The Top 1% Net Worth Amounts By Age: Are You Rich Enough?

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 2023 requires having at least $13 million according to the Federal Reserve.

$13 million is $3 million above the ideal net worth amount for retirement based on a poll I conducted a couple of years ago that had thousands of entries. For reference, the estate tax threshold is $12.92 million per person. Hence, we can use the estate tax threshold as a guide for a top 1% net worth.

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%. To pay less taxes, having a large net worth is better than having a high income. The government goes after income more than it goes after wealth.

But if you are retired, then cash flow is more important than net worth. As a retiree, you income is what will maintain your lifestyle.

The Top 1% Net Worth Amounts By Age

I’d like to construct two simple models to demonstrate what I think should be considered a top 1% net worth by age. All wealth and no income is not ideal. Similarly, all income and no wealth is not ideal either. There needs to be a balance.

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.

A Top 1% Income Has Increased Tremendously Since 2016

Back in 2016, when I first wrote this post, a top 1% income in America was $380,000. Thanks to economic growth and inflation, a top 1% income in America is now $650,000. Further, a top 1% income varies by state.

To have a top 1% income in Connecticut requires an income of over $955,000. In California, a top 1% income is at least $805,000. In New York, a top income is at least $818,000. However, in West Virginia, you only need to earn above $374,000 to earn a top 1% income.

But overall, a top 1% income in America is $650,000, so we will use this figure in calculating my top 1% net worth by age guide.

The Assumptions To My Top 1% Net Worth By Age Guide

  • $650,000 is the constant top 1% income variable
  • The Ideal Income Multiple increases over time
  • A net worth equal to 20X your average gross income equals true financial independence
  • A multiple of income is superior to a multiple of expenses to determine a top 1% net worth because income is harder to manipulate

Top One Percent Net Worth By Age Chart

Have a look at the chart below. It’s a good snapshot of top 1% net worth starting at age 25. To have a top 1% at 25 requires a net worth of at least $250,000. To have a top 1% net worth at age 30 requires a net worth of at least $1 million and so forth.

As the latest Federal Reserve Consumer Finance Survey shows, the average American household is now a millionaire with a net worth of $1.06 million. But the median American household net worth is about $193,000.

Given you’re shooting for a top 1% net worth, you can look at the chart and see a top one percent net worth target of $5 million at age 40. Does $5 million seem like a reasonable top 1% net worth threshold if the average is about $1.06 million and the median is about $193,000? I think it does.

My top 1% net worth by age can also be used for households, which can consist of individuals or couples.

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 to a 25 year old’s net worth because the 60 year old has had 35 more years to accumulate wealth.
  • Younger people in this chart will logically have a tougher time getting to the top 1% income figure of $500,000 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 because so few people will make $500,000 within a couple years out of college.
  • If you have around a $255,000 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 as a highly coveted software engineer or finance whiz. Or you could have started a business or made a lucky investment.
  • The minimum income multiplier peaks at the traditional retirement age of 65. It is 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.
  • In 2023, $12.92 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. For couples, the estate tax threshold is $25.84 million in 2023.

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 $500,000+ 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 $500,000+ gross income lifestyle could be matched by someone spending 100% of his $250,000 gross income. Hence, my goal since retiring in 2012 was to try and replicate the gross income I lived off of in retirement through passive income.

On the other hand, many of my colleagues easily spent 90% – 100% of their $500,000+ 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

A top one percent net worth is by definition rich. But let’s look at more definitions of rich based various economic factors.

The risk-free rate (10-year bond yield) is currently around 5%. Therefore, one needs a net worth of roughly $10 million ($500,000 / 5%) to be able to generate $500,000 a year in top 1% income. In other words, thanks to a high risk-free rate, one needs about $3 million less to replicate a top 1% net worth lifestyle.

It’s worth adjusting your safe withdrawal rate in retirement, depending on where the 10-year bond yield is. Have a dynamic safe withdrawal rate to change with the times.

In today’s interest rate environment, $10 million can therefore be considered rich enough to be in the top 1%. As the risk-free rate declines, the amount of capital required to be rich increases and vice versa. In a higher interest rate environment, it’s actually easier to generate passive income.

The Ideal Income For Maximum Happiness May Equal A Top One Percent Net Worth

Another net worth calculation is using the ideal income for maximum happiness. We can assume the goal of being in the top one percent is to be happy.

I think that ideal income is $200,000 per individual and $350,000 per couple living in a coastal city. Once you earn these gross income figures, your happiness no longer increases due to money. You are making enough to survive and feel happy.

Therefore, using the same 5% divisor, we can get $4 million for an individual ($200,000 / 5%) and $7 million ($350,000 / 5%) per couple as a top one percent net worth for maximum happiness.

If the risk-free rate declines to 2.5%, the ideal income for maximum happiness can stay the same. In a lower interest rate environment, the $200,000/single and $350,000/per couple incomes goes farther. However, the net worths required to generate these ideal incomes double to $8 million and $14 million, respectively.

If you don’t live in an expensive coastal city, you could probably reduce the $200,000/$350,000 income figures by 30% – 50%. Then divide the numbers by the risk-free rate to come up with your personalized top 1% net worth for maximum happiness.

So let us embrace this high-interest rate environment. It enables us to work less, relax more, and feel more secure. If and when interest rates eventually decline, we’ll need to work harder to grow our net worths.

Getting To The Top 1% Net Worth Is Possible

The sad part about a top 1% net worth is that it seems like it’s getting harder to achieve. Some of the reasons are inflation, globalization, more volatile investment returns, and more frequent boom-bust cycles. Inflation is a real killer if you’re not on its right side.

Only one percent of people can achieve a top one percent net worth. Hence, it may not be worth trying to save, invest, and work so much to beat out ninety nine percent of your peers. You could end up incredibly miserable for a long portion of your life!

Instead, a great short cut is to feel rich without technically getting rich. Feeling rich includes feeling grateful for the things you have today that you wanted yesterday.

I remember feeling incredibly rich when I was a study abroad student in Beijing in 1997. My dorm room was 88 degrees at night and my roommate and I were sweating buckets each night. But we felt thankful every eight seconds our fan rotated towards. We were poor students, but we also felt incredibly rich to be on such a great adventure.

Thankfully, you don’t need a top one percent net worth to feel rich. If you have enough to pay for your living expenses, family and friends who love you, and your health, you are rich no matter what your net worth tracker says!

What is the minimum net worth amount to be considered rich?

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Invest In Real Estate Like The Top 1%

If you want to get a top 1% net worth, 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.

Own your primary residence to get neutral real estate. Then invest in real estate by buying rental properties and real estate online.

My favorite private real estate platform is Fundrise. The company began in 2012 and manages over $3.3 billion in assets for over 400,000 investors. Fundrise’s focus is on residential real estate in the Sunbelt region where valuations are lower and yields are higher. The demographic shift toward lower-cost areas of the country is a multi-decade trend.

I’ve personally invested $954,000 in private real estate funds and individual deals since 2016. My goal is to take advantage of lower valuations in the heartland of America to diversify my expensive San Francisco holdings. Real estate is currently in a downtrend due to higher mortgage rates, which is why I’m buying now.

Invest In Private Growth Companies

Finally, the richest Americans start businesses and invest in private businesses. Therefore, consider diversifying into private growth companies through an open venture capital fund. Companies are staying private for longer. As a result, more gains are accruing to private company investors.

Check out the Innovation Fund, which invests in the following five sectors:

  • Artificial Intelligence & Machine Learning
  • Modern Data Infrastructure
  • Development Operations (DevOps)
  • Financial Technology (FinTech)
  • Real Estate & Property Technology (PropTech)

Roughly 35% of the Innovation Fund is invested in artificial intelligence, which I’m extremely bullish about. In 20 years, I don’t want my kids wondering why I didn’t invest in AI or work in AI!

The investment minimum is also only $10. Most venture capital funds have a $250,000+ minimum. In addition, you can see what the Innovation Fund is holding before deciding to invest and how much.

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.