The Personal Finance Podcast - The Median Net Worth By Age! (We are Getting Richer!)

Episode Date: November 8, 2023

In this episode of the Personal Finance Podcast, we're going to talk about the median net worth by age. How Andrew Can Help You:  Join The Master Money Newsletter where you will become smarter with your money in 5 minutes or less per week Here! Learn to invest by joining  Index Fund Pro! This is Andrew’s course teaching you how to invest!  Watch The Master Money Youtube Channel!  Ask Andrew a question on Instagram or TikTok.  Learn how to get out of Debt by joining our Free Course  Leave Feedback or Episode Requests here.  Thanks to Our Amazing Sponsors for supporting The Personal Finance Podcast. Shopify: Shopify makes it so easy to sell. Sign up for a one-dollar-per-month trial period at  shopify.com/pfp Chime: Start your credit journey with Chime. Sign-up takes only two minutes and doesn’t affect your credit score. Get started at chime.com/ Monarch Money: Get an extended 30 day free trial at monarchmoney/pfp Policygenius: This is where I got my term life insurance. Policygenius is made so easy. To get your term policy go to policygenius.com and make sure your loved ones are safe.  Links Mentioned in This Episode:  How and Why You Should Track Your Net Worth (Plus The Exact Net Worth Tracking Tool I Use to Make it Effortless!) Why Barista FIRE Is the Coolest Strategy There Is (Retire Faster Than You Thought!) Why Coast FIRE May Be The Perfect Strategy for You with Andy Hill Connect With Andrew on Social Media:  Instagram  TikTok Twitter  Master Money Website  Master Money Youtube Channel   Free Guides:   The Stairway to Wealth: The Order of Operations for your Money  How to Negotiate Your Salary  The 75 Day Money Challenge  Get out Of Debt Fast  Take the Money Personality Quiz Learn more about your ad choices. Visit megaphone.fm/adchoices

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Wealth builders and welcome to the personal finance podcast. I'm your host, Andrew, founder of mastermoney.com. And today on the personal finance podcast, we're going to be talking about the median net worth by age. If you guys have any questions, make sure to hit us up on Instagram, Twitter, TikTok at MasterMoney Co. And follow us on Spotify, Apple Podcast. Or whatever podcast player, you love listening to this podcast on it. If you want to help out the show, consider leaving a five-star rating and review. We truly, truly appreciate you leaving those five-star ratings and reviews. Now, today, we are going to be diving into the median net worth by age. And this is one of my favorite episodes to do because every three years, the Federal Reserve

puts out a report that actually summarizes the changes to family finances in the United States. And for most people, comparison can be the thief of joy. But what I want you to do here is it is good to use the median and average net worth by age just to have some sort of benchmark to see where you are. Now, this is not the end-all be-all. I want you to focus on the things that you can control. But at the same time, these are usually very helpful just to see where you land and in what range. Now, as we go through this, I will link it up down in the show notes below because

you're going to hear me reference this for the next couple of years. I will reference this report a lot because this is the actual real numbers that the Federal Reserve puts out. Now, one cool thing about these numbers also when we go through these, as these are actually inflation adjusted numbers. This means that it is actually showing the real dollar changes when showing any year before 2022. So this comes out every three years and then it comes out the year after the final year.

So what that means is that this report is showing 2019 up to 2022 at the time recording this and then it will show more in the next three years. So this is really important because that means that this data is showing that net worth has actually grown substantially over time frame. So I'm really, really excited to kind of share this with you and go through this process with you. Now, in this episode, I'm actually going to go through at the top of the show, what is net worth? And I'm going to show you, you know, some of the things that make up your net worth.

I'm going to go through the average net worth by age and compare it to the median net worth by age. And I'm going to talk about the differences between the two and why it's very important. to understand those differences. Then we're going to go through how to actually grow your net worth. If you're brand new to learning how to build up your wealth, I'm going to talk about a bunch of different ways that you can grow your net worth and how to automate tracking your net worth. Every single person listening to this podcast should be tracking their net worth. If you are not yet, that is your financial scorecard. You need to be tracking your net worth. We're going to be talking about how to do that automatically. We want to automate as many pieces of our personal finance

system as we possibly can. And net worth is another big factor towards that. You know, I'm huge on automation. I'll show you exactly how to automate that process. So, without further ado, let's get into it. All right. So the first question is, what exactly is net worth? If you've never heard of net worth or you've heard people throw that term around and you don't know exactly what this is, then I'm going to explain what net worth is. If you are not new to net worth, you can skip ahead two minutes if you want to to hear when we dive deeper into this stuff. But your net worth, you're not going to explain. You worth is your total assets minus your total liabilities. To put this in simple terms, it is what you own minus what you owe. So say, for example, you're trying to figure out what your assets are or what

you own are. This can be things like cash in your checking account, cash in your savings account, cash in your high yield savings account. All different pieces of cash can be factored into your net worth. This is also investments. So this is a huge factor when it comes to your net worth and what I really truly like to track is cash and investment. So investments are things like stocks, bonds, mutual funds, index funds, ETFs, anything that you have when it comes to investments, that is going to be factored in your net worth. Yes, that includes your retirement accounts, your Roth IRA, your 401k, your 403B, your 457, depending on where you work and what you have, all of those are classified as part of your net worth. In addition, real estate properties. So things like

your personal residence, for example, in the equity in your personal residents. Now, if you're underwater on your house, then that is actually a negative when it comes to your net worth. But when it comes to your personal residence, that can be on there. Or rental properties, things like duplex, dryplex, commercial buildings, apartment buildings, all these different things are going to add to your net worth. This is why you see real estate investors with very high net worth typically, because if they have a ton of equity in properties after they've owned them for a long time, then their net worths are going to be much, much higher. And you can have a lot of people out there who have very high net worth, but have very low.

liquidity, meaning that they don't have a ton of cash on hand, but because their assets have appreciated over time, they have a high net worth. You've seen this with the baby boomer generation, for example, where the baby boomer generation has a ton of equity in their home. And the problem there is that the majority of their equity for most folks are in their home, but they don't have enough cash flow, really, to fund their lifestyle. So this is another big problem that we have. You do not want to have the majority of your net worth in your home. I want you to learn that as we go through this episode. In addition, you can also classify things like personal. property. So this is things like the value of your car. This is jewelry. This is artwork. All of these can be

classified in your net worth statement if you want to. I typically refrain from adding this stuff to my net worth statement. Why? Because some of this stuff doesn't have intrinsic value, meaning that it's only worth what someone else is willing to pay for it. It doesn't have any cash flow backing it or anything like that. So if you think about cars for a second, they go down in value over time. So if you're tracking your car, sure, your net, worth might get a nice little bump at the beginning, but then it depreciates over time. But there is nothing wrong with having your cars and your network statements. Most people have their cars in our network statements. I just don't do it because I don't think I will ever cash in my cars and not drive a car

anymore. So really, I'm just rolling that into the next depreciating asset, which is just over and over and over again. Now, jewelry may hold its value longer than something like your cars. So that's something you could put on your network statement and you have art available as well. Now, what are liabilities, meaning that what are we subtracting when we add up all of these items here, all of these assets in one place, all of the things that we own, then what are liabilities? What are we subtracting from there? So some of the liabilities are things like your mortgage, for example. So your mortgage is a debt. And so how much you have on your mortgage you need to subtract from the rest of these assets you have in place. Car loans are also going to be subtracted by your assets. Student loans, how much you have in student loans,

will reduce your net worth until you get that paid down. Credit card and other debts will also reduce your net worth and any other outstanding debt or obligation. If you have a personal loan or if you have business loans, all of those will reduce your net worth on your net worth statement. And the business loans would if they're on your personal network statement. So in the business loans would if you have a personal guarantee and or if they are on your personal statements. If they're in an LLC, you can classify them potentially a little differently if you want to. But I'd just like to look at the real numbers in my real life. So typically I will add them in. So here is something I want you to think about here.

is a lot of people when they are starting off, maybe you just graduated college, you get in your very first job, you go out and you calculate your net worth and your net worth is negative. I do not want you to get discouraged because your net worth is negative. This is a normal thing, especially if you have student loans when you're first starting out, what is going to be fun and what is going to be cool about this is that over time, you're going to watch that net worth, start to increase over time. Meaning if you're in the negative, say you have a negative $20,000 net worth. As you start to pay down debt, you're going to see this creep down to $15,000. negative 10,000, negative 5,000, all of a sudden you have a break-even net worth, meaning your net worth is zero, your assets and your liabilities, or even. Then what you can do is then you're going to start to work to watch that net worth grow over time. It is amazing how fast this can accelerate if you make the right financial decisions. I'm not saying you have to be perfect. I'm just saying you have to make the right big financial decisions in order to get to that net worth number that you want to get to because your net worth is your financial scorecard.

And that is why we want to track this and make sure that we understand where our money is going and what we are doing with our money. So this is really, really important stuff that you understand what your net worth is. Now, let's figure out what the average net worth is and the median net worth is in the U.S. All right. So what I'm going to do first is I'm going to talk about the average net worth for all U.S. households in 2022. And that number was $1,059,47. Now, this is an inflation adjusted number, and it's an increase of $200,000 from the average back in 2019, which was $865,719.

Now, if these figures seem incredibly high to you for any reason at all, it's because they are, because you think about this, every person walking around the U.S. is not a millionaire. They don't have a net worth of a million dollars. And this is the problem with averages, because if you think about how averages work, say you had 10 people on the line. Say you had 10 people on a line. And if nine of those people all had a net worth of $200,000, for example, and there was one extra person who was worth $200 billion, think of someone like Mark Zuckerberg or Elon Musk or Warren Buffett, for example, then all those people are going to

skew that number all the way up to an average of like $20 million just because you had that one individual standing there who had a much higher net worth than everybody else. This is why we don't want to look at averages when it comes to these numbers. And instead, we want to look at the median net worth. So what I'm going to do is I'm going to go through and kind of show you by age, the average net worth and the median net worth so that you have a grasp on both of those. So what was the median net worth for U.S. households in 2022? The number shoots down to a much more normal average, which is $192,700. It's actually a little less than one-fifty average of what the actual average net worth is. This is why we want to use median because these figures are so much more

real than are the average. But the great thing about this is the real median net worth for U.S. households was up a studying 37% from the last study. 37% is the total increase over that time frame. And total household debt grew less than 4%. This is absolutely amazing. This is a great sign that people's net worth are increasing over time. And you can think about this for a second. The media for this entire time was preaching doom and gloom. And instead, the average net worth is up 37%. So what we're going to do is we are going to dive into what you can do by age and then the median net worth by age. We'll also compare it to the average. The average is going to be so significantly higher. But we're going to talk about that median net worth by age so that you have

a better understanding of how this is going to work. All right. So the first group is folks in their 20s. So if you're in your 20s, the best thing about this is that time is on your side. You have so much time for compound interest to start working for you and allowing you to build wealth. In fact, for most people, if you start in your 20s, if you can start just investing a couple hundred dollars in your 20s, you will become a millionaire because you have so much time left for this money to compound. And this is where your dollars have the greatest impact, where you may be thinking, oh, an extra $100, an extra $200 a month, that's not going to make a massive difference. It will make a massive difference over time. You are building the foundation to your financial

house. So you are building the base to your financial house. And this is going to absolutely change your life over that time frame. And if you're in your early 20s, studies have shown that if you got an average rate of return of 10%, that every dollar you invest will be worth over 80 dollars by the time you turned age 65 just by investing those dollars. Think about that for a second. Every single dollar that you spend could be worth over 80 dollars. But let's just bring it down to 80 dollars just to make that simple math. Every five dollars that you spend is worth $400 by the time you turned age 65. Every $20 is worth $1,600 by the time you turned age 65. So the way that you can do this, the way that you can really make this easy is start now. Start setting up automatic investments from your

checking account into either your brokerage account and or retirement accounts. Now, that's a beautiful thing about the 401k is it goes directly out of your paycheck into your 401k, so you're automating the first thing. So you may be automating your money a little bit already and not even knowing it. But now, if you set up automatic transfers so that you can transfer that money over to your brokerage account, maybe your Roth IRA, maybe a nice HSA, sprinkle all of these in, and then you're going to be building wealth over that time frame. I'm turning into the emerald of personal finance here. So that is the biggest thing you want to do. In addition, I want you to get your financial habits in order because starting to have your financial habits in order right now is going to be incredibly

powerful for you. So get your spending habits in order. Make sure you have a little money left over at the end of every single month so that you can invest those dollars. And really, I want you investing those dollars first. Building up that strong emergency fund is also going to be really, really powerful in your 20s. Make sure you get six months of expenses saved up in that emergency fund. And then setting up those retirement accounts and starting to contribute to them automatically is going to be very, very powerful. Now, the third thing I want you to do in your 20s so that you can increase your net worth is focusing on earning more. Most of us in our 20s, we don't make as much money as we want to be making. So we need to focus on earning more. We need to spend money on ourselves and invest in ourselves. What do I mean by that? I mean investing in a bunch of different skills so that you can earn money infinitely. Investing in yourself is one of the most powerful things that you can do. So spending money on skills is going to be great. Say, for example, you master negotiating your salary and you spend money learning how to negotiate. You go to negotiation conferences. You take negotiation courses. You read every book on negotiating.

Never split the difference is a great one, by the way. Then if you do this, over time, you're going to be a master negotiator. And if you are really, really good at negotiating, you can get almost anything you want in this life, especially when it comes to some wealth-building things. You'll be able to negotiate in real estate. You'll be able to buy businesses. You'll be able to negotiate your salary. You'll earn so much more money just with that one skill.

And if you invest in yourself with just that one skill, it will change your life. Number two is you can start a side business in your 20s to increase that income. also. That is really going to help you significantly, even if you fail because you're going to learn a ton of lessons. I had multiple businesses in my 20s fail, and I also had a few successful ones. And the successful ones are the ones I ended up focusing on so that we could grow those over time. And then building up additional assets, if you can get started into something like real estate, if you're interested in that, that's another great thing that you can do. Because once you have that negotiation skill and you start negotiating your salary at your job for those increases, then you have

so many other things that you can do. Now, if you do not know how to negotiate your salary at your job, We have a free e-book that wrote with a very specific system. We have a six-month system on exactly how to do this. And you can check that out at mastermoney.com slash resources. And it is called, finally, get that raise. So that is the things I want you to focus on in your 20s if you want to increase your net worth over time. Now, here is the average net worth and the median net worth for folks in their 20s. If you're between age 20 to 24, the average net worth is $120,896.

The median net worth is $10,800. Now, if you're between the ages of 25 and 29, the average net worth is $120,000, and the median net worth is $30,160. Now, something I want you guys to note here is that when it comes to average and median net worths, those median net worth numbers, as you're going to see as we progress through these age ranges, is actually extremely low. I want you to try to focus on beating those median net worth numbers. Make that your goal today. Make it something that you think about every single day because if you can beat those median net worth numbers, you're going to be much better off than someone who's actually hitting them.

Because as you see, as we progress, these median net worth numbers are not hitting the targets that they need to be hitting in order to be able to be financially free and retire. So we want to be better than these median net worth numbers and we want to make sure that we are trying to outperform them as much as possible. Now, let's jump into the 30s. All right. So in the 30s, we want to understand how powerful the time you have is. So if you have not started investing, starting to invest is going to be the number one thing I want you to do. But I want you to continuously invest if you have already started investing. Also, I want you to automate everything. Everything should be automated when it comes to your

personal finance system. If it's not, we'll teach you how to do that here on the personal finance podcast. Make sure you are on the Master Money newsletter. We've got some surprises coming out when it comes to everything automation on how to automate every single piece. of your money. So you're spending way less time actually managing your money, which is going to be amazing. Now, in your 30s, for a lot of people, your income is going to start rising. Maybe you got past that entry level job. You've got a couple promotions. Maybe you've got some additional certifications. And so now what you're doing is you're starting to make a little more money. Maybe you're a physician. You were in residency. Now you're actually out in the world working. There's so many different

things that could be happening. But most people's income will start to rise in their 30s. So your savings rate needs to increase over that time frame. I want your savings rate as a baseline to be at 20% or more, but really, I want you to be saving 25, 30, 35% of your income over that time frame so that you can really start to accelerate your path to wealth and financial independence. The reason why we do this is to put fuel to the fire so that our money can grow faster and we can have our freedom with our time. We want to be financially free. That is the entire goal of why we do this so that we can have freedom with our time, freedom with our energy, so we can do what we want. We want each and every single day. That is the power of this stuff. Now, number two is I don't want you

really to sweat the small stuff here. I don't want you to sweat the nickel and dime type of things. Have your latte. Have your avocado tossed. In fact, spend more money on the things that you value. But I want you to learn how to figure out what you actually value. And I want you to cut out everything else that you do not value. So when it comes to some of this stuff, you're really busy. Maybe you're getting married. Maybe you have kids. There's a lot of stuff going on. You're juggling so many different balls in your 30s. So you just need to focus on the big decisions and don't sweat all that small stuff. So these are going to be things like housing. Getting into too big of a house too early can absolutely destroy your wealth building ability. Make sure your housing costs are less than 30% of your

income. Number two is food costs. If you do not value eating out and you're spending way too much money on groceries, that is an area where a lot of people just don't realize how much they're spending. Make sure you track that for a couple months in a row. See if it's way more than you actually think it is. For most people it is, and they're shocked every time I have them add this up. So make sure you're adding up those food costs because food is another big factor you really need to think through when it comes to groceries and eating out. And then number three is transportation. Those are the big three items that if you can control those three, everything else you can spend lavishly on a bunch of other things. So I want you to make sure

that you can control those three expenses and at least track them in some way, shape, or form. I like to just do this with automation and automate tracking of this stuff so that you can see exactly how much I'm spending and a percentage of my income on each one. And then number three is as you you start to build out a family or if you have people who depend on your income, there's a couple of things I want you to do. First, I want you to look at a will. And if your net worth is over a million dollars, I want to let you look at a trust also. But making sure you look at a will or a trust is something definitely worthwhile. Trust in will is the place that I think is super simple to do both of those things. And you can do it all online. So that's a great place to look if you don't have an

attorney that you want to work through. Then there's life insurance. So the only life insurance that anybody really needs is term life insurance. And it's only if there's people out there who depend on your income. Maybe you have an aging parent or you have kids or you have a spouse who depends on your income to live. That's when you would need life insurance. If you're just solo, dolo out there, you don't have anybody depending on your income, then you do not need term life insurance. Do not anybody else tell you that. But term life insurance, the key is term life insurance, not cash value, not whole life, but term life insurance is the cheapest and it will do exactly what you needed to do. So I just want you to have the cheapest form of life insurance you possibly can that will take care

of your dependence, if anything were to ever happen to you. Then lastly, two other things that you can do for your family, if you have a family, is make sure you set up savings and college funds, things like your 529, for example, and then make sure you have proper health insurances, things like that. And by the way, if you're new to finance and you're just getting your money in order, we have a guide called the stairway to wealth that you can check out. If you go to mastermoney.com slash resources, you'll find the stairway to wealth. And it's kind of a guide of step-by-step what to do in what order to do this stuff. So if you're looking for that, make sure you check out the stairway to wealth. Now, between age 30 to 34, what is the average net worth and what is the

median net worth? Well, the average net worth is $258,073. And the median net worth is $89,801. So that median net worth is pretty low for most people. I want you to be above that. Now, if you've just started getting your finances together late 20s, that's great. You're doing a great job, especially if you had student loans, things like that, but I want you to try to strive to progress past some of this stuff. Then, between age 35 to 39, the average net worth is $501,289, but the median net worth is $141,200. So I do like that jump in that time frame where people are starting to earn more money, and that is the biggest jump we have had so far. Now, let's take a look at the 40s.

All right. So if you are in your 40s, first of all, everything we've talked about thus far, if you have not started any of those things. Start those things first when we talk about the 20s and the 30s. Then there's some other things that I want you to look at and I want you to assess where you are. So first, I want you to see what your wealth options are. What do I mean by that? What are the options that you have available to you? If you have some additional income coming in, what are some things that you can do with that money? If you've always been interested in real estate investing, maybe that's something you could do. Are there things out there that you can

take extra dollars and put them towards businesses? Or what are your interest there? Or do you want to just continue funding retirement accounts and then funding taxable brokerage accounts, things like that, maybe having a bunch of different tax efficient strategies. Also, you have some other options here. If you've built a nice base, I want you to consider something like barista fire or coast fire. Now, what is barista fire and what is coast fire? So barista fire, and this got popularized because people would quit their job and go work at Starbucks or at a coffee shop, for example, because they would enjoy that more than working in their day job. But what barista fire is, is say, for example, you built

up a nice nest deck. And maybe you have a million dollars invested right now in the market. And say, for example, you figured out that you need $1.2 million in order to be able to retire. We're just using lower numbers here because I want you to understand how this works. And let's say, for example, you need $1,250,000 invested in order to be able to retire. So if you had that $1.25 million, then you could draw down $50,000 per year on that portfolio. But let's say you already have a million dollars and your wish you can retire right now. maybe you have a tough boss who came into play or your company's making a ton of changes and you're just not enjoying your job or your career anymore. You're just completely burnt out. But with barista fire,

what you can do is you can take a part-time job with something that you love and still be able to retire. You can live off that 4% rule that million dollars and have that $40,000 coming in. And all you have to do is make up the difference, that $10,000. So here's some great example. Say you love yoga, for example. What if you could become a yoga instructor, earn an extra $1,000 per month. And in addition, you already have that nest egg in place, all of a sudden, you're doing something you love every single day and you don't have to work at the job you hate. So we have an entire episode on Barista Fire if you want to check that out. Now, Coast Fire is where you get to a point in time where you've invested your money over a time frame. And if you never touch that money again, you never invested another dollar, it's going to hit your

fire number, meaning the number that you need in order to be able to retire. If you want to figure out what that number is, by the way, the quick math is figure out how much you want to spend every single year in retirement, multiply that number by 25. So if you want to spend $80,000, a year in retirement, 80,000 multiplied by 25, is $2 million. So that's how much money you would need in order to be able to retire. That's the really quick back in the napkin math that you can do at any point in time. Also, in your 40s, continue to increase your income. This is a really prime earning year still so that you can take those extra dollars,

fuel the fire and try to retire early. And statistically, your earned income goes down in your 50s. So making sure you maximize that earning potential on your 40s is really, really important. Number two, I want you to focus on your health. because focusing on your health is really, really important at all ages, but especially as you hit your 40s, if you have not got your health right yet, you need to start today. So the book Rich Habits found that Millionaires spend 5.8 hours per week exercising. It improves your focus.

It improves your energy. It allows longevity during retirement. So making sure you prioritize that health, your diet, all of those different things is really, really important. And then number three is ignore your peer successes. So you're going to see a lot of folks out there who are becoming very successful. Do not try to keep up with the Joneses in your 4th. that is going to put you backwards when it comes to your wealth-building journey.

So making sure you don't fall into that wealth-killer trap of trying to keep up with the Joneses is really, really important and ignore that lifestyle creep. So what is the average net worth by age when we are in our 40s? So from age 40 to 44, the average net worth is $590,718. And the median net worth is $134,730, which amazingly is lower than the $1,000. the median net worth of 35 to 39. Don't love seeing that. Then at age 45 to 49, the average net worth is $780,923 and the median net worth is $212,800. Now, let's jump into the 50s. So lately, I've been noticing how fast things are changing at home. The kids are growing like crazy,

clothes don't fit anymore, and routines are changing. And it just hits you. Life is expanding. And when your life grows, your responsibility grows with it. That's something I've been thinking about more this spring, making sure the safety net we have in place actually matches the life that we're building. And that's where PolicyGenius comes in. PolicyGenius is an insurance company. They're an online marketplace that helps you compare life insurance quotes from some of the top insurers in America, all in one place for free.

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And then we'll talk about some of the other decades on their average net worth and their median net worth. So when it comes to your 50s, I want you to be focusing on your risk level. Think about your risk tolerance here. It might be time to make a change to your portfolio because your working days are probably going to be slowing down within this next decade here. And so I want you to make sure that you are not in some super- risky assets, for example. You're not just fully in crypto or something like that. I want you to make

sure that you have a nice portfolio that is going to sustain you throughout the rest of your life. So you really want to start thinking through that stuff and looking at your risk tolerance. So assessing your risk tolerance is one of the most important things. I also want you to think about the changes in retirement. You know, retirement is a huge transition. It is something that you've got to really think through what that's going to look at. Like, and you're going to go from being someone who is accumulating wealth or saving wealth over that time frame to someone who is going to be actually using. their wealth and consuming their wealth. So this is something where it is very hard to actually make that transition.

So I just think about this, for example, you've been saving your money your entire life, and now all of a sudden you retire, and it's time to draw down in that portfolio. That's got to be a difficult thing to do for the first time. It starts to draw down that 4% in that portfolio. You know all the math. You've been educated over time, but at the same time, you still have to start taking action on this, and you've been thinking about it for so long, and now it's time to do it.

It's got to be somewhat nerve-wracking to have to do that. I want you to also think through like, hey, what are my retirement days going to look like? What am I going to be doing every single day? How am I going to fill my days? And then just make sure you're mentally and financially prepared for retirement. Also, number three is I want you to simplify your finances. So get rid of debt. That is one less thing you have to worry about. I really think that people should have their mortgage paid off by the time they hit retirement age. They don't have that additional debt.

In addition, debt has a place, but I prefer no debt in retirement. I'm just not a person who wants to have that additional risk in retirement. and then stacking up and making sure that you have a one-year emergency fund is also something I believe in when it comes to retirement age. So six months for most people when you're in your working years and your accumulation years. And then once you hit that retirement age, I want you to have one to four years at least in cash, or more if you want to, that are going to allow you to be able to weather any storm. Say, for example, if the market goes down and we have like a great recession at some point in time, say you had four years of cash, you could use two years of cash to

be able to pay for your lifestyle. And then you can start drawing down your portfolio again. It just kind of de-risks your whole situation. So if you make enough money and you can build up some cash reserves, I would love for most people to do that because that really, really is helpful. And that's something that I am making sure I'm even thinking about it now. And I'm in my early 30s, but I'm still thinking about that now on how I can build up that cash reserve over time. So that is something where I'm looking at that because cash is security. And then just trim all the fat. Get rid of anything that is, you know, sucking out life from your retirement. Get rid of things that you don't use anymore. Make sure you kind of just reduce the amount of things that

are around you that you don't need and then you can invest those dollars instead, just to give you extra security and remove that financial stress. So what is the average net worth and median net worth by age and your 50? So between age 50 to 54, it is $1,132,532 is the average net worth. The median net worth is way too low, $272,800 between age 55 and 59. The average net worth is $1.42 million, and the median net worth is $320,700. That, my friends, is way, way too low. So making sure that you are beating these median net worth numbers, especially as you progress, is super, super important. Now let's look at the median net worth between the 60s and the 70. So between age 64, the median net worth is $394,010. And between age 65 to 69, the median net worth is $394,300. Between age 70 to 74, the median net worth is

$433,100. And between age 75 to 80, the median net worth is $316,000. Now, I want to kind of talk through this a little bit as well is there are some changes in the real household net worth over this time frame. and I really want to see what the changes in these numbers are. So the amazing thing here is that folks below age 35, their net worth increased 143% over this time frame from the last time. So from 2019 to 2020, 143% increase. Age 35 to 44 is 28% increase. Age 45 to 64 is a 27% increase.

Age 55 to 64 is a 48% increase. and age 65 to 74 is a 33% increase. 75 or more is a 14% increase. So for everybody, it's a 37% increase in net worth when it comes to median net worth. But age 35 and below had the highest increase at 143%. So congratulations if your net worth is increasing over this time frame. That is absolutely amazing. I love to see this stuff because it means we are all working towards trying to build more

wealth. Even when people out there are saying that this is a terrible economy, we are at least working towards building more wealth over this time frame. So this is some amazing news for a lot of different people here. If you have been working really hard on increasing that net worth, I congratulate you because that is absolutely amazing. Now, one other thing I want to talk about before we wrap this episode up is how you can automate your net worth. And the way that I automate my net worth is with a tool that I have been using for over a decade now. And it's completely free, which is why I love this tool. It used to be called personal capital is now called Empower. So in Empower, you can just link up all your

accounts and you can put in your house and stuff like that in there if you want to. And then it will track your net worth for you automatically. Now, the second way to do this is if you don't want to use the technology and you just want to put it into a spreadsheet or something like that, you can put all your assets minus all your liabilities and have a net worth statement there. You just have to update it every six months to a year in order to make sure that it is up to date so that you have that financial scorecard. This is why it is so incredibly important to be tracking your net worth. Every single person listening to this episode should be tracking their net worth because I think It is the most powerful scorecard that you can have out there.

It is your financial scorecard. It is really, really important for every wealth builder out there to have that available to them and be looking at their net worth so that they can see it increasing over time. Now, I don't check this every single day or week or month. I check my net worth maybe every six months to a year because if you're checking every single day, markets are going to fluctuate. You're going to see some differences over that time frame. You don't want to get discouraged on daily checks.

Instead, I prefer to check it every six months or every year. Really, every year is probably around. when I get around to it when I go to my year-end money checklist, which is something that we talk about here a lot as well. So if you guys have any questions, make sure to hit me up at Master Money Co on all the different socials. And I cannot thank you guys enough for listening to this episode. If you guys have any episodes that you want me to do, make sure to shoot me an email because I read every single one of those emails. And we've actually made a few episodes in the last couple of months based on emails that we've gotten from people. So if you have an episode that you are

interested in us making, make sure you get on that Master Money newsletter and then respond to that newsletter and tell me some suggestions if you want me to make an episode and we can talk about that. And or if you have another question, it can go on a money Q&A episode as well. Thank you guys so much for investing in yourself because that's exactly what you're doing when you listen to this podcast is you are investing in yourself, which like we said at the top of the show is one of the most important things that you can do. I appreciate each and every single one of you. Our entire goal is to bring you as much value as we possibly can.

And so I'm so excited to have you along for this ride as we continue to try to bring you as much value as possible. Thank you guys again for listening and we will see you on the next episode. Rosen lasagna, medium power, 15 minutes. Sounds like Ojo time. Let's play. Feel the fun with Play-Ojo. The online casino with all the latest slot and live casino games. What you win is yours to keep with no wagering requirements, instant payouts and no minimum

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