Find Out What Your Net Worth Should Be Based on Your Salary
Written by
Jacob Wade
Edited by
Gary Dudak
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Whether you make just enough to get by or rake in a ton of cash every month, it’s important to track your net worth, which ideally isn’t a fixed number, but a target, often set as a multiple of your annual salary that increases with age. Simply put, it’s a measure of how much your assets are worth minus any liabilities. The goal is to increase your assets and pay off your debts.
But how much should you be worth if you don’t make much? Or how about if you have a high income? Keep reading for the recommended net worth based on your salary and how you can increase it over time.
Your Ideal Net Worth vs. Your Salary
Many financial advisors would tell you to aim for your net worth to be about one to two times your salary by age 30, two to three times by age 40, and then a higher multiple, such as six times or more, by age 50 and older.
However, like any money rule, it can greatly vary by everyone’s personal financial situation. Keep in mind this is a general guideline, and the best benchmark is the one that aligns with your short-term and long-term saving goals and investment strategies. Here are a few key takeaways:
- Age 30: Aim for a net worth of about your average salary set aside.
- Age 40: Aim for a net worth of two to three times your current annual salary.
- Age 50: Aim for a net worth of four to six times your average salary.
You can use a simple formula to determine your target net worth, such as: (Your Age / 10) x Your Gross Annual Income. For example, if you are 35 and earn $80,000 annually, your target net worth would be approximately (35 / 10) x $80,000 = 2.8 x $80,000 = $224,000.
What Is Net Worth?
Your net worth is simply what you own minus what you owe. To calculate your net worth, you need to add up the value of everything you own (assets) and subtract the total of all of your debts (liabilities).
Assets include:
- Cash
- Your 401(k)
- Roth IRA
- Brokerage accounts
- Real estate
- Vehicles
- Furniture
- Jewelry
- Other items of value
Liabilities include:
- Credit card debt
- Student loans
- Mortgage
- Auto loans
- Back owed taxes
- Furniture payment plans
- Other debts
Find Out:
Net Worth Example
Let’s say you have the following assets:
- $400,000 home
- $10,000 car
- $10,000 cash
- $50,000 retirement accounts
But you also have these liabilities:
- $350,000 mortgage
- $15,000 car loan
- $5,000 credit card debt
Based on this scenario, you can take the assets of $470,000 and subtract the $370,000 in debts to get to a $100,000 net worth.
What Your Net Worth Should Be Based On Your Salary
Your net worth should be different from others who make more or less money than you. If you don’t have a high income, don’t expect to have the same net worth as someone making $1 million per year. You can still build wealth — but at your own pace.
Also, your net worth should grow over time. So, even if you make a high salary at age 23, you might have a lower net worth than someone with a lower salary who is 53 years old.
Net Worth by Salary Example
For this net worth by salary example we’ll assume you’re 35 years old and have been saving since you graduated college at age 22. This means you’ve had 13 years to grow your net worth.
And while most careers grow in salary over time, we’ll assume you’ve earned the same amount every year since you graduated. And you’re investing the amount you save each month with an average return of 5% annually.
Here’s what your net worth could look like based on your average salary.
| Salary | Savings % | Monthly Savings | Total Saved | Total Net Worth |
| $30,000 | 5% | $125 | $19,500 | $26,569 |
| $40,000 | 7% | $233 | $36,400 | $49,525 |
| $50,000 | 10% | $416 | $65,000 | $88,423 |
| $60,000 | 12% | $600 | $93,600 | $127,533 |
| $70,000 | 15% | $875 | $136,500 | $185,986 |
| $80,000 | 18% | $1,200 | $187,200 | $255,066 |
| $90,000 | 20% | $1,500 | $234,000 | $318,833 |
| $100,000 | 22% | $1,833 | $286,000 | $389,614 |
| $110,000 | 25% | $2,291 | $357,500 | $486,965 |
As you can see, the higher your income, the higher your savings rate should be. This impacts how much you can save in total and how much your investments will grow.
Now, this assumes your money is either invested in the market or going toward other assets like principal home mortgage payments. Both of these things will increase your net worth over time.
What Should Your Net Worth Be By Age?
Your net worth should grow as you age, and the closer you are to retirement, the higher your net worth should be. Another way to calculate what your net worth should be is based on a multiple of your income. Fidelity has a suggested income multiple for your net worth based on your age, which we’ll use in the example below.
Here’s an example of what your net worth should be by age based on a few different salary amounts:
| Age | Income Multiple | Net Worth Based on $50k Income | Net Worth Based on $100k Income | Net Worth Based on $150k Income |
| 30 | 1x | $50,000 | $100,000 | $150,000 |
| 35 | 2x | $100,000 | $200,000 | $300,000 |
| 40 | 3x | $150,000 | $300,000 | $450,000 |
| 45 | 4x | $200,000 | $400,000 | $600,000 |
| 50 | 6x | $300,000 | $600,000 | $900,000 |
| 55 | 7x | $350,000 | $700,000 | $1,050,000 |
| 60 | 8x | $400,000 | $800,000 | $1,200,000 |
| 65 | 10x | $500,000 | $1,000,000 | $1,500,000 |
As you can see, the more you make, the higher your net worth will be. And your net worth should grow by age so that you have enough to retire on.
And while net worth is important, if a majority of your net worth is tied up in your primary home, you may not have enough income from your investments to retire on. It’s a good idea to meet with a licensed fee-only financial planner to ensure you’re on track for retirement and that your net worth is trending in the right direction.
Caitlyn Moorhead contributed to the reporting for this article.
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