Net Worth and Income of the Top 20%, 10%, 5% & 1% In America

[@AllenKrell]

I have noticed people think the 20% income number is low because of how our society is isolated from each other. In suburbs around my town, almost everyone is in top 20% and most people are in top 10%. If everyone you know and socialize with is in top 20%, you don't see the 80% that don't have that income level.

[@ErinTalksMoney]

So true!

[@roboticsforfun5000]

What you say about the isolation is so true, except in some cases where the top 20% live in borderline community that separates middle income and low income. In my area, 3 households (including mine) are financially secure and 1 that is 1 disaster away from financial crisis. We contribute towards the expense of keeping up our rural county road, the part that we drive on. Because we fixed that, the low income households prefer to drive on our pothole free street, we see a lot of junky cars drive by. Can't complain, we choose to live here and save at least $8000 on property tax alone.

[@shoobidyboop8634]

20% of me wants to believe 80% of what you're saying.

[@bobzelley5100]

We see them , they are in plain sight . The driver. Pool cleaner , lawn maintenance guy, paddock mucker ,.dog walker, school aid , day care worker, grocery store checker outer etc. In plain site

[@daleviker5884]

@ Allen Krell The opposite is also true, and is very obvious when you look at social media. People at the bottom of the ladder think that virtually everybody is like them, except for some mythical "1%" that owns everything. Go on to almost any comments thread talking about finance and you'll see dozens if not hundreds claiming that most Americans have no savings, and that most Americans live paycheck to paycheck. That's true of a subset of people but it in no way describes the average or median American.

[@MemphisMike901]

Great info. I just retired at 58(3 months before hitting 59) zero debt, modest lifestyle afford, monthly Pension, and a net worth about 1.5mil depending on market. We barely made over $100k/year.

[@nmccw3245]

Congratulations 👍🏻

[@freeman7296]

I'm trying for the same thing - but at 60....hopefully I'll get there too. congratulations.

[@howellwong11]

I'm like you except that I am 91 years old and make only $50k/yr.

[@robertgregory1927]

Awesome! I got out at 55 and it’s awesome! Enjoy!

[@BakoSooner]

Only 71 more payments and that Benz is all mine! Great video. I just retired with $3.7MM in retirement account and I find myself still substandard while driving around in my 2015 Ford Edge.

[@kebl1965]

On a $40k annual income I have managed to build a $1m net worth in the last 8 years through smart investing and by having money to buy undervalued real estate. It isn't terribly hard, but it won't just fall into your lap either. What is holding people back? 1) Cars loans 2) Credit card debt 3) Lifestyle 4) Habits I've tried to help others as much as possible to be able to get out of the rat race, but sadly too many are just comfortable in their situation.

[@stephanguitar9778]

Where I live in Australia there has not been undervalued housing for 3 decades. A crack den in the worst part of any city will cost you close to $1 Mill. A real house starts at $1.5mill.

[@kebl1965]

@@stephanguitar9778 That’s crazy expensive! Of course what I am buying isn’t top of the line. Usually it’s abandoned and on the verge of being razed. With a great team, we restore them and add significant value.

[@mikehlavinka2964]

It's extremely difficult to jump in to an investment when everyone else is bailing out, but that is what is often required for a smart investment. It requires looking at the big picture, the really big picture.

[@kebl1965]

@@mikehlavinka2964 I’m not in the position at the moment to take advantage of a housing crisis like 2006 … but those who are will become a whole lot richer.

[@Monipenny1000]

@@kebl1965 my husband and I were able to take advantage of the 2008 housing crisis though not on a large scale not having nearly as much capital as I'd of liked, and mostly with some debt to buy deals but it has paid off well. Now we are in a much better postion with more capital but we are getting close to retirement unfortunately to take advantage again since we self manage. This is where my husband and I are at odds. I can't convince him to hand over our real estate portfolio to a property manager and go all in when the home prices do come back down. Just today I spoke with an office manager of a management company who would be the perfect fit plus at really great rates compared to the average. I want to just hand it all over now and run with it in spite of my husbands wishes. His plan is to retire with only 5 rentals in 5 years. Funny how he thinks he can decide that without my input or even compromising. Maybe it's time I give him the ultimatum, either go with my plan or we split our assets and do our own thing. I tried for the past 2 years to discuss this with him to no avail.

[@07028]

Very much agree that many households can reach $2,500,000 net worth by retirement age. It does take consistent savings/investing and a willingness to live a little beneath one’s means.

[@mocheen4837]

I am hoping to reach 5-6 million by age 60. This is without any inheritance as my family owns a dozen apartment buildings in San Francisco.

[@surudog4929]

A working husband and wife maximizing their 401k and company matching is around 5k$/month. If you invested that into S&P500 index for 25 years, that money will be worth $4m at say age 50 if you started at age 25 @7% annual return.

[@wannamontana4130]

Yes, ... the discipline is 50+ percent of the battle.

[@BusArch42]

⁠@@surudog4929yup! We did just that and are 57/59 with 5.5 million

[@1NotAPony1]

My wife and I have been in the top 1% and debt free for decades. There are reasons not many people achieve a high net worth, even with a high income. Most people live far, far beyond their means. They buy depreciating assets like expensive vehicles and replace them with the same thing every few years. They live in homes they can't really afford, and a lot of their income goes to paying for it. They don't practice delay of gratification. They somehow feel entitled to have what they want, even if it means going into debt for it. A lot of the folks you see driving luxury vehicles and sporting a Rolex may have a high enough income to purchase those things, but many, if not most, of them, have very little net worth. Compounding is an amazing thing when you are on the right side of it. A lot of folks have built a high net worth with incomes that were average. It simply takes discipline and sacrifice, and most folks simply won't do it.

[@ErinTalksMoney]

Very solid words of wisdom!

[@DarrenWigfield]

I'm not convinced about your "homes they can't afford" comment. It seems like many people build wealth by living in homes that appreciate in value at a rate that's faster than the interest they pay on the mortgage.

[@1NotAPony1]

@@DarrenWigfield You can believe what you like, it's a free country. I can tell you that in the largest studies of self made millionaires, the majority had their homes paid off. Folks often justify a big mortgage by touting appreciation. Many also believe there are automatic tax advantages to paying all that interest. The truth is that standard exemptions are so high that very very few Americans itemize and actually benefit at all from paying all that interest. My wife and I haven't had a mortgage in well over 20 years. We live in a very nice home that is paid for. We make a very high income, and money that would be spent on a mortgage goes to growing more money. Even now, we live in a home that is much more modest than folks that make a fraction of what we do. Folks can choose to do what the majority of financially successful people do, or they can justify what they want and chart their own course. Free will is a great thing.

[@DaveM-FFB]

@@1NotAPony1 I appreciate your perspective. However 10 years ago we passed on the opportunity to live mortgage free in a modest house. Instead we increased our real estate investment, and our net worth has benefited significantly, providing financial opportunities we would've never enjoyed.

[@1NotAPony1]

@@DaveM-FFB I am genuinely happy it worked out for you. There is more than one way to accomplish almost anything. My wife and I have been in the top 1% for decades, and know several others that have as well. For all of us, having our homes paid off was a priority early on. We certainly used leverage in other ways, when it made sense. We joke now that while friends are celebrating finally paying off their mortgages we will be picking out the interior color for our jet. ON EDIT: A lot of it is perspective too. What a lot of people consider wealthy, or a lot of money, isn't that much to others. I can tell you, once you reach a point where you have a high six figure monthly income, having a nice home paid for isn't difficult, and the truth is, most multi millionaires placed a great deal of importance on that early on. A lot of it has to do with developing the right mindsets and habits. It matters if someone want to just be comfortable, or actually wealthy as well. As a real estate developer and builder, trust me, I'm happy that so many are so willing to stretch to buy homes they really can't afford. It's made me a lot of money.

[@antoniosoria9433]

I’m 57 and our net worth hovers around $6.5M, but I can’t convince myself to retire (private sector with no pension). I started maxing out my 401(k) in my mid-20s, the day I started my career job. I asked my fiancé to do the same, jokingly as a condition of marriage. For 30-ish years we’ve aggressively invested in the stock market, both individual stocks and ETFs, and invested in qualified in and non-qualified accounts. We also dabbled in real estate for five years, owning four rentals at once but we really soured on it and sold all and went back into equities. The key to becoming wealthy is start early and to think long term, and most importantly live well below one’s means. We do spend about $20k/year on international and domestic trips, but in everything else we’re frugal and even pay cash for our Toyotas.

[@mocheen4837]

Great job!

[@bgood4449]

You can retire as you have won unless you enjoy what you do. Life is too short to keep working.

[@ds5651]

Look into the 4 percent rule

[@jadexu6382]

Job well done! Can you share the range of your salary? Most people can't afford to max out 401k.

[@antoniosoria9433]

@@jadexu6382 To provide “perspective”, I graduated from engineering school four years late (26 yo) saving for retirement; that’s my viewpoint, my belief and I also had no student loans. I started my career 31.5 years ago making $35k/year. Since day one, I maximized my contribution, $15k/year back then and now $27k ($197k/year) now. Also, at 30 yo, I maximized a traditional IRA. I also decided to match myself $1:$1 in a regular brokerage account at 40 yo. Also, I had my wife do the same. During the past 30 years, any bonuses, stock options cashed and restricted stock units cashed, all went into the stock market into a regular brokerage account; the worse the stock market performed, any extra cash went into buying the same sticks and ETFs. We did peel off some of our wealth to pay off the house (in our mid 50s), bought an Airstream in cash and a big diesel truck (Ford) in cash. In fact, all our vehicles were paid in cash except the first car, which I paid off two years early to avoid further interest accumulation. I follow Warren Buffet’s advice. Please don’t get the wrong idea that we live life with no fun; we travel domestically and internationally extensively. Travel is are largest discretionary expenditure. We’ve been to all seven continents and we choose experiences over material goods. I turn 60 yo in two years but will probably work until 62. We choose to stay employed since we enjoy our jobs, managers and employers (in Silicon Valley). Now, saving automatically (very important!!) but investing is even more important. Let me know if you have further questions..

[@PH-md8xp]

Great video. I went to school with a kid whose family is in the top 0.1 percent and we remain friends as adults. From time to time, he invites me to one of his many resort type homes in different parts of the world and really, these people live in a completely different world from the rest of us. Literally no comparison. It’s hard for me to remain grounded in my own reality after experiencing a few days of their world.

[@networth00]

I am worth about $6m and moved to South Florida and feel kinda poor so I know what you're talking about. These people down here are seriously rich.

[@DaveM-FFB]

Many new college grads have negative net worth (due to student loans). Forty years ago I was one of them. I prioritized net worth goals (as opposed to income goals) and regularly tracked my/our progress. A ship that's not tracking a heading won't likely reach the intended destination.

[@BusArch42]

My husband was in so much debt when we got married. It took three years using his entire net and living on mine to clear everything. We lived on beans and rice that entire time. After that we prioritized savings and investing. It’s been 30 years of diligence. It doesn’t happen by magic.

[@noahgunter9080]

This is a fantastic breakdown of the steps you have to take to build true wealth. I feel exceptionally lucky I started investing early and consistently compounded my income via assets to create more cash flow. I grew to a 7 figure mark well-diversified portfolio having exposure to different prolific lnvestments. Passive income is mandatory for building long term wealth

[@everett9464]

You're right. In the past 3 years, I have gone from $25 an hour ( Internship after college ) and now in 2022, I am at 205k. I am moving more and more money into assets. It is really cool to see my M1 account paying back dividends

[@TheDoomWizard]

True wealth? We are in irreversible climat echange. All of your wealth will be wiped out in the next 10 years. I have created a channel to educate fools like you.

[@roboticsforfun5000]

Thank you for doing that research into this group. I wonder if you were in the top 20% or 10%, would you totally get how the 1% spend their $$$? Through your videos, I've learn that our household is up there in the 1 - 5% group. The 1 thing I would say though, is that nobody in my neighborhood would ever guess. We drive a brand new modest car, live in tiny home and do most of our landscaping ourselves as 1 of us is fully retired and I work part time. Everything that we do, its paid in cash, no mortgage whatsoever. Sometimes we feel snubbed by our moderately 20% group neighbors for not being rich as them, and then also snubbed by our middle income neighbors for not enjoying their feast of cheap pizzas, cheap beers and wine. Some tried to tell us about the fantastic mortgage rates or cheapest source of groceries or healthcare products that we could not relate to and probably seemed uninterested. In the end, none of our neighbors would talk to us... they remain friendly but so superficial. I think they don't know where to place us, so they kinda avoid us. We feel so isolated from society. As a result, I watched too much KZbin videos and discovered your channel while getting answers about the philosophy of the general public (my neighbors). Oh BTW, we did our taxes at the local H&R block, who had to contract out our taxes to their corporate office as they do not have the qualifications for our tax codes. The clerk who handled our case make snide remarks when I asked about a $4000 deductible that was not included because she had misfiled a document. And she gleefully broke it down for me, that we pay in excess of $2000 a month to the federal government, its at least feeding a small family somewhere.... that we shouldn't be concerned about a possible $800 back in additional refunds. Just pointing out that you can be equally misunderstood on either side of the 20% 80% divide.

[@marcsherman4862]

Interesting book - the psychology of money. worth a read.

[@roboticsforfun5000]

@badinstinctsKZbin Thanks for the tip on doing your own taxes. But I found that there is a part of our taxes that made it mandatory for us to use a tax accountant. I can't remember where I saw that, but its some fine print on the official IRAS website. I think it is with regard to overseas income.

[@Reload77725]

Another wannabe trying to flex. Honey you're not all that. Just stop. I can see why your neighbors won't talk to you.

[@BoxOfRain]

Really a great video. I wonder how this would play out with retired families as they don't have the income from employment. We fared higher than I thought. We always lived well below our means and avoided all debt unless absolutely necessary. Thanks!!

[@HimanshuWadlolz]

Love the content! Would love to see how/where people spend their money based on income. Would be a cool indicator of where quality of life stops changing significantly with income

[@ErinTalksMoney]

Very interesting topic - thanks for the suggestion!

[@MrEnergyCzar]

Happiness levels plateau around 80-100k income per year, regardless of lifestyle or perceived quality of life...

[@marcsherman4862]

spectrum- but probably around 128K a year in todays dollars for your average suburban family in or near cities with populations of 500,000 and above.

[@MaxPower-11]

Do keep in mind a couple things when considering this data… 1)This data is for Households and there could be a significant difference in the financial well-being of a say a household with an income of $106K that has say two parents, four kids and maybe a grandparent living in the household, vs. say a single-member household making $106K. Both constitute a ‘household’ but they are obviously very different from a financial perspective (unless you adjust the data for household size). 2)The household income number is for the entire USA but there are significant cost of living differences in different areas of the US and as such, one’s actual disposable income could vary significantly depending on the region they live in.

[@soapa4279]

So glad I'm in the top 10%. After grinding for years, going through highs and lows I finally did it. I earned 1 million simoleons in the Sims 4.

[@derek8239]

At 51 years of age and as a 26-year retired Army officer. I get a pretty good monthly pension. I also own 3 properties, roughly worth 957k. Although, one property was an inheritance, along with 393k. I also have a pretty good amount of money in my Thrift account and a sizeable Roth IRA that I still contribute to, so I'm doing good in retirement with a net worth of 2.3 million.

[@jonedmondo8806]

Starting young is the key! I didn't start soon enough, but have still done well. I just can't believe how well off I would be if I started sooner.

[@wemustdissent]

One thing worth understanding about the higher income earners is that when you are in the top 5% and above where you are looking at the 340k+ income a significant part of that income is probably capital gains and dividends from investments rather than earned income that is basically being autoreinvested and is not actual pocketed income. So someone in the 5% may on paper have an income of $342k a year but they might have a pocketed income of somethihg like $110k, which is why you can have someone making that much seem not that wealthy just on the face of it. I mean if they wanted to redirect all those distributions to their bank account they could be a lot "richer" if they wanted but often that isn't the type of attitude that gets you that much net worth so a lot of them are relatively frugal. Just goes to show the person being "rich" is probably not the person who is actually wealthy.

[@networth00]

None of those "capital gains, dividends" are counted unless they are pocketed income.

[@matthewjensen524]

When you reach more than $5 millions net worth, your income primarily come from business/passive/capital gain, not earned income.

[@lexknobloch5787]

You have hit the nail on the head. You can have a lower middle class income and still retire with millions. You need a side business and capital gains to get there.

[@immobilien]

I started with nothing and managed to make into the top 1% bracket. The main thing you realize when you reach this bracket is the fact that you don't worry at all about money anymore. You have less desire to buy big houses and fancy cars. You just enjoy the freedom that it gives you.

[@ph3733]

Less desires to buy big houses and fancy cars … yep, that’s absolutely true for me too. You figure out how useless that is and that you are not any longer part of keeping-up-with-the-Jones clan.

[@howellwong11]

You don't desire to buy big houses and fancy cars because you already have them.

[@BusArch42]

@@howellwong11not necessarily. We own Toyotas and live in a moderate home. People around us earn 15% of what we do. Nobody except our adult children knows we have 5.5M is assets and income of almost 500k annually. You would never guess it from our lifestyle. Our cars range from (newest) 3 years to 12 years old. We buy moderate quality new cars with cash and drive them until they die. We clean our on home, cook at home instead of eating out and would not dream of going to buy coffee more than once a month. We have spent the last 40 years living well below our means. We are trying to make a good life for our kids. We set aside money for college (not part of our net worth) starting when they were born. They all earned full ride scholarships so they are cashing out scholarship exemption and putting it into Roth IRAs. Yes they all have jobs as well as going to college full time. It is likely that when we die our kids will receive a million or more in inheritance even though we have not received any inheritance from our boomer parents.

[@BusArch42]

@@ph3733it’s all about hiding your actual financial state from everyone lol

[@SunRise-ul7ko]

Well I'm in the net worth 5%> group & 20%> income group. I guess being a single person house hold reduces your income, but not having, the expenses of a wife & children boosts your net worth.

[@ErinTalksMoney]

haha...I understand where you are coming from...BUT I highly doubt that my husband would refer to me as an expense 😂 (Children sure - as they are not income earners, haha)

[@SteveG1337]

Sounds like you need to find a financially savvy partner. I personally decreased my alcohol budget/expense drastically, so maybe savings can still happen when you’re no longer single.

[@SunRise-ul7ko]

@@SteveG1337 In your case maybe, but not on average. Biology & science have proven, woman have in an instinct called hypergamy. They are attracted to safety & provision, so in general woman mate up to a higher value partner. Try to get the woman to pay for the man on a first date, for example. Dating ends up on average where a man has his resources extracted. The same in divorce. I see marrage as a financial raw deal for men, even without children, because woman having to marry some one of higher value.

[@SteveG1337]

@@SunRise-ul7ko I learned early on never to buy women drinks until they buy me some. I only buy rounds with friends who also continue the buying rounds. Never mind I never pay for the first date. We either are doing something free outside, or I meet them for coffee and ensure I show up early already paying for my drink.

[@SunRise-ul7ko]

@@SteveG1337 Good to see a rational male. Same, I've always expected a woman to pay her fair share. However by doing so, I've had to put up with a lot of shit from the majority of woman.

[@surudog4929]

I wish you could give a breakdown of the top 2%, 3%, 4%. I know those numbers from another website. Top 2% are $6.7m and top 1% are $11m.

[@ppsh43]

I like that Erin says these are household net worth and income amounts for households, not for individuals. Often times, stories like this are not clear.

[@yankeedoodle6293]

I’m in the top 5% with a net worth around 6-7 million. I worked my ass off for 20 years straight flipping and investing in real estate until Covid hit. Now I’m reaping the fruits of my labor I’m in my 40’s and have a high school education, if that.

[@ErinTalksMoney]

That's incredible!!! That is just a testament to your hard work and dedication! Congrats! 👏👏

[@marcsherman4862]

WOW!! Good for you!

[@mikehlavinka2964]

I am in a similar scenario to you. I worked very hard, scrimped and saved. got my first rental about 30 years ago. did the vast majority of upkeep, painting and repairs. I wanted to purchase a second rental in the early 2000s but housing prices were too high so I just continued saving. when the housing market crashed it affected my job but I was able to jump around and continue working. meanwhile I was able to pick up three distressed properties at bargain prices. A ton more work fixing them. I knew the housing market would come back but I never imagined it coming back so hard. Now I live off the income they generate. The hard work in my younger years has proven to be a godsend. I only hope people understand the hard work that was involved.

[@stephanguitar9778]

Not productive enterprise then?

[@networth00]

Yankee Doodle, I seriously thought this was my comment because our stories are very similar, same net worth. I retired at 43yo (8 years ago) and make passive of about 500k now since my rentals were perfect as airbnb. I do not manage them and live 1000 miles away. I'm not rich rich but I'm not working either.

[@matthewholliman1399]

Great content! You may have already shared this but I would be interested in knowing your family’s net worth goal. I hope it is more acceptable to ask this rather than your current net worth. If not, I’m happy you are obviously making progress.

[@StanHasselback]

Very good additional context to the numbers Erin. I live in one of the expensive area's listed however I live a modest lifestyle as that's what make me more comfortable. I do travel but not on the high end. In fact I really enjoy visiting developing countries. Money is important but it should never be the most important thing in your life.

[@deepaksubramony5438]

Excellent video. And you are correct that any upper middle class household in America can easily get to $2.5M in net worth by retirement (and even much, much more than that if they are smart with their money).

[@chessdad182]

I'm financially comfortable, but I mostly ride my bicycle to go places. I think it is a bit humorous that the person riding the bicycle is in a much more financially comfortable position than most passing the bicyclist in their expensive cars.

[@kchal0]

29 with a nw of 1.8m give or take. hopefully by the time i retire in 30 years i'll be in that top 2-3% range. Thats assuming the market doesn't just completely fall apart by then but if that happens i guess we have bigger problems to worry about.

[@joemurphy4517]

This is a great summary. The 40 hour per week is not a good comparison for a metric. It's more like 80 plus hours per week because it's nonstop.

[@ralphalf5897]

The issue here is it doesn't break down the brackets by age. Being worth 2M at 23 is infinitely more impressive and foretelling than being worth 12M at 65.

[@user-rf1nn8sg3f]

Depends on how they did it... Pro Athlete, Actor, Musician is not as impressive at 23 as business owner, partner, or CEO at 23.

[@steveludwig4200]

You are out of your mind. A 23 year old is VERY likely to have MUCH higher spending habits and is going to buy more expensive "stuff" for the next 40 years including cars, boats and houses....and 2 of those 3 are depreciating assets. Also no guarantee on the economy either.

[@hump1953]

I’m a little over the top 10% net worth wise but due to being retired do not meet the income threshold.. am I still in the top 10%?

[@stephenc2481]

net worth is more important and salary. If you reached the 10%, things take care of itself. You are the top 10%.

[@terrykrall]

Wife and I are in the top 5 percent plus. Our combined incomes pre tax was approx 120 at the highest. No children, buy cars new or newer and drive them 10 years. Live in a home much below our means and paid it off as soon as we could, then saved and invested.

[@1dash133]

According to your video, my wife and I are in the top 10%. We don't feel wealthy, because our incomes aren't exceptional - we just managed to save a lot by keeping our expenses down. And most of our wealth is tied up in real estate, 401(k) accounts, and stocks ... so it's not like the money is readily accessible to us. We both drive ten year old vehicles and probably won't trade them in until they reach 20 years. Our discretionary expenses include a night out at a restaurant a couple of times a month and a trip to the movie theatre once a month (we even splurge on popcorn!). My wife still works. I retired in 2017. You could say that we are missing out on some of the best of our Golden Years. And there may be some truth to that. However, for the things that we value most (family), we are rich beyond words. We care for my 96 year-young mother. We care for our 20 year-old son, who is taking time "finding himself" (i.e., no college and no job). And we care for our 10 year-old labrador/golden retriever mix dog. They each have their own set of needs, requiring our attention and support, and we love them all. I don't consider what we are doing as a sacrifice. It's just the way things are: we're needed. At some point in the future, my mother will transition to a long term health care facility, my son will find his independence and our dog will go to Doggie-Heaven, freeing my wife and me to come and go as we wish. While we may enjoy the opportunity of taking long vacations then, I don't think that we'll be any happier than we are now. Life is good! 🌄

[@InfiniteQuest86]

Wow this is eye opening. We have over $500,000 of annual income but are nowhere near the top 10% in terms of net worth.

[@manumann9999]

Hi Erin . Great work . Please keep it up . I like watching your videos . Just a little pointer .. the top 1 percent household income of over 800k is the average rather than the threshold income . The threshold is probably a little over 500k :)

[@GusMahn]

My wife and I (mid 50's) fall into the top single digits. It's strange because I sometimes feel like I've failed financially. While I know we've done well, things still require planning, and hard decisions have to be made. The next one is how, where, and when to retire. Money isn't fun for some of us even when we've have a bit.

[@antoniosoria9433]

We experience the same “feeling”. Although the numbers tell us otherwise, that we’re in the top 2% net worth, the planning and decision-making is quite a lot of work, especially struggling with uncertainty.

[@GusMahn]

@@w1pev695 You are dead on there. I watched my mother squander 7M in less than 20 years. Spending, gifts, donations, failure to adjust spending in 2 downturns ,and a child who didn't launch were the cause. There was plenty of money to do all of those things, but some moderation was required. I WILL NOT be a burden on my children even if it effects my wellbeing. Everybody is an example of something, and I don't want to be my mother when it comes to money.

[@GusMahn]

@@w1pev695 Lol only if they are used. I've only bought two new cars in my life, and I'm a car guy.

[@networth00]

@@w1pev695 I'm probably in the top 3% and just bought two new cars, a Ford F150 and a Toyota Rav4. Buying used cars in this market is not a good idea, plus we drive cars for a loooong time.

[@southbound1969]

Hi Erin. I am curious about calculating TOTAL net worth. Should the value of one's pension be included to get a true worth? Example, a way to calculate a pension's worth is to multiply the annual payout by 25. I've only heard this mentioned one time on financial channels.

[@user-cr3fz8lz2i]

I often wonder the same point! I’m retired Air Force (MSgt /20 yrs) and will retire from the gov’t soon with over 21 years. That’s 2 pensions that will never run out…not including SS. How can one put a value on those pensions? Guess I’ll give it the MasterCard monicker and call them “Priceless!” Good question @southbound1969!

[@davefoster2962]

Just got back from collecting rents from my tenants. I have 7 digit investment portfolio plus owned home. I'm only in my 30's sitting at top 4% 💪

[@live4yourself_]

I never look at networth because it's mostly tended to owning a home for the majority of Americans. Calculating a single family home that you need to live in to not be homeless as part of networth to me is a trick to make people think they aren't as poor as they are.

[@jarrettlabate5595]

I understand the net worth portion and it makes sense the yearly income just doesn't seem to line up with what I've seen in reality for instance I have a net worth around 2.5 m but a yearly income closer to around 100 k

[@birddog3130]

I am in the top 97 % income bracket..... (3 % from the bottom) With her low cut, see through top, I never heard a word she said.🙃

[@meibing4912]

Out of top 1% after taking some market hits (or they became somewhat richer 😄) - still all good. Upper middle income - steady savings and investments since my first pay check made it happen.

[@flash.gordon]

One of the benefits of living in a Social European Country is that retirement, education and health are Public funded, therefore we don't need to save specifically to those areas. I feel that Americans need to be more aware of saving money, and probably more stressed too. Maybe I'm wrong. Great channel btw!!!

[@ErinTalksMoney]

Thanks for watching! I'm so curious how things work in other countries. I have to be honest - being born and raised in the US, I really only understand this perspective. I can't imagine not having to consider or cover the cost of health care, education or retirement.

[@ariefraiser140]

It's definitely a trade-off. On the one hand, no other nation produces as many millioniares as the US. On the other hand, it is most definitely a stressful environment, and the income inequality is huge. I didn't realize how stressful the US was until I started traveling internationally and saw how laid back a lot of other countries in the world are.

[@marcsherman4862]

In Europe, a great bit of wealth that allows for retirement is "pension wealth" which you did not mention specifically - what we have in the US , beyond the anxiety which you mention, is an undercurrrent of a type of class warfare-- but we never count pension wealth - although it very much exists for many.

[@marcsherman4862]

@@ariefraiser140 most definetely. Its amazing to see!!

[@enjoyslearningandtravel7957]

@@ErinTalksMoney I can’t know the specifics, but in Europe, even though it’s publicly funded, for example, the university in some countries, someone has to pay for it plus that includes healthcare.

[@rondouglas5147]

OK, not sure where I fall. Combined income 109K, includes rental properties (no liens) after expenses, VA disability, one retirement annuity and 2 SSIs. $1.5M+ Equity in house (reverse mtge, no pmts) and $1.5M+ in rental property. No debt. I seem to be in between brackets. Also a bout $40K in liquid savings.

[@mstberg523]

Based on those minimum net worth thresholds, that easily puts the vast majority of CA homeowners into the Top 20% bracket of all Americans, since almost all homes today in the SF, LA, and San Diego metro areas (where 75% of CA pop. live), are valued at over $1.0 million! That doesn't even take into account their 401k's. I am referring to the millions of CA folks who have lived in their homes for, say, 10+ years, since these folks would have built tremendous equity. I know a few who bought as recently as 2012, just after the global housing collapse of 2008.

[@kenwilliams3279]

On the car payments. I live in a poor suburb in New Zealand. I live here by choice at the moment because the smaller mortgage enabled me to take the risk of becoming self employed (which I have done) and also to SMASH the mortgage in a short time. I can then consider upgrading. What absolutely shocks me is the number of people driving brand new or near new Jeeps, and Ford Raptors.... it just makes me ask HOW and WHY given this is such a low socio-economic area.

[@johnl4421]

The statistic I find absolutely amazing is that the top 1% is only 2x as likely as others to own a luxury car. Hands down, anyone in the top 1% could afford one. The important thing I am noticing is they are choosing not to 'waste' their money in that way. Granted, nice cars are nice, so the follow-up question would be, "What is the definition of a luxury car?".

[@networth00]

Luxury cars (like Range Rover, Merc, and BMW) are not dependable. I'm prob in the top 2 or 3% and I drive a Ford F150. It rides as good as a luxury and never breaks down. If something goes wrong, I just buy another one without missing a beat. Oh and I don't care if it gets scratched or dented.

[@joshuacrawford7258]

I would be curious on people’s journey making it to the top 10-5%. It seams like the income gets there before the net worth. Our household income is there. At 35 with 4 kids, I don’t project having the correlating net worth for 8-12 years.

[@AskArianne]

Love this video! You make talking about money not boring! Lol. Just subbed!

[@ErinTalksMoney]

Yay! Thank you!

[@neomage2021]

Getting there. Have an income right near the top 5% but have a long way to go for the net worth

[@HE65432]

I know several people who are well past retirement age but still working. These are wealthy people who don't need earned income, but they enjoy their work and feel that it gives purpose to their lives. To me the notion that one should work productively until a certain day and then lie in a hammock for a decade or two doesn't make sense. Many investment companies and financial planners promote the idea that one's goal should be to coast through life after a certain age. For some people at least, this is not a good plan. Be productive, keep doing, and I think you will more likely stay healthy and happy.

[@thomaspansing4323]

The 0.1% is hard to fathom if you stay stuck in a time-based mindset. Another way to look at it is # of units x profit per unit. So, if you sell 4 houses and make $250k profit per house that's $1 million profit independent of your personal time. The units can be anything just an example. Another mindset shift is using other people's money to fund the business that produces units. So this removes your time and money from the wealth equation. A saying I came up with recently and that works for our business is "I earn what I spend of my lender's money." So my income is based on how fast I spend money to produce the units that yield profits. Income then becomes like a conveyor belt that you keep increasing its speed.

[@rolfbell7829]

How does one calculate both increased equity and increased real estate value into net worth as well as rental income? Passive income is discussed a lot.... what about this form of passive savings?

[@Aaron_R]

Erin - you forgot one important detail - these are for households (not individuals) - many people are married - 100k+ between 2 or more people is different from 100k plus for 1 person. 53% of US is married.

[@WilliamB.-ij6gl]

Thanks for video. I always find it confusing how the statistics shared in these videos by all experts discusses household income. Since that can be 2,4, or even more earners under one roof. Seems odd to me that this would be the focus since there are so many variables with this metric making it nearly impossible for individual income earners to compare and contrast different income levels.

[@JoeTaxpayer]

Stunning to me is the Top 20th percentile, an income of $106K. At the moment, the 30yr fixed rate mortgage is 6%. Using 28% of income to qualify, the 20%er can afford a loan of $413K. The median home price is $429K. Income drops quickly as we go to the 30th percentile, fewer than 1/3 of families can afford to buy the median priced home. Of course there are lower priced homes, but the imbalance, the fact that a median income household can't afford a median priced home is concerning.

[@antongeorghiou342]

I think the video misses something quite important when talking about growing wealth by increasing savings and keeping spending in check as earnings rise. That something is taxes and direct and indirect tax transfers. Someone earning $400,000 has a much higher marginal tax rate than someone earning $100,000, which means that if you earn in the $400,000 range you on average are seeing anywhere from 25-35% of total income go to taxes (depending in state tax rate) whereas if you have $100,000 income and if you also have kids, your total tax rate may only hover in the 15-20% range. That makes a huge difference in your ability to save because each dollar earned is taxed so much more heavily. The other issue is that depending on employment status you may not have the same access to deferred tax savings. For example if you are self employed in 2023, for last year you can set aside $56,000 tax free. On the other hand if you are a wage earner an W2 employee, then you can aside less than half that in a tax deferred 401K plan, which means that the mentioned marginal tax rates bite that much harder. Thats before you even get to means tested tax rebates. For example the $7,500 EV incentive recently authorized by congress evaporates for people earning wages above a certain cap. All of this means in sum that it is much harder to build up your wealth even if you try to keep spending down as income rises simply because all the benefits conferred on middle income families evaporate at higher tax bracket levels and also because marginal taxes start eating a much larger share of the total earnings.

[@spinnetti]

You are right... you don't need a huge income, you just need to live reasonably and not try to chase the latest gadgets. Our lifestyle has remained about the same for the last decade, but every increase goes straight into investments - we are up to about 35% savings rate now as we get close to retirement. Most people seem to fritter away their future on name brand clothes and new cars every few years selling out their future for irrelevant perceived status. Our Net is way more than our income would suggest, and we are just normal folks who started out with nothing but minimum wage jobs. Had I had better financial education when I was younger I'd comfortably be in the 1% by now, but even with my ignorance we are still well more than double the net of the 5% point - 3%?

[@petehoeft6518]

While the top 5% sounds really great. Yes, it's a first world problem, but once you're living on that kind of income and worth, maintaining that in retirement is a huge challenge. So I think the balance of income to net worth is where the real action is at. If someone with a lower income invests more earlier and over a longer period of time (and buying a house early (and cheaper) and paying it off), you could have a combined income (husband and wife) of say, $150K a year, invest like crazy, and have a high net worth of say $1.5M. Chances are, the balance of what you'll need to live into retirement will be right-sized of what you have invested. So, the main theme is that net worth and income are relative and a point in time thing, but you have to think about what it will be in retirement (for most Americans). You'd be surprised at how quickly $1M drains off over 30-40 years.

[@jimclark5037]

$558k net worth getting you into top 20 surprised me, as net worth includes house equity! I think my view on that is skewed being from Boston suburbs of Massachusetts... where if you bought a house 20 years ago for $200k it's now probably worth $600 to $700k!

[@postmodgent1499]

The 0.1%($50M+/net) number 300-500K individuals globally, basically the base of the apex with 0.01% and 0.001% being first and second heaven a galaxy away from those just inside top 20%. 60-80% is socio-economic purgatory.

[@chriss3625]

We are in the 20%, dividends go right to reinvestment… and emergency funds are in CD and bond ladders depending on the rates which are not much more than a pittance… these don’t feel like ‘income streams’ to me…

[@ahndeux]

Only problem is that by the time she retires and amassed $2M in wealth, it would only be worth $500K in today's money. The real goal is to hit the $3-$4M mark if you plan to retire in 20-25 years from now.

[@anthonydooley3616]

Great video. I am not clear if the income numbers are gross, net, or adjusted gross income (AGI). It's interesting to see where you stand on a scorecard compared to others. Appearances are misleading.

[@dacripe]

I always feel like I am behind in finances until I see videos like this. I'm in the top 20%?! I feel bad for the 80% below me then. Still got a ways to go for entering that top 10% (mainly that Net Worth number is the reason), but I should reach it when the mortgage is paid off in 13 years.

[@eugeneforge]

I do believe you are correct that the $2.5 million is very doable. If a household saves 15% of a $50,000 annual income and have a 10% ROI, it only takes 37 years to reach this point. You simply have to start early and stay diligent.

[@crazyahhkmed]

Or you could invest a higher percentage if you start later, to compensate.

[@baldeagle4710]

being in Cali sucks...incomes here are way higher than in the midwest, but everything is exponentially more expensive

[@NameRequiredSoHere]

As a retiree, I fall between the cracks. I have a "wealthy" net worth of $1.5 million, but since I no longer work, I have a lower middle class annual income is $36K. This doesn't include investment earnings. I want to delay dipping into that pot as long as possible. I can get by on 36K because I have not debt, no mortgage, and I'm very frugal. Anyway, I don't feel "wealthy" at all.

[@elmateo77]

If you start at age 20 you'd only need to invest $236 per month ($2832 per year) to get to $2.5 million by retirement age (assuming you invest in S&P500 index funds which have averaged 10.5% over the last 100 years). Totally doable for someone earning even the median income.

[@jeremi1208]

how bout recently?

[@elmateo77]

@@jeremi1208 It depends what you mean by recently. Over the last 10 years the S&P500 average return has been 14.7% (that's including the recent drop, we had several years in the last decade of 20%+ growth). If we extrapolate that out over a working lifetime, the same $236 per month would get you to nearly $10 million. Over the last 6 months (since the start of 2020) returns have been -24% (prices have gone way down). If that continued over 40 years you'd have like 0.1% of what you put in. Since most people will invest over 30+ years, it makes sense to look at the long term average when making predictions. Although past performance doesn't always match future performance, it's the best indicator we have.

[@nealinnc]

Many people retire with a net worth in the millions but don't have 300,000 to 800,000 per year salaries. They are certainly wealthy. It makes no sense to say you have to earn X and have X saved to be at some level. Some people save and other people have large incomes will a low net worth.

[@kevinjones5560]

I’ve never considered myself “wealthy” because we live pretty frugally. My wife and I are both retired in our early 60’s and live off of dividends and investment income. We have no debt at all and a net worth of about $6.5 million. We paid every penny for both of our kids’ private educations through graduate school so they have no debt either. We will likely help them buy their homes to prevent having a huge tax hit when they inherit what we have left.

[@howellwong11]

I will let you in on a secret, you are wealthy with a net worth of $6,5 million.

[@Donkeyearsa]

I qualify to be in the top 10% in assets but not in income. In income I am scrapping between lower middle class and the top of lower class. I am in my early 50s and can retire with a limited income. I don't wish to retire for two reasons the first is I would not know what I would do with myself. The second it that it's to scarry because you just don't know what may happen to the stock market. Between January 2000 and December 2012, the stock market gained nothing. If I was retired I would have been spending my assets at the same time that my assets where crashing.

[@mariosalas2366]

The most important thing is to be happy

[@midageq6755]

I like the content as well as the manner she presented it

[@ErinTalksMoney]

Thanks! 😊

[@ld5714]

I agree 110% that there is no reason why the average american household cannon reach the $2.5M mark. All that is necessary is to start early, say the course and not panic sell, steadily increase your savings % and live and invest wisely. If they started in their 20's they could easily surpass that mark IMO.

[@markhalstead2386]

Our net worth sky rocketed after we paid off our house. We haven't had any debt since paying it off early. That is the secret to wealth. No debt and live below one's means. I do think billionaires must be much more exclusive than even the 0.1 percent.

[@joshklein5752]

What an incredible video and channel. Keep up the great content!

[@thejakelegion]

Hmm. I guess it will be a while for me then. I make good money but I'm early in my career and won't have a net worth of this size for many years, I think.

[@Louis-qo7tf]

Is it individual or household?

[@richardgannon8292]

Could u do a video on the Different between a Ira and a Roth Ira and what is a roth ira conversion

[@MrBloaf]

Keep in mind while looking and the huge income of the top 1%. They are making more than half of that from their net worth if just doing the 4% rule.

[@magicsmoke0]

One thing you should've made clear in the video is, people with X Net Worth have on average Y income, but not everyone with Y income has a Net Worth of X, so these % are strictly for Net Worth and not income.

[@carlyndolphin]

My net worth is $4.8 million. I don’t feel wealthy though. My income before tax is €480K. I’m 42 years old. 95% is my money is invested in real estate and index funds.

[@lberhold]

If you're an investor who just puts your money in the S&P500, then those income numbers correlate quite well with net worth. Most people include their primary dwelling unit in their net worth, but that's not a fair representation because unless you sell the house, it's actually 100% a liability, not an investment. If you sell your house, then you're homeless. Net worth ought to be counted as your investable or invested assets. If you have $100,000 of investments, you should expect roughly $8,000 in a typical year, and likewise $1M should yield $80k. No year is typical, so it will vary above or below that number.

[@kenneth8081]

Do both have to be true - income and net worth? Like if you have a high net worth due to investments, but your income is lower, how do you classify that?

[@RustySpike007]

We're in the top 10% for income and top 5% for networth. I'm early 50's and my wife is late 40's so we have more time to stack cash and no debt to hold us back. I feel like we are just average middle class people. I think it's because the road to the bottom 20% is so much shorter than the climb to the top 1%.

[@KathyJacksonSanDiegoRealEstate]

Excellent video once again Erin.

[@thirdman1228]

Excellent episode! Thankyou

[@DR.Detroit11]

oh, like that you pointed our area out!

[@typhoon320i]

.1% - 43 million net worth entry point, most likely does NOT get you a private jet. Those cost $50-100 million right there. Yachts are a million a foot, once you get over 100 feet

[@michaelwoods4495]

How do you know? Our attorneys know and our children, but we don't tell anyone otherwise.

[@kevinhoock9742]

Great info every video ! Anything on retirees finances ?

[@GaryCruz]

Top 1% is achievable if one invests. Too many people would rather look rich than to be wealthy. In the end, it's not about the money but the freedom that money buys.

[@seankennedy4284]

Yes, please.

[@nadermazari3334]

So if someone makes about $20,0000 a year with net assets (home, retirement, stocks, material stuff) of $10, 00000, what level would that be?

[@bernie9728]

Just because someone appears to have more than you that does not mean they do. Just remember "net worth" means assets minus liabilities. You might have a lot of assets, but if you also have loans outstanding for most of them your net worth is low. Sometime people even look rich, but are in a negative net worth position. Don't get me wrong, there is nothing wrong with debt as long as it's manageable. It's easy to get in trouble with debt and it can crush you. It's not complicated it's just simple math. This video mostly considers people who are still working. I retired 7 years ago and went on Social Security. I don't consider Social Security to be earned income because Social Security is just the government returning the money they took out of our paychecks while we were working. That said, it's not a competition. I like living in the sweet spot of life. What I mean by that it having enough money that I don't worry about money, but not so much that I have to worry about people trying to take it from me. In other words, I like flying under the radar.

[@1001legoboy]

Also people take risks, not paying enough for insurance, medical healthy foods…

[@GG-tg5ub]

Can you be in the top 20% with the net worth but not the income or do you need both to be there?

[@billyrayband]

"wealth" should be biased towards net worth, with income being less important. In retirement, your net worth will be at its highest, and generally your expenses will be lower. For income, you may have RMDs on top of your social security and pensions driving your income higher than your expenses. Or your money may be in a ROTH, where you may have no taxable income at all, but may have a great net worth.