Net worth: the only number that actually matters
Key takeaways
04 · ideas- Net worth = total assets − total liabilities
- Track monthly, not annually
- A rising net worth matters more than income level
- Include retirement accounts — often the biggest asset
Basic level
The essentials · 1 min
Net worth = everything you own − everything you owe
Assets: savings, investments, retirement accounts, home equity, car value
Liabilities: mortgage balance, car loans, student loans, credit card debt
- A doctor earning $300k with $500k in student loans and a $800k mortgage may have negative net worth
- A teacher earning $60k who bought a home 20 years ago and saved consistently may have $400k in net worth
Track net worth monthly. A rising net worth — even slowly — means you're building wealth regardless of your paycheck.
Intermediate level
How it applies · 1 min
Net worth benchmarks by age
These are median figures (half of people have more, half have less):
| Age | Median net worth (US, 2022) | "On track" target |
|---|---|---|
| 25–34 | $39,000 | ~$50,000 |
| 35–44 | $135,000 | ~$200,000 |
| 45–54 | $247,000 | ~$400,000 |
| 55–64 | $364,000 | ~$700,000 |
| 65–74 | $409,000 | ~$1,000,000 |
The "on track" column assumes you want to retire at 65 with $1M.
What to include:- Retirement accounts (401k, IRA, Roth): include full balance — it's your money
- Home equity: current market value minus remaining mortgage balance
- Car: use current market value (Kelley Blue Book), not what you paid
- Don't include: leased cars, rental deposits, money owed to you (too uncertain)
Advanced level
The math, step by step · 1 min
Net worth growth formula
Where r is your average annual return on invested assets, S is annual savings, and t is years.
Sensitivity analysis — starting at net worth $50,000, saving $12,000/year:
| Return rate | Net worth at age 65 (starting at 35) |
|---|---|
| 5% | $1,040,000 |
| 7% | $1,490,000 |
| 9% | $2,190,000 |
The two levers: You can increase net worth by (1) increasing the savings rate S or (2) increasing the return rate r. Increasing savings is fully in your control; increasing returns requires taking more risk. For most people, saving more is more reliable than chasing higher returns.