If you’re not tracking your net worth, you might not know whether you’re truly making financial progress in life or not.

You might think you’re making progress with your savings or debt paydown plan, but unless you’ve accounted for all of your investments, savings, and debt and tracked them over time, you’ll never know for certain. Your net worth accounts for all of your assets and liabilities and can provide a much better picture of your overall financial health.

The path to increase your net worth is simple: Spend less than you earn, reduce your debts, and invest the rest. How you navigate that path is up to you, but consistently following it will result in building a substantial net worth over time. And time is often a major contributor to net worth.

It’s no surprise that Americans in their 50s and 60s are worth more, on average, than people in their 20s and 30s. They’ve had a lot more time to travel down the path to a high net worth. So, if you want something to compare yourself to, be sure you’re comparing yourself to people in your own age group.

For aspirational readers looking for a high bar to aim for, making it into the top 10% of your age group could be exactly what you’re looking for.

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Here’s the net worth that puts you in the top 10%

The best data available on Americans’ net worth comes from the Federal Reserve’s Survey of Consumer Finances. Every three years, the Fed conducts a survey asking a sample of American households about their entire financial lives. Everything from their income to their retirement savings, their house, and their credit card debt is laid out on the table for the Fed. The Fed also collects standard demographic data from those households, including the age of the household members.

The most recent survey results come from the end of 2022. At that point the median household had a net worth of $192,700. The top 10% of American households had a minimum net worth of $1,936,900. Here’s how it breaks out by age.

*For households with couples, the age-reference person is the male in mixed-sex couples and the older individual in same-sex couples. Data source: Federal Reserve. Calculations by author.

Keep in mind, those numbers are from the end of 2022. Many people have most of their net worth tied to stock investments and their primary home. Both of those assets have seen substantial gains over the last two years. As a result, the bar is probably higher today. Nonetheless, the top 10% numbers from 2022 remain a great aspirational goal to strive for.

Growing your net worth to elite levels like the top 10% of American households requires a plan. That’s the easy part. The hard part is sticking to that plan. If you can consistently make progress day after day and month after month while you’re still young, it’s only a matter of time until you reach your goals.

How to join the 10%

Growing your net worth is as simple as putting your money to work where it provides the greatest long-term financial returns. That can be anything from investing in the stock market or real estate, to paying down debt, to pursuing an education in a new higher-paying field. All three have varying degrees of risk and expected returns, so it might make sense to contribute to several different buckets all at once.

Paying down high-interest debt is one of the best uses of any extra cash you might have. The stock market produces an average annual return of about 10%. If you can pay off a credit card with a 25% interest rate, that’s a guaranteed 25% return on your “investment.”

Many of the top 10% do have at least some debt, though. The average household in the top 10% has $375,000 of total debt, mostly consisting of mortgages. Few people should be in a hurry to pay off their mortgage in their journey to build their net worth. It’s some of the lowest interest rate debt you could have, and saving outside of your home provides liquidity in case of emergencies. In most cases, you can outperform the interest rate on your home mortgage through smart investing.

A smart investment choice that can significantly boost your net worth is taking advantage of retirement accounts. Nearly every household in the top 10% by net worth invests in retirement accounts like a 401(k) or IRA, with a median balance of $558,600.

The tax advantages alone could provide additional funds to invest, since you receive a tax deduction up front for any contributions to a traditional retirement account. Additionally, your employer may offer a 401(k) matching contribution, which is commonly worth 50% or 100% of your contribution up to a certain limit. You’ll be hard-pressed to find another investment offering a 100% instant return on investment.

As mentioned, there are many ways to navigate the path to a high net worth. Consistently spending less than you earn, paying down your highest-interest debts, and strategically investing across retirement accounts can put you on a path toward joining the 10%. If you execute that plan for long enough, you’ll surely find your net worth headed in the right direction. Even if you never join the top 10%, you’ll likely have plenty to enjoy a comfortable retirement.

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