Since the thread has been about net worth I would imagine most would include it. I've always understood net worth to be "everything you own" - "everything you owe" = net worth. I would also guess that for many of us in the high 6 figures or very low 7 figures, home equity makes up a meaningful percentage of that net worth.

i include mine in my net worth number, but i also have a separate number for cash/cash equivalent that i use for evaluating the FI part of FIRE. I look at net worth more as a "here's how much i'm worth if i died today and my estate was liquidated".

I am always hesitent to calculate primary home into it b/c i have a very expensive home. Have anywhere between 400-900k of equity (lakehouse so values are high variance depending on buyer.)


For me my networth is cheap property, rentals, and cash. My retirement accounts dont even go over 400k.


I am always kicking myself over 401k b/c i was scared stiff after 2008 regarding the market. If i was not...i'd likely be worth 5x as much. That said - eff the markets. I am very risk averse.

i do not include home equity. mainly because neither does the SEC when determining if someone qualifies as an accredited investor.

Frankly, a million just isn't that much. If you don't have a million by 50 (maybe earlier), retirement is going to be tough. I'm not talking just living, but living an enjoyable life with enough to keep you busy to make up for not working (golf, travel, fishing, etc).

$2 million at 65 is living on $80k/year. Maybe a little more longer term if you don't want to leave much behind. If it's in your 401k your taxes aren't changing from making that in a yearly salary. I'm guessing most married couples on here are making that much or more, especially as they are in their 50s.

Home counts for net worth, but long term planning it's only valuable if you're willing to sell. I've got $1M in equity in my house (bought in San Diego at the bottom of market 2011 and more than doubled since), but unless I'm leaving CA, it doesn't mean much (other than buying bottom of market was awesome).

Regarding lifestyle, I think that's a huge thing many get caught up in. I'm kind of in the middle. I made a few million this year, but staying in my 2100 sq/ft house. A few minor splurges here or there, taking family to Hawaii next month, wife got a really nice purse for Christmas, but mostly that money is sent to my advisor and goes to our plan to hopefully retire at 50.

Everyone is different though. I can't believe there are so many people making $25M/year that just stick to the grind. Give me two years of that and let me sip margaritas on the beach the rest of my life. But, most of those people are just wired differently and that's how they got to where they are. They wouldn't enjoy not working as much as I would.

topher06 said:

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Nearly everyone in this thread is "wired differently" than most Americans, and in many cases benefit from fortunate circumstances (even if that is largely driven by their own efforts, guessing we don't have many total bootstrap cases). I agree that $1 million in retirement probably isn't enough for my own lifestyle, but hopefully for anyone reading this thread that might not be making $1 million/year they realize that $1 million in retirement (particularly after-tax savings) would be a massive step up compared to even above-average Americans.

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Definitely this. I'm 44 and we have over $1M in retirement if my pension (which is already capped) is included. Much more than that if you include the house/cars/etc. We have 3 kids and my wife didn't work when they were younger, and then was just part time later (and most of that went to pay for private school). $1M isn't what it used to be - I plan to have $4-5M by the time I retire in 15-18 years and we can live quite well off of that (will likely have more income in retirement than we do currently). Congrats to those who own real estate and/or work start-ups. That can be profitable, but definitely not for me. I like my 40 hrs/week and 4/10 schedule. The additional hours/stress are most definitely not worth the extra income for us.

So I got into the game a little late. I graduated at 24, with $40k in student debt and not a lot of job prospects. Started out in a crappy sales job, but thankfully landed a good contractor position that got my foot in the door in the IT world. Only lasted a few months, but it was able to get me hired by an IT firm in NY.

I'm now on my second long term job (worked in QA at one major company in NY for 5 years), and my first as an employee.

I saved everything I could while in NY, but was still paying off my debt aggressively and dealing with NY COL.

Once I moved to my current job (~3 years ago) is when things really picked up for me. Got a pretty good pay bump, combined with lower COL and killing my debt.

I'm currently right below $300k (age 33), but in good position to maximize saving going forward. (Single, no debt, maxing all retirement accts, and investing heavily.)

So even though I started fairly late, I'm hoping to make up that ground in the next few years.

Upper bound projections have me hitting $500k by early next year and $1M by mid 2025. (Age 37)

But with the way the markets have been, it's hard to say.

I include home value/equity in net worth because I refuse to live in Dallas forever. We almost sold in the fall and moved away but that fell through.

Continue to enjoy watching $2M+ homes being built on pretty much every lot around us. In the meantime, I fight my property taxes and....wait.

I believe listing home equity as a bonus only and not what i would want to include.

I came out of A&M at 26 with two degrees, >$50k in loans, ~$5k in credit card debt, and owing my grandfather ~$14k for a pickup he financed for me. Married an Aggie three years my junior with zero debt in 2008.

Lived and spent like we wanted, saving the bare minimum until we had our first kid in February 2012. Got serious about saving and getting out of debt in December 2013.

Hit $1M in net worth in Summer 2020. Hit $1M in cash and investments and $1.5M in net worth in Summer 2021. We're both engineers and I became a partner in my firm in 2021 also.

Only debt we have now is our house, which we just refinanced in 2021 to a 15 year mortgage. We moved in December 2018 and have about 32% equity at this time.

I didn't come from a wealthy family. My dad is debt free except for a mortgage. He's a retired teacher and widower, with more expendable income than he's ever had in his life. His net worth is probably in the neighborhood of $60K.

My in-laws had more money than my family, but also lived more extravagantly. They inherited quite a bit recently and now live even more extravagantly.

I am so happy I discovered financial intelligence at an early age and preach it regularly to the young people that work for me.

ETA: I'm 41, she's 38, and we have three kids.

Yeah, average savings is mind boggling:

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According to Fidelity, the following is what the average American has saved for retirement:

• 20 to 29: $15,000
• 30 to 39: $50,800
• 40 to 49: $120,800
• 50 to 59: $203,600
• 60 to 69: $229,100

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I can't even wrap my mind around this. So most Americans will live almost 100% on social security which is what for the average person? 2-3k/month?

They live off of social security and other government subsidies / programs. If they're lucky they managed to pay off their residence but most just work until they die or have to go to a Medicare funded nursing home.

i think its just people that were never educated on it. Its insane that our schools dont teach some sort of classes on this from 5th grade and on...

if everyone saved 500k, wouldnt that just drive up the price of everything? just wondering if having so many with so little helps keeps pressure on prices to stay low.

chrisfield said:

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I can't even wrap my mind around this. So most Americans will live almost 100% on social security which is what for the average person? 2-3k/month?

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Completely agree it is insane, but don't forget that they won't be paying for (at least basic) healthcare and they get other poverty-level kickbacks from the federal government. It isn't much different than how the Lean FIRE people think about it... get income low enough to scrape by with a combination of minimal investment income plus federal government assistance (we don't appear to have many of the true lean FIRE types here).

Truth be told I could be the richest man in the world and I still wouldn't be happy, it's not about the money as much as it is about getting it

Foamcows said:

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if everyone saved 500k, wouldnt that just drive up the price of everything? just wondering if having so many with so little helps keeps pressure on prices to stay low.

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Not necessarily. They'd be spending less to save.

But, the point is valid. It's like those that think we can just take all this accumulated wealth from billionaires and distribute it for equality. All that does is cause massive price increases, likely followed by irresponsible spending, etc.

BlackGoldAg2011 said:

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Since the thread has been about net worth I would imagine most would include it. I've always understood net worth to be "everything you own" - "everything you owe" = net worth. I would also guess that for many of us in the high 6 figures or very low 7 figures, home equity makes up a meaningful percentage of that net worth.

i include mine in my net worth number, but i also have a separate number for cash/cash equivalent that i use for evaluating the FI part of FIRE. I look at net worth more as a "here's how much i'm worth if i died today and my estate was liquidated".

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I think when it comes to if someone is actually a millionaire then home should not be included.

Why? because you need to live somewhere.

so unless you sell the house and move all the proceeds to cash, you are most likely going to be spending the same amount to buy another house (or even more).

the only way around this is to rent, but then you are losing out due to Biden's inflation.

I haven't figured out the answer to this one yet.

topher06 said:

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chrisfield said:

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I can't even wrap my mind around this. So most Americans will live almost 100% on social security which is what for the average person? 2-3k/month?

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Completely agree it is insane, but don't forget that they won't be paying for (at least basic) healthcare and they get other poverty-level kickbacks from the federal government. It isn't much different than how the Lean FIRE people think about it... get income low enough to scrape by with a combination of minimal investment income plus federal government assistance (we don't appear to have many of the true lean FIRE types here).

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I think it has to be BS that few Americans can afford a $500 expense.

If that was actually the case, we would be having mass starvation and riots in the streets.

there are so many government payment programs now that alot of people have never worked and will never work- still have a flatscreen tv and an Iphone.

I'm trying to decide what to do once I have a million dollars in savings:

1) buy a condo in Florida and rent it out when I am living around the world (of course that means investing in a second property)

2) renting but then being afflicted with potential inflation and not being able to Airbnb or rent out the place when I am not there

chrisfield said:

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I can't even wrap my mind around this. So most Americans will live almost 100% on social security which is what for the average person? 2-3k/month?

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less than that my friend - I am qualifying for the highest payout possible and it's $3235 at age 67

(I'm currently age 51)

Depends on the house. Some people stash a ton of money in their primary residence due to the favorable treatment of a homestead in bankruptcy. If you have a $10MM homestead, I think a good chunk of that should be counted as part of a net worth calculation.

Quote:

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I can't even wrap my mind around this. So most Americans will live almost 100% on social security which is what for the average person? 2-3k/month?

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I don't think the lesson here is that people are working the same jobs as you and just not saving for retirement.

I think the lesson here is that many people are underemployed/not working and are facing an a high inflation environment (high rent, higher food/gas costs, etc). Retirement isn't an option. This group has gotten large enough to influence the metrics.

True. Their income is so low that the state income tax isn't really a factor while property tax in Texas can be relatively expensive. Also, a lot of blue states have supplemental welfare benefits that I'm sure they can take advantage of.

Between SNAP, SSI, medical subsidies, low income internet/phone subsidies, low income utility subsidies, tax credits, housing subsidies (or a reverse mortgage if they ended up owning a home) and other state/local supplements I'd bet an elderly couple with no retirement savings of any kind is living the equivalent of a $50-60k/year lifestyle.

diehard03 said:

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Quote:

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I can't even wrap my mind around this. So most Americans will live almost 100% on social security which is what for the average person? 2-3k/month?

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I don't think the lesson here is that people are working the same jobs as you and just not saving for retirement.

I think the lesson here is that many people are underemployed/not working and are facing an a high inflation environment (high rent, higher food/gas costs, etc). Retirement isn't an option. This group has gotten large enough to influence the metrics.

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It's both. There are lots of folks in well paying jobs with crap saved for retirement. And this predates any significant inflation. The median retirement savings has been low like that for a few decades, much of which was in an extraordinarily low inflation environment.

you see this alot in real estate and oil and gas where borrowers have recourse debt. You load up the homestead valuation to protect assets.

I can't stress enough to young people how powerful it is to leverage your low fee, company provided 401K plan from an early age. I have gone higher for periods of time, but for the most part just contributed the percentage of my pay that maximized the company match. For me, that is 5% which the company then matches with 3% of annual pay. In addition, they contribute 7% of annual pay to every employee at end of year (my company pays a lower base salary than competitors but I like this 7% I never see going straight to savings on top of base salary). So at a minimum, 15% of my annual pay into the 401K plan every year. I'm 49, I married at age 32, my wife is 3 years younger and works (but only 1-2 days a week from when the first of our 3 kids were born until 4 years ago and now 4 days a week), I'm a spender, have no side hustles or businesses, and I still have a $2 mil net worth (although $500K of that is from house equity). I am far from the incredible saver or investment manager that many on this thread appear to be, and my net worth may not compare - but I am on track for a comfortable retirement and that's all I wanted. Never chased wealth or early retirement but tried to balance living in the now while responsibly planning to be able to maintain lifestyle in retirement. Zero effort other than checking a box on a 401K contribution form, selecting some S&P 500 type funds, and not reacting to market scares or run ups - just let it ride. I am fortunate to have an A&M engineering degree, a decent salary, and received promotions, but the savings rate and stock market performance did the bulk of the work. Could probably retire at 60 but may work a few years more.

On top of the 401K contributions I have 95% only purchased used cars (but a LOT of them), am underhoused perhaps, and my wife is NOT a spender at all. Take care of my own yard, rarely hire a maid, do pay someone to treat pool. Lifestyle matters but as long as money is contributed to retirement fund prior to that paycheck ever getting into your bank account, and you don't take on massive consumer spending debt, you should be good long term.

AggieFrog said:

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cmk10 said:

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i think its just people that were never educated on it. Its insane that our schools dont teach some sort of classes on this from 5th grade and on...

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If nothing else, have them create a spreadsheet and demonstrate the power of compound interest. For the vast majority of students, a personal finance class would be more valuable than just about any math or science class they could take (not saying it should replace them, but it will be more valuable long term).

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It's one thing to say, but another to do. Teenagers and kids have no real concept of time. My 5 yo talks about tomorrow as if it's next week and next month like it's today. Teens and older kids are better at small scale time conceptualization (days, weeks, months) but they fail to grasp things on the order of years and decades. I know I sure as Hell did.

You can give them a spreadsheet and talk on compounding interest, but the implication will rarely sink in because they will struggle with the time scale. You're talking periods multiples longer than they've been alive.

They'll also struggle with the numeracy. As a teenager, $1000 was serious money. $10k was nearly unfathomable. I thought making $40k-$50k/yr was living it up (partially because I was poor). You're also going to be taking about what, to many, are unfathomable amounts of money.

When you're done, their takeaway is going to be that 40 years is forever and there's no way they'll reach $X million just saving a couple hundred every month.