Net Worth Targets by Age: The Formula Personal Finance Pros Use

Generic 'save 10% of income' advice ignores how much you've already accumulated. A better question: based on your age and income, what should your net worth actually be today? The most widely-used formula comes from Dr. Thomas Stanley's research on millionaires and gives a target that scales with both lifetime earning and time in the market.

The Stanley formula

Expected net worth = age × pre-tax income ÷ 10. A 40-year-old earning $90,000 should have a net worth of $360,000. Stanley called households at twice this number 'prodigious accumulators of wealth' (PAW) and those at half or less 'under accumulators of wealth' (UAW). Most people land somewhere in the middle.

Why ÷ 10 works as a constant

The constant assumes a long career, modest investment returns, and steady saving rates. It implicitly bakes in the math of compound growth. Variants exist — some financial planners use ÷ 6 for younger savers and ÷ 12 for those near retirement — but the simplicity of ÷ 10 makes it the most cited rule of thumb.

Worked examples

• 25-year-old, $60,000 income: target $150,000 — aggressive, most won't hit it
• 30-year-old, $75,000 income: target $225,000
• 40-year-old, $100,000 income: target $400,000
• 50-year-old, $120,000 income: target $600,000
• 60-year-old, $130,000 income: target $780,000

When the formula breaks down

Late-career income spikes (executives, partners, founders) make the formula too aggressive — you can't catch up to a target based on a salary you only had for three years. Use a five-year average income instead. Conversely, doctors and other late-starting high earners look like 'under accumulators' for years before catching up dramatically.

Use it as a compass, not a verdict

Hitting the target is great. Missing it isn't failure. The formula tells you whether your current trajectory matches your income — if not, the question is whether to raise savings or lower lifestyle. Both work. Both move you toward target.