Lifetime earnings and portfolio value

[disneysteve]

A question was asked over on the ER forum about how much you have earned in your lifetime. Using the Social Security records as your guideline you can come up with a number, at least for W-2 income.

I did that and discovered something really interesting. My total lifetime earnings almost exactly match our portfolio value (before the current correction). My wife had earnings too, but hers were minimal compared to mine. So discounting that, we've basically managed to build a portfolio that equals the total amount of money I've earned since 1981. It's almost as if we've had a 100% savings rate which is pretty cool.

[myrdale]

we've basically managed to build a portfolio that equals the total amount of money I've earned since 1981. It's almost as if we've had a 100% savings rate which is pretty cool.

That is the power of compound growth and long term investing in the market.

I don't remember the details all the details, but does that include the inheritance from your cousin as well? I've known a few people who were fortunate (if you can call it that) from being left property from friends or neighbors.

[disneysteve]

I don't remember the details all the details, but does that include the inheritance from your cousin as well? I've known a few people who were fortunate (if you can call it that) from being left property from friends or neighbors.

Great point. Yes, that does include the inheritance. I hadn't accounted for that. So we didn't actually "save" as much as I earned, though still a pretty substantial chunk of it.

[kork13]

Out of curiosity, I pulled up my SS statement online, and added everything up... Lifetime SS earnings (2004-2024) are right at $1.25M. Current assets: roughly $2.25M.

That said .... $1.25M doesn't account for DW's income (probably $400k-$500k lifetime), which has been combined with my own for the last 11 years. Plus probably 15-20% of our lifetime earnings have been non-taxable/non-SS income.

So as a rough measure, total lifetime earnings is probably a pretty decent yardstick for asset accumulation.

This discussion reminds me of the indicator from "Millionaire Next Door", being a "Prodigious accumulator of wealth", "average accumulator", vs. "under-accumulator". He looks
at your accumulated wealth vs. income & age. Multiply your age x annual income, then divide by 10 ... This is what your "expected" wealth would be. If your actual wealth is 50% of that number, you're an "under-accumulator" .... Roughly equal means "average accumulator" .... Double or more means "prodigious accumulator." It's got arguable value besides being a gold star or badge of shame ... But again, just another yardstick.

[bjl584]

Out of curiosity, I pulled up my SS statement online, and added everything up... Lifetime SS earnings (2004-2024) are right at $1.25M. Current assets: roughly $2.25M.

That said .... $1.25M doesn't account for DW's income (probably $400k-$500k lifetime), which has been combined with my own for the last 11 years. Plus probably 15-20% of our lifetime earnings have been non-taxable/non-SS income.

So as a rough measure, total lifetime earnings is probably a pretty decent yardstick for asset accumulation.

This discussion reminds me of the indicator from "Millionaire Next Door", being a "Prodigious accumulator of wealth", "average accumulator", vs. "under-accumulator". He looks
at your accumulated wealth vs. income & age. Multiply your age x annual income, then divide by 10 ... This is what your "expected" wealth would be. If your actual wealth is 50% of that number, you're an "under-accumulator" .... Roughly equal means "average accumulator" .... Double or more means "prodigious accumulator." It's got arguable value besides being a gold star or badge of shame ... But again, just another yardstick.

By that metric, I'm in the "Prodigious" category.
A good feeling I suppose

[srblanco7]

Including an estimate of DWs lifetime earnings but not adjusting our earnings for inflation, we're pretty close to a 1:1. My earnings history on the SS website also gave me a nice snapshot of my career progression - and I noted that my earnings during the last 10 years are roughly equivalent to the first 25 years of working. As such, there's a fair portion of our savings that hasn't had a lot of time in the market.

[LivingAlmostLarge]

Out of curiosity, I pulled up my SS statement online, and added everything up... Lifetime SS earnings (2004-2024) are right at $1.25M. Current assets: roughly $2.25M.

That said .... $1.25M doesn't account for DW's income (probably $400k-$500k lifetime), which has been combined with my own for the last 11 years. Plus probably 15-20% of our lifetime earnings have been non-taxable/non-SS income.

So as a rough measure, total lifetime earnings is probably a pretty decent yardstick for asset accumulation.

This discussion reminds me of the indicator from "Millionaire Next Door", being a "Prodigious accumulator of wealth", "average accumulator", vs. "under-accumulator". He looks
at your accumulated wealth vs. income & age. Multiply your age x annual income, then divide by 10 ... This is what your "expected" wealth would be. If your actual wealth is 50% of that number, you're an "under-accumulator" .... Roughly equal means "average accumulator" .... Double or more means "prodigious accumulator." It's got arguable value besides being a gold star or badge of shame ... But again, just another yardstick.

So I pulled my DH's same yeaers as you but we're older. Why was your earnings so low? Is it because so much came non-taxable? Your average wage is $62,500 which seems lower than what you've posted. Have you calculated what you earned including BAH and BAS and non-taxable?

We're at 1x earnings to assets not including the house

[kork13]

So I pulled my DH's same yeaers as you but we're older. Why was your earnings so low? Is it because so much came non-taxable? Your average wage is $62,500 which seems lower than what you've posted. Have you calculated what you earned including BAH and BAS and non-taxable?

We're at 1x earnings to assets not including the house

Not specifically, but as I mentioned, I do know that for most of my career, that stuff has generally been 15-20% of my income ... So adding that in, plus DW's income, it does come somewhere close to 1:1 as well.

[Atretes1]

I keep a running total of lifetime earnings. Lifetime 2.607 Million. Net worth 1.6 Million. My base pay currently is 95k and my lifetime average is 81k. I have been working for 32 years so far with 7 left to retirement. I started working in 1993. I didn't really start saving for retirement until 2004. I've been maxing out my retirement since 2017. Side note. I've only had 4 total jobs my whole life.

[jenn_jenn]

This is an interesting metric. I’m younger than most on this board (33 y/o) and haven’t had quite the same amount of time to realize the benefit of compound interest.

Based on Medicare taxable earnings from my SS statement, I’m at ~$1.5M for lifetime earnings. This excludes my husband’s earnings though, which is a big caveat because he makes more than I do and is 2 years older. Our combined net worth is ~$1.5M.

It isn’t possible for us to grow our net worth at the same rate of annual earnings in the near term but it will be interesting to see if/when that shifts.

[LivingAlmostLarge]

Not specifically, but as I mentioned, I do know that for most of my career, that stuff has generally been 15-20% of my income ... So adding that in, plus DW's income, it does come somewhere close to 1:1 as well.

The NW grows exponentially after a certain point. Mostly we both know the returns are more than the contributions. I would say that only happened in the last 5 years personally after 40. What I do find interesting is that the PAW metric of millionaire next door is very low. Very low. To be a PAW you don't have to have that much. I think i like the metric sometimes C has about 1x, 8x, 10x, 15x, then 20x, then 25x what you need in retirement. That measurement need more measurable if you were on the right path.

Personally I find us based on what I think we'll need to be at 14x our expenses. I of course could be supremely wong since I am estimating spending based on what I think i'll want to spend.

[Atretes1]

The NW grows exponentially after a certain point. Mostly we both know the returns are more than the contributions. I would say that only happened in the last 5 years personally after 40.

I have 7 years to retirement. I'll be 56 with many more years to be in the market. It will be interesting to see what my returns are during the next 7 years. I am 300k from a 7 figure investment portfolio and I will be maxing my accounts hopefully for the next 7 years.

[disneysteve]

I have 7 years to retirement. I'll be 56 with many more years to be in the market. It will be interesting to see what my returns are during the next 7 years. I am 300k from a 7 figure investment portfolio and I will be maxing my accounts hopefully for the next 7 years.

My first year IN retirement our portfolio grew by $450,000, way more than I had ever earned while working. Compounding is a wonderful thing.