The median household net worth in the U.S. is $121,700, but it’s almost double that for those in their late 50s and early 60s.
According to the Fed’s latest Survey of Consumer Finances from 2019, the median net worth of Americans between ages 55 and 64 is $212,500. The average net worth, which tends to skew higher due to high-earning outliers, is $1,175,900.
Net worth is the value of assets you have in the bank and any properties you own minus outstanding debt (known as liabilities).
Net worth = assets – liabilities
Given that the median U.S. salary is $68,703, most people don’t arrive at their net worth overnight. Very few people start out with millions (or even thousands) already in the bank, and it takes time to save and invest enough that your net worth is valued at more than a simple emergency fund.
Net worth tends to increase with age, since assets appreciate in value over time, and people usually benefit from higher earnings as they progress in their careers. By the time you reach the decade before retirement, you may have plans to finish paying off debt, such as a mortgage, and perhaps even ramp up your investing efforts so you can live comfortably off your savings during your non-working years.
Here is a breakdown of both the average and median net worth across American households by age, according to the Fed:
Household net worth by age
|Age of head of family||Median net worth||Average net worth|
|Less than 35||$13,900||$76,300|
As you can see, net worth tends to peak in retirement, so you might think of the decade in your late 50s as your “final stretch” to earn, but also to plan, save and invest your money wisely.
As you prepare for retirement, looking at your net worth can be a helpful tool in planning for the future. Retirees typically live on a fixed income, usually made up of some combination of social security income and their retirement investments (typically a 401(k) and/or IRA, though many retirees also draw from other brokerage accounts including mutual funds, ETFs, etc.).
However liberating it may feel to imagine putting your working days behind you, it’s not uncommon for those in their late 50s and 60s to feel a slight panic at the thought of no longer earning a paycheck. Looking at net worth can help ease this anxiety, since it gives you a clear idea of what resources you have in your name that you can live on (like cash) or sell if you choose to (like a house, car, boat, etc.).
As you get closer to retirement, there are ways to grow your net worth without necessarily working more. You want to make sure you’re investing and saving smartly.
It might seem obvious, but even in your 50s and 60s, it’s still important to have a separate emergency fund. Keeping your money in a high-yield savings account earns you a little bit more on your cash. The Marcus by Goldman Sachs High Yield Online Savings or the Vio Bank High Yield Online Savings Account are two options to consider. You can also opt for a higher-interest checking account like the Alliant Credit Union High-Rate Checking Account.
Switching to a new savings account might not make you rich, but it’s an easy way to maximize the money you already have. Consider it the “low-hanging fruit” on your journey to wealth.
Next, consider ways to make the assets you have work in your favor. A common step many people take in their pre-retirement years is to downsize their current home or make a plan on downsizing once they stop working. Selling a larger home and buying a smaller house might afford you more cash to live on every day, and/or help you pay off a mortgage faster instead of carrying debt into your retirement.
Also make sure to utilize tax deductions, credits and incentives that keep more money in your pocket each year. This can ultimately help you put more money into a savings or investment vehicle. If you qualify, the Saver’s Credit can give you a tax credit worth up to 50% the total amount you’ve saved in a qualifying retirement account. “Catch-Up” contributions allow workers ages 50 and older to contribute up to $6,500 extra to a qualifying retirement plan or IRA without penalty
Alternatively, retirement might also present additional opportunities to acquire new assets that increase both your net worth and your income. Since credit scores tend to increase by age, the decade between your 50s and retirement might be the perfect time to buy a rental property at lower interest rates and add an additional revenue stream to your financial mix. This could give you extra money to live on in addition to your retirement funds.
Having a high credit score qualifies you for the best interest rates, helping you borrow money more affordably. Credit monitoring services like CreditWise® from Capital One and IdentityForce® help you monitor your credit score so there are no surprises.
Check out our list of best credit-building cards to repair or improve your score.
Last, take these years to shore up your investment strategy. Work with a financial planner, or automate the process with apps such as Personal Capital and Mint that let you view your assets and track how much you have across your mutual funds, index funds, 401(k)s, IRAs, etc. In both apps, users may also include properties with cash value (like houses and vehicles) to their net worth calculation.
Whether your pre-retirement years are spent earning more, spending less or increasing your savings and investing, tracking your net worth along the way can give you clarity and peace of mind.