Retirement Planning: Achieve Financial Freedom at Every Age
Retirement planning: We all do it – compare ourselves to others. There’s a comparison we’ve only started doing in the last 20 years, and studies have found it’s one of the worst comparisons you can ever make. I’ll explain that at the end, and hopefully, it will make your life a lot better.(retirement calculator)
But first, let’s talk about one of the most objective comparisons: money. We all earn it, save it, invest it, and spend it. Where do you stand on your net worth compared to your peers? In this post, I’ll break it down in detail.
Net worth growth strategies
Money is objective. It’s a set number made up of liabilities and assets. For example, if you own a house worth £100,000, but owe £50,000 on the mortgage, your net worth on that part of your life is £50,000. I’ll cover more examples like this because it’s essential to understand.
The reason for this post is a comment I received about a previous discussion on financial rules. Many worry they won’t have enough for retirement, let alone a million-pound pension pot. The question of how much you need to retire depends on many factors, and I can’t answer that definitively. However, I’ve done a lot of research for this post, using data from the UK, US, Canada, Australia, and more.
Financial advice for retirement
retirement plan: Let’s start with averages. First, the “mean” average: you add up all the numbers and divide by the total count. Second, the “median” average: you find the middle number in a set. Let me give a couple of examples to explain why both are important.
Say we have ten people in a company, and nine of them earn £30,000. The tenth person, the boss, earns £200,000. The mean average is £47,000 – but try telling the nine employees that their average salary is £47,000! They won’t agree because most of them earn much less. The median, on the other hand, shows the middle income, which better represents most people’s reality.
Now, let’s dive into the numbers. For the UK, here’s the mean net worth by age group:
- In your 30s: £60,000
- In your 40s: £213,000
- In your 50s: £420,000
- In your 60s: £540,000
- In your 70s: £450,000
- In your 80s: £440,000
These are averages, which include everyone – even billionaires like Elon Musk who skew the numbers.
For the median net worth:
- In your 30s: £14,000
- In your 40s: £44,000
- In your 50s: £78,000
- In your 60s: £125,000
- In your 70s: £107,000
- In your 80s: £100,000
These median figures reflect what the “middle” person has, which paints a more realistic picture for most people.
Now, let’s talk about couples. Working together, couples generally fare better. Here’s the mean net worth for couples:
- In their 30s: £100,000
- In their 40s: £300,000
- In their 50s: £600,000
- In their 60s: £900,000
- In their 70s: £800,000
- In their 80s: £700,000
The median net worth for couples:
- In their 30s: £30,000
- In their 40s: £90,000
- In their 50s: £180,000
- In their 60s: £250,000
- In their 70s: £230,000
- In their 80s: £210,000
These numbers show that most couples are better off working together towards their financial goals.
Finally, I want to touch on another comparison that has become more prevalent in the last 20 years: social media. It’s the kind of comparison that ruins self-esteem. People tend to share only the best moments of their lives online, which leads to unhealthy comparisons. Remember, social media doesn’t show the whole picture, just the highlights.
So, instead of doom-scrolling, spend your time improving yourself. Build your self-esteem by working on your finances, and take control of your future. And don’t worry if you feel like you’re behind – it’s never too late to catch up.