Net Worth: How do you stack up?

[LivingAlmostLarge]

Definitely I'm not sure how someone whose in their 20s can only have $2k saved, that's barely a paycheck.

But I think most people in their 50s and older are still doing okay with pensions. I wish I had a pension.

[disneysteve]

Originally Posted by MonkeyMama

I see quite a few retirees taking on mortgages and moving up to much larger houses in retirement. They don't have the cash for it in the least. I think it is quite common these days for people expect to pay their mortgages forever.

True. I saw a stat recently that I can't recall about the percentage of seniors with mortgages and that number has been steadily rising.

[SnoopyCool]

What things are considered in net worth? I understand it is Assets - Liabilities, but (for instance) do I assume my vehicle is a liability?

We're, unfortunately, even with the comparison (I believe). Hopefully we will get better and better as time goes by. Not hopefully; we will.

[disneysteve]

Originally Posted by LivingAlmostLarge

Definitely I'm not sure how someone whose in their 20s can only have $2k saved, that's barely a paycheck.

That doesn't surprise me that much. Keep in mind that many folks in their 20s are still in school. I didn't get out until I was nearly 29.

[disneysteve]

Originally Posted by SnoopyCool

What things are considered in net worth? I understand it is Assets - Liabilities, but (for instance) do I assume my vehicle is a liability?

Everything you own that has monetary value is an asset and all money that you owe is a liability.

As for your car, if you own it outright, it is an asset. If you owe more than it is worth, it is a liability. If you have partially paid it off, it is a little of each.

[SnoopyCool]

We own our vehicles outright, but I had heard that since they cost $ for maintenance, gas, insurance that they were liabilities. Same with a house. I guess I can thank the Rich Dad, Poor Dad guy for that.

[disneysteve]

Originally Posted by SnoopyCool

We own our vehicles outright, but I had heard that since they cost $ for maintenance, gas, insurance that they were liabilities. Same with a house.

Think of it this way. How much would you end up with if you sold everything you own tomorrow and paid off all of your debts? That is your net worth.

Yes, cars and homes cost money to operate and maintain, but they still have value so they count as assets for the purpose of calculating net worth.

Of course, net worth is constantly changing. Some assets appreciate. Others depreciate. So if you calculate your net worth today and then do it again in a year, you would need to downgrade the value assigned to those cars.

[VickiO100]

Don't be so critical of others. There are those of us whose net worth is below the median for various reasons. Perhaps money is not as important as other things.

In my case, having a child to raise (alone) beginning at the age of 18 doesn't exactly allow one to save much, especially when paying for college 18 years later on a single salary. Due to a late start at college for myself, I actually have negative net worth at the moment.

I am working to correct this situation now that college is finished but it will take a few years. I doubt I will ever reach the median figures stated in the article.

[DebbieL]

Welcome to the boards Vicki. You're right, of course. We all have our own path and our own tale to tell. I too was a single parent for many years, so I know what that's like. I never got ahead at that time (also my ex is a total deadbeat who doesn't even visit our daughter, let alone want to support her).

Now, I'm 37, married almost 2 years ago, and finally things are looking up. I'm also back in college to earn my accounting degree, while working full time days and trying to deal with raising a teenager (15 year old DD). It's very busy for me, but at least I know things are getting better and I'll have a great paying career when it's over.

My net worth is positive, but not on the level of the "average" on that website. In a few years it will be looking much better.

I think people on this site can sometimes forget that most of them are not the "norm". The fact that they are even on this site is probably testament to that. I too sometimes feel "behind" the people who post here about their high net worths.

Another thing that makes things difficult where I live is that housing is out of reach for any sane person that's not a millionaire. Average prices are over $600K now. The same place would have been $240K five or six years ago. Average household income here is only in the 60s. People must be crazy to be buying at these prices. I cannot afford a home, and sometimes that weighs on me. I don't leave this city because it's my home town and all my family is here. My daughter is so close to my parents and her cousins it would break my heart to separate them, so I'll stay at least for now (and hopefully this damned housing bubble finally pops up here).

You are not alone in your situation. I would dare to say you probably represent a huge portion of the population. Congratulations to you on going to college - I am right there with you!

[Snave]

I am in that 25-34 category and it says a little over $2000. While that is extremely low,my guess is that those closer to the 34 bring it up some and those near 25 drag it down. I know my wife had a negative net worth at 25. She had been out of school fro 2 years and had 20K in student loans and 10K in credit cards. She probably had 8-10k at the time in her 403b, so she still had a negative 20k net worth. My guess is that she was not alone. That is probably what brings that number down significantly.

[LivingAlmostLarge]

Snave, gotta agree. At 25 things were dismal as well for us. We probably had a $10k net worth. But things got better fast.

I don't think many here post their actual net worth, just commenting on the statistics.

By the way, as a single parent why are you paying for college? The kid should be getting tons of free rides and grants! Anyone under $60k family income at Harvard gets a free ride.

[stressedmama]

Just a thought... another thing bringing the 25 - 34 category down in the net worth column would be that a lot of people buy their first house during this time of their life. So, many people probably are in the first 5 years or so of their mortgage and their equity is very small compared to what they still owe.

[Snave]

Originally Posted by Ima saver

I was shocked too!! How do people ever expect to retire? My net worth is 6 1/2 times the average for my age. ( I used my husband's age and then my age but there was very little difference) The average person my age only has a net worth of $244,000!!

Ima, $150,000 of that $244,000 is probably tied up in their homes also. That means most have even less in liquid assets for retirement.

[LivingAlmostLarge]

But that's why I asked how many older people are using pensions to live on like my mom with very little liquid cash saved? She basically has nothing saved liquid, but gets a very generous pension, will get a very generous SS and has a paid for home.

[Snave]

That will work for those that are older and are already drawing from a pension, etc... But that doesn't explain the lack of savings on everyone elses part. Take a look at the numbers for those in their thirties, fourties and fifties. A lot of these folks have little savings and will NOT get a pension.

[DebbieL]

My parents are what livingalmostlarge describes. Actually, my dad makes more now in retirement than he did working. Their house has been paid off completely for 30 years. My dad retired about 17 years ago (and my mom about 7 years ago). Actually they both have good pensions (especially my dad’s). Here in Canada you also get old age pension (everyone gets this whether they worked or not – it’s usually around $500 a month, but they give you extra if you’re poor) and Canada Pension Plan (our version of social security – although our payments are capped at around $800 a month and that’s only if you made enough money and contributed the maximum into it). Between all their pensions and the fact that they haven’t had a mortgage (and have never been in debt for anything else) for 30 years, they do very well. They don’t need a huge bank account. They probably have between 40-50K in the bank at any time (just because they don’t spend a lot of money day to day). I’m guessing they net between $5-6K monthly. Actually, my dad said putting money in an RRSP (our version of 401K type thing) was a really bad move for him. When he had to start withdrawing it (they make you do so by a certain age here) he was at a higher tax rate than when he put it in. Retirement savings vehicles like that often aren’t a good idea for people who have good pensions from their work (which is obviously not as many people nowadays).

[disneysteve]

My mom is 77 and lives just fine on SS and investment income - no pension. In fact, since selling her house last year and moving to an apartment, her savings are actually growing. By selling the house, she dropped her monthly expenses by about $700 (taxes, utilties, maintenance, etc.) and her rent and electric at the apartment is less than that. Plus, the proceeds from selling the house are invested (conservatively - CDs and MMA) and generating income. So she has a positive cash flow and an increasing net worth. Not bad for a 77 year old.

[Snave]

Originally Posted by disneysteve

My mom is 77 and lives just fine on SS and investment income - no pension. In fact, since selling her house last year and moving to an apartment, her savings are actually growing. By selling the house, she dropped her monthly expenses by about $700 (taxes, utilties, maintenance, etc.) and her rent and electric at the apartment is less than that. Plus, the proceeds from selling the house are invested (conservatively - CDs and MMA) and generating income. So she has a positive cash flow. Not bad for a 77 year old.

So in this case, the house was an asset. I know a lot of other posts lately have been discussing homes being assets or liabilities.

[gamecock43]

Maybe in the beginning houses are liabilities and then they become an asset the longer you own.
In the beginning you are stretching yourself to make payments, and make repairs, but as the years go on you come to anticipate repairs that will be needed, and save for those. Later on you can refinance, and your house would have increased in value as well.

[LivingAlmostLarge]

Exactly my parents draw more retired than working. They had little 401k or IRA savings but mostly pensions. Very, very generous pensions.