Reaching the age of 70 is a major milestone. Many people wonder if they have saved and invested enough over their lifetime to be financially secure in their later years. Having a good net worth at 70 provides peace of mind and financial stability during retirement. So what is considered a good net worth at 70? There are a few key factors to consider when evaluating net worth at this stage of life.
What is Net Worth?
Net worth is a snapshot of a person’s financial health at a given point in time. It is calculated by subtracting total liabilities (debt) from total assets. Assets include things like savings and investment accounts, retirement accounts, home equity, cars, valuables, and personal belongings. Liabilities include credit card debt, mortgages, student loans, and any other outstanding bills.
Net worth reflects both savings and spending habits over time. Those who consistently save and invest more than they spend will likely reach age 70 with a higher net worth. On the other hand, those who accumulate significant debt and have not prioritized saving may reach 70 with a lower net worth.
Average Net Worth at 70
According to the Federal Reserve’s Survey of Consumer Finances, the median net worth for Americans aged 65 to 74 was $266,400 in 2019. However, there is significant variation among households in this age group.
Here is a breakdown of average net worth at ages 65-74 by percentile:
| Percentile | Net Worth |
| 25th percentile | $93,200 |
| 50th percentile (median) | $266,400 |
| 75th percentile | $616,000 |
| 90th percentile | $1,366,000 |
As you can see, there is a wide range of net worths at 65-74. While $266,400 is the median, those in the top 25% highest earners have over $616,000 in net worth at this age.
Factors that Impact Net Worth at 70
A number of factors shape net worth over a lifetime. Here are some of the key influences:
Career and Income Level
Higher earning individuals and couples tend to reach retirement with larger nest eggs, all else being equal. Those with advanced degrees and high-paying jobs have more discretionary income available to save and invest over their working years.
Savings Rate
Consistently saving a portion of income each year enables compound growth. Saving 10-15% annually can make a big impact over decades. Small savings add up significantly when invested prudently.
Investment Returns
Investing savings in assets like stocks, bonds, and real estate can enable greater capital appreciation over time. However, negative returns can also hurt net worth for those near or in retirement. Having the right asset allocation is key.
Inheritances
Some individuals receive an inheritance from their parents or other family members that gives their net worth a boost. Even a modest inheritance of $10,000-50,000 can make a difference over time.
Health Care Costs
Poor health and high medical bills drain financial resources. A serious illness or condition requiring expensive treatment can negatively impact net worth. Good insurance coverage is essential.
Cost of Living
Those living in lower cost areas typically have lower expenses and can save more. Individuals in high-cost cities like New York and San Francisco need much higher incomes to build wealth.
Debt Repayment
Carrying high amounts of credit card and student loan debt make saving difficult. Paying off debts frees up cash flow to invest and boost net worth.
Family Situation
Single individuals need one retirement nest egg. Couples may accumulate more in combined assets. Having children and elderly parents to support can also drain resources.
How Does Home Equity Factor In?
For many Americans, home equity represents a significant portion of their net worth. Appreciation in home values, especially over decades of ownership, creates wealth.
According to the Consumer Finance Protection Bureau, home equity made up nearly 60% of senior’s net worth in 2016. Downsizing to tap home equity or utilizing a reverse mortgage can provide retirement income.
Seniors who rent their homes do not have this real estate asset to draw upon. Renters typically have lower net worths than homeowners in retirement.
Target Net Worth Guidelines at 70
While averages provide benchmarks, users looking for a target net worth range at 70 may consider these guidelines:
– Conservative Target: 8-10 x your annual income at 70
– Average Target: 12-15 x your annual income at 70
– Aggressive Target: 20+ x your annual income at 70
So for example, if your annual income from Social Security, pensions, and other sources is $50,000 at 70, aiming for 12-15x would mean a target net worth of $600,000 to $750,000.
These multiples provide estimated targets to sustain your lifestyle in retirement. Those desiring more extensive travel and entertainment may aim for the higher end. Frugal seniors need less.
Building Net Worth in Your 60s and 70s
While accumulating assets in your 20s through 50s is ideal, it is never too late to shore up your net worth, even in your 60s and 70s. Here are some steps to take:
– Delay Social Security benefits to increase payments later
– Move retirement savings into growth assets like stocks
– Downsize your home to free up home equity
– Consider relocating to a low-cost region
– Pursue an encore career or side gig to add income
– Cut discretionary spending on items not essential
Every dollar saved and invested wisely in your later years can provide more financial stability. An extra $10,000 invested at 65 could grow to nearly $25,000 by 75 at a 7% return.
Conclusion
What is considered a good net worth at 70 varies significantly based on your income, asset levels, and retirement lifestyle. While $266,400 is the median net worth for households aged 65-74, you may require more or less to live comfortably. Use target guidelines to project your needs and continue prioritizing saving and prudent investing as you transition into your 70s. Monitoring your net worth annually can help you make proactive decisions to stay on track. With diligent planning, you can feel confident your net worth is prepared to support your retirement goals.