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Subject:  More on AAWs, UAWs and PAWs Date:  9/14/2002  4:38 PM
Author:  lazyfrog Number:  203 of 220

I liked “The Millionaire Next Door” (TMND).
I like the lessons it had to offer.  I 
especially appreciate the equation it gives
as a way of benchmarking how effectively 
I am accumulating my wealth.  I think it's
important to chart your progress over 
time.  I see this as no different between 
measuring your return against the return 
of the S&P 500, or charting the progress 
of the lowering your blood pressure.  Things
need to get measured.  I must agree with 
however that the equation that TMND door offers,

Age / 10 x Income = Average Accumulator of Wealth (AAW),

is flawed in that it does not give enough weight to
age.  For equation to be useful, it must somehow 
come close to telling where we should be in reality.
Like Felbi, I've also played around with a few 
equations to try and come up with something that will
be more useful.  I wanted the equation to approximate
the net worth of the average person of median income
in a particular age group.  

According to the June (or July) 2002 issue of “Money” magazine 
median income and net worth by age looks like the 

Age  	Income (approx) Net Worth (approx)
---- 	--------------  ------------------
<25  	25,000        	 2,000
25-34   40,000        	 22,000
35-44   54,000        	 100,000
45-54   62,000        	 165,000
55-64   53,000        	 210,000
>65	25,000        	 185,000

In order to be sure I checked some other sources 
as well.  On Scott