Everybody knows about NetworthIQ, the site where you can post and track your net worth every month. I myself don't partake, but many (most) PF bloggers do. Recently, the site started posting aggregate net worth statistics.
Naturally, PF geeks like me would like to know how well the NetworthIQ data tracks to the Fed's Survey of Consumer Finances (net worth in thousands of dollars).
By Age:
SCF NetworthIQ
Under 35: $14 $41
35-44: $70 $260
45-54: $145 $525
55-64: $249 $800
65-74: $190 $950
75-up: $163 $1,050
By Education:
SCF NetworthIQBy Income (SCF median incomes):
Less than HS: $20 $7
High School: $69 $48
Some College: $69 $31
College: $226 $120
SCF NetworthIQ
$11,000: $7 $3
$26,000: $34 $3
$43,000: $71 $18
$68,000: $160 $75
$104,000: $311 $175
$140,000: $960 $820
A note on the data: Without the raw data from NetworthIQ, I can only estimate the median values, since the data is partitioned differently by NetworthIQ than the Fed. Further, the NetworthIQ population is highly skewed toward young people (average age around 28). The respondents over age 55 are small in number and highly non-representative.What always strikes me about net worth data is that in general, Americans have small net worths in relation to their incomes. In the NetworthIQ data, for example, the median net worth for those with incomes between $150,000 and $200,000 is only $477,000. In the SCF data, the median net worth for the top 10% of incomes ($186,000 median income) is $924,000. In The Millionaire Next Door, Stanley and Danko suggest that one's net worth ought to be equal to one's income multiplied by one's age, divided by 10. (If you're 30 and you have an income of $75,000), your net worth should be $225,000.) This survey data suggests that this isn't true for most people.
5 comments:
Doesn't it seem odd that the NWIQ numbers would be much higher across the board by all the age ranges, but lower overall by education and income?
Unfortunately, there's no way to get the actual medians from the NWIQ data, so those are my guesstimates. The odd numbers have to do, I believe, with the wildly abnormal distribution of NWIQ respondents (85% are under 39 years of age; only 2.75 have high school or less education; and the income distribution is bimodal, with a small peak around $60K and a big peak around $125K). The SCF data is a proper survey that reflects the actual population.
"One's net worth ought to be equal to one's income multiplied by one's age, divided by 10."
Yikes, that means that I should have about 132k (24*55000)/10 after only one year of work. Oh, I'm only about 125k behind. I suppose "rules of thumb" like that tend to be less accurate at the ends of the spectrum.
Interesting data though
Dear god, I hope the Millionaire Next Door numbers aren't right. I knew I was behind, but I didn't think I was THAT bad. By those standards, I would need to have over $150k in savings by now. I'm 27.
I agree with you that the average net worths are low in relation to people's incomes. I definitely fall into that statistic right now.
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