How Does Net Worth Actually Develop Over a Lifetime?

The above graph shows just how unequal our starting points are.

Americans’ Starting Points Are Far From Equal

The 25th percentile is grim.

How Wealth “Accumulation” Goes For The 25th Percentile

If you’re in the 50th percentile, there are the same number of people above you as below. That’s also known as the median.

How Wealth Accumulation Goes For The Median, Or 50th Percentile

In the 75th percentile, obviously, things are better.

How Wealth Accumulation Goes For The 75th Percentile

In the 90th percentile, we start seeing actual wealth.

Actual Wealth Accumulation A La The 90th Percentile

You peak in your mid to late 50s around $17.5 million. From that age, your net worth fluctuates, but stays above $10 million, except that in your 80s it might dip ever so slightly below that.

What Real Wealth Looks Like – The Top 1%

Recapping across those groups, here’s what wealth looks like in your mid to late 60s, what most consider standard retirement age.

Wealth In Your Mid To Late 60s And What It Means For Your Retirement

here’s what the same data look like on a logarithmic scale

The next graph shows what contribution you can expect toward your retirement budget according to the “4% rule.”

And again with a logarithmic scale to see the details for most people…

… we identify a threshold level of initial assets above which households accumulate assets, take on better occupations and grow out of poverty. The reverse happens for those below the threshold…”

A Caveat About The Above Trends

It’s disheartening to see how most Americans never manage to build enough wealth for a decent retirement, and for most, it’s likely not because of poor choices, lack of talent, or laziness.

The Bottom Line