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Are you turning 40 soon? Or looking ahead to see if your retirement savings are where they need to be? At 40, I finally feel like a real, full adult — which also means making sure my investment accounts and retirement savings are on the right track.

This brings me to our point today: How much should the average American have at age 40 to ensure they’re on track to retire someday? Let’s look at how to calculate overall net worth and figure out how much is enough.

How do you calculate net worth?

Net worth is calculated by taking all the assets you have and subtracting your debts or liabilities. Basically, if you had to settle your overall financial ledger right now, how much would be left?

Start by adding up the amount you have in:

• Savings account
• Checking accounts
• Certificates of deposit (CDs)
• Investment accounts
• Retirement accounts
• Health savings accounts (HSAs)
• Life insurance with cash value
• The fair market value of bigger assets like home, car, or boat

Don’t include potential assets, like unreceived inheritance, or possible payments, like Social Security retirement benefits. Anything not available to you now doesn’t count as an asset.

Then, subtract the amount you owe. This might include:

• Mortgage
• Car loans
• Credit card debt
• Payday loans
• Personal loans
• Home equity lines of credit (HELOC)
• Second mortgages
• Business loans if you’re a sole proprietor and not a C corp or LLC owner

Subtract what you owe from what you own, and you’ll get your net worth. For example, if you have $150,000 in assets and $50,000 in debts, your worth is $100,000.

Note that some people don’t think you should consider your home as part of your net worth. This is because you’d have to sell it to realize the gains, at which point you wouldn’t have a place to live. While that is worth considering, a home is still an asset you can sell in retirement. If you ever need to move into assisted living, for example, the house can be sold to finance your living expenses.

Ready to build your net worth? These investment apps make it easy to get started.

What should your average net worth be by 40?

As with most financial questions, the true answer is: It depends on your specific situation. For example, you’re going to need a higher net worth if you want to retire at 55. But you’ll need less if you just entered your highest earning years and plan to work until 65 or later.

To get a better answer, however, let’s look at what most Americans have.

According to the most recent data from the Federal Reserve’s Survey of Consumer Finance, the median net worth for people between the ages of 35 and 44 is $135,300, while the mean is $548,700. The median (which is the middle number in a sorted list of numbers) is a better indicator of where most Americans fall because it balances outliers that might skew the data.

Some experts say you should have two- to three-times your annual salary by age 40. So, if you earn $100,000 per year, you’ll want to have between $200,000 and $300,000.

Budgeting apps can help you reel in spending — and grow your net worth.

How do you increase your net worth?

There are two ways to increase your net worth: Get rid of debt or accumulate more assets. In reality, it’s not quite that simple. Still, if you have a lot of debt, that’s usually the best place to start because most banks charge more interest on any debts than they’ll pay for money in a CD or savings account.

For example, the best APY for a 12-month CD is around 4% in interest. The average car loan charges between 7% and 15% APR, depending on your credit score and other factors. So, you’ll pay more on debt than you’ll earn in interest by buying a CD.

After paying down your debt, there are a few other steps you can take to increase your net worth and prepare your finances for retirement:

• Max out your 401 (k) if you can. This will lower your taxable income and increase your net worth. If you don’t have access to a 401(k), consider an IRA or Solo 401(k).
• Open a high-yield savings account and build an emergency fund. HYSAs tend to offer higher interest rates than traditional savings or checking accounts.
• If you have access to a health savings account, max out your contributions and invest what you won’t use in the next few years. This allows you to grow your healthcare funds (and net worth) faster.

Looking at where other people are can feel overwhelming, especially if you’re worried you’ll never reach those figures. If you feel behind on your net worth, don’t let those fears stop you from making changes. Start by taking small steps to pay down debt and increase savings and investments.

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