Ever wondered where you rank financially among Americans? Curious about what it takes to join the top 5% in income or net worth?
Every three years, the Fed surveys the finances of American households, tracking assets, debt, and more. One of the things they cover is who landed in the top 5% of both income earned and net worth.
In this episode of Best in Wealth, I will share the income that puts you in the top 5% of income earners by age, what lands you in the top 5% of net worth by age, and why
none of it matters. Don’t miss it!
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Outline of This Episode
- [1:15] Getting into the University of Wisconsin Madison
- [3:21] The income that puts you in the top 5% of income
- [11:12] Individual versus household income
- [12:00] The income that puts you in the top 5% of net worth
- [17:21] Are you in the top 5% of income or net worth?
The income that puts you in the top 5% of earned income by age
Do you land anywhere in these brackets?
- 18-29: If you earn $156,732 or more, you are in the top 5%. You are just launching your career and starting to earn an income.
- 30-39: If you earn $292,927 or more, you are in the top 5%. You are getting more established in your career and perhaps started a business or received a promotion.
- 40-49: If you earn $404,261 or more, you are in the top 5%. Maybe you continued to receive promotions or your business grew.
- 50-59: If you earn $598,825 or more, you are in the top 5%. The 50s are your highest potential for earnings years. Maybe you sold your business or became the CEO of a company.
- 60-69: If you earn $496,139 or more, you are in the top 5%. You may be retired and living on social security and your investments during these years.
- 70 or older: If you earn $350,215 or more, you are in the top 5%. Most people in their 70s probably are not working any longer and that income is being derived from Social Security, pensions, and investments.
What does it take to be in the top 5% of households? If you earn $499,000 or more, at any age, you are in the top 5% of all income earners.
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The income that puts you in the top 5% of net worth
What does the top 5% of net worth look like in each age group?
- 18-29: $415,700 or higher
- 30-39: $1,104,100 or higher
- 40-49: $2,500,000 or higher
- 50-59: $5,001,600 or higher
- 60-69: $6,684,220 or higher
- 70 or older: $5,860,400 or higher
Your net worth is far more important than your income. You can make all of the money in the world but if you do not save anything, your net worth will never increase. It will stay zero.
Secondly, you can earn a lot less than the top 5% of income earners and still save enough to be in the top 5% of net worth.
Are you in the top 5% of income or net worth?
It is okay if you do not fall into any of these categories—they can be very skewed. Numerous factors impact these numbers. Secondly,
these numbers don’t matter. If you have the right retirement plan for you, you will have the retirement of your dreams regardless of whether or not you land in the top 5%.
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Podcast Disclaimer:
The Best In Wealth Podcast is hosted by Scott Wellens. Scott Wellens is the principal at Fortress Planning Group. Fortress Planning Group is a registered investment advisory firm regulated by the Securities Act of Wisconsin in accordance and compliance with securities laws and regulations. Fortress Planning Group does not render or offer to render personalized investment or tax advice through the Best In Wealth Podcast. The information provided is for informational purposes only and does not constitute financial, tax, investment or legal advice.
