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What Are You Really Worth?

Published on December 16, 2014

Are you worth your weight in gold?

Chances are, probably not. According to a recent New York Times article, Americans aren’t saving enough. To find out how you stack up, follow these three simple steps:

1. Know your Social Security benefits
2. Weigh your lifetime wealth ratio
3. Gear up your retirement game plan

Know Your Social Security Benefits

Your Social Security statement sums up all your taxable earnings over the course of your lifetime. You can access it online at www.ssa.gov/myaccount. Here are just some of the benefits of signing up for online access:

Other important Social Security information you can get:

Having this information will help you and your financial planner make more informed decisions about your future and your retirement investments.

Weigh Your Lifetime Wealth Ratio

Let’s say that you started working in 2002 and your lifetime earnings are $729,500. Wow, that’s almost a million dollars!! Is that good? How does that stack up against others?

Well, it depends. Have your earnings been stable over the years in question? What are your current expenses? You need to look at more than just what you have earned; you need to take a hard look at what you have spent. Is the money going out as quickly as it comes in? Or do you save?

A useful number to help determine how well you are saving is the Lifetime Wealth Ratio. This concept was introduced by the budget blogger J. Money. If we look at the ratio of what you are saving in comparison to your earnings, it would look like this:
Net Worth ÷ Total Income Earned = Lifetime Wealth Ratio

For example,

Years Taxed
2002 2,500 High school
2003 3,000 High school
2004 45,000 First real job after college
2005 45,000 Real job
2006 52,000 Real job
2007 52,000 Real job
2008 54,000 Real job
2009 75,000 Real job + freelancing
2010 75,000 Real job + freelancing
2011 78,000 Real job + freelancing
2012 78,000 Real job + freelancing
2013 85,000 Real job + freelancing
2014 85,000 Real job + freelancing
Total Income Earned $729,500
Total Net Worth (savings, cash, other assets) $50,000
Lifetime Worth Ratio 14.59%

The goal is to have as high a ratio as possible. If you have more than a 10 percent ratio you are doing OK; if the ratio is higher than 25 percent—even better. This shows that you are not only earning but you are saving and investing your money. And, compounding can help your savings even more!

Gear up Your Retirement Game Plan

Ensuring a comfortable retirement will not just happen by itself. And you can’t count on Social Security to be your retirement plan. Financially savvy investors know they need to have control of their retirement plan. And, for those who understand alternative investment options, a self-directed IRA can be a great way to build retirement wealth more aggressively. This investment vehicle allows individuals to invest in nontraditional assets that they already know and understand such as real estate, mortgages and other loans, private hedge funds, precious metals, limited partnerships, commercial paper and notes, and more.


For information about ensuring that your retirement game plan is in gear with a self-directed retirement plan, contact Next Generation at (888) 857-8058 or Info@NextGenerationTrust.com.


We do not give investment advice and strongly recommend you consult your trusted financial advisors about your specific self-directed Traditional or Roth IRA and your retirement investments.

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