Getting to the top 1% net worth by age is a very impressive goal. But how much money do you need to get there? Overall, to have a top 1% net worth in 2022 requires having at least $10 million.
$10 million is also the ideal net worth amount for retirement, based on my experience and the polling of thousands of others. For 2023, the estate tax threshold rises to $12.92 million.
People like to throw around random net worth figures all the time when asked how much is considered rich or how much they would need to never work again. Often, the figures just sound nice, like saying “one meeeeleon dollars” without any mathematical justification.
This post puts some numbers behind ascertaining how much wealth one needs to be in the top 1%. Remember, having a large net worth is better than having a high income. The government goes after income more than it goes after wealth.
For example, you can live in a $8 million mansion. Yet, you can also get Universal Healthcare subsidies if you make less than ~$94,000 a year with a family of four.
Ways To Construction A Top One Percent Net Worth Calculation
Based on my older Top 1% Income Earners post, we know that in order to be in the top 1%, you’ve got to earn at least $380,000 in gross income a year. The data comes from the all-knowing IRS back in 2016.
However, in 2022, the top 1% income earner is closer to $500,000 a year due to inflation and a continued bull market until recently. That’s right. Inflation has boosted the income threshold to be a top 1% income earner by ~25% in just several years!
Based on my Net Worth For The Upper Middle Class post, we learn that the net worth range for the top 15% of all Americans between the ages of 45 – 74 is around $700,000 – $830,000.
Finally, I’ve shown numerous examples as to why earning roughly $200,000 – $250,000 gross a year per person and $300,000 a year per couple is the ideal income for maximum happiness. Being rich is sometimes a state of mind, and I’ll use these income figures in my analysis as well.
Given these data points, I’d like to construct two simple models to demonstrate what I think should be considered a top 1% net worth. All wealth and no income is not ideal. Similarly, all income and no wealth is not ideal either. There needs to be a balance.
The Top 1% Net Worth Amounts By Age
Instead of going through stale Federal Reserve data about wealth and population stats, I’d rather create logical assumptions based on the existing current top 1% income data.
We know the constant variable X (top 1% income). All we have to do is solve for Y (top 1% net worth) based on Z, an agreed upon income multiplier determined by yours truly.
At the age of 35, one should have about 5X gross income as a net worth. At the age of 45, one should have about 13X gross income as a net worth. By the time one turns 60, the net worth figure should be closer to 20X gross income. Don’t believe me?
Read the source: How Much Should My Net Worth Be By Income. Making money means nothing if you have nothing to show for it!
One can therefore conclude that a top 1% income-earning 35 year old should have $2,000,000 in net worth. This coincides with her $400,0000+ a year income if she wants to be in the top 1% net worth echelon.
A 45 year old top 1% income earner should therefore have roughly $6,000,000 in net worth. While a 60 year old should have a net worth of roughly $9,400,000.
Have a look at the chart below. It’s a good snapshot of top 1% net worth starting at age 25. I’ll then share some further analysis after you digest the chart. I use $470,000 as the an overall top one percent income. However, with inflation over 7.5% and likely to average over 4% in 2022, a top one percent income is likely now over $500,000.
More Notes About The Top 1% Net Worth Chart
- Top 1% net worth is relative to our ages. It’s unfair to compare a 60 year old’s net worth with 35 more years to accumulate wealth to a 25 year old’s net worth.
- Younger people in this chart will logically have a tougher time getting to the top 1% income figure of $470,000 compared to older people. At the same time, the multiplier younger people have to hit to get into the top 1% net worth is also lower. I start at age 25 as a result, because so few people will make $470,000 within a couple years out of college.
- If you have around a $235,000 net worth at age 25, you’re in the top 1% probably due to some savvy investments made right out of college. Income alone isn’t going to cut it. You may have just started making a top 1% income of $470,000+ as a highly coveted software engineer or finance whiz. However, thanks to taxes and general living expenses, accumulating $235,000 in net worth by age 25 still isn’t that easy.
- The minimum income multiplier peaks at the traditional retirement age 65 because it’s pointless to accumulate so much more money when you’ve got less than 35 years to live. Social Security is available at 65, adding another million to your net worth if you capitalize its annual payments.
- The minimum income multiplier stays steady at 25 after age 80 in order to maintain a $11+ million net worth figure. In 2022, $12.06 million is the limit per individual one can pass on before the Death Tax kicks in. Therefore, you might as well spend every single last penny above the estate tax threshold on yourself, loved ones, or charities instead of giving it to an inefficient government.
- The top 1% net worth figures in the chart are for individuals. But, feel free to use the net worth figures as targets to shoot for if you are a married couple as well since you are a unit. Just know that the Death Tax income limit logically doubles to $24.12 million in 2022.
Replicating Top 1% Net Worth By Lifestyle And Savings Rate
The definition of “rich” can be someone who no longer has to work for a living, while maintaining a top 1% income earning lifestyle. This is where things get a little tricky, because many people spend $470,000+ differently.
When I was making big bucks, I would always save at least 50% of everything I earned after maxing out my 401k. I knew the income wouldn’t last forever because the job was not sustainable. Given my 50% savings rate, a $470,000+ gross income lifestyle could be matched by someone spending 100% of his $235,000 gross income.
On the other hand, many of my colleagues easily spent 90% – 100% of their $470,000+ gross incomes. One close colleague told me, if he didn’t make at least $500,000 a year, he couldn’t save any money! He required at least $300,000 a year after-taxes to support his family of four. Talk about a high burn rate.
Related: How To Make $200,000 A Year And Not Feel Rich
More Definitions Of Rich
The risk-free rate (10-year bond yield) is currently around 4.2% thanks to elevated inflation and the Fed rapidly raising rates. Therefore, one needs a net worth of roughly $11.9 million ($500,000 / 4.2%) to be able to generate $500,000 a year in top 1% income!
As a result, I highly recommend people reconsider the 4% Rule and reduce their safe withdrawal rate in retirement. The 4% rule is outdated and dangerous to follow in this permanently low interest rate environment.
$11.9 million can therefore be considered the upper band for the definition of rich in today’s environment using this methodology. Given a top 1% net worth is at least $10 million, $11.9 million can be used as a top 1% net worth for a couple. It is also aligned with the 2023 estate tax threshold per person of $12.92 million.
As the risk-free rate declines, the amount of capital required to be rich increases and vice versa.
Another calculation is using the ideal income for maximum happiness. I think that ideal income is $200,000 per individual and $300,000 per couple. Therefore, using the same 1.6% divisor, we can get $12.5 million and $18.7 million. In other words, a top one percent net worth amount based on happiness can be between $12.5-$18.7 million.
Finally, even if you can’t reach a top 1% net worth amount, you can most certainly feel rich. There are always ways to feel rich even if you can’t get rich.
Data From The Federal Reserve About Top 1% Net Worth
Take a look at some data from the Survey Of Consumer Finances, which comes out every three years. The median net worth for the top 1% is $10.7 million, which jives well with my calculations. The top 1% net worth should continue to increase over time due to inflation. Inflation increased by roughly 6.8% in 2021 and 8% in 2022.
Here’s an older chart when the top 1% gross income was roughly $380,000 back in 2010. In just 11 years, a top 1% income amount has grown by about $100,000, or 26%! This shows the power of inflation and the importance of investing and always asking for a raise.
The chart shows what one needs to accumulate based on a 2.5% risk free rate and various savings rates. The risk free rate will obviously adjust over time. But I don’t think it’ll get over 3% for a long while. The top 1% income levels differ by age.
Getting To The Top 1% Net Worth Is Possible
The sad part about being in the top 1% of net worth is that it’s getting harder and harder to achieve. The reasons are due to inflation, globalization, and continued low interest rates. Inflation expectations are picking up post-pandemic.
However, overall, interest rats are still very low. It takes more and more capital to achieve the same income as it did 10 years ago. Everyday citizens are now required to take more risk to make a return. Is there any wonder why capital is flowing to more risky assets like stocks and real estate?
Only the poor or super wealthy say money can’t buy happiness. For most of us middle class citizens, becoming rich is a nice goal to have. Now you’ve got some concrete figures to shoot for by age.
Stocks and real estate really are my two favorite ways to build and earn passive income today. Time to start building!
Loading ...Invest In Real Estate Like The Top 1%
If you want to get a top 1% net worth, I highly encourage you to invest in real estate. Real estate is a core asset class that has proven to build long-term wealth for Americans.
Real estate is a tangible asset that provides utility and a steady stream of income if you own rental properties. Further, the wealthiest Americans own tremendous real estate portfolios.
Given interest rates have come way down, the value of rental income has gone way up. The reason is because it now takes a lot more capital to generate the same amount of risk-adjusted income.
My favorite two real estate crowdfunding platforms are:
Fundrise: A way for accredited and non-accredited investors to diversify into real estate through private eREITs. Fundrise has been around since 2012 and has consistently generated steady returns, no matter what the stock market is doing.
CrowdStreet: A way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations and higher rental yields. Growth is likely higher as well due to strong demographic trends.
Both platforms are free to sign up and explore.
I’ve personally invested $810,000 in real estate crowdfunding across 18 projects. My goal is to take advantage of lower valuations in the heartland of America. There is a strong demographic shift towards lower cost areas of the country thanks to technology and the pandemic. Real estate is the ultimate inflation hedge.
Manage Your Finances In One Place
One of the best way to build your net worth is by signing up with Personal Capital. They are a free online tool that aggregates all your financial accounts in one place. This way, you can see where you can optimize your money. People with a top 1% net worth are vigilant at tracking their money.
Before Personal Capital, I had to log into eight different systems to track 25+ difference accounts. Now, I can just log into Personal Capital to see how all my accounts are doing, including my net worth. I can also see how much I’m spending and saving every month through their cash flow tool.
The best feature is their Portfolio Fee Analyzer. It runs your investment portfolio(s) through its software in a click of a button to see what you are paying. I found out I was paying $1,700 a year in portfolio fees I had no idea I was hemorrhaging!
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The Top 1% Net Worth Amounts By Age is a Financial Samurai original post. Join 60,000+ others and sign up for my free weekly newsletter where I share more tips on how to achieve top one percent wealth. I’ve been helping people achieve financial independence since 2009.
I find this article interesting, the comments even more so… I am 31 and have a net worth of roughly $1,000,000 all of which is self made. 3 years ago when I started my company I was 60k+ in student loan, IRS, and credit card debt. My wife and I were living in an RV in a trailer park living off our credit cards to build the business. Today my company is growing faster every day and that fuels my net worth even more. I unfortunately have no inheritance nor will receive any. Neither my wife nor I come from affluent families. More over we will need to support our aging parents. Some generations must break the cycle by supporting those both above and below them on their family trees.
I believe in building a highly profitable “money printer” (business) that you control. Then take that earned income and invest it in passive assets which can depreciated against your cash flow to a taxable amount of less than or near zero. This I believe is how those in the 1% in their late 30s-40s do it. I choose real estate and really don’t understand how many of the readers have high net worths but no real estate. It blows my mind! It’s an asset you can leverage, generates cash flow, appreciates, and has a world of tax benefits… why on earth would you choose paper you don’t control???
Overtime my real estate income will replace and surpass my earned income resulting in a healthy tax sheltered retirement income which grows over time. It will be near mathematically impossible to spend my money before I die after 30 years of continuous growth. That’s a legacy that has no expiration date. Why does your article reference % rules which factor eating your principal?
I am new to wealth but mathematically, it seems riskier to have a negative in any part of the equation regarding the principal investment. Any “horizon” is the inevitable zero at the end of your percentage rainbow. Would it not be better to live off the cash flow of paid off real estate which overtime will become a self sustaining machine which provides its own reinvest capital?
i am 46 yrs old with a $3mm net worth. i have 9 rental properties which i just cashout refi’d. all my debt is serviced by rents. I can essentially live free if I rent my main residence and move to a cheaper state w/ rents that are reasonable. thinking about hanging it up but I keep working full-time because I do not like real estate market right now and think their may be some wood to chop there soon. thoughts?
Good article that I have returned to from time to time for updates. Although the income multipliers don’t work for super high income individuals.
My general rule for wealth is to take the income you want to achieve and use a simple multiplier to find the amount you need in assets to generate that income passively. Having assets that produce a passive income is true wealth. That’s it.
The key is to choose your income and multiplier carefully. I agree with Sam that the 4% rule is antiquated, and it was really intended originally to offer guidance to retirees with a 30 year horizon. So instead of the old 25X multiplier (4% draw) I use a 33.3X multiplier (3% draw) as a base line, with a 40x (2% draw) multiplier as an upper range goal for safety.
Everyone’s income goal is different depending on location and lifestyle.
For comparison, my goal is 100,000 in income per month or 1,200,000 in income per year. I vest in a 200,000 per annum pension in 5 years, so need to fund the remaining 1MM income through my own investments.
For that, I estimate I need between 33.3 million and 40 million in assets, excluding real estate. I should cross the 30 mm mark in about 60 days with a profit distribution at year’s end. That is all equity, cash and c/e. I have had no real estate, as my job has required me to be mobile, although I am buying a primary residence now in the 4mm range in NYC, after renting a very modest place for years. I anticipate 5 more years of high income in the 8 to 12 mm range per annum, ‘retiring’ at 57 with 40 to 50 mm saved, having overshot my safety goal. We have no heirs. We inherited nothing, as our parents are still alive, although they paid for some of our educations, we covered the rest and expect nothing more.
For background, we wanted a large passive income because we have become accustomed to certain standard of living in the past 15 years. Although we are diligent savers, we still have a burn rate of about 350K per year after taxes. mostly going to experiences, high end travel, great food, a full time maid/cook, and we live part time in NYC and part time abroad. I am budgeting for a burn rate of 600K in retirement. I will need 10K per month to cover housing and associated costs, 2K utilities, 3K insurance, 15K staff, 3K food and entertainment, 3K membership fees to clubs, gifts and charity, 1K to clothing, toiletries and miscellany and the rest toward travel and taxes.
All that said, I could just as easily move into the Cape Cod house for sale next to my parents place for 400K and live quite merrily among friends and family back home on 120K per year or 10% of the above, so I should be good whatever happens.
I would love for the author to explore how people actually became 1-percenters early in life—I don’t care what it takes to be a 75 year-old rich dude, what’s the fun in that?! I do not believe that 1 percent asset wealth is achievable by working a W-2 job. Nor do I believe it’s as by being lawyers or doctors working 3,000 hours a year. Both force one to spend too much on taxes and do not scale up.
While it may be that the majority of millionaires hold their assets in real estate, and are penny pinchers (great fun), I believe that the majority of under-50 year old 1-percenters made their money from owning a corporation. The main problem for accumulating wealth is that it does not pay to have a high taxable income through salary (W2 or 1099). Mark Zuckerberg as CEO of Facebook has an official salary of less than $100K! His main wealth accumulation is through stock and stock options. To get wealthy, one has to have equity in a company. You can start one, or join one and get paid in stock options.
I know a number of individuals with $30M-$200M in net worth, all of them made their money through corporate exit. None of them were in the 1 percent asset category until they had an “exit.” This was my case too. I would argue that wealth accumulation is a “hockey stick” resulting from a very un-diversified investment in a closely held company for 5-20 years. For 1% asset wealth, there is a long period of flat wealth growth when the individual “invests in himself/herself” and then a huge spike (the IPO, the business sale, etc.). If you are not ready to start a company, it is far better to be employee #50 in a company that will have an IPO than a high salary hack at a Fortune 500. You will learn more in a start-up environment and take a very non-diversified risky bet by getting stock options. You will likely fail a few times, but do not consider that the end, consider it as “on the path to success you will often meet failure.”
The 1% net worth by age is quite interesting actually. It looks like from 25-30 your 1% NW would almost quadruple, while 30-35 it’d almost triple, and 35-40 it’s almost a double.
Seems to almost imply that as we get older in age, it’s sufficient to pursue a lower return and ease on taking risks to increase net worth?
Or is this decline in rate of net worth increase mostly due to the 65 year old $11.75MM goalpost and it’s sufficient to slow down as we get older to that point?
I revisit this page every few years. 55 now with 4M net worth; 1.5M in property and the rest in taxable and non-taxable accounts. I’ve never earned more than $200K a year; most of my assets are due to regular investments, modest stock grants from jobs, spending less than I make, a $250K settlement from a motorcycle accident 20 years ago and a $400K inheritance in 2014 from a family trust. I realize now that I have more money than I will ever likely need. Currently working for a national firm that actually has a *pension* if I stay another 3 years will vest in a modest one, 8 years would be a pretty decent one. Enjoy my work enough that it might happen.
I encourage people with significant assets during this difficult time to give money away; to food banks; to rental assistance; etc. Look into moving highly appreciated assets into a Charitable Giving Account (mine is at Schwab); you get the tax deduction when you move the assets, not when you make the donation. Then you can issue checks from that account to any charity you want.
Congrats and thanks for checking in!
I hope more people who have saved and invested diligently spend more time spending and helping others. Dying with too much is a crying shame. So many people in need.
I am motivated to keep writing on FS every week for free to help people make better financial decisions.
Excellent analysis. Your articles always puts things in the right perspective. One question though: You mention a target of some $11M for financial freedom at the age 65. How does that number change if one wants to retire a little earlier, say at 55?
I am 47, at $4.5M liquid networth plus owning a business. I am not as frugal as I should be so am aiming to go for a little higher target of $15-20M at retirement. I am planning to achieve that by continuing to save and invest regularly and having a liquidity event from exiting my business.
Fingers crossed
I came to this country with $32 in 1995. Only thing I had was blessings from my parents and God! I worked hard and started built a very good business and sold it to a NASDAQ listed company for $$$$. I was married in 1999 and had son when I was still in training , I could not spent time with him after that because of business….. I am worth $100 million dollars but when I think about my relationship with my 18 year old…. I feel I am the poorest dad!
Well done! How are you spending your fortune?
Wow! Did you not even hear what he said? He feels poor bc of his relationships and you are focused purely on the money. That’s why you can co spider yourself wealthy but not rich. I get that the pure financial aspect is your business but clearly he would give up some wealth for better filial relationship. You said it yourself elsewhere in the comments so why ignore it here?
I’m focused on money because this is a personal finance site. Go figure.
Here’s a good post: https://www.financialsamurai.com/how-to-feel-rich/
>$9 million net worth here, turning 50 in a few months. Got there thru investing, equity stake in business from management job then started my own biz and sold 6 years later.
I’d say about 20% of wealth came from investing gains, 15% from mgmt equity stake and 65% from own business.
If you have the ability to start your own business in a good niche do it! A million times better than being a wage slave, even a highly paid wage slave. And fun as hell. There is no feeling like being your own boss and controlling your destiny.
“A man’s worth is his family.” Michael Corleone (Godfather III)
Having made high six figures, the realization of sacrificing time for money was too great with a child at home. Money truly does not buy happiness.
I absolutely agree. The first 5 years of a child’s life is so precious. I sacrificed a lot of money to spend time with my son for the past 3 years, and I don’t regret it at all. The moments have truly been priceless.
This is a wonderful post, as are many others I’ve seen on this website.
I feel Rich because I’m financially free at 40. These net worth calculations would put me in the 1% in terms of wealth, but my annual income is closer to a school teacher’s: $63K/year for the last 5 years. I’m retiring from my W2 job this spring, and my income will decrease even further. Wildly, I’ve just realized the Feds will be giving my family of 4 free healthcare at our income level. This post references that fact: we’re rewarded to be wealthy, not high wage earners.
For people who don’t understand how wealth is built by Average Joes, my situation is incomprehensible. How do you approach $3M by age 40 with a salary of $63K (zero received from family here; and $100K in student debt to start)? The answers are probably all over this website from the few articles I’ve read. When I was 22 a college teacher gave me a copy of Your Money or Your Life.
To summarize, I took the lesson of this book to heart and continued learning. Be frugal where it counts (I still drive my 20 year old Jeep from college even though I could go pay cash for a Maserati). By assets, not consumer junk. Focus on your goals. Do your own chores/maintenance on your property(ies). Eat at home. Fine cheap hobbies you love. Hardest of all: figure out how to instill these frugal traits in your children, because wealth is fun to maintain but a bitch to earn.
Excellent points. I came across this because I am looking for an executive position and realize currently I am debt free and have a family of 4 but want more. My business is good not great and I am opening another business with my brother.
But though I have a nice net worth outside of the top 1 % I live frugally. And during this pandemic I have become debt free paying off a small HELOC for a condo in another country and our home in the US.
Old values need to be returned to or this country will be destroyed by the socialists.
2.8 million. 47 years old. Would rather be rich than look rich. I only feel rich enough to be rich, but not to look rich.
I Love Your Blog! – Whenever my kids ask if we are rich – i tell them, “We are about the HENRYs (high income not rich yet) and well below the rich. They have no clue what I mean. I define rich as 1) not having the drudgery of a job to be a HENRY and 2) being able to stroke a check for a Gulfstream G650.
I think where you live too skews the definition of rich – we travel to NYC once a year for medical check-ups and I find myself easily spending $300-$500 on dinners for 4 of us and we are not talking Michelin rated places.
I totally agree with your 2% ROI as what you need to have as “wealth” in order to replace your income. The reason I think the wealth number is much higher is a lot of the time you will have your money locked up in things that don’t produce an ROI – like real estate. Even though I generate rent – if I have repairs or do a 1031 exchange – I find i gotta keep the rent income available for the real estate so that it can run free from additional investments – taxes also take a bite out of it.
Finally, I know it seems absurd that your former colleagues spent $500K a year on expenses – but just from my brief experience with NYC – I can easily see how someone could do that. I live out west and not in any cosmopolitan city – My kids’ private school is $25K a year x two kids. I consider 401K as “expenses” and ditto for my backdoor Roth IRAs and their 529 college saving plans – so if you add savings to the expense side, we easily push $300K a year with no house payment. For me to make $300k a year I need to have $12 million in liquid assets to get the no brainer ROI on treasury and high-grade commercial paper. I can’t bring myself to keeping that much of my net worth in liquid assets so I keep the job to keep building the pile. One day I’ll take the leap as you did but again – love your ideas!
https://www.brookings.edu/blog/up-front/2019/06/25/six-facts-about-wealth-in-the-united-states/
Brooking institute say $10.7mm is the median not the threshold for the 1% net worth and that makes a lot more sense to the net income threshold 1% data.
Best regards
Very cool that the numbers match pretty well! Thanks for sharing. I’ll write another post on this subject.
Stumbled across this site. I am working with an executive search company. I have a net worth of $ 2.8 $ 1.8 in the market and $ 1 in 3 pieces of property. I have a business that is doing OK and am starting another business next year. And this is whether I get an executive position or not.
I officially became debt free by paying off a small HELOC for a condo in another country and my home in the states. I have another condo that I rent. But I am more concerned with what happens with the government than my career.
What can happen to all this if the government goes socialist. Can we even protect our assets at that point?
You could always go asset light and spend more of your wealth so that the government doesn’t spend it for you.
In today’s day of almost 2020 and its inflationary pressures and income insecurities, true wealth can only be defined when enough passive income exists to cover your routine expenses, which varies from person to person. There should also be at least 2-4% additional growth rate above the needed income so the nest keeps up with mandatory future inflation and thus keep generating enough income to last indefinitely. For someone needing 100,000 income, this requires about 2.5 to 3 million saved in INCOME generating assets that earn 5-7% steady income (about 125k-210k annual income). Take 100k for living life and reinvest excess so pot keeps growing forever. Many will try but few will achieve this target. That’s the harsh truth.
More money = more happiness. End of discussion
I’m 60 and have made ~$800,000 a year for the last 7 years. I have a net worth of ~$4,000,000 on paper and I feel “ok” but not rich. Because about $1,500,000 is tied up in my house and business property that I will never sell. And even though my business has $1,250,000 in the bank, if I withdraw it, I’ll only get to keep about $750,000 of it after taxes. So my liquid net worth is right at $2,000,000 right now and while I should feel rich, I just don’t yet. Maybe if/when my liquid net worth hits $5,000,000 I will.