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 2024 requires having at least $13 million according to the Federal Reserve. And in 2025, the top 1% net worth amount will likely continue to go higher due to inflation.
$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 $13.99 million per person in 2025, up from $13.61 million per person in 2024, and up from $12.92 million per person in 2023. 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% invests in real estate. The combination of property price appreciation and rental income growth is a powerful wealth creator. Real estate enabled me to retire at 34 due to a portfolio of rental properties that generate over $120,000 a year. You can invest 100% passively in real estate through Fundrise, with an investment minimum of only $10. I’ve personally invested over $300,000 in Fundrise so far.
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.
For background, I worked in investment banking from 1999 – 2012, retired in 2012 with a net worth of $3 million at age 34, and now have a top 1% net worth for a 47-year-old. Financial Samurai began in 2009 and is the top independently-owned personal finance site with roughly one million pageviews a month.
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 2024, $13.61 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 $27.22 million in 2024. But estate tax thresholds are set to expire after 2025 if Congress doesn't pass new legislation.
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 4.5%. Therefore, one needs a net worth of roughly $14.4 million ($650,000 / 4.5%) to be able to generate $650,000 a year in top 1% income. When the risk-free rate was only 2%, you would need a whopping $32,500,000 to generate $650,000 a year in top 1% income!
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, $13 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!
Loading ...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.
My favorite private real estate platform is Fundrise. The company began in 2012 and manages about $3 billion in assets for over 380,000 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.
Another great private real estate investing platform is Crowdstreet. Crowdstreet offers accredited investors individual deals run by sponsors that have been pre-vetted for strong track records. Many of their deals are in 18-hour cities where there is potentially greater upside due to higher growth rates. You can build your own select real estate portfolio with CrowdStreet.
I've personally invested $954,000 in private real estate since 2016 to diversify my holdings, take advantage of demographic shifts toward lower-cost areas of the country, and earn more passive income. We're in a multi-decade trend of relocating to the Sunbelt region thanks to technology.
Both platforms are sponsors of Financial Samurai and Financial Samurai is a $300,000+ investor in Fundrise.
Invest In Private Growth Companies
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 Fundrise venture capital product, 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 90% 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 Fundrise is holding before deciding to invest and how much. I've personally invested $140,000 in the venture product so far to gain private AI company exposure.
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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. I share more tips on how to achieve top one percent wealth since 2009.
1.4 Mil at 33 still feel broke
Just gotta keep grinding for 10 years. 33 is young. Let that compounding work for you.
Been coming here since 2021 to stay on track and stay focused. I actually only own $5600 in investable assets in my E trade account. But I have a business that does $10mm in revenue and net about 10-15%. Started it when I was 23 in 2015. Just bought $3mm of land and a warehouse for my business. Commercial landscaping. Considering the multiplier for my industry 5-7x I feel like I’m doing okay. I feel the tax advantages for owning business and property is the best. All paths are different. I’m not college educated but regularly read your articles and when I have excess cash I buy equipment or trucks to grow my business. I have stayed unmarried and no kids to get to the 1% of my age group at 32. I also have about $250,000 equity in my homestead I bought before Covid thank god. No plans for a big house. I’ll stay put in my small townhouse and enjoy travel excursions as I can finally get away having 60 employees. I’m only sharing this for the folks who may be wondering how to get to where they want to be. I plan to buy investment propety every year with my profits and whatever equipment necessary to expand my commercial landscaping business. Thank you for your insight and I tell my friends to come here all the time.
Thanks for commenting and sharing. It’s great to hear from more business owners. I agree about the wonderful benefits of owning a business and real estate.
If you find a life partner, it’s going to make all the business and effort and money you make even more worthwhile. I hope you do!
Safe withdrawal rates fluctuating with interest rates don’t make any sense. For a start interest rates are nominal and SWRs are supposed to rise with inflation. Also its unreasonable to assume SWRs can fluctuate with interest rates, which are actually quite volatile. Reality is that you need to do some kind of historical analysis on your portfolio and/or a monte carlo to assess your risk at using different SWRs.
You’ll enjoy this post that explains my dynamic safe withdrawal rate more clearly.
Navigating Retirement: The Financial Samurai Safe Withdrawal Rate In Action
Good stuff Sam. Always enjoy your take.
Love your content. I am always fascinated by the thinking of other like minded people. Good fortune and health to all.
I am 45, married no kids. $250k annual income in charleston sc. net worth $1.5m and we save $50k per year in retirement savings and $25k per year in cash savings to pay off mortgage which is out only debt. We owe $150k there. Target goal is $4m net worth and $3m investments by age 60 which seems we are on track for. We still feel middle class……
Just have to count your blessing and review the things you have to feel rich.
See: How To Feel Rich Even Even If You Can’t Get Rich
I am a 51 year old with $4.8mm networth – 67% in the market (MFs, ETFs, Individual Stocks), 33% in Cash (HYS, CDs, MM). 65% Pre-Tax (401k, IRA, Stocks, Pension), 35% Post-tax. I don’t have any real estate currently but planning to take about 15-20% of net worth to purchase primary residence for cash in California or Nevada. Prefer Nevada as it is no-tax state (401k, SS, Pension, No state tax) but leaning toward California primarily due to better access to top of the line medical facilities. I was doing better until my returns in 2022 got killed as I could not pay attention to my investments due to personal issues. Here are my returns over the last 14 years starting in 2010
11.96%, 15.36%, 27.11%, 29.48%, 19.31%, 10.14%, 17.41%, 32.40%, 36.31%, 9.92%, 20.82%, 16.61%, -11.94%, 23.57%
At an average of 5% returns working till 65 I would be at close to $10mm NW and 10% returns would be close to $20mm. I am not sure I want to work past 62. So, I am hoping for close to $8-15mm networth by the time I am ready to call it a day. Please give your feedback am interested in hearing what you think.
Financial Samurali any thoughts?
Retirement is better with a $10+ million net worth. You might as well go for it since that’s your in your target.
https://www.financialsamurai.com/10-million-dollars-the-ideal-net-worth-amount-for-retirement/
Question — you said you saved 50% of your gross income after maxing out your 401k. How is that possible? even in a tax free state, you will pay approx. 30% in federal tax, 3% in SS and 2% in medicare. That means that your after tax income would be around $325,000 and you claim to have saved $250,000. Did you really live off of $75K? If you lived in a tax state, it would be another 5-10% less. I always find articles where people claim high savings rates to be a bit of disservice because maybe you mean 50% of net income (after tax), which would still be good, but certainly quite different from 50% of gross.
$13M starting for top 1% in 2023??? Horse manure! With well over 30% of the Stock market value wiped out in 2022 alone, combined with high inflation throughout 2023, A more representative of top 1% net worth would be less than $10 M.
Reading these replies makes be sad. It seems the majority have the one-more-year syndrome and everytime they reach their goal, they just stay on the treadmill and increase their goals higher. Great, I guess, if your reason for living is the work that you do, but how many *really* enjoy what they do? I suspect not many.
For us, when we had reached our goals in our early 50’s, I made the call to retire. I worked in banking and the grind did not make me happy. What is the point at that age of continuing the grind to increase our net worth from $4m to $6m or $8m while giving up my 50’s – the decade many find is their last one of relative youth.
I am now 59. We are mobile and travel. In 2023 we have been to 8 countries, spending roughly similar periods of time in each – those countries cover most of the world. From New Zealand to Ireland and 6 others in between. Our net worth for our age is quite far from the 1% figures in this article, yet our net wealth is about 45 times our 2023 spend, and our net wealth is growing. If anything, we will ultimately need to spend more and/or give money away.
And 2024 is coming and another year of travel is planned.
In my view, WE ARE RICH and probably among the luckest people on this planet. Every single day is a day doing what WE want and travel is the ultimate life-style (in our view). We don’t need the 1% net wealth – and the very marginal increase in our life-style a few more million would provide is totally out of proportion with the time and stress it would take to accumulate it.
My advice – the 1% numbers are no more than a passing interest. Seriously, forget about the 1%. Stop the one-more-year syndrome. Stop comparing with others. Stop increasing your goals and loosing more time chasing more money you don’t need – which you likely do because you are comparing with others. Plan what YOU need for YOUR life with YOUR circumstances. THAT is how you become HAPPY. You will NEVER become happy if you continue to compare with others. So forget the 1%. I don’t care at all for it. We are TOTALLY HAPPY and therefore TOTALLY RICH with the ~$4m we have in our late 50’s, a life of freedom answering to no one, and travelling the globe.
John: Thank you for such a great and wonderful comment. I am where you were about 7 years ago. Just turned 52. I had been thinking precisely about the one more year syndrome and how it never ends. I have been a terrible investor I think but still somehow have managed to get the family net worth to a little over $4 million. I am so glad I read your comment because I am myself afflicted with the one more year syndrome. My wife and I want to travel. For many years, we have worked hard (we both enjoy our line of work BUT at the end of the day, work is still work!) Every one and then in life, on almost the last day of the year, while the rest of the family is still asleep, you come upon a comment that you feel is just made for your and your life situation. Your comment was precisely that for me. I doubt that I would ever meet you in person, or whether you will ever even see this message, but Thank You for taking the time to write up such a thoughtful perspective. I think I will be joining your lifestyle after the New Year! If we ever meet, I owe you a nice cold beer!
Great comment. I was laid off in October of 2023 and decided to retire. At 58, I just didn’t want to look for a job again and have to prove myself all over. At that point in time, I had $4.4M in investment assets, a house that is worth $3.5 million that is paid off (with only $12K/year property taxes since I have been in it for 25 years). The $4.4 million has since grown over 8 months to $5.2 million while I have been thoroughly enjoying myself with all kinds of travel and time to read and ride my bike.
Like lots of folks on this site, I set myself up so my needs are small at only $5K a month. So everything on top of that is spent for my pure pleasure. And if the market goes down? So what. I have set myself up so. my needs are small, everything else is gravy. All that to say that you are right. $10million is a lot of money. $5 million is a lot. If you can’t figure out how to to make that into a very pleasant retirement, then you need to rethink your priorities. And maybe one of the priorities is that you don’t need to be in the top 1% to live a fantastic life.
$800K on 8 Months is huge! What did you invest in?
You may enjoy this post: the stock market is absolutely the economy
the stock market. lol
Gotta love it! I think the fact of the matter is Americans are like wealthier than the media makes us out today. Even though my question was five months ago, five months later, I’m assuming he’s up over $1 million.
See: 2025 Wall Street forecast for the S&P 500
I agree it doesn’t take an actual 1% net worth to feel rich. Yes it would help a lot to have multiple millions, but it’s not necessary. Rich is largely a mindset. I say this because I know people who have less than $50,000 to their name who can’t stop smiling day after day vs other people with single to triple digit millions who are grouchy and miserable every day.
I also agree that real estate is often a significant way to grow wealth exponentially. That and owning equity in business(es).
This is the least relatable post of yours I have ever read. I have a loooooong way to go!
Do you plan to update your numbers based on the most recent data reported by the US government?
Updated for 2023 and beyond! Thanks for the push. It’s incredible the top 1% income threshold is now $650,000 from $380,000 in 2016.
30 years old here from Dallas, TX. Started a contracting and landscape business at 23 (2015) that does over $7 million in revenue today. By the time you calculate my cash flow multiplier of 6x and then subtract my debt on trucks and equipment I am sitting at $1.6 million. I got a lot of offers to buy my business using the 6x multiplier EBITDA. I also bought two flex industrial spaces for $600k (put $120k down) that I lease to a trucking company cash flowing $1500 a month (after mortgage, taxes repair). My goal is one commercial building a year and to buy other landscapers out through my 30s and 40s and scale. Right now with all writes offs and deductions my income is average $250-$300k year which I invest all my profits back into my business or property. I did buy a Porsche in 2021. I don’t really stress about driving a car that nice but I do think your 5% net worth rule is good which technically I am over that percentage. I believe business and real estate is the best path for someone who is young to build wealth. I have a personal goal of building a company that does 9 figure revenue and owning alot of real estate. I also bought my first home at 28 for $400k which I don’t include in my net worth. Money and building net worth is my hobby. You don’t have to be in a flashy tech business. I’m a simple contractor and Mon-Fri I drive a a $10k car and wear mud boots. I only drive my Porsche on a Sunday or special event. Keep it low key and invest invest invest. I also have a staff of 50 and includes office staff of 10 that run the biz. I could maintain where I’m at and work less if I wanted but as I mentioned my goal is 9 fig rev and sell to private equity or publicly traded company. Then live off my real estate income and probably dabble in developing properties as a passion. I want to say your website has been a tool for me since 2015 when I went to business for myself. I have spent hours here. I finally ordered your book today and can’t wait to read it. Thank you for everything you do as I had no financial education or upbringing. I had to figure it out and financial samurai has helped me so much. Excited to keep wealth building and I strive to be better as a businessman and investor everyday.
Anyone in Dallas who wants to connect ryanriso2316@gmail.com. Love to talk business and investing with other like minded folks.
Well I’m really fantastic the avarage net worth by age
Damn, Ryan, very nice. Porsche to boot. My man.
At least you aren’t offended!
I hope more people key in on the conclusion, which asks whether it’s worth saving, investing, and working so hard, and for so long to try to get into a place that only at 1% of the population is in.
You can be just as happy or much happier with less than a top 1% net worth.
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.
Hi whiteshoe,
Do you mind sharing your occupation? Or how you got to your NW?
Thanks!
I call Bullshit on this one.
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. I’m not a therapist who knows the ins and outs. I don’t know the person.
Here’s a good post: https://www.financialsamurai.com/how-to-feel-rich/
Wow. Late to the party but……Just because this is a personal finance site does not mean that emotions are not involved. Sanjay, you are right in reflecting on your personal relationships and looking for a happier path for you and your family. Good Job!? A good job is done by a man who has a net worth of 2 million dollars and looks back on his interpersonal relationships with pride and no remorse.
Emotions are important. But as a stranger, I don’t have the capability of helping Rieder at work through their emotional problems, based on one small comment.
Where did all the Karens come from?!
>$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!