Hello, everybody. It's Sam from Financial Samurai. In this episode, we're going to talk about the average net worth for the above average married couple. So if you're single right now, don't worry. I think there's someone out there for you. You just have to make it your mission to find someone because from a financial perspective, I think life is much easier with someone.

Instead of paying the full $2,500 a month in rent, you can split it $1,250 each and that brings more disposable income into your pocket. And obviously, besides sharing more of your expenses, life is just more interesting when you have someone to care about who will go through the journey together.

So what is the definition of above average? Well, first of all, I don't want any of you guys to get offended if you are considered average or below average. It's just math. Think about the bell curve. And what we're trying to do is be above average because life is – we only got one shot, right?

So we might as well try a little bit harder and do a little bit better so we can try to live a better life and help our finances. So the above average person is loosely defined as someone who graduated from college. Only about 35% of the American population has a college degree.

Now if you've got a job right out of high school and you are making above average income for your city or state, then you're obviously above average. The above average person works hard, plays well with others, takes full advantage of their pre-tax retirement accounts, saves additional disposable income so they can generate passive income and they stay on top of their finances.

The above average person is also quite reasonable. They don't expect anything from their parents or from the government. And if they were C students in school, they don't expect to live an A lifestyle. This is pretty important here, folks, this last line. If you're a C student and you expect to live an A lifestyle, you're probably going to be miserable.

And this is what I see happening more and more today. People want to go straight to the top, straight to the corner office without putting in their dues. So now that we've got the definition of what above average is, let's look at the data. The average net worth, depending on where you look, is somewhere between $150,000 to $250,000.

But the median net worth in America is closer to about $80,000. So the average is being brought up by the super wealthy in America who have benefited the most from the super boom, sonic boom, since 2009, 2010. The lesson there is you've got to own risk assets such as stocks, real estate and so forth because over the long term, it's probably going to do well for you.

So now that we know the averages, let's look at what the average net worth for the above average person should be. I did a pretty detailed analysis in terms of years worked, average pre-tax savings, average post-tax savings, and average property equity and combine them into a chart. And here are some of the numbers.

At 25 years old, the above average person has got about $79,000 in net worth. At 30, $250,000. At 35, about $430,000. At 40, $660,000. At 45, $914,000. At 50, $1.24 million. At 55, $1.7 million. At 60, about $2.2 million. And at 65, about $3 million. So that's what I think the above average person should be able to accumulate in his or her lifetime.

Steady work, steady savings, building property equity, paying off that mortgage and so forth. So how does that translate into target net worth amounts by age for the above average couple? Now, I don't want folks to get fixated by the numbers, although the numbers are important. I want to kind of talk a little bit more philosophically about how do we combine our finances and have targets to shoot for.

Now everybody knows that married couples who stay together have a financial advantage over single people. We can again share expenses and grow things together. It's much easier. And before we get into the exercise of figuring out the net worth of the above average couple, let's take a moment to define an above average couple.

They stay together for the long term, so they don't divorce because divorce is probably the biggest detriment to your finances, for couples finances that is. They discuss long term financial goals such as retirement age, retirement number, succession planning, like a will and trust and so forth. They don't keep any financial secrets from each other.

They know their monthly budgets like the back of their hand. They make sure their net worth risk exposure is aligned with their goals. They share expenses in a fair way. They support each other's career and endeavors. They work together as a team to get things done. They seek to understand the other side of the story during conflicts and always come to a compromise.

They plan for the financial expense of children, even if they don't have any. Each spouse can financially support themselves if the relationship ends. This is a very important one to me because I do believe financial dependence is the worst. If you love your spouse, you want to set them free financially.

You want to make them feel as they can do anything they want with their money and your money. I know this topic is up for debate and I've written a post about it and we can talk about it in a future episode. I'd love to get my wife on and talk about it.

But freedom from each other financially is very important even though you're still together. So we'll talk later. And then finally, the above average couple only have children if they've run the numbers and know that they can afford children. Now as a parent myself, I do realize now why so many couples who are financially struggling have so many children.

The answer is you don't realize how much joy children bring to you until you have children. And then you just want more of it rationally even though your budget can't afford it. But above average people are quite rational and they think rationally that it's better to have enough money to take care of your children.

Otherwise maybe bad things will happen in terms of neglect, stress at home, and they might turn out to be, I don't know, maybe not so happy or really troubled kids or adults and that wouldn't be really good for society. So let's move on to various net worth calculation methods for couples.

There are only three methods that I would like to introduce. One is the equality method. The second is the government taxation method. And the final one is the financial samurai method. So let's go with the equality method. The equality method basically states that a man and a woman are equal.

Given both sexes are equal, it is only logical to conclude that both spouses study hard at school, work, save, and invest for the future before and after meeting each other. One simply has to double the amounts in my above average person net worth chart to get to the equality net worth figures.

So in other words, by 30, the number should be about 500,000 for the total net worth. By 35, about 850,000. By 40, 1.32 million. By 45, 1.8 million. By 50, 2.5 million. By 55, 3.4 million. By 60, 4.3 million. And by 65, around 5.7 million. Now I can hear some of you guys grumble and complain saying those figures are just way too high.

Now I don't know what country you're living in, but I live in America and men and women are equal. And if men and women are not equal in your country, please leave a comment and explain what the heck is going on because it is 2019 folks, soon to be 2020.

And if people are not equal by now, then I don't know when people are ever going to be equal. Now some of you are probably arguing these figures are too low because there are tremendous financial synergies in a relationship. Since you can't have synergies before you actually meet, it's better to simply double the above average net worth per person figures to stay conservative.

Alright now the next method, the government taxation method. This is quite an interesting one. Despite tremendous federal income tax improvement after Trump became president, there is still a marriage penalty tax. If you take a look at the tax brackets and rates for 2019, which will probably be very similar in 2020, notice how an individual pays a 37% marginal federal income tax bracket after they make $510,300.

But if you look at a married couple's column here, a married couple starts paying a 37% marginal federal income tax above only $612,350. In other words, 1+1 does not equal 2. Instead 1+1 equals 1.21. Because if 1+1=2, married couples should pay the 37% tax rate when their income is above about $1,020,600.

So what's going on here? Well, 1) if there are two high income earning couples each making above $510,300, they probably shouldn't get married. 2) if you're a couple making above $612,350 combined, you probably shouldn't get married if you want to, that is, pay more taxes to an inefficient government.

But 3) what is really going on is that the government believes 1+1=1.21 because it is sexist. It is holding on to old ways of thinking. Think about the makeup of the government. It's largely made up of men. And men think one way, women think another way. Things are changing, but it's predominantly made up of men.

The president is a man, congress, senators, they're mostly men. And therefore, they have this ideology that one spouse should stay at home and take care of the children. And that one spouse, if you look at statistics, is usually the woman. I've been a stay at home dad for 29 months now.

And I will certainly say there are hardly any men out there when I take my boy to the playground or to the museum or park. I would say the numbers look like this. This is here in San Francisco where the cost of living is high and I guess people don't really want to take care of their kids as much or they can't.

The percentages are about 80% of the caretakers of children that I see between Monday and Friday are nannies. About 20% are moms. About 8% are grandparents, maybe 9%. And then the rest are dads. So maybe in this land of change and equality, maybe the government is right after all.

Maybe we're just not equal because I really don't see any dads staying at home taking care of their children. But still, conceptually and I think philosophically, one plus one should equal two but the government has different ideas. Now of course, there are tremendous benefits of having a stay at home spouse take care of their kids, right?

You know, your children get more love from the person you trust the most. The nanny, I swear to goodness, they're probably 80% on their phones and not paying any attention. Also, okay, daycare costs a lot and there's other great benefits to having one stay at home spouse. But I still believe the ratio, the math is too low.

The combined income of $612,350 provides only a 20% greater threshold until the top 37% tax rate kicks in. It should be higher. I believe it should be higher. But if you love the government, are very traditional and believe one spouse should probably stay at home, then you are a proponent of the government taxation net worth method.

So finally, let me introduce, I think the best way, the financial samurai method to calculating an above average couple's net worth by age. The financial samurai net worth method provides a recognition there are financial synergies for being a couple. At the same time, the financial samurai method denounces government policies to its core for its sexist and discriminatory ways.

Besides, the ludicrous 20% increased allowance for married couples, the government only provides child tax credits, student interest deductions, and IRA contributions to those who make below a certain amount. So why is the government deciding so much on who gets to benefit and who doesn't? Why are we letting the government dictate so much of our lives?

I don't think we should. It's shameful to discriminate against hardworking Americans who live in a higher cost of living area. The government should treat everyone equally and not pick and choose who gets to thrive and who gets to suffer. I am also a strong believer that each spouse should save and invest as independent man or woman because breakups happen all the time so it is imperative we count on ourselves in the worst case scenario.

At the same time, there is no need to have double the property size presumably because a couple is sharing a room, a kitchen, a bathroom, a living room, a dining room, a garage, and a backyard. So let's take a look at the numbers for the financial samurai method. At age 30, net worth target $550,000.

35, $900,000. Let's call it a million. 40, $1.35 million. 45, $1.7 million. 50, $2.1 million. 55, $2.7 million. 60, $3.3 million. 65, $4.1 million. In other words, the financial samurai is simply a hybrid method. We all know that equality is the right thing. One plus one equals two. But we also know that the government has tons and tons of data about all of us and our habits and everything and that they know how to optimize their budget and so there is obviously some credence to their method as well.

So the financial samurai, we combine them and boom, we got these numbers here. And I think it's logical to look at these numbers and think, okay, that makes sense. Please remember that the above average couple net worth targets are based upon my assumptions for the above average person. Not the average American who wakes up 10 years later hating his or her job because he or she forgot to save and invest all during this time.

The average American who cannot come up with $1,000 to pay for an emergency is not the example you want to follow. If you haven't achieved my suggested net worth figures yet, don't worry. Just the fact that you're listening to this podcast means you're serious about supercharging your finances for a better life.

Now you will have some clear financial goals as a couple. Give your savings and investments some time to compound. Not only do couples have roughly a 70% higher combined net worth than single folks, life is also more enjoyable when spent with someone you love. Thanks so much everyone. And if you liked this podcast, please leave a positive review and share your thoughts in the comments and the post.