Last week, I asked everyone, What is considered well-off? Well, here is what you said.
First, there was a major overall theme that I didn’t even mention to start off: being debt free! I at least six individuals commented on how being debt free was essential to be considered well off. Along those same lines, several individuals said that having a positive net worth was important – you can have $100,000, but if you have $150,000 in student loans, what’s the point?
A second major theme was passive income. Several readers said that generating a passive income was a necessity of being considered well off. The amount of income varied, but it was still a factor for some, and there were some great passive income ideas.
Another theme brought up was housing. Most excluded home value from the net worth calculation. Also, many said that it was reasonable to have mortgage debt at 40, but it should be paid off by 50.
Finally, several readers commented on how there was no true number. So said cover all expenses plus 20%, others said it varies by life style.
So, what numbers do The College Investor readers’ consider well off?
Well Off At 30:
- No Debt
- Average Net Worth was $207,000
- The Most Common Response was $150,000
Well Off at 40:
- No Debt
- Homeowner
- Average Net Worth was $585,000
- The Most Common Response was actually a tie: $500,000 or $1,000,000. Big range.
Well Off at 50:
- No Debt, including mortgage debt
- Average Net Worth was $1,214,000
- The Most Common Response was $1,000,000. Interesting that it was the same at 40.
So, are you well-off? Are you working on getting there? Do you agree or disagree?
|
Share the Love
|
Get Free Updates
|
This post was written by...
Robert – who has written 317 posts on The College Investor.
Robert is the founder and editor of The College Investor, a personal finance site dedicated to young adult and college student finances. You can learn more about him here and connect with him on Twitter or Facebook.
{ 14 comments… read them below or add one }
That is weird the figure at age 50 is the same as age 40.
Let me help you change that then. I say $3 million in liquid money by 50!
Sam
Very interesting survey Robert! I’d say $1Mil is a little on the lower side if we take inflation into account.
I agree with Moneycone. $1M is low. Interesting survey.I think a $207,000 net worth at 30 is pretty great.
I’m still under 30, but I hope to hit your target by the time I get there!
I just cannot get behind no debt at 30, I just can’t. Why would I pay off debt if I could put more money in my Roths and 401ks? We have a duplex and with it a mortgage but I really do not think I am less well off then a person paying more as rent and having no ownership in their home. I agree with have enough to cover your expenses plus 20%.
Interesting… I’m pretty close to being well off by these standards. Which makes me think it’s a little low… since I certainly don’t feel like I’m almost “well off”. Maybe I’m just on my way!
Is the 30 figure for single or for a couple? I really don’t think I’m going to pay off my mortgage in 2 years, so I probably won’t be “well off”. I should still be pretty comfortable, though, and who knows what will happen between now and then!
Good question. I personally answered the question for myself as a couple (my wife and I). Also, the question was “well-off”. I’m glad you’re comfortable now, and hopefully you will be well-off by next decade!
My defenition of well off is having good passive income. And for now, I am working on it.
Again, I can’t imagine how on earth anyone would have $150,000 or $200,000 by age 30.
If you graduate college when you’re 22 and save $18,750 per year, every year, and have zero debt, you’ll hit that mark.
But how many 22-year-olds (or 24-year-olds, or even 28-year-olds) earn enough to save $18,750 a year?
It’s a bit easier than that usually, because your $18,750 number assumes a 0% rate of return. If both a decent rate of return and a historically typical inflation percentage are factored in, the amount needed to be saved each year to meet the target would be reduced a bit. A diversified set of stocks, bonds, and cash should work well over those 8 years between 22 and 30.
Some engineering, business, and science majors, among some others, that successfully acquire a job within their field could save upwards of $20k/year fairly soon out of college if they were determined.
-Pick simple vacations (beach, camping, etc)
-Live with a significant other or roommate to cut down on shared expenses.
-Cook most food at home rather than dining out too often.
-Keep car expenses to a minimum.
-Ditch unnecessary expenses (if one uses the computer a lot, forget cable tv, or if one doesn’t text a lot, make sure the mobile plan reflects that, etc)
I completely agree with Paula here. I have simply no idea how anyone my age (just turned 24) could save $18,750/year. And I’m saying that from the perspective of someone who is in the workplace and earning a decent wage, unlike a lot of my peer group who are falling foul of an incredibly competitive graduate job market.
It’s pretty difficult to be there by 30 but between 30 and 40 miraculous things usually happen – you get married and if you’re like most people who read articles like these – you’ll marry someone educated with a comparable income as you… buy a home and get more conservative about goals and life plans… and there you have it – combined bank account, combined 401k amounts to push up that net worth. By myself I was around $100k for my net worth, when I got married and both started getting promoted in our careers, bought a home and buckled down by 37 our net worth was hovering at $900k.
We found that as single folks we saved the 16% in our 401k, neither of us had a Roth and we saved some but mostly blew our money on international vacations, stupid designer clothes and BMW’s… paying for all things in cash of course. We didn’t have debt but we also didn’t have anything to show for it.
Now that we’re married and a bit wiser, there’s a paid off Honda in the garage and we only do short domestic vacations. The last time we bought designer crap was more than 10 years ago. Ahh those were the days.
I’d say you should have sufficient passive income to cover all your monthly expenses plus an additional 25%-35% more….then you’ll be well off. Actually there would be no need to work for a living if your passive income covered all your expenses.