Average Net Worth by Age (How Do You Compare?)
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Have you ever thought about how your household wealth or annual income stacks up to others your age, or even how others made their first million dollars? Today we are talking about network, what IT is, how to calculate and what a healthy network looks like in 23 and b。 Hello, hello, hello, and welcome to the bigger pockets money podcast. My name is maddie jensen, and with me, as always, is my plaid fanatic cohoes sketch.

It's a great it's great to see this wonderful pattern we've established with the art bigger pocket money. Bigger pocket is a goal creating one million millionaire are in the right place if you wants to get your financial house in order because we truly believe financial freedom is attainable for everyone no matter win or a where you're starting excited to get to the short day we're gona talk data. We're going to look at the average medium and top one percent wealth by age bracket. What's the top one percent wealth in your twenty thirties, forty years, fifties and sixties and get into IT and will have some discussion about how people get there to these are brushes and accelerate the in journey.

Funny you should say that's got A I just asked, do you ever wonder how others made their first million? So i'm going to put you on the spot. How did you make .

your first million? There is a couple of things that that accelerated my journey. So um I started my journey in twenty fourteen and I started by making fifty thousand dollars a year. And over the next five years, I able to increase that uh income to close to two hundred thousand dollars per year. I get my expenses low the whole time and I serial house actually I invested um into the stock market and that come pounding over about five six years enabled me to cross the million dollar mark shortly before thirty five, twenty eight, twenty nine.

So I had a bit of a different jury. You had the benefit of mister money mustache when you were starting your journey. I did not I will say that our journey probably started in two thousand, two when we got married and we got to our first million just before carl turned forty.

And I don't even know what yeah that was. It's been a minute ten years ago, eleven years ago. Um so IT took us a little bit longer, but we also weren't really focused on IT either.

We were saving for the future, but we didn't really know what we were saving for. So we weren't saving as aggressively as we could be. We were investing rather aggressively, but in a not the same type of of aggressive investing as a typical fire inherent wood.

Uh, we got there through accommodation of spending significantly. Lesson we earned. Carl was a high income earner. Uh, being a computer programmer, I was not a higher commoner to just say that I find IT up for in case. And but we we spent approximately in my salary and saved approximately his salary.

And we did IT through a combination of live in flipping and taking the proceeds from that, rolling them over to a twenty percent down payment after next house and putting the rest in the stock market. And we just kept compounding that. And our first million came eleven years ago, and IT has doubled and doubled again since then.

You I like your journey a lot Better than mine and a lot ways because it's, I think, about the luck that was in major right. I joined to start up as the in third employee and took over a CEO, which allowed me to drink this guy rock in my income. I bought a bunch of rental properties starting in fourteen leading up to twenty, twenty, twenty one, twenty two around that and ride of appreciation.

And even the stock market was a big tale over that same time period for the all the index science put in like everything that could go on right for me at the highest level, the most metal things went right. And so there's a good bit of like OK. How do you know I want to be cautious about those things? Some good place in there, but there's also a tremendous amount of luck um on that front.

And there's always different ways to think about how how the career could go in some of this. So I I don't like your journey is much more repeatable, I think, than the one I been on. Maybe actually like to kick off something here that wasn't even on our our little agenda here with a quick, with a quick preview.

This is a sighting like a lot is called a visual capitalist that com, which just cuts and fund stuff to show there. And this is a chart that I think really made a difference to me. This is updated church now it's a couple years old. There was two thousand and seventeen.

But remember looking at this as I was doing um the my portfolio planning and thinking like huh this is really interesting and for those living on a podcast, don't worry, I will just to start a chart and tell you this is interesting and leave to wonder. But this is this is A A composition of wealth diagram and IT shows how the middle class invest their assets and how the ultra rich invest their classes, their assets. And then he throws in this upper income group in the middle, and you know, the whole class is defined as year to five hundred k and the ultra rich is defined as ten million plus network.

And the most striking difference here is that the middle class, most of their were network. Sixty two percent is in their primary residence. And for the ultrarich, the vast majority of their wealth, or about half of their wealth is in businesses, business equity and real estate.

That is not the primary residents. Ts, and then stock, securities, mutual funds and trusts. And guess what, the people between five hundred thousand and ten million hours are right in the middle.

They have about a quarter of their wealth in their primary residence and a quarter and businesses or other real. But this is what this is. This really struck a cord with me.

You know, years and years ago, what I saw this, and really kind of put me in this high conviction place, like if you want to get into this upper ashes of wealth, you can hold all your wealth back in your primary residence. You have to be developing a business or real estate equity over time. Compounds and compounds and compounds.

And this is going to be the big difference like that. There's one chart that is how your capital should be deployed. That's that's gonna. Yet chance at least to get in these up relies, it's this one and showing that wealth is built, the wealth fee at least have built their wealth in businesses, private businesses, real estate and stocks um all the things that we talk about all day long here on bigger pockets. mine.

And this is not a guess, right? This is based on data.

This is based on data. Now a little date, I haven't updated one that really does this good a job of diving into the wealth of americans on this. This is from two thousand and seventeen possible.

The mix has shifted but come up IT hasn't shifted much. This story is still the name um in twenty twenty four. Another issue with the data that we're gna discuss even today is that the federal reserve comes up with studies for american wealth every couple of years.

So the last major study on as was done in twenty, twenty two and twenty three and the next one be dead until twenty twenty six, that's a constant problem unless they're finding somebody is doing original research, very expensive, very large scale polling of americans. You are going to find wild variations if you get look for like the updated networks numbers in twenty, twenty four, twenty five. So are being a little a bit of a look back.

There is always A A bit of leg on these things. But I still think the story is the one that relations struck a core with folks who are watching on youtube. Placing on the podcast wave is built by alter rich in real state private businesses.

And something that is fascinating. I ve never seen that before. I'm glad you chair that with a sky. All right, let's start off and define what we're talking about.

What does net worth mean? Simply put, your network is the difference between what you own and what you own. So the formula is really straightforward. Your network equals your total assets minus your total liability.

So your houses worth a million dollars, but you have a five hundred thousand dollars, mark jon IT, that's five hundred thousand dollars in that worth, not a million dollars that worth. And speaking of house, Scott, does my house count in my that worth? Some people say yes, and some people say no. I wanna know what you think.

I think this is an an Angell argument. And the answer is, of course, yes. Home accounts technically towards network, but in many cases in bigger pockets, money. We talk about how the primary residence release to this middle class chap, if most of your wealth is in your primary residence, probably aren't gna join that the upper islands of wealth creation in america, once you get something else going on like a business cooking um because that that primary resonance is not going is is is is not really an asset that is gonna inflation. Your wealth over the long term, it's more, I believe prior residents should be thought of as an expense.

And when you're thinking about retiring and how you're the portfolio can lead to early financial independence, I think you should generally default to excluding your primary residence from your network equation. And a lot of research agrees with that. That's why the researchers that we're going to look at today has two snapshots of your network, one with your primary residence and one without a primary residence. And that presents both data sets because of that dynamics.

We need to take a quick break. But while we're away, we want to to hear from you, do you know what your net worth is if there on the spotify APP or below on youtube will be right back?

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Welcome back to the show.

I get what you're saying but in a pinch, if I needed to access funds, I could sell my house. Yeah i'd have to find some place else to live. I would probably go rent or by another house um that also presents interesting problem though um my house right now is probably worth seven fifty and I paid three sixty five for IT.

There's a significant delta. I value IT lower like on the conservative side when I am calculating my network and I only calculate the home equity in the property, not the entire seven fifty. But I care I don't do that math quickly. But whatever the differences that is, my I add that to my network. But yeah, that does create a middle class trap if I didn't have other investments because, oh, look, i've got four hundred thousand dollars in that worth, but it's all set up in my house, especially now where I wear in this higher interest rate environment. My mortgage payment is thirteen hundred dollars a month. So if I were to sell this house and go find another house, if I just got a mortgage, i'm going to be taking on a significantly higher monthly expense every month, which I think this is a different kind of trap, the the home equity trap or the home the primary home trap where you've got to the interest rate trap. We need to come up with some clever name for this.

the lock in effect.

the lock in effect. Oh, well, that's I guess there's a name for IT then ah the lock in effect, I am I am a little bit behold into the lock in effect, not because they couldn't afford the other more expensive property. I just don't want to pay more. I like my house.

Yeah, I mean, this is a problem that millions of americans were rambling with. And you know if if the way I like to frame the debate about whether you should include or not include your home equity in the network calculation as a relates to financial freedom is what you're intent is with the house like that, you're forever home and you don't plan and selling IT and your plan is to retire in your home.

Don't count your home equity towards night worth. It's not gonna produce in a casual there. You can use a paid off home or whatever to defy the expected of.

You have no mortgage payment of, 对， build a portfolio capable of generating cash to cover the mortgage payment, their advantages to having come back when you're paying off a house. But I just wouldn't put IT you need to build an asset base outside of IT. And if you would look at your network strictly that way, I think you're onna be make a lot Better decisions that give you Better financial flexibility. Um then if you overweg the value of your home related to your freedom, your ability to stop working for a paycheck.

that's an interesting take. I like the way that you are framing that. So Scott, I know that you have rental properties and primary residents. Do you include your rental property equity in your network but not your primary residence equity?

I do now because I I never had a primary residence until now, right? Because this is the first year i've had. I've always had house hack investment properties.

I think the word intends really important. I've got a as a house hack intending to keep IT as a rental property. I absolutely include a rental property in my P.

N, L. And I would sell the rental property if I thought that there is a Better investment alternative. The purpose of the house tech was to create an investment property that was part of my long term. My investment pool IT was never intended to be my long term house.

And so I do think it's fair to include a house hack or if you're in the process of a live in flip, the quality in those because the intent is different than to resign in the house for the long term, should should be realistic with your with yourself. Is your house in an asset is a part of your investment port folio, you intend to generate income from IT? Or is IT not and treated accordingly? Ly, but it's an art, right? It's technically party your network. So that's little bit I have.

Do you know what? This is a great question to ask our audience. So do you think your network should include your house, your home equity or not? Please leave an answer below on our youtube channel if you're watching this on youtube. So Scott, do you think people are getting anything else wrong with their when they're calculating .

their network? You know I think yeah I I don't include me personal facts. For example, my network, some people do uh, around that. I think that if you listen a bigger pockets money and you use a nap like mona or something like that, you're probably get ta get pretty close to computing your vehicles.

You know you can you can you know I I won't necessarily include um you can, but I think it's kind of the same deliver as the house appreciating asset. It's not really part of the investment portfolio and the vehicle unless you're put him on tero or doing something crazy like that, delivering for ruber is not really going to put cash in your pocket. So I think I would exclude those as well on there.

Um you know I wouldn't include a boat, you know certain other things like things that are not going to put money in your pocket, that are toys or or or vehicles. I wouldn't include the network tap and I really be strict. And when i'm thinking about my my real network, the wet network, that's going to help you move to our financial freedom in only including assets that expected to appreciate value and or produce cash well. And I think you're going to, again, make much Better financial decisions if you treat your net worth that way and treat the the boat of the cars as the the practical, the appreciating asset to the toys that they probably are.

I asked in our facebook group, what are you include in your network? And I see people, a lot of people, saying cars. I saw, uh, woman name's melani said everything except cars, uh, everything is a cars, jewelery and household goods so, uh, somebody else says, just equity positions.

There's all sorts of different answers. And I think it's really interesting how how people instead, once smart alex said bd baby's pokemon. One thing that I do think is .

going to be interesting outside of these categories, that is business asset. A lot of the ultrawealthy, the top one percent by netware are onna have private business interests. And I betcha that the numbers were going to look at today for the top one percent are way understated because if you have a private business, you're probably not valuing IT on your personal baLance sheet um at a super higher inflated level.

When would you suggest somebody start tracking their network immediately?

You should if you just started talking yesterday, the best time twenty years ago, the next best time is today, if really think the bigger pockets money and you'll track your network, you know this is not the episode for you. You should go and start doing that. You go back. We have several episodes de that and that should be your immediate practice right now because there's no point in trying .

to play the game. You can even keep score. Oh, wow, okay. Well, you can email him, Scott, at bigger pockets on. Okay, Scott, what do you think is the minimum network to be considered rich? One million dollars.

I I think fires the number and i'm going to put that number between one point five for a low cost living area and two point five to a medium to highest cost of living area for ultra high cost living areas. The number goes up in there, but I think it's one and a half to two and a half million is the the baseline number to be to be rich at that point. You can fire modestly or earning a middle middle class job plus the asset base you can have. You can do anything you want, but you can do everything you want. But with your answer that I was.

I was joking and quoting Austin powers when I said one million dollars, but that's where I at right now, is if you have a million dollars year, million air and million air are rich. And just because you have a million dollars doesn't mean that you're going to be able to retire. But I you know, i'm a little older than you and i'm kinds stuck in the past where going from nine, nine, nine, nine, nine, nine to a million is a big deal uh, so I consider a million dollars to be rich.

I think million dollars is great answer to IT. I bet you I I wonder what the the audience feels like um uh is rich to them yeah.

As we're going through this episode, I would love to hear your thoughts to all of these questions. So hit me below. Email media bigger pockets, ts t com, email Scott, a bigger pockets that com, or hop over to our facebook group.

facebook 点 com， flash groups, flash B P money, what there's like. No real rules to this. We are going to show data sets that have these these numbers on on there. How do you feel about us even talking about benchMarks for love creation?

I love benchMarks. I love having a goal to work words because when you don't, it's really easy for dollars to slip out of your pocket here and there. Oh, I whatever I don't have to worry about you know buying that coffee or going out to dinner, buying beer for everybody at the bar or you know, whatever you're spending your money on what you .

think about benchMarks, I think that they're really good ideas for what's attainable. Um what's possible in various brackets and and some folks, I think like me, need to have a little bit of competition in there, see how we're doing against that kind of stuff.

That's why I like you know, it's hard for me to just like run on my own, but I love hello top ten for example, because I can see you i'm going i'm in the I am out of shape by more in the this percent tile and I want to get into that percent tile and taken back like them. I think that helps motivate certain types of folks. And I think this is a good data set for some folks, and I think I can also be problematic for folks. So that is demotivating to that just depends on your personality. 问 了 the 投保 机 所 哪。

That's true, although I think I have a little more competitive than than average. And I would want to like I would want a game to find IT. Oh, i'm supposed to have thirty seven and eighty four.

I'm GTA win. I'm going to get thirty eight. I'm going to get thirty nine, forty four thousand.

So a couple of things that that I think stick out about this this data set here are and let's start with with folks in their twenty years. This is this should be and is the most extreme um differences, right? Like at a twenty year old in college probably doesn't have a lot of network and what maybe maybe they worked in high school and save ups and cash, whatever. But you look at a million of thirty one thousand dollars in that worth and a twenty nine year old who has started spending their twenty building a business or going into some you feel like investment banking and is starting to begin approaching those higher income levels. You know that's where you can possibly get to this kind of two million dollar network by that point from probably through some sort of business or elite te income generating activity like a sports profession, a big scale um or some of these highly illustrative private equity investment banking jacks on there said, you know I don't know what you what do you observe about the twenty the the contribution of wealth for twenty year old people in the twenty.

the twenty year olds in your twenty, more than any other one of these decades in your twenty, you are starting off either just having graduated high school or you're in still versus by the end of your twenties. Ten whole years in your twenties is a very different time period than ten whole years in your thirties or forties or fifties just because of the life changes that are happening in that decade.

Uh, so having a two million dollar network as the top one percent verses the bottom twenty five percent has three thousand dollars in network I can see um I would encourage anybody looking at these charts to keep your eyes on the bottom twenty five and the bottom seventy five percent because those are going to be like between three thousand and one hundred and thirty thousand I think is a more realistic ideal. Not everybody is going to be in elite ite athlete. In fact, a very few people make IT to the elite athlete tear.

And even fewer are mark za berg starting facebook in his twenty. So, you know, I think that those and he's not even two million. He's like two billion um between three thousand and one hundred and thirty thousand.

That's a great benchmark. That's a great goal. And twenty one years old, I have a negative network. okay? Well, the bottom twenty five percent actually has an average three thousand dollar network. So I would like to do what I can to get myself out of debt as soon as possible.

So I can start building my positive network if you find yourself in debt, and there are other options you can choose from, besides just taking your w two money and throwing IT at your debt, I would encourage you to do that. Start a business in your twice because typically in your do is especially your early twenties, you not married, you don't have kids, you have a lot more flexibility in your time to put into starting a business. If you need an idea of a business to start, go on youtube and look at literally every person there because there is something that you can do online or even in person that is reflected on youtube that will generate income and stay .

tuned for more after a final break.

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let's job back in. I think that's the right answer here, right? Like you're listening to bigger pockets money right now. You're not listening to uh, the chain smokers or whatever the kids listen to these days of junior chinese um on that.

And so you know like like what's the goal? The goal is surely to be in the oppressions of the wealth distribution scale um by the time you're done your twenty years heading into your thirty year. And I think that's right. I think I think that the the lesson learned here, if you're just getting started, is take that shot and business you might lose you might not go well, but you can get almost impossible to get into the top one percent without doing something like that and that cash. That's why um I talked about this in the past, but I believe that the twenty two year old just graduating college is starting out in the work force should focus on just saving up cash and using IT on a business opportunity. Health ck or some project like that supervision for go that four a one k or the rough I R A for the first year, three while that's going on there and see the opportunity because that opportunity is not gonna be there in the same sense if in authorities and and four days you decide have a family, have kids and and life starts to to catch up a little bit, it's just that's the unfair head start that you can get uh in those early days and that's why you're going to see this the most extreme distribution um or or or scale distribution um of of wealth in this racket in someone s twenty .

years your dream job. You are business that you start doesn't have to be this sexy, amazing new thing. You can just go to these boring businesses.

Uh, cody sanchez talks about boring businesses and how those are the bread and button of her networks and just buying these boring businesses in doing this boring work. This this solid work can generate a lot of income in your twenty years. Absolutely focus on increasing your income, paying down your debt and starting aside business. Starting a whole like the best time to start aside business is when you're already employed because then you can take some risks. And if IT pays out awesome and if IT doesn't start again, I got what is your quote if nine at us, ten small businesses failed, start ten businesses.

You do that starting at age twenty two um every two and a half years to go through two ten bets, you can have two very successful outcomes by the time you're thirty. Uh if you try one debet over the course you're twenty years, which is a very realistic goal. Sometimes gna work at that point in time.

You your hit rate if you try twenty, is going to start getting Better than one in ten, right? I like a lot of people with no business argument, no ribs behind them are starting a business may fAiling and they give up. But when you start ten businesses probably going to start hitting on business seven, nine and twelve on those fronts.

And that's that's a really powerful dynamic, and that's why you're seeing this this distribution for going up here. One thing that did take me by surprise, the data that is at the bottom cortile of wealth and some is still positive. I would have guessed that would be negative.

Oh, that's interesting. Now that's with the primary residence. Without a primary residence is much closer to zero.

No interest there.

Yeah, that is very interesting. I think it's an average. One thing I would rage anybody in their twenties to do is max out your rough I R A every year that you possibly can because that's when your compound interest is going to really have that start taking that hockey stick effect, uh or start to lay the foundation for the hockey stick effect down in your, uh, forties and fifties.

But your your routh array is do you paying taxes now traditionally, you are typically you're going to be spent paying a lot less in taxes in your twenty years, then you will in your thirties and forties. So you're paying taxes on a lower amount. Uh, going in IT grows tax free and you withdraw a tax free so get as many dollars as you possibly can into rah L A and twenty.

Yeah I think that's right. I think I think after you've got enough cash to be able to take advance of a real state in our business opportunity, like what I did is I spent the first two or three years not doing that, even though even that part, but just stuck on a cash to a house hack and try some business ideas. And then after my inconvertible wing i've done that, i've masked up my my rough for 1k uh h every year。

Sense and you had a plan. I think a lot of people aren't contributing to their retirement accounts in their but also don't have another plan for that money. OK. Scott, let's move on to our thirties. In your thirties, you are ideally building upon the foundation that you set in your i'm hoping that you are now debt free or very close to IT, but if you're not debt free that you have been investing while you are going through your debt payoff. Um what advice do you have for someone in their thirties who is coming in closer to the bottom twenty five percent, the eight thousand dollars network if they don't have a primary residence or the sixteen thousand dollars network they do?

There's no reason that if you're starting in a medium or bottom cortile, you can expect to move up a cortile or two cortile twenty fifty to seventy fifth percent. Alright, for the someone thirties that would be starting your thirties with, you know eight thousand dollars and ending with close to two hundred thousand dollars.

It's a lot more of a stretch to think you're gonna go from eight thousand to six hundred and forty five thousand dollars by the thirties, but you can move to that that as on and then have a great crack at ten to close to a million dollars and ninety percent by forties and moving up those those games. So I think that's how I would be thinking about this. And he goes back to the place, right? You know I think that a lot of I would imagine, but there's there's the economic starting gate here, which is, I think a median U S.

income. So if you're not learning a median U S. Income, there needs to be the the, the workload put in for probably two to four years to develop the skill sets that can get you to that point.

Once you're earn a median income, it's about the frugality and allowing that take spans likely to move, got these buckets in those basics and blocking, tackling. But that begins to compound as you can move into the sixty fifth, seventy fifth percent, all from an income standpoint, which should be achievable over the course of a decade or so. And that will setch up to really move again in that millionaire atas by the middle end of your forties. And how I probably be thinking about IT in my in my theories, if I was sitting there at the the bottom .

cortile on that front, yeah, I think now is when it's really important to keep track of these benchMarks. And just because you're not in the same level as these benchMarks doesn't make you a bad person of i'm not trying to sit here and say, oh, if you're in the bottom of twenty five percent in thirties in your a terrible person but if you're in the bottom twenty five percent and you're in your thirties, your chances of retiring early are very slim so let's start looking at these benchMarks.

If you're not quite at eight thousand in in your thirties, what are the circumstances that have surrounded you not being there? Did you are you a physician? And you just like you specialize and super specialize and hyper specialized, and you're just came out of school.

I'm not talking to you. Are you a teacher? I really, really wish we pay teachers more. What other things can you do to add to your income to increase your income so you can start saving more aggressively, but also look at the circumstances surrounding your spending.

I I don't see very many people who don't have something to cut from their expenses that would not affect their life a lot. Um I think there's just so much mindless spending because I deserve IT or I thought I was cute or everybody else is doing IT. And I think in your thirties, if you're not in the fifty to seventy five percent network bracket, you should be doing everything you can to tighten up your expenses and increase your income.

I agree. I think you know what, we're bigger pockets. So off in a real state player too. I live in flip or house hack can make a big difference what you do. Two of them over the course of a decade. I mean, that as could be that could add hundreds of thousands of dollars to the network and bumped a pretty material, pretty close to you, get the other side of a million, even if you're starting from scratch. If you can spend the first couple years your thirties, amazing, even fifty year one hundred k in liquidity um uh to to be as a downpayment on the first second mindy, if you don't make me asking where did where in your thirties you starting your thirties? Where would you have been on this network scale?

Way to put me on the spot, goat. Um I would probably be in the top seventy five percent in my thirties I did have a primary residence. Um I would say three to four to five hundred thousand dollars in that worth.

Okay, great. And and IT would would be fair to say that you're now in the ninety five plus percent time of network orage.

Gp, I am in the ninety percent time.

What do you think that journey was conducted of your and right .

and into my fifties?

What do you think you did to move from one like that kind seventy five percent of of the .

ninety cent we invested in the stock market. We got intentional about our investing. We got intentional about our spending. We got intentional about our house flipping. And we started paying attention when we were in the seventy five percent time we were saving for a retirement, but had made a couple of really great bets. One of the early bets that we made was google.

Um my husband was a computer programmer and he asked somebody in his cubical, do you know how to do this problem in computer programing? And the guys like, no and cards like, uh, okay, he reaches up to get this giant, the computer programing book and the guys that will just google IT and he said White, because this was not when google was a verb. He said, just google IT in I don't know what those words mean.

He said, go to google dot com and type in your your question and like the guy had to show him how to use google the first time and IT came back with the answer like that. And he's cars. Like this is the greatest website in the history of the world.

And he started following IT. He started doing research on that. He started looking into IT a lot more and became a little bit obsessed with IT.

And when they announced that they were doing an IPO via a dutch auction, instead of, you have to know, a investment banker in order to get in, he bought shares in google, and that has exponentially increased in value. That has been a really great bet. And I don't want to give stocks, tips or hot stock advice, but carl did the research.

He had used the product. IT was unlike anything else that he had ever seen before, and he believed in that product, but he also didn't put our entire that worth in that one stock. So there were several key stock purchases because we didn't know what index funds were. There were several key stock purchases that happened in our thirties that propel us into the ninety fifth percent tile in our forties and fifties.

Yeah OK. So the answer is to how to go from seventeen to the ninety six percent is to investing google.

Investing google when you're thirty, when it's IPO.

And then as a byproduct of that, the shape of your network, I bet you change to be much more effective of the wolf that that we showed up the early earlier part of this of the super red track where much the wealth was in um equity in real estate, then in the primary residence over that course, that journey.

right? Yeah I would say we are fifty fifty stocks and real state. And then of that fifty percent in stocks is probably fifty percent in individual stocks and fifty percent in index funds.

And we are .

slowly extricating ourself from the stock portfolio and putting IT into index funds. But you know that you head on capital gains and all sorts of fun, nice problems to have, taxes and and things like that. But we we really like the the stability of an index find I have here as .

well as how many years in the journey to your financial independence ARM journey were you earning in the top one percent of all americans?

What is the top one percent? I think it's .

over six hundred and fifty thousand dollars, but that would have progressed. That would have dressed over the last ten years, right? I would have adjusted inflation.

So you know so many years where you can close to being a top one percent on that journey. No, I love how you use laughing at that, right and and I think that that's like a miserable here is is sure. Yes, income is important and driving towards network journeys.

But I read a that that um eleven percent of amErica that basically no one stays. Very few people stay in the top one percent of the income, others on a consistent basis. Top one percent is very dynamic and people go into and out of IT.

I think there's a set of reading here um from an article is that eleven percent of americans will join the top one percent for at least one year during their trim working years, age twenty five to sixty, but only five point eight percent will be in there for two years or more. So most of the people that are even in that probably top one percent network by age, aren't sitting in there making a huge income. Of course, there will be people that are doing that, famous athletes, rock stars, Taylors with whatever around there. But that is not, that is not bio large, not the bioproblem of what is getting people to the network is is a sustained elite ite level of income. They probably all earning a high level of income, but it's more to do with, I think, the expense profile and how you invest that put in the top one percent of wealth holders in this country .

what you think I think you're spot on. And i'm trying to think of all the people that I know who are in the ninety ninety five percent income, I am sorry, uh, wealth brackets and they none of them were in that six. I don't know anybody that makes six hundred thousand dollars a year.

Here's another one. This is a cora. Say, how accurate that is. So ninety four percent of americans are reached. The top one percent will enjoy IT only for a single year. Ninety nine percent will lose the top one percent status within a decade.

wow. And that was that network or is that income? And yeah, I don't want to work hard enough to make six hundred thousand dollars a year. That's that's like I don't need six hundred. I if would spend the money I have, I don't need to make more.

I'll put this out there. I I have made a top one percent income in two years out of the last time and I had to work very, very hard uh, in those particular years and give up quite a lot in order to do that to be realized. So Scott.

let's move into the forties.

Yeah so I think what's interesting here is at the extreme and the the top one percent, we're really starting to see separation from an income perspective. So i'm looking different day at here to to pull that in. Um but in in under thirty five, the ninety ninety percent tio top one percent you have to earn four hundred and sixty five thousand dollars per year.

When you get into the thirty five to forty four year old bracket you have to earn over a million dollars year one million sixty six thousand dollars per year to be in the top one percent. So the income rely the, the the spread from an income distribution is even more extreme. In the and forties and fifties and eight days about the same.

Yeah, fifty, forty, forty five to fifty four, one point three. Forty five to sixty four one point four, fifty to sixty four one five to be in the top one percent million. So there's a much that when really people really come into their own terms of their their maximum income generation potential, especially at the top of the food chain. But what surprising is how the spread between the net top one percent net worth is not as high uh, on this. And so that needs me to believe that even as people really come into their own from an earnings perspective at the apprehends of this, um the expenses must go up as what that's probably when we buy in the really house the ruin his car, the private school tuition or those to the other types of things you'd expect there to be a larger spread business income distribution that I just I just changed up. So that was most interesting take away from me looking at the data set in the forties.

That is really interesting. And I would you I just think of the forties as as kind of an extension of the year thirties. Um you're continuing to build, you're continuing to save and invest and you keep an eye on your expenses in your forties because that's when IT really can be easy to creep out into those expenses.

Oh, well, all of my neighbors got a new car. I should get a new car too. I neighbors got a boat that looks like fun.

I wanna go skin all the time and the guys at worker always going on these lavish vacations. If it's not something that you value, then don't buy IT just because everybody else is buying IT. I think the forties is when you can really start to see some lifestyle creep ah so just keep that in mind.

Um Scott, i'm going to talk about your fifties since you're not actually fifty yet um in your fifties retirement is getting closer. Look at these networks numbers in your fifties the bottom twenty five percent is less than one hundred thousand dollars that makes me a little sad for people to get to their fifties and not even have six figures in that worth yet. That doesn't mean that retirement is never gonna en.

We've talked to ll of people who have been able to retire in about ten years, starting from approximately a zero dollar network. So even if you you're listening to this in your fifties and your network is on the lower end there, there are still hope for a traditional retirement. They're still hope even for A A slightly early retirement.

Um here seventy five percent five here is already one point one million dollars. Ninety f percent tiles, two point six, ninety five percent tis five million. I would I kind of surprised that that's the ninety five percent tile.

I would think that the ninety five percent tile would be a little bit lower than that, more like three or four. But so five percent of americans, oh, I like reading this wrong. Five percent of americans have a five million dollar networks or higher, the fifteen million million netware. I'd like to know who those people are, but again, your fifteen is is a whole ten decade, ten years. So whole ten decades, sometimes IT feels like ten decades ah, especially when you're teaching your daughter how to drive.

One interesting hypothesis I have about this age racket too, is that's prime ears. The the, the type years, very good. One thing. One thing is interesting about the fifties is that that is, I believe, the typical age that into the one sixties when folks retire or retire when they inherit wealth um from from parents, for example, uh on there.

So I think that that's probably playing a factor and why we're seeing such a big job and not more than doubling or almost doubling of the wild from a point seven to fifteen. And we see less of a jump in the next decade. Um combine with high incomes ing on potential. I bet you that that's causing A A chunk of this .

yeah you know what's got that's a really great point. And looking at these numbers between the fifties and the sixties, that is unless you're in the top one percent, there's almost no growth, there's almost no movement. In fact, in your sixties, the bottom twenty five percent is actually dropping.

IT is not hard to imagine, for example, someone building up to that ninety six percent time by the time, and there there, in their early fifties, two point six million dollars after career, hard work and and regality in a couple of good investments, and then inherited another two million from family members who behave very similarly to them on over there working lifetime, and that bumping you up to the five million dollar mark, right, like you got.

Imagine that that's beginning to be a much more important part of the puzzle here. Continue to most believe, most most millionaire or self made in america. But I bet you that a good chunk of them, after that becomes of may, then supplement that with several million more from million air parents on that front. So I think that there's a dynamic ic that's going on or need the scene here that someone should study and will have on the podcast when they complete 在这里。

Yeah reach out to us. If you've made that study, we would love to to dive into that. Ah one thing I want to note is that if you are in your fifties and you are considering retiring well before age fifty nine and a half, which is when you can start withdrawing your retirement funds without penalties, uh make sure you have some sort of bridge to fund those.

This is where you want to start thinking about um and even in the afford as you want to start thinking about avoiding the middle class trap, avoiding the all of my network is is locked up in my homework ity and my retirement accounts. You want to start thinking about how you're going to fund your lifestyle from the time you retire until the time you hit fifty nine and a half. Scott, I think this is a really interesting set of numbers here.

I love looking at this kind of data because you know the benchmark that somebody can compare themselves to or set goals for based on these numbers in the twenty thirties, forties, even into their fifties, is really gonna keep them on track. Uh, just knowing what other people have, knowing what other people are making, seeing what other people are doing and seeing how they are investing and how they are growing their network can help give you some ideas how you can grow your network too. I love the stock market. I love real state in the right circumstances, uh, when you have purchased intelligently, when you have purchased intentionally. And uh, I just I think having these numbers is really helpful to people who are competitive or people who are just curious how much in should I have?

I think another another know take way i'll have here from this is, is the benchMarks are really helpful and understanding what realistic care like. If you're in your twenties and you want to fire in your twenty years, you ve got to be in the top one percent. You want to be in your fire in your thirties, you got to be in the top five percent, at least probably close to the top two or three percent.

You want to fire in your forties, fifties or sixties, you gotta in the top ten percent to the top twenty five percent. So IT gets a lot more realistic, uh, the longer that time arizon is. And there's and I think that's that's one way to kind of benchmark or think about this on theirs. Are you willing to do what IT takes to be the top one percent to get there in your twice? Um or it's very much more realistic and reasonable to try to get there in your fifty fifties or sixties um which seems stainless for many millions of americans who do put the work in for a several decade.

Yes, god, the bottom line is if you want to retire early, you are going to have to do work. You are it's not going to fall lunch, your lap, you're going to have to do something, give something up, make different choices that your average american to be able to do something. What does stay frames? They say, live like no one else now, so you can live like no one else later.

If you are spending every penny that comes in, living beyond your means, not paying down your debt in your twenty years and thirties, your opportunities to retire early in your thirties, forties and fifties are going to be significantly less. So you're listening to bigger pockets money. You are probably already thinking about this, but we would love to hear from you where do you fall in this uh network brackets?

Um you can email me and be a bigger pockets a com. You can email Scott Scott, a bigger pockets com. We won't use your name on the air. But I think would be really fascinating to see.

You know twenty five percent of people sent in and said that they're in the top one percent or there in the top seventy five percent, or there in the bottom twenty five percent. I mean, you heard me say I was in the bottle, twenty five percent in my twenty. So there's no shame wherever you are in this, in this a network graph, I would love to hear from you.

Alright, got, this was super fun. So we can add here. Do IT that rap up this episode of the bigger pockets money podcast? He, of course, is this that trend? And I am, I jennen 拜拜。