Wealth is a subjective concept. What one person considers as barely getting by another person might consider wealthy. How do you define wealth? Is it based on your net worth? Your income?
In this post, we’ll examine the data on American net worth, income, and surveys on wealth.
How Much Net Worth Do You Need to Be Wealthy?
Net worth is the difference between your assets (what you own) and your liabilities (what you owe). According to Schwab’s 2023 Modern Wealth Survey, it takes $2.2 million to be considered wealthy in the USA. As Howard Hughes reportedly said, “A million dollars isn’t what it used to be.”
According to the most recent data from the Federal Reserve Board’s Survey of Consumer Finances, the average net worth for U.S. households in 2019 was $748,800, while the median net worth was $121,700.
Here’s what it takes to be amongst the wealthiest in the US:
Top 1% = $11,099,166
Top 5% = $2,584,130
Top 10% = $1,219,126
The website DQYDJ has put together some very helpful tools to analyze the Fed Board’s Survey. The following table breaks down net worth in a few percentiles by age bracket:
| Age | Mean Net Worth | Median Net Worth | 25% | 75% | 90% | Top 1% |
| 18-24 | $28,707 | $8,216 | -$1,415 | $24,791 | $93,732 | $435,077 |
| 25-29 | $49,388 | $7,512 | -$3,664 | $61,568 | $152,063 | $606,188 |
| 30-34 | $122,700 | $35,112 | $2,761 | $117,134 | $258,741 | $956,945 |
| 35-39 | $274,112 | $55,519 | $5,177 | $228,275 | $601,341 | $4,034,486 |
| 40-44 | $623,694 | $127,345 | $18,518 | $351,292 | $848,815 | $7,909,637 |
| 45-49 | $761,560 | $164,197 | $19,872 | $452,226 | $1,354,761 | $10,494,100 |
| 50-54 | $897,663 | $171,320 | $38,973 | $493,928 | $1,440,829 | $13,524,094 |
| 55-59 | $1,165,477 | $193,549 | $38,885 | $644,806 | $2,506,118 | $17,545,849 |
| 60-64 | $1,187,730 | $228,833 | $48,565 | $735,348 | $1,995,238 | $14,629,637 |
| 65-69 | $1,250,679 | $271,805 | $44,125 | $808,183 | $1,939,467 | $16,439,046 |
| 70-74 | $1,173,653 | $258,531 | $70,081 | $816,274 | $1,966,166 | $12,625,305 |
| 75-79 | $945,480 | $272,976 | $83,500 | $611,857 | $1,541,480 | $12,770,142 |
| 80+ | $973,141 | $235,193 | $107,664 | $589,233 | $1,655,537 | $9,932,353 |
Is there a certain percentile that we should define as wealthy? Personally, I would put the cutoff somewhere around the top 5%. Based on the data above, that means someone would need $2.6 million to be wealthy. That’s not too far off the $2.2 million net worth number that Schwab survey respondents thought made someone wealthy.
It’s worth noting that 48% of the Schwab Survey respondents said that they feel wealthy today. The average net worth of respondents saying they feel wealthy? $560,000. That’s only ~¼ of the amount respondents thought would make someone wealthy!
How Much Income Do You Need to Be Wealthy?
According to IRS data for 2020, here is the minimum Adjusted Gross Income to reach each percentile:
Top 1% = $548,336
Top 5% = $220,521
Top 10% = $152,321
The website DQYDJ put together a great summary of income data from the United States Census Bureau’s Annual ASEC survey. The following table breaks down median income percentiles by age:
| Age | 25% | 50% | 75% | 90% | 99% | Average |
| 20 | $6,000 | $16,479 | $27,516 | $40,000.00 | $80,004.00 | $19,526.09 |
| 25 | $21,000 | $35,000 | $55,000 | $76,011.00 | $160,201.00 | $42,943.11 |
| 30 | $25,200 | $45,003 | $73,321 | $108,530.00 | $338,500.00 | $59,818.59 |
| 35 | $30,616 | $52,776 | $87,055 | $133,504.00 | $347,103.00 | $71,388.71 |
| 40 | $32,000 | $54,896 | $87,855 | $140,669.00 | $330,011.00 | $71,525.01 |
| 45 | $31,382 | $57,000 | $100,012 | $160,001.00 | $421,905.00 | $81,303.94 |
| 50 | $32,003 | $55,002 | $93,010 | $159,403.00 | $403,724.00 | $77,529.42 |
| 55 | $32,015 | $55,000 | $101,000 | $165,240.00 | $501,500.00 | $83,291.85 |
| 60 | $32,100 | $57,000 | $100,006 | $160,790.00 | $435,000.00 | $81,424.28 |
| 65 | $32,001 | $58,000 | $90,541 | $152,095.00 | $484,120.00 | $82,909.61 |
| 70 | $34,182 | $54,800 | $95,751 | $164,400.00 | $474,201.00 | $84,946.11 |
| 75 | $28,320 | $53,432 | $87,301 | $146,051.00 | $441,200.00 | $73,327.31 |
While the median income to reach the top 5% is about $220 thousand, it varies a lot by age (and location would also make a big difference).
Bloomberg recently took a survey of households making over $175,000. They asked these high-earning households how rich or poor they currently felt. Many of these high-earning households felt they were poor. Even some of the respondents with net worths over $5,000,000 felt poor!
Conclusion:
As we have seen, there is no definitive answer to the question of how much money it takes to be wealthy in the U.S. Regardless of how you define wealth, it is important to remember that money is not the only factor that contributes to your happiness and well-being. According to Schwab’s survey, people more often describe wealth as enjoying experiences, relationships with loved ones, and being in good health than maximizing earnings or having a lot of money.
Therefore, instead of focusing on how much money you need to be wealthy, you may want to focus on how much money you need to achieve your financial goals and live comfortably according to your values and preferences. Wealth is often as much a state of mind and living as it is a number.
Scott Caufield, CFA, CPA