
Ranking net worth by age, income, degree, and gender - eastbayjake
https://www.earnest.com/blog/ranking-net-worth-by-age-income-degree-and-gender/
======
Animats
_based on anonymized data from in tens of thousands of applications for
student loan refinancing._

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.

~~~
hkmurakami
Or interest rates went down. If you scroll further down their data includes
MDs and DDS people. Those people are definitely not in financial trouble.

~~~
nostrademons
There's still a massive sample bias problem. Financially responsible, employed
MDs & JDs frequently pay off their student loans by ~4-5 years into their
practice. That means that a MD/DDS/JD using a loan refinancing platform is
probably just starting their career (likely, given the ages in this report) or
has no clue how to manage their money (also likely, given the sample bias
Animats pointed out).

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.

~~~
hueving
>JDs frequently pay off their student loans by ~4-5 years into their practice

I think your information about the cost of legal degrees and the prospects for
new lawyers (on average) is woefully out of date.

~~~
nostrademons
It's typical - conservative even - for lawyers who end up going into BigLaw.
$160K starting salary will let you pay off even a couple hundred grand in
loans in just a couple years.

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.

------
xt00
The title was promising, but the data, yes definitely seems to be skewed and
fairly strange...

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..

------
MCompeau
Obviously this data set is heavily skewed due to the fact it comes from loan
applicants. Can anyone suggest a better, more representative source for net
worth data by age, income, etc.?

------
shoo
it's a bit of a shame they don't clearly define what the Y axis is - how
they've reduced over the individuals. presumably they've taken the mean
instead of the median values.

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
    

[1] [https://dqydj.com/net-worth-by-age-calculator-united-
states](https://dqydj.com/net-worth-by-age-calculator-united-states)

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!

------
thesumofall
Did they simply take averages across all people in each bracket? I can think
of very few reasons to have debt while having cash / investments surpassing
the debt (exceptions aside such as retirement funds that can’t be accessed).
Would have been better to split the groups in percentiles

~~~
nostrademons
A number of people believe you should take on low-interest debt (eg. student
loans, introductory car payments, mortgages) and then invest the cash from
them in higher-yielding investments (eg. the stock market, Bitcoin, P2P
lending, new businesses).

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.

~~~
hueving
Student loans aren't good to lump with the others because the interest rates
on the government loans can be obscene. I know someone who took out student
loans from the government during very low interest (2012) and they got 6.8%.

With the expected stock market return below that, it's probably better for
most students to just pay off the debt.

~~~
nostrademons
That seems really high to me. My student loans (2001-2005) were 4.5%. Has it
gone up so much recently?

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.

~~~
hueving
Yes, it was for grad school loan for a masters program.

------
CryoLogic
I didn't like that they correlated by age, savings and career but not by
duration in career.

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.

------
mamon
What’s striking is that net worth of MBAs is as low $30k - I am a programmer
living in Eastern European country and my net worth is around $170k And I
thought Americans are supposed to be richer

~~~
adventured
That depends on what you're measuring. The average individual American is
worth $388,000 net, third in the world behind Australia and Switzerland. That
figure is radically ahead of the rest of the world, except for a handful of
countries.

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).

~~~
Melchiorarchy
"The average individual American is worth $388,000 net, third in the world
behind Australia and Switzerland."

Do you have a source for that? That's certainly not the average American
across all demographics.

~~~
hueving
Read the comment. It's a great example of why understanding the difference
between mean and median is critical.

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?

------
ozim
It is cash only net worth, they don't have data on tangibles.

