Ranking net worth by age, income, degree, and gender
earnest.com
earnest.com
The data comes from loan applicants. That's not a good source of net worth data. People refinancing student loans are probably already in some degree of financial trouble.
This age bias doesn't necessarily extend to other professions, as someone with a bachelors or associates in a non-STEM, non-professional field might be paying off (and refinancing) their loans for decades.
The data here is interesting, but because of these biases, you have to take it with a grain of salt; it probably doesn't reflect the financial picture of the population at large.
I think your information about the cost of legal degrees and the prospects for new lawyers (on average) is woefully out of date.
This admittedly is only about 20-30% of law school graduates, but in a survey of net worth, dropping the 20-30% of data points that are most likely to have high net worth will skew your average significantly.
Most of the student loan refinancing options are targeted at low risk borrowers who can qualify for a lower interest rate. Generally the people who are in financial trouble won't be refinancing because the rates set by the government (which don't take individual credit risk into account) are already lower than they could qualify for.
The refinanced loans also don't qualify for income based repayment like federal student loans do, which is the last thing that people in financial trouble would want to give up.
I was hoping to find something like actual net worth by age.. you can also just calculate what people probably want to know anyway.. like if I'm X age, how much money should I have saved and how much should I be saving to reach X dollars by ~60 years old.. so I did that math..
Assuming 7% compounding interest -- investing in index funds for example:
To have 5 million in your stock accounts by age 60:
At age 25 you should have $125k, and contribute 25k per year
At age 30 you should have $200k, and contribute 35k per year
At age 35 you should have $300k, and contribute 50k per year
At age 40 you should have $500k, and contribute 70k per year
At age 45 you should have $850k, and contribute 100k per year
At age 50 you should have $1M, and contribute 200k per year
So I guess if you have a house that is worth $1M, then you only need to target $4M to hit that random value I picked, but I think most people would agree that having $5M in the bank would be basically plenty to retire on especially if it keeps growing while you are withdrawing from it..
comparing the "net worth by age" to the values of "Average Wealth (No House)" from [1] and crudely trying to compensate for the different age buckets gives something like this:
x0 : mediam wealth (no house), dqydj
x1 : average wealth (no house), dqydj
x2 : average(?) net worth (also seems to exclude housing), earnest.com applicant cohort
age x0 x1 x2 x2 / x1
25-29 4.4 16.9 2.4 14%
30-34 16.0 58.7 16.8 29%
35-39 17.2 203.0 28.5 14%
values in 100k USD
I guess from this one could tentatively claim that being an applicant for student loan refinancing is correlated with low average net wealth relative to the population as a whole. Which intuitively doesn't seem surprising!
IMHO these people are simply unaware of the concept of risk-adjusted returns or the idea that high-yield investments don't always go up and can, in fact, lose principal value, and they'll make up the next wave of bankruptcies when we next get a downturn. But the belief does exist, and has become increasingly more prevalent in the last couple years.
With the expected stock market return below that, it's probably better for most students to just pay off the debt.
Edit: Just Googled. 4.5% is still a typical range for unsubsidized Stafford undergrad loans. 6.8% sounds like it was either a grad student loan or a parental (PLUS) loan.
If I worked retail until 30, and than went back to school to to become a dentist (and the survey was taken a year after graduation) that skews the data.
The average Russian has a net worth of $16,000. The average in China is $26,000.
The median US figure, is far lower than the average, at maybe $60k today, with rising stocks / housing. That median figure is higher than Germany and Sweden, but well behind eg France at $120k or Belgium at $160k (they're #3 in the world at the median).
The median figure in Russia is $4,000. The median net wealth in China is around $7,000.
For the US it's simple: you want to be in the top 50%. Below that, wealth levels fall rapidly. In the US the gap between the average level of wealth and the median, is extremely high, as wealth tilts overwhelmingly toward the top half. Sweden and Germany also similarly have badly skewed median vs average net wealth figures (not quite as bad as the US though). As an engineer, you should be in the top 1/3 pretty easily assuming a decent career and income level (an average engineer in the US will earn close to 2x the median full-time wage).
Do you have a source for that? That's certainly not the average American across all demographics.
Imagine a room with 100 people. 99 have $100 in savings, 1 has $1 billion. What is the average wealth of the people in that room? What is the median wealth?