Your net worth is kind of like a scorecard of your financial progress. Seeing that number march steadily higher over your life should assure you that you're on the right track.
Your net worth is calculated by adding up all of your assets -- cash savings, investments, home value, and other property -- and subtracting your liabilities -- your mortgage balance, student loans, credit card debt, and any other money you might owe.
For someone right out of college with lots of student loan debt and practically no savings, it may feel like an impossible challenge just to get your net worth back to $0. Meanwhile, someone approaching retirement age may wonder if they're truly wealthy enough to quit working. Comparing your net worth to the average person in your age group may reassure you about your situation or motivate you to catch up to or exceed your peers.
Here's how much the average American is worth by age.
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Average American net worth by age
The median household net worth in America is $192,700 as of the end of 2022, according to the most recent data available from the Federal Reserve's Survey of Consumer Finances. Note that's far lower than the arithmetic mean of $1.06 million, as extremely high net worth households dramatically skew the averages. As such, sticking with median net worth is more appropriate for determining whether you're above or below average.
As you might expect, net worth typically increases with age, since you'll have more time to build up savings and pay down debt. That said, some individuals accumulate more debt than savings over time, moving in the wrong direction. Additionally, net worth declines slightly post-retirement as people spend down their retirement savings or donate more of their wealth.
Here's the median net worth by age group, according to the most recent data from the Federal Reserve.
| Under 35 | 35-44 | 45-54 | 55-64 | 65-74 | Over 74 | |
|---|---|---|---|---|---|---|
| Median net worth | $39,040 | $135,300 | $246,700 | $364,270 | $410,000 | $334,700 |
Data source: Federal Reserve.
If you find yourself sitting at an above-average net worth for your age, congratulations. Just be sure you don't take your foot off the pedal and stay on course, and you'll likely end up financially well off in the future.
If you're behind your age group, there may still be time to catch up. Even if you're already nearing retirement age and have a below-average net worth, there are a few things you can do to improve your standing.
How to maximize your net worth
There are two sides to improving your net worth: paying down debt or increasing your savings and investments. Balancing both is essential to making the most of your money.
Debt isn't inherently bad. It can be a great tool for maximizing your net worth over time if used properly.
For example, it often makes sense to use a mortgage to purchase a home. And since interest rates on mortgages are relatively low and easily refinanced, it usually makes sense to keep mortgage debt in favor of saving and investing. The same is often true for student loans.
But if you have high-interest debt, like credit cards, it typically makes the most sense to pay down that debt as quickly as possible. With interest rates often in the mid-20% range or higher, it's much harder to find a better return on investment than paying off your credit cards.
Investing in the stock market is one of the simplest ways to grow your net worth. And with various tax-advantaged retirement savings accounts, the government will help you save and invest your money. Additionally, your employer might offer a 401(k) match, which can help add to your net worth as well. Saving consistently in your retirement accounts is a great way to boost your net worth.
No matter where your net worth currently falls, you have the power to improve it. Consistently paying down high-interest debt and building your retirement savings and investment accounts adds up little by little over time.
