’s not, it’s time to increase your income, cut your spending, and reduce your debt.
How to Calculate Your Net Worth
Net worth is simply the total value of all assets minus the total value of all liabilities. It’s a financial benchmark applied to companies and individuals. The formula is a simple one:
Net Worth=Assets−Liabilities
Here’s what makes up the assets and liabilities categories.
Assets
There are liquid assets and illiquid assets. Liquid assets are investments or possessions that can be turned into cash relatively quickly with little or no loss of value.
Bank accounts, certificates of deposit, stocks, bonds, mutual funds, and exchange-traded funds (ETFs) fall into this category.
Illiquid assets are investments or possessions that are difficult to convert into cash quickly. Your home (if you own it) is an illiquid asset, as are any other real estate holdings.
The balance in a retirement savings plan (before you turn age 59½) and a business partnership are considered illiquid assets.
Most personal property, such as vehicles, furniture, and clothing, should be left out of your net worth calculation. Even if they cost a lot to acquire, their resale value may be unknown.
However, investment-quality art, jewelry, and collectibles could be assets you’d use in calculating net worth.
Liabilities
Liabilities are debts. Credit card balances, car loans, home mortgages, student debt, and business loans all fall into this category. Personal loans count, too.
Where Do You Stand?
The chart below features the median and mean net worth figures for American households by age group.
The data was compiled by the Federal Reserve Board’s Division of Research and Statistics in its 2022 survey of assets, debts, and financial behavior of U.S. households. The next survey, begun in February 2025, will be published in late 2026.
The median is the figure below which half of families have less net worth, and above which half have more net worth. The mean figure is the average net worth calculated from the net worth for all families in the age group.
| Age of Family Reference | Median | Mean |
| Less than 35 | $39.0 | $183.5 |
| 35-44 | $135.6 | $549.6 |
| 45-54 | $247.2 | $975.8 |
| 55-64 | $364.5 | $1,566.9 |
| 65-74 | $409.9 | $1,794.6 |
| 75 or older | $335.6 | $1,624.1 |
Don’t place too much importance on how your net worth compares to these numbers. They are just meant to give you a sense of the range of national data.
Note the big differences in mean and median net worth in each age category. Remember that the mean is an average. A relatively few affluent families can skew the average. That may be why the mean net worth of American families younger than age 35 tops $183,000.
The Ideal Number
What should your net worth be? Every person has their own lifestyle and individual expectations, so there is no one-size-fits-all, universally agreed-upon number.
That said, Thomas J. Stanley and William D. Danko, authors of “The Millionaire Next Door: The Surprising Secrets of America’s Wealthy” offered this formula as rule of thumb:
Net Worth=10Age×Pretax Income
Your annual household pretax income multiplied by your age, then divided by 10, equals “what your net worth should be,” according to Stanley and Danko.
Using this formula with a basic salary of $25,000, we get the following results:
| Age | Income | Net Worth |
| 20 | $25,000 | $50,000 |
| 30 | $25,000 | $75,000 |
| 40 | $25,000 | $100,000 |
| 50 | $25,000 | $125,000 |
| 60 | $25,000 | $150,000 |
The numbers in the middle-age ranges might look feasible, but the formula is less likely to work for people just starting out in life. Few 20-year-olds have racked up $50,000.
Then again, most professionals, if all goes well, see a steady increase in salary over the years. Below, see the results for the same formula using increasing income:
| Age | Income | Net Worth |
| 20 | $25,000 | $50,000 |
| 30 | $35,000 | $105,000 |
| 40 | $45,000 | $180,000 |
| 50 | $55,000 | $275,000 |
| 60 | $65,000 | $390,000 |
The net worth estimates are still unrealistic for very young workers, and they’re not great for people approaching their retirement years.
Still, the numbers may provide a benchmark for consideration. At the least, they may help you determine if you are moving in the right direction.
The Marotta Formula
Interestingly, under the scenario where income rises with age, the net worth estimate above delivers results similar to those generated by a formula devised by David John Marotta, a financial advisor.
Marotta recommended following a savings plan that would result in a net worth that, by age 72, was 20 times your annual spending.
Under this plan, the older you get, the more you save. Since most people earn more as they grow older, this is not unrealistic.
| Age | Income | Savings Factor | Annual Spending | Net Worth* |
| 30 | $25,000 | 1x | $15,000 | $15,000 |
| 35 | $35,000 | 2x | $20,000 | $40,000 |
| 42 | $50,000 | 4x | $35,000 | $140,000 |
| 51 | $55,000 | 8x | $40,000 | $320,000 |
| 66 | $75,000 | 16x | $50,000 | $800,000 |
How Do I Calculate Net Worth?
The formula to calculate your net worth is: assets minus liabilities.
Is a Net Worth of 500K Good?
That depends on your age, your income, and your circumstances. It also depends on whether you compare yourself to other people, or to what experts recommend is an ideal net worth. Generally speaking, a $500,000 net worth is good, especially if you’re mid-career. But you’ll want to increase it as much and as long as you can.
Where Should I Be Financially at 35?
Fidelity recommends that you have about two times your salary saved by age 35.
Here’s the breakdown:
By age 30 | Save at least 1x your salary
By age 40 | Save at least 3x your salary
By age 50 | Save at least 6x your salary
By age 60 | Save at least 8x your salary
By age 67 | Save at least 10x your salary
The Bottom Line
A positive net worth is better than a negative one, a higher net worth is better than a lower one, and an increasing net worth is better than a static one. Words to live by.
If your net worth is negative, strive to get it to a positive number. Live within your means and build it by saving and investing, a little at a time. Create a budget, cut your spending, and pay off debts.
Even if you feel your net worth is high, keep increasing it to ensure that you have enough money to live well during your retirement years.
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