Are You A HENRY? High Earners, Not Rich Yet

It occurred to me while writing my bestselling book that a good percentage of you are HENRYs. A HENRY is a “high earner, not yet rich” consumer who is on the path to financial freedom.

HENRYs mostly earn six-figure incomes who also save and invest aggressively. However, HENRYs often don't feel rich compared to others. As a result, HENRYs are often a little anxious about their current status in society.

Nobody really feels sorry for HENRYs given their plentiful opportunities to make a fortune. Perhaps the only thing keeping a HENRY from achieving their lucrative destiny is grit.

Definition And Examples Of HENRYs

The acronym first originated in 2003 when it appeared in a Fortune article written by Shawn Tully. The definition of HENRY, “high earner, not rich yet” helped define the hoards of gung ho workers trying to climb the corporate ladder.

These workers often attend good schools and join industries such as technology, management consulting, investment banking, law, and medicine. As a result, they end up making more money than the average person. However, given many of these high-paying jobs are located in expensive cities, they often don't feel like they are getting ahead.

HENRYs are usually under 40 years old, but can really be of any age. The older you are as a HENRY, the more financial help you probably need. In terms of income, HENRYs are often defined as making at least $100,000 a year.

Coastal City HENRY

HENRYs in expensive coastal cities often make between $150,000 – $300,000 a year. The dual-income household income range is generally between $200,000 – $500,000. Yet, even on this income level, they still have to carefully watch their expenses.

I once wrote a popular post entitled, Scraping By On $500,000 A Year: Why Some High Income Earners Can't Escape The Rat Race. The couple with two children that is highlighted in the article is a classic example of a Coastal City HENRY. They have two six-figure jobs, two children in private school, a $1.8 million home, and not much cash flow leftover (~$7,000 a year). The 1,000+ comments are pretty entertaining.

Most Coastal City HENRYs are also likely pursuing a Fat FIRE lifestyle. After all, most people want to maintain their lifestyle in retirement. Living off a six-figure income while working for decades and then dropping down to a five-figure income in retirement isn't ideal.

After some calculation and feedback from many Coastal City HENRY households, I believe a family of four in an expensive city needs to earn about $300,000 – $350,000 to live a relatively middle-class lifestyle. As such, this is the investment income range I'm consistently shooting to earn today.

Once a Coastal City HENRY earns more than $500,000 as a couple, they are entering what most Americans would consider rich. Today, an individual needs to earn more than $500,000 to achieve a top one percent income.

Heartland City HENRY

In contrast to a Coastal City HENRY, a Heartland City HENRY is someone who doesn't live in an expensive coastal city like San Francisco, Los Angeles, San Diego, Seattle, New York, Boston, Washington D.C, and Miami. Philadelphia and Miami are still relatively cheap. But costs are going up.

A Heartland City HENRY individually earns between $100,000 – $200,000 or usually up to about $300,000 as a couple. After about $300,000, a Heartland City HENRY is considered rich, given the median house price often costs less than 3X the HENRY household income.

Thanks to positive demographics, technology, and lower taxes, the demand for real estate in heartland cities is going up. Therefore, Heartland City HENRYs might start feeling squeezed if their incomes aren't going up even faster.

What HENRYs Complain About The Most

The #1 complaint by those who classify themselves as “high earners, not rich yet” is high taxes. Given HENRY's main source of income is W2 income, they are taxed at the highest marginal rates possible. If a HENRY doesn't particularly like their job, their dislike for taxes will be even higher.

For example, we learned in a previous post how Goldman Sachs analysts were absolutely miserable working 100-hour weeks. All of these analysts out of college are considered HENRYs. If they stick with banking for 10 years, they will likely be multi-millionaires. The main problem they face is lasting long enough to get rich.

A Coastal City HENRY is most at risk of paying more taxes under the Biden administration. Biden wants to raise taxes on individuals making over $400,000 and households making over $450,000.

Increasing taxes at these income levels seems reasonable to pay for all the increased government spending. However, try telling that to someone who hates their job and has a lot of student loan debt.

Short term and long term capital gains tax rates by income for singles - definition of HENRY
Table that shows short-term capital gains tax rate much higher than long-term rates

One of the reasons why I was happy to leave finance in 2012 was because I may have faced a 39.6% marginal tax bracket in 2013+. When you're already exhausted, the last thing you want to do is pay more taxes. So instead of complaining, I chose to do something about my situation.

In comparison, Heartland City HENRYs are in better shape when it comes to taxes. Not only do they live in relatively lower-tax states, they aren't making a high enough income to be subject to higher marginal federal tax rates.

Heartland cities should continue to attract people who hate taxes the most. You've already seem some very rich people such as Elon Musk and Larry Ellison relocate away from California due to high taxes and over-regulation. However, these two are obviously not HENRYs! They are two of the richest people in the world.

When Does A HENRY Finally Start Feeling Rich?

Sooner or later, the angst HENRYs feel about not feeling rich should begin to dissipate. The more wealth they accumulate, the more settled they will feel.

For Coastal City HENRYs, the first stage in feeling more settled is when they achieve a $3 million net worth. A minimum $3 million net worth provides the lifestyle and buying power of a $1 million net worth from decades ago. At this level, you have the option to take things down a notch or negotiate a severance, which provides peace of mind.

If you are a Heartland City HENRY, then a net worth between $1 million – $2 million should provide for the same type of relief. Although, you would have to remain in a heartland city to maintain such a level of comfort. Whereas a Coastal City HENRY has more flexible to relocate to increase their buying power.

The other indicator for when a HENRY can shed the monicker is when their after-tax passive investment income can cover their base level expenses: food, shelter, transportation, and clothing. Once the basics are covered, they should feel much better about their financial situation as well.

Any more income and wealth is just running up the score. However, a HENRY will sometimes look to the mega-millionaires and billionaires and wish they had more. It’s always comparing for more.

Perhaps what annoys a HENRY the most is seeing people who are less educated than them making more money. A good example is a HENRY slaving away at McKinsey & Co. while their high school friend who got C grades makes a fortune off cryptocurrency or a small business.

Below is a Wall Street Oasis forum comment that perfectly encapsulates how HENRYs feel about others less smart than them.

How a HENRY feels when less intelligent people make more money than them

HENRYs Cause Their Own Problems

Although HENRYs work hard for their money, they also spend a lot more than the average person as well. It is partly due to poor spending habits that they find themselves dissatisfied with their financial progress.

Instead of being happy with their existing house, they want to upgrade to a forever home. Instead of being happy with a Toyota Highlander, they want to drive a Mercedes G550. Although a local public school is well-rated and free, a HENRY might opt to send their child to private school.

Given the types of spending choices HENRYs make, very few people care about their struggles. For all intents and purposes, they are leading very comfortable lives. HENRYs will also eventually be rich if they keep saving and investing. Therefore, HENRYs must keep their complaints to themselves by being stealth.

If you were to ask a typical HENRY whether they would classify themselves as poor, rich, or middle class, they will predominantly say middle class. This is despite the fact the median household income in America is roughly $70,000.

Below is a typical HENRY budget for a family of four making $400,000 living in an expensive city. Hopefully, Biden really does stick to raising taxes on married couples making over $450,000. If so, this couple is safe. If not, they will simply have to cut costs or work harder to get rich.

A $400,000 HENRY budget for a family of four in an expensive city
Budget of a couple making $400,000 a year with $34 left over

Mass Affluent Or Aspirational Class

Finally, HENRYs can also be considered part of the mass affluent or aspirational class. Those in the mass affluent or aspirational class are top 20% income-earners. They are highly coveted by any type of money management firm because these firms want to grow with their clients.

We all aspire to be fitter, richer, happier, and healthier. Therefore, being a HENRY should put you in a good position to achieve better things. I don't think it's a derogatory term by any means. In the meantime, try to be mindful of being a high earner. Not everybody can earn multiple six figures.

As one of my favorite Chinese proverbs goes, “If the direction is correct, sooner or later you will get there!”

Related: The Median Net Worth For The Mass Affluent

Recommendation For Building Wealth

Stocks are very volatile compared to real estate. Therefore, if you want to dampen volatility, diversify your investments, and build wealth at the same time, invest in real estate. Real estate is my favorite asset class to build wealth.

The combination of rising rents and rising capital values is a very powerful wealth-builder. By the time I was 30, I had bought two properties in San Francisco and one property in Lake Tahoe. These properties now generate a significant amount of mostly passive income.

My favorite real estate investing platform is Fundrise. With over $3 billion in assets under management and over 310,000 investors, Fundrise is the leading, vertically integrated real estate platform today. Investors can invest in their diversified real estate funds with as little as $10. 

Fundrise primarily focuses on single-family, multi-family, and build-to-rent properties in the Sunbelt. With lower valuations, higher yields, and strong demographic shifts, Fundrise investments are in the sweet spot of a positive long-term trend. Come check out what they have to offer. 

For accredited investors who are able to invest $10,000 – $25,000 per deal, check out CrowdStreet. CrowdStreet has a direct-to-sponsor model where investors invest directly with the real estate sponsor, thereby improving efficiency and communication. Further, investors are not charged a fee to invest. Instead, the fee is borne by the sponsor.

There is a “fanning out” of the American population as remote workers look to save money. The global pandemic has helped accelerate this trend as many companies have permanently allowed their workers to work from home. 

Reader Questions And Action

Readers, are you a HENRY? If so, do you feel angst about not yet being rich? What income and net worth levels do you consider captures most HENRYs?

For more nuanced personal finance content, join 55,000+ others and sign up for the free Financial Samurai newsletter and posts via e-mail. Financial Samurai is one of the largest independently-owned personal finance sites that started in 2009. 

To read the best personal finance book, buy a hard copy of Buy This, Not That: How To Spend Your Way To Wealth And Freedom, my instant WSJ bestseller. It will help you achieve financial freedom sooner and help you make more optimal decisions to live a better life.

About The Author

96 thoughts on “Are You A HENRY? High Earners, Not Rich Yet”

  1. You talk about young families a lot as you’re lucky to have one! What advice do you have for many of us 60+ single HENRY’s living in ridiculously tiny studios in NYC, who have <1m net worth, looking at our W2 paychecks showing almost half gross take-home, and admiring those with multiple rental properties until you hear the stories of nightmare renters who end up squatting while you bleed money and sanity trying to get them out? I know, you’re going to say Fundrise… but having lost money to “creative investment schemes” in the past, we are all leery.
    Some general guidance gif those of us with a way shorter horizon very welcome …

    1. Hi Senior Henry!

      The good thing about being single with no kids is that your monthly burn rate is very low. Therefore, I would continue to develop a good relationship with your landlord to keep your rent low, and use your free time to make a side income.

      Being a parent for the past five years, I really miss all that free time I had to do side hustles or do fun things. There’s so much money to be made outside your day job nowadays!


  2. Not sure why so many of the HENRYs in high-tax coastal states elect to pay a wealth advisor 75-100bps to put them into taxable investments before maxing out 401(k)s, IRAs, etc. Even once those are maxed out, they can still utilize insurance/tax wrappers for less than 75bps/year and invest in the exact same investment allocation tax-free.

    When you do the math, the wealth/financial advisor model loses every time on an after-tax basis.

  3. Early 30s HENRY in high cost coastal city. Married + 1 child. NW of ~$2mm. Annual cash income of $850k + $2-$300k of carry. Most of asset base is in public equities, real estate PE (single asset, no dissimilar from fundrise with 1.5-2.0x MOIC targets) with a potpourri of other items (GP commit, crypto, etc.). Own single family home in high $2mm FMV with high $1mms of IO mortgage left. Fully maximize all tax advantaged retirement account each year (401k, mega roth, 529, etc.).

    Net worth creation seems very difficult given frequent calls on cash from taxes, GP commitments for funds and upkeep. Definitely do not live frugally but also not an intensely luxurious lifestyle (no business class travel, luxury German cars, etc.). Seems bizarre that it just “feels” like we’re covering lifestyle at this point but may just be relative.

        1. Besides generally investing, I would carve out 10% of your earnings and invest it in the most speculative investments you like.

          Further, I think buying one property, renting it out after 3-5 years, and buying another does wonders.

          1. Do you think about carving out 10% of earnings as net or gross? Does net for you include after other calls on cash (e.g. tax, tax advantaged retirement accounts, etc.)? Not trying to overcomplicate things but 10% of net vs. 10% of gross can be very different numbers… especially as a W2 employee.

  4. Making $250k in KY. Bought a house in 2012 for $204k and net worth now about 2 million. Our cars were 30k and 36k both new 4 years ago.

    Biggest obstacles to building wealth for me was paying back large loans for my professional degree and being taxed based on high income in years where I was negative or low net worth. Childcare has also cost me over $200k. I’m a big believer in focusing on what you can control and not worry about other people… or keeping up with the Joneses.

    It’s a good idea to live below your means early on if your goal wealth building. For me, amassing some wealth was more about financial security than material things. I plan to keep working, but I like the peace of mind of knowing I’m not solely financially reliant on my current career.

    It is interesting to hear people in a seemingly better financial situations than myself way they have trouble affording vacations or kids’ college. I’ve got three kids and take one or two vacations annually. Their college is a few years off, but I don’t forsee that being an issue either.

      1. PharmD although I don’t have a traditional job. Yeah, that’s household earned income although my wife works part-time. And I agree, cost of living is a major factor.

        Still, I think people have to make the choice for their personal situation as far as balancing wealth building vs lifestyle spending.

        The nicer houses in my school district easily reach the 700k to 1.3mm range though. And there’s plenty of estate style setups or horse farms that extend up into to the millions.

        A family in this specific area with our income typically buys in the 400k to 800k range. However, early on, I placed a higher emphasis on fully funding our tax advantaged retirement accounts while paying down student debt. The stock market has fared well since then so we’ve been lucky in that regard.

  5. HENRY is a new term to me as well. Puts things in perspective and helpful to see relativity across the U.S. and even internationally.

    Have always felt uneasy about how I stack up… as I was younger it was ego, and as I’ve matured, it’s more about being financially independent. Have been in Healthcare tech for 20 plus years and always wanted to have other avenues of income but bailed out of all of the side hustles I “almost” participated in – real estate, rentals, small business investment. Apparently I am following in my father’s ultra conservative footsteps. He paid cash for everything. Warned me of the pitfalls of credit. My parents retired very comfortably and still live conservatively.

    It does not help that I happen to live in one of the top wealthiest counties in the country even though it is a low cost of living Midwestern city. I live in a great neighborhood, Blue Ribbon public schools, and relatively low cost of living. I live in one of the most affordable subdivisions in the area – homes are approx 500-700k avg. Adjacent subdivisions all around us have homes in the 1-2m range.

    Married – 49 and 47 – wife left high paying corporate gig in our early 30’s to go back to graduate school to do something meaningful. This made me realize that happiness along the way is part of the goal. Finding happiness is sometimes a skill you have to learn… or at least I did. I certainly was all drive early on with ambition to climb as high as I could. I dialed that back as I decided in my mid 30’s to turn down a few career opportunities and promotions that required moves to coastal or more expensive cities. The constant acquisitions, layoffs, re-orgs of corporate world and uncertainly of being a W2 employee made me uneasy. Although I survived all of those scenarios, I don’t like the feeling of not being in control.

    I chose to want to be around to raise my 2 boys, coach them in sports, and control my travel more. I was on a plane every week for better part of 2 decades. We have sacrificed a lot of earning potential but I honestly would not trade it. It worked for us. While we are somewhat surrounded by some very wealthy people, we seem to fit in culturally even with some of the disparity. We all have enough $ to do the things we want to do and often together.

    -250-300k combined income (she works part time as a school psych)
    -Paid 385k for house in 2007 – now worth 600k – owe 80k – cld have paid off but interest rate is 1.875%
    -Drive a 7 year old BWM – bought 1 year old 15k below sticker with 7k miles on it.
    -Wife has a Highlander
    -No debt other than mortgage
    -Kids are 14, 16 – put away close 50k each in 529’s – but (knock on wood) scholarships may be in the picture
    -approx keep around 100k in liquid
    -NW around 2.5-2.6M
    -vacation often while kids are still living with us but mix of affordable trips with maybe one
    more expensive trip every year. We mapped out how many Spring Breaks, Summer vacations, etc we have left with them and have planned that out. Hard to believe empty nesting in 5 years.
    -1.5M in retirement

    Have just started feeling like I can breath a bit financially – the market run in the past 7 years has helped that I’m sure but hard to believe we are this blessed but can still feel uneasy about our financial well being!

    All of your perspectives are very interesting and helpful!

    Thanks all!

  6. Sam,

    I liked the part about comparisons. The DOGE thing was overstated and the small business understated: hard work IS the key.

    $2.5 million is a lot of money from a job, but a scrappy entrepreneur with a crew of welders, electricians, or running a construction business could make several times that number with much less education.

    That is, for now (until the government regulates entrepreneurship into oblivion and only Harvard MBA’s are able to open lemonade stands).

    All the best.

  7. My husband and I are Henry’s. We make about $520k combined in the SF Bay Area in banking. We have NW of $4.2mm – about $2.5mm in retirement accounts and a home worth at least $2.3mm with $600k mortgage. We live comfortable but 3 kids are in public schools, we just started saving for college a year ago (oldest is 7th grade), and can only afford one vacation per year. We have to budget when it comes to big ticket items like furniture. So we don’t feel rich. We are expecting larger than normal bonuses this year and plan to start buying real estate. I don’t think I will feel rich until I have enough passive income to cover our basic living expenses. Also, we want to save another $500k for college costs.

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