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[Calculator] Your Net Worth at Every Age

It is a shame that most Indian families, even today, are not aware of the basics of Personal Finance – a concept that has so much credibility, yet so little adaptation. Hence, they miss out on the exercise of calculating Net Worth, and their realistic retirement goals.
But first, it is important to understand the definition of your Net Worth.

What is Net Worth?

Your Net Worth, is the difference, in value, between what you own—your house, retirement funds, investment accounts, checking account balance, etc.—and your liabilities, such as the mortgage, credit card debt and so forth.

In simple English, your net worth looks at everything you own, including assets that will be part of your retirement plans, such as your PF, EPF stocks, investments, etc. If you create a separate list of your all your outstanding balances (debts) and subtract that amount from the total sum of everything you own, what’s left is your NET WORTH

Understanding the Benchmarks

If you are stepping into adulthood, your immediate priorities are probably about securing your job and getting enough income to ensure a good marriage proposal. Don’t judge me for this – you know it’s the truth. The good news is that with just a little financial planning, you can not only secure your future but can even afford a great lifestyle for today.
A reliable benchmark for this is to calculate what your net worth stands. Roughly speaking, it is calculated by adding up your cash and assets and subtracting them from your liabilities usually in the form of debts.
Before we start, one quick note: Do not worry about where your friends stand as far as Net Worth is concerned. Instead, be smart and achieve targets at each age bracket listed below.

In Your 20s

You’re just starting out, so don’t get too worried out about your net worth. If you happen to have a college loan, there is a good chance that you may well be in the negative. No matter what your parents say, do not be tempted integrate their net worth with yours. It’s their money, and you surely can make your own.
First, get that first job. The good news is that most companies offer a Provident Fund option, where your employer matches your contribution to it. Sure you get a little less every month, but there not a single person out there will contest how important it is to have. an employer contribution to your Provident Fund. It’s extra money from your employer, and you’re earning compound interest too – every year! This method will build your net worth – very quickly. Besides this, invest (not save) up to 10% of your salary – mostly in some of the equity (stocks, mutual funds, etc.). The return is always higher than what your bank offers.
Next, keep your job as long as you can. The cost to buy Wisdom is paid primarily with time. Find out what you love to do and what you’d like to be doing for rest of your life. Do not, under any circumstances have a police record, or a bad CIBIL score. So try as much as you can to stay away from Credit Cards. The repercussions to these mistakes are long term and will hurt you for a very long time.

When you Turn 30

By the age of 30, you should have at least half of your salary saved into your retirement account.  As an example, if your salary (Basic Pay) is 4 Lakh rupees when you are 29, then you should strive for 2 Lakh rupees in your Provident Fund, as well as other Investments by the time you reach 30. It is a possible option for savings and investing.
Let’s say you start investing 18,000 each year (1500 per month) starting at age 23; if your investment account earns 8 percent annually, you’ll reach a 2 Lakh Net Worth net worth by age 30, comfortably. Add your PF Contribution to that, and you are well on track.
If you are starting late in your career, this might seem overwhelming – especially with your costs. No need to worry! Remember, that the rules set here are savings guidelines, not rules etched in stone.

When you Turn 40

By age 40, you should aim to have a total net worth of 2 times your annual salary at the age of 39. So, if your salary edges up to 8 Lakhs by the time you turn 39 so that by the time you reach the age 40, you should strive for a net worth of 16 Lakhs.
An easy way to build your net worth is by continuously contributing to your retirement accounts. Owning real estate is another way, and is a prevalent mode of investment in the middle of your 40’s. In case you are falling behind on your Net Worth, this is a good time to evaluate your career choices and how soon you can accelerate.

When you Turn 50

By age 50, your goal is to have a net worth of 4 times your annual salary at the age of 49. If you’re earning 25 Lakhs at the age of 49, then your net worth target at age 50 is 1 Crore! That is the power of compounding magic, especially if your start investing in early in your adulthood.

In case you start late, start saving very aggressively!
In your 40’s you might have children growing up and heading off to college. Don’t neglect your retirement savings in favour of your kids, who have a long life, and plenty of opportunities to earn back their money. Encourage your children to work and cover some of their expenses. After this, if you somehow land up falling behind on your financial goals, work towards a side income (rental, freelancing, etc.) or upgrade your education with an Executive Mba to get an income boost.

When you Turn 60

By the time you turn 60, you’ll be on track with a net worth of 6 times your annual salary at the age of 59. If your salary is in the 35 Lakhs to 50 Lakh range, then multiply that amount by 6, and that’s your net worth.

Calculator Attached

The calculator below gives you the projected Net Worth you should have, based on calculations of your first monthly salary, your age at the time, your current monthly salary, and your age today. The calculator makes two assumptions:
  • Your Base Salary was, and remains still, at about 40% of your Cost to Company (CTC). This is extremely common.
  • You will continue to maintain your salary increment, till you retire.
The calculator also has a BONUS feature to extract data from Provident Fund Website (http://www.epfindia.com) to accurately calculate the interest calculation as well as you and your employer contribution to your PF corpus. I have included this because it is a pervasive mistake to exclude your PF earnings to calculate your Net Worth. However, the calculator only calculates (For Provident Fund) up to the current year (which is 2017, in this case), since that is the only data available.
Another quick way to calculate your Net Worth is from this simple formula, from the book, “The Millionaire Next Door “, is as follows:
Multiply your age times your realized pretax annual household income from all sources except inheritances. Divide by ten. This, less any inherited wealth, is what your net worth should be.

In the end, remember that the benchmarks described above, and through the calculator are to give you an idea of the direction your retirement goals should be. Depending on your retirement plans, especially if they include exotic travel, you may need to save more. However, if you are planning a quiet retirement in a community where you can manage your expenses, then you’ll need less.

About Shobhit Dixit


  1. Hello, everything is going well here and ofcourse every one is sharing data, that’s in fact fine, keep up writing.

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