1. Awesome article! I like how you applied the millionaire next doors logic and then went deeper into examples. Well written!

  2. Great article. Net worth is all savings and property less debts. The older you are you will own a home and hopefully have no debts. Your income needs are less. Doing that math. I am doing quite well. I did the same using what my salary was at age 50 when I retired. I found out I was doing more than fine then as well. And then I had house debt, and others. I have no debts since I reached 62. This formula is good to check as you age as well.

  3. Insightful and substantive, as always.

  4. 4.55x the formula for our family. I would agree, 2x is conservative. Why seems pretty easy to me though, who would want to continue to sacrifice their time in to earn other’s wealth?

  5. Does this mean a 15 year old should have $150k saved up? A 21 year old just finishing college, $210k? Todd, you’re a smart guy – this formula needs to be further adjusted based on a starting age. Perhaps 15 x (Your Age – 21)?

    • As I stated in the post, it’s just a rule-of-thumb and therefore extremely limited. Regarding your criticism, I don’t know of too many 15 or 21 year old’s analyzing their savings rate as related to their income (not the target market for the post). And as long as you’re picking details, it’s age multiplied by income for the numerator so if they’ve been students their whole life then the answer is zero (not the numbers you listed) so it will actually work well in your example anyway (but I get your point and agree). So yes, if you want to take the analysis seriously then you need to go beyond simple rules-of-thumb using my Ultimate Retirement Calculator and the information in my book “How Much Money Do I Need To Retire“. But IMHO, I still stand by the idea it’s a useful rule of thumb, as far as rules of thumb go. Another rule of thumb is based on spending instead of earnings. It’s 25 to 33 times first year spending in retirement. It also has limitations, but is a similarly useful rule of thumb. To get more exact requires my calculator and book. Hope that helps!

  6. This method might work for those in previous generations, but it’s completely unrealistic for most Millenials who are struggling to accumulate wealth due to student loans and high rent prices. Most can’t even afford to purchase a home even if they wanted to due to the crushing load of student debt they took to achieve even the most basic credentials entitling them to an entry-level job in this world. Maybe by the time they’ve reached their mid-thirties they will have been able to get out from under this mountain, but even then their net worth will likely still be far below this stated standard. In most urban areas, where young people migrate and where a 35 year-old could be expected to have reached a $100,000 salary, their rent is easily pushing 40-50% of a single person’s income. If your a DINK (dual income no kids) you might achieve this standard, but overall there are a lot of qualifiers necessary to reaching PAW status.

    An entire generation is essentially handicapped. If your response is “We’ll these are the numbers and they aren’t changing because circumstances are hard” then its clear that our future as a country is only more inequality and paycheck-to-paycheck living for its citizens.

    • I disagree with you 100%. State your limitations and you shall have them. I personally know many in the millennial generation doing better than previous generations because they’re better educated with access to better information thus making wiser decisions than those before them. If you look for the cup half empty then that’s what you’ll see. Are there problems and challenges? Yes, of course. But there has never been a better time to build wealth and achieve freedom if you know what you’re doing. I recommend you see the discussion in my related post on this site “How Any Can Achieve Financial Freedom In !0 Years or Less“. It will either open your eyes to other possibilities, or irritate the daylights out of you.

  7. This post was really interesting especially the part where you question yourself with them 12 questions.

    I’ve just tested myself in a practical way to really just self-review why wealth building is important to me using these questions and I must admit some of the questions make you think deeply.

    After completing my test I can already feel an emotional attachment to why I actually want to achieve a specific level of wealth going forward and this is from just completing that practical test.

    My unlimited goal for wealth isn’t to live a life full of expensive materials it’s more about securing a financial future for a life of comfort where I can support myself and family as time progresses without having to rely on the system or anyone else for financial aid.

    I’ve also always been interested in learning how to make money work for me from investing. For now, though, I’m just increasing my capital value learning my trades which I will be leveraging for the future.

    I’m going to keep my practice sheet with your questions and my answers and place it where I can see it and read it daily.

    Thanks for sharing.


  8. How one can calculate her networth if she is only in above the middle ground of total networth for her age because she put two brothers to University and built a house for her parents and until now still support her family financially ?

    • It’s still counted the exact same way. The math is the math. I hear all your reasons, but money doesn’t care about reasons. It obeys math. I’m not trying to be insensitive, but that’s just the inviolable reality of how this works.

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