What the Top 10% Have and Earn

A reader and I had an interesting conversation a week or so ago about what it takes to be wealthy. We talked about both net worth (which is wealth IMO) and income (which may or may not be related to wealth) and what the top percentages of people in America own and earn. I thought the information in one of his comments was very interesting, so I thought I'd share some excerpts of it with you all. Here goes:

It seems that it requires somewhere in the realm of $300,000 to be in the top 10% of Americans in wealth.

The top 10% of income earners make $120,000 per year.

Interestingly, the top 1% of households average about 15 million dollars per family.

It is always a little mind blowing to be reminded of how different the top 1% is from the rest of the country.

It's also worth looking at his sources a bit more for some additional information. For instance:

The top 1% had average wealth of $15 million per family in contrast to the $22,800 average wealth of the least wealthy 50% of families or the $313,500 in wealth for families ranked between 50% and 90%.

I was also fascinated by this:

Only 17.8% of all U.S. households make more than $118,200 a year.  Only 2.67% make more than $200,000.  The fact that only 34% make more than $65,000 is astounding given how expensive other cost of living items have gotten over the past decade.  That is why the middle class is feeling squeezed from all different sides.

What is even more fascinating, is how even amongst the super wealthy income is not distributed evenly.  There are approximately 146,000 (0.1%) households with incomes exceeding $1,500,000 a year.  Even at that, the top 0.01% of households had incomes of $5,500,000 and accounted for 11,000 households.  The 400 highest tax payers in the nation brought in a stunning $87,000,000 a year.  Now that is wealth.

So what does this all mean? Not much really -- at least not much when it comes to managing your money. It is interesting to see where everyone stacks up and compare yourself to the masses. Doing this, it turns out that I'm "wealthy" (as is anyone with over $300k in net worth). But that's only relative wealth, not the I-have-so-much-money-I-can-do-whatever-I-want wealth most people think of as being "wealthy."

Where do you stack up in these numbers?

Comments

[MC]

Well, this explains the low savings rate!

BTW, the data for your first statistic (that you linked to in your post) is from 1998---12 years ago. You probably should at least add inflation onto that $300,000 number. I bet it's a *lot* higher now.

[Budgeting in the Fun Stuff]

We are definitely not wealthy according to those numbers (not that surprising). My husband makes about $43,000 and I make $35,000. Our net worth with our house is around $130k-$140k. We're in our mid-20s.

I'd say we are solid middle class with a great savings rate. :-)

[brooklyn money]

It's all about location, too. Almost everyone I know in SF, NY or Boston makes $100K plus, but that is not wealthy when a family-sized house in the burbs costs $600K.

[John Z]

brooklyn money hit the nail on the head. I live in Northern NJ and with a household income over 125k I don't think of us as anything more than average.

I wonder at what income level the regional cost of living concerns that most of us have starts to subside or become a non-issue.

[Anthony]

"Only 17.8% of all U.S. households make more than $118,200 a year."

My wife and I missed the $118k mark by about $10k. But gladly, we're only 24/25! We have a long way to go!

[Rod Ferguson]

I'm wealthy by this yardstick; assets exceed $500k, liabilities around $115k, liquidity about $60k and cashflow in excess of $130k for the household. I don't feel wealthy, though. It took us nearly 25 years of work and sacrifice to get to this point. And I don't have the disposable income to just go spend on what I want. Every dollar has a purpose and goes somewhere for something.

[KC]

I wish they would drop the top 1% from the statistics that get thrown around. Outside of that very select group, the nation's averages become very average.

If incomes were tapped at $5 million, and the top 1% were forced to "redistribute" the extra $10 million they earn, then the other 99 out of 100 household NOT in this group would see their incomes jump by $100,000 per year.

Similar, I like to say if I won the $20 million lottery, then 10 people would be happy as $2 million would be more than enough for each.

Ah, what could be!

[JimL]

KC,

You need to read it again. The $15 million is the level of wealth, not the annual income. As such, if it was redistributed, it would not result in an annual income that you suggest.

[BD]

Annual Income: Between $8,000 and $12,000, depending on how much work I can get. Where I stack up: poverty level.

[Steve]

KC

Why should anyone be forced to re-distibute their wealth? Work hard and give your money to others, that sounds like fun.I understand your general point, but wealth is not the only thing to think about. If peoples basic needs are covered than it doesn't matter if someone makes 50k or 15 mil to be happy.Be happy with what you have not jealous of what others have.

[Michelle Wachowski]

Made $291,000 last year (freelance graphic artist working 16- to 18-hour days, every day) and, dismayingly, still feel "poor" because, after taxes, cost of living expenses, and gear . . . am left with, like, $80,000. Can't achieve dreams of financial independence on that! Maybe in a decade or two!

[Ted]

Pulling in about $80,000/yr, net worth will pass $100k in the next 3 months. 35 yrs old. Could be better, but we're doing fine and grateful for our situation.

[Woody]

Will make about 50K this year down from about 82K last year as the wife is now unemployed. We are close to the 300K level do to time and constant saving from about the age of 35. The only way to build wealth is to purchase assets that contribute to increasing your asset base. I think that if you gave people a choice of purchasing stocks or making payments on a new WANT most would buy the WANT.

[JoeTaxpayer]

KC - That $20M winning will be dished out as $1M/yr. After all taxes, you might clear $550K-$600K. Since it runs out after 20 years, you'd have to save nearly half of that to keep from running out of money. I wouldn't turn it down, but I sure wouldn't think 1/10 of that is enough to retire on. $2M can be taken as $1M lump sum. $550K after tax? Not enough.

[average rob from Michigan]

I was pulling in about 120000 a year and my wife just switched jobs after graduating from pharmacy school, so we will hit over the 200000 mark this year. We are in our mid 30s and have a net worth of $800,000. Though my wife resisted, I successfully converted her into an avid saver.
My friends are amazed that I've managed to pay off all her student loans (pharmacy school is expensive) and our home mortgage (Not too hard when one's house is worth less than half of one's yearly household income).
Although I do not consider myself rich; however in terms of net worth, I am doing pretty well, especially compared to others in desolate metro Detroit.
I worked hard during college and paid my way through internships and scholarships. Though I finally took my son to Disney World this year, I have resisted the yearly vacation to the next exotic resort. Did not feel compelled to buy a McMansion or fancy cars before the recession. Yet, I am still amazed to see everyone racing to buy the latest iphone, ipad, mcmansion and luxury car. To those people who are living beyond your means, please don't say you were doing every thing right before and after your demise.

[BigO4MCDdrivthru12]

Avg. Rob, a net worth of $800,000 is quite substantial. In a similar situation, just a little younger. It's amazing to see the fads people crave...reading stories like I spent all of my checking account on an Ipad. It's sad. And the worst part is you probably paid for it, because God knows they didn't pay income taxes. But I digress.

[Mike Hunt]

After reading the statistics in this post I feel thoroughly discouraged with the efforts I've made to grow my net worth...

-Mike

[no one special]

Between wife & I, net worth over two million. I'm retiring when I turn 57 (in one year).

[ACS]

In general, I feel like we are middle class even with a net worth nearly 3 times the "wealthy" net worth. We *mostly* live a middle class lifestyle although we spend way more on travel than the average person (which is why I say "mostly"). We certainly will never feel like the I-have-so-much-money-I-can-do-whatever-I-want wealthy folks out there!

@ Average Rob from MI -- 800K in your 30's is great, combine that w/living in a low-cost area and you guys are doing fantastic!
@ No One Special -- Way to go. I'm sure you've already got the countdown calendar going -- enjoy your retirement!

[F]

I came across figures for my country, Belgium, which should be similar to the US in terms of standard of living. The figures are surprising: 10% of all families have a net worth of over a million dollars (17% by 2017). Another surprising figure: 20% average savings rate (has increased lately). Source is a recent study by Barclays.

[F]

And I should add that medical expenses are covered by the government, plus you get a pension once you're retired. So they're saving privately, on top of that. It's a cultural thing.

[G]

My husband and I live our life similiar to average Rob from Michigan. Minus the kids. I learned my lessons early from my father. My father provided a house-hold income of less than $40K/per year. He put four kids through college, paid off his house and never ever financed a car. We never went out to eat and we had one family vacation to Disneyland. There is something to be said for the peace of mind and financial stability that frugality can provide. My father never blamed the 1% for his lot in life. He is retiring at 75 in the top 10%. If our society could focus more on making, investing and saving money, and less on spending it frivolusly then the country's wealth would be better distributed. The 1% did not create the income disparity. The Jones' did!