3 Benchmarks That Indicate If You’re Actually Building Wealth
Wouldn’t it be great if, just by showing up to work, keeping your head down and doing your best, you were rewarded in ever-increasing amounts based on your time and effort? The short answer is obviously yes, but the longer answer is much more complicated in the economy of 2026.
Whether you have to work multiple side hustles just to get out of the paycheck-to-paycheck cycle or have been practicing your speech to your boss about getting that raise you so richly deserve, it can be hard to tell when and how you are actually building wealth.
Read More: 5 Signs You've Made It Based on Net Worth Data
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Here are a few expert-backed benchmarks that will help you know if you are on the right path to doing just that.
Your Net Worth Is Your Master Metric
Simply put, to know just how much actual wealth you have, you need to be able to properly calculate your net worth, or at least get a rough estimate. Cody Schuiteboer, president and CEO of Best Interest Financial, is here to help you with that, plus figure out a few ways to track your progress over time.
“Net worth is the scorecard, and everything is supporting data. Calculate net worth by adding everything owned minus everything owed. The value is less important than how it changes over time,” said Schuiteboer.
Essentially, the direction of the number is much more important than the actual total, so calculating your net worth quarterly can help you answer the question of if your money is increasing more than what you deposited into your savings account.
“If net worth increased from what you deposited and more, then you are experiencing the power of compounding," Schuiteboer added. "A good external benchmark, as mentioned in 'The Millionaire Next Door,' is to calculate your pre-tax income times your age, then divide that by ten. If your net worth is greater than that number, you are doing a good job of accumulating net worth with your income.”
Keep in mind that if your net worth is continuously lower than the math Schuiteboer describes above, you may not be preserving or expanding your income to its fullest capabilities.
You Can Control Your Savings Rate
If every financial move you make feels like you aren’t exactly behind the driving wheel, then focusing on things you can control will help you feel like you are actually building wealth instead of just sticking your finger in the dam.
“Your savings rate the most accurate indicator of your wealth-building. What you have saved and invested in a year includes what you have paid in retirement, paid into a brokerage and paid towards the principal. When calculating the savings rate, use the total salary from the year and be sure to include retirement account contributions, brokerage account contributions and payments towards the loan principal,” explained Schuiteboer.
So, what does that look like in real time? Well, many economists and financial advisors alike believe that saving 10% of your income is a good indicator you’re on track for retirement.
However, to build wealth, Schuiteboer said, “The truth of the matter is that saving 20% or more means one is building wealth and not just saving to avoid being poor in retirement. There is an illusion that high income means saving more, when in fact, I have seen many six-figure earners saving 3% of their income, and their future is worse off than a family saving 20% who earns half as much.”
You Can Gauge Your Milestones Based on Your Age
Like all good things in life for most people working for themselves, growing your wealth takes time, so remember that measuring something by your age or how long you’ve been doing something is a pretty good goalpost.
“The most accurate indicator of retirement wealth is the total saved compared to the total earned. Aims are that in your 30s you have one times your annual salary saved, in your forties three times saved, in your fifties six times saved and in your sixties eight times saved,” Schuiteboer said.
If you are meeting these benchmarks, then you can exhale a bit, especially when wondering if your golden years will be comfortable or not. Keep in mind that Schuiteboer also added, “Another indicator is that by your 40s, the total annual gain of your investments should be the same as the total amount contributed to your investments, and in your fifties, your investments should earn more than you.”
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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