Wealth and income are seen as two of the best measures for how well you're doing at life. People are inherently private about their money, but luckily the Australian Bureau of Statistics (ABS) has the inside scoop.
At the end of FY16 the median household net worth was $527,000. A big portion of this amount will be equity in their house and that figure doesn't account for age.
Most household wealth is their house and superannuation assets, which will mostly be invested in a similar fashion to Vanguard Australian Share ETF (ASX: VAS) and Vanguard MSCI Index International Shares ETF (ASX: VGS), except with much higher management costs.
According to Suncorp Group Ltd (ASX: SUN), the 'millennial' generation is actually doing a fine job of saving. Monique Reynolds, Suncorp Bank Regional Manager said "On average, Australians aged 25 to 34 are saving $533 per month (12.7 per cent of their personal income). This is $100 more than the national average (11.5 per cent or $427)."
The above suggests that Generation Y have a good savings habit. Considering the average full-time wage in Australia is currently $83,000, then 9.5% of this figure for super is almost $8,000 a year. Over 40 years that adds up to well over $320,000, with no compounding effects.
The average Australian can probably look forward to super balances of well over $1,000,000 assuming they have a low-cost super fund and are invested predominately in growth assets.
A recent InvestSmart article suggested that if a 22 year old puts aside the $533 a month and achieves real returns (after inflation) of 6% then they'll have $73,000 by 30. With a few alterations with higher earnings and a lower savings rate due to promotions and life changes, that person could hit $218,000 by 40, $500,000 by 50 and $1 million by 60.
Of course, spreadsheet calculations makes things look easy. Things look decidedly more difficult for the newest cohort of adults with the growing cost of university, huge housing costs and low wage growth.
But, no-one is saying the average person will hit $10 million. Hitting $1 million is quite achievable for people willing to live materially below their means and invest in growth assets for the long-term.
If some of the above net worth figures seem too difficult, just play around with MoneySmart's wealth calculator to see what you could achieve. Remember, the long-running average share market return has been 10% over the past few decades.
Foolish takeaway
Everyone has different sets of circumstances. Some people have wealthy parents to help out, others are battling high costs with low wages. Whatever your situation, it's possible to achieve surprising wealth if you can just stash a little into the share market every month or two and hold something like iShares S&P 500 ETF (ASX: IVV) for the long-term.
