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%. Remember,having a large net worth is better than having a high income. The government goes after income more than it goes after wealth. For example, you can live in a $8 million mansion and get Universal Healthcare subsidies if you make less than ~$94,000 a year with a family of four.

Based on myTop 1% Income Earnerspost, we know that in order to be in the top 1%, youve got to earn at least $380,000 in gross income a year. The data comes from the all-knowing IRS.

Based on myNet Worth For The Upper Middle Classpost, we learn that the net worth range for the top 15% of all Americans between the ages of 45 74 is around $700,000 $830,000.

Finally, Ive shown numerous examples as to why earning roughly $200,000 $250,000 gross a year per person and $300,000 a year per couple is the ideal income for maximum happiness. Being rich is sometimes a state of mind, and Ill use these income figures in my analysis as well.

Given these data points, Id like to construct two simple models to demonstrate what I think should be considered top 1% rich. All wealth and no income is not ideal.Similarly, all income and no wealth is not ideal either. There needs to be a balance.

Instead of going through stale Federal Reserve data about wealth and population stats, Id rather create logical assumptions based on the existing current top 1% income data. 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.

At the age of 35, one should have about 4X gross income as a net worth. At the age of 45, one should have about 9X gross income as a net worth. By the time one turns 60, the net worth figure should be closer to 20X gross income. Dont believe me? Read the source:How Much Should My Net Worth Be By Income. Making money means nothing if you have nothing to show for it!

One can therefore conclude that a top 1% income-earning 35 year old should have$1,520,000in net worth to coincide with her $380,0000 a year income if she wants to be in the top 1% net worth echelon. To be clear, the $3.42 million/$380K ratio should be considered the minimum combo for a 35 year old.

A 45 year old top 1% income earner should therefore have roughly$3,420,000in net worth. While a 60 year old should have a net worth of roughly$7,620,000. Have a look at the chart below to get a good snapshot of top 1% net worth starting at age 25. Ill then share some further analysis after you digest the chart.

* Top 1% net worth is relative to our ages. Its unfair to compare a 60 year olds net worth with 35 more years to accumulate wealth to a 25 year olds net worth.

* Younger people in this chart will logically have a tougher time getting to the top 1% income figure of $380,000 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 as a result, because so few people will make $380,000 within a couple years out of college.

* If you have around $380,000 in net worth at age 25, youre in the top 1% probably due to some savvy investments made right out of college. Income alone isnt going to cut it. You may have just started making a top 1% income of $380,000 as a highly coveted software engineer or finance whiz, but thanks to taxes and general living expenses, accumulating $380,000 in net worth by age 25 still isnt that easy.

* The minimum income multiplier peaks at the traditional retirement age 65 because its pointless to accumulate so much more money when youve got less than 35 years to live. Social Security is available at 65,adding another million to your net worthif you capitalize its annual payments.

* The minimum income multiplier stays steady at 14 after age 80 in order to maintain a $5.3 million net worth figure. $5.3 million is the limit per individual one can pass on before the Death Tax kicks in and takes half. You might as well spend every single last penny above $5.3 million 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. Just know that the Death Tax income limit logically doubles to $10.3 million, unlike the highest income threshold for our progressive tax system ($400,000 + $400,000 = $450,000).

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 $380,000+ differently.

When I was making the big bucks, I would always save at least 50% of everything I earnedafter maxing out my 401k. I knew the income wouldnt last forever because the job was not sustainable. Given my 50% savings rate, a $380,000+ gross income lifestyle could be matched by someone spending 100% of his $180,000 gross income.

On the other hand, many of my colleagues easily spent 90% 100% of their $380,000+ gross incomes. One close colleague told me, if he didnt make at least $500,000 a year, he couldnt 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

Given the risk-free rate is currently at around 2.5% +/- 0.5%, one needs a net worth of roughly $15,000,000 ($380,000 / 2.5%) to be able to generate $380,000 a year in top 1% income.$15 million can therefore be considered the upper bandfor the definition of rich in todays environment using this methodology.

If we assume that earning $200,000 gross income per person is considered rich because its the ideal income for maximum happiness, then one needs a net worth of roughly$10,000,000($200,000 / 2.5%) to be in the top 1% of net worth. A $200,000 gross income is equivalent to a $380,000 income earner saving 48% of their gross income.

Finally, if we assume the $380,000 income earner only lives off 25% of their gross salary (75% savings rate), then we can assume the $95,000 a year spender requires$3,800,000 in net worth to feel rich.

Heres a chart that shows what one needs to accumulate based on a 2.5% risk free rate and various savings rates. The risk free rate will obviously adjust over time, but I dont think itll get over 3% for a long while.

Only the poor or super wealthy say money cant buy happiness. For most of usmiddle class citizens, becoming rich is a nice goal to have. Now youve got some concrete figures to shoot for by age. And if youve ever wondered whether youre already rich, now you can know for sure!

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

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Updated for 2020 and beyond. The bull market should be making a lot of people wealthier if theyve been continuously investing all this time! Further, tax cuts and the raising of the estate tax threshold to $11.4M per person will also boost wealth as people get more motivated to amass.

Author Bio:Sam started Financial Samurai in 2009 to help people achieve financial freedom sooner, rather than later. He spent 13 years working in investment banking, earned his MBA from UC Berkeley, and retired at age 34 in San Francisco.

Sams favorite free financial tool hes been using since 2012 to manage his net worth isPersonal Capital. Every month, Sam runs his investments through their free Retirement Planner and Investment Checkup tool to make sure he stays financially free, forever. Its free and easy to use.

For investing opportunities in 2019, Sam is most interested in investing in the heartland of America throughreal estate crowdfunding. Property valuations are much cheaper and net rental yields are much higher. There is a demographic trend towards moving away from higher cost areas of the country to lower cost areas thanks to technology.

Im 60 and have made ~$800,000 a year for the last 7 years. I have a net worth of ~$4,000,000 on paper and I feel ok but not rich. Because about $1,500,000 is tied up in my house and business property that I will never sell. And even though my business has $1,250,000 in the bank, if I withdraw it, Ill only get to keep about $750,000 of it after taxes. So my liquid net worth is right at $2,000,000 right now and while I should feel rich, I just dont yet. Maybe if/when my liquid net worth hits $5,000,000 I will.

Just stumbled on this column and thread and think its misleading because it assumes the reader wants to be among the top 1% in the graveyard. Cant think of any other reason to use the riskless rate of return as a discount rate. I dont have many friends outside the top 1% and I dont know any of them who think this way. Most folks I know want to live their entire lives comfortably (as they define comfort). Rich people invest their money, as the aspiring rich do. They dont sit in cash. Far better than using the riskless rate to calculate wealth would be using a discount rate of something like 3% for an age 45 couple, or 4% for an age 65 couple, per the Trinity study and subsequent analyses (like Kitcess). A 100-year old widow with $1 million in the bank is rich. As for myself, I hope that the second of my wife and myself to die will have less than $1 million in financial assets upon death. More than that and we will have failed in our objective to spend almost everything we dont give away during our lifetimes.

Im 42, have a child, and have a husband who is a big spender. I work for a company with master degree and just signed up for 401K, now Im considered a middle class tier (recently I got a job with higher pay). Im reading this article and peoples comments and think how much Im behind the game and again it scares me so much. My income doesnt fall in the category you discuss about and I really dont now how to get there. All Im practicing is to spend less but I dont know what I should do with making more money part. I spoke with a financial adviser and he recommended me to sign up for a life insurance with 6.9% interest (through insurance company) for 20 years and pay monthly but there is still a risk that I dont get anything extra and end up getting what I accumulated in 20 years. I have little saving that I could hide from SOMEBODY so far and its equal to two months of my net income and thats all I have. Im really scared and dont know what I should do for me and my child future . Should I continue saving up and when it reaches to a certain amount I have to invest it in something, I highly appreciate your insight.

Dont be scared. This is a top 1% income post, where only 1% of earners get to. Its totally fine not to earn this amount. Its just a curiosity thing or aspirational income to strive for.

You should max out your 401k, and try and methodically invest another 20% of your income in a balanced portfolio based off your risk tolerance.

See:Investment Strategies For Retirement Based On Modern Portfolio Theory

I signed up for 401K with maximum amount I could contribute. I have to wait a few months to plan and budget for the rest of my paycheck to see if I can invest in anything else as Im responsible for the bills and main expenses! 🙂

Please do not buy any insurance product (or any other financial product) before consulting at least one other second advisor and also doing your research. Make sure whomever you speak to about your finances is a Fiduciary. It sounds as if your advisor is trying to put you into an annuity which is often high fee (beneficial to him) and not necessarily a good fit for you. You dont give enough information to make a judgement, but you sound as if you are not familiar with investing, so tread cautiously. Do not panic. Start reading and doing research.

You might start with a broad based mutual fund that tracks the larger market. A low-fee outfit such as Vanguard, Schwab or Fidelity is a good place to start. They have a range of funds available. Vanguard is a first rate company with some all in one funds that balance the portfolio automatically depending on your targeted retirement date.

I was pretty sure the point in using the low risk rate is another example of setting a low end.

Even the cash stash invested in some chase freedom savings of $15 million would sustain the same bottom end income as the $380k salary man.

This guy just built his own mathematical model to prove that you can mathematically achieve top 1% income happiness.

The total target number is definitely a factor however, most people really need to address personal consumption / overhead and future tax rates going forward in their planning. Im 44 and a few years away from semi-retiring and spending the days on the golf course (hopefully)! Im a small business owner (20+ years) and active RE investor who has consistently lived below my means and reinvested a large percentage of my income. My average AGI runs about 400-450k and effective tax rate is in the mid 30s which fluctuates. Net worth is about 9m. The following is the scenario I debate about when trying to decide when to pull the trigger: Assuming an average return in retirement of 6% (conservative mix of 3-9%) and a 35% tax rate, the after tax net on 9m is about $351,000 per year which is sufficient with no debt (for my objectives). At a 60% tax rate, that number drops to $216,000 and that doesnt factor in the effects of inflation. With the government in the fiscal condition its in, whos to say the top tax rate can jump back up to 50,60,70%+ in the future? We have been there before. Somehow they have to eventually address the shortfall and and you rest assured, it wont be on the backs of the lower income bracket! Its sad, when people ask me what my concerns are about being self employed, its never the competition that concerns me, its always governmental regulation and tax policies.

Your age, income, multiplier, net worth chart is very good info for many.

Add a 10% income column and 10% net worth column.

Many will find those figures closer to where they are.

Being in the 10% is a comfortable place to be for many.

It would serve as a first goal to give it a name.

And it would make many feel proud and appreciative that they got there.

Im confused as to why you assuming income is constant among all age groups.

Im pretty sure the 99th percentile of age 25 income is less than 380K, and the 99th percentile of age 50 income is enormously higher.

$380,000 is the top 1% income level for all ages. That is what we know. Too income levels by age are unknown, or at least doesnt have strong backing.

The multiplier takes into account some of that income variance by age to get the net worth output.

So long as the input data is clear, the output data should be clear. Youve got to have control variables to solve a question. The more certain control variables you have, the stronger the output.

Can you share how youd create the model with actual figures? How does your income and net worth stack up?

These numbers are interesting, and a decent way to measure net worth, but they are mostly geared for w2 income folks. Those of us that made our wealth through real estate have a number of factors that skew this analysis. Chiefly, if my net income (all from rental properties) is $120k, that is probably closer to $200k gross income for a w2 earner. But in my case I have significant RE deductions (like depreciation), that I pay little taxes to net that $120k.

Another issue is ones specific housing situation. Those who have significant equity in their primary residence dont need to make as much monthly cash to live well. As an RE investor that is even more pronounced as my primary was part of an RE investment project that had high yields.

Thirdly, for me to have cash to make future investments, I do not need to earn it from cash flow. I get it from (hopefully smartly) tapping into the equity in my properties. The cash out refi or HELOC money I pull out, while a loan, is basically tax free (or tax deferred.). Of course it is only deployed in money making RE ventures, so the loan on that money is paid for by the new projects cash flow.

In summation, I always focus on minimizing my cash flow. In other words cashflow pays my bills, but its the equity appreciation (be it forced equity through development/repositioning or market driven) is what makes me rich. If Im making so much in cashflow that Im paying significant taxes on it, Im not leveraging enough. Of course defining these numbers specifically is highly personal and YMMV.

One factor that needs to be taken into consideration when looking at net worth is what state you live in. If you have a $2 million net worth and you live in California, half of your net worth could be tied up in your home. Whereas, if you live in Nevada, as an example, an even larger home could be owned for around $500,000. This would leave an additional $500,000 for investment assets for the Nevada resident.

Check this post out:The Best States For Retirement

Rich to me is when one can retire even if they choose to keep working. For me that number would be 3 million dollars. At 3 mill I would like to have 1 mil+ retirement, 1 mil+ non retirement, and primary residence paid off.

Sounds good to me! Once the primary residence is paid off, living expenses arent so bad anymore. I just finished paying off one mortgage, and it feels good. Doesnt cost to much to eat, transportation, etc. Just kids.

This is a rather strange post. 1% of the population? Really?

To be in the 1% of the population is mostly luck. Did you forget your statistics semester in MBA school?

99% have less net worth.. Hello? You are no longer middle class.

And the vast majority of people trying to become part of the 1% will not succeed. Its basic mathematics! LOL!

The market segment in which you need to sell to is the mass affluent. The mass affluent are the real movers of the American economy. The 1% dont buy enough stuff to make an economy.

Aspiration is always strange, until it becomes a reality.

Its understandable to be salty about shooting for these numbers at a later stage in life. But for those who arent retired yet, these are interesting numbers to know and potentially shoot for.

Also known as survivorship bias.

Its amazing the internal conflict of the nouveau riche.

Its interesting how many in the top 1% were also in the top 1% in school all along. Not all, but a large percentage, definitely over half. So, is studying for years also luck while everyone else mucks about?

Not succeeding in getting to 1% is acceptable. Not trying is not. Then again, that makes it easier for current 1%ers to stay where they are. Fine by me.

And also perhaps an excellent argument to increase the marginal tax rate!

This is a very interesting analysis, and certainly provides a good range of goals for those aspiring to 1% status.

It does seem to be mostly hypothetical though, and I would also like to see some statistics on actual 1% net worth by age. Im especially curious how many of the 1% inherited vs earned their wealth. I imagine it would be quite a few.

Less than 10%, there are tons of articles about this all over the internet and books about it as well. Although as you go up the ranks, meaning past 0.1 and then 0.01%, etc, the number gets higher, but it never becomes the majority even at the Forbes 400 level.

So you saved 50% per year after taxes and 401(k) contributions, right? Just wanted to make sure it was after taxes. If not, very curious as to how you did that because taxes are about 45-50% of income in NYC.

Yes, agreed. Taxes are about 45% after Federal, State, and City, this doesnt add up properly.

I was always shooting for 10M (inflation-adjusted) as a teen because my family would go to Carmel, CA, and Id see all these beautiful homes close to the beach for 3-4M. 10M seemed like a nice round number to be able to afford one of those homes and be considered rich.

Do you think that achieving an ideal $200,000 income is more important than achieving a net worth that can generate $200,000 passively (8-10M)? Because the net worth goal would require a lot more work and stress.

As a point of reference, Im 21 and currently have a gross income a little over $70k.

I use nice homes to motivate me all the time as well!

Youve first got to shoot for the $200,000 before you can get to the $8-10M most likely. Hence, once you get to the $200K, observe your own fillings about how whether it is all worth it and then go from there.

Definitely shoot for the 200k, but dont decide that income is a must before you build the Net worth. I still dont make 200k, but can say it is possible to push the Net worth numbers up close to the goals Sam laid out.

It takes planning, smart investing, some luck, and keeping an eye on your long term goals, but it can be done.

Obviously it is harder in higher cost parts of the country, so expenses verse earnings is going to play a big part.

Brett, what industry do you work in to make $70K a year? Im 19 now, and Id love to make that much by the time I am 21.

Gosh.you 1%s you. I have much less than the numbers discussed here, and still feel rich given where Ive come from. Everyone here is talking multi-millions, never mind 1 million, which is a loooot of money for a loooooot of people. if you have 35 times your expenses invested and working for you, you are rich no matter what your number. Thats my theory. I only thing I am still figuring out is if the 35x is enough to cover college expenses and some inheritance to kids, or is it just retirement.

I like the way you are trying to interpret the meaning of the top 1% by age and by income, very fancy. I think its more simple than that. Wikipedia defines a High Net-worth Individual as a person (not household) with at least $1 million in liquid assets (excluding the primary residence). In the same page Wikipedia states that there are 3.44 million individuals in the US that meet this criteria (2012 data). It turns out that 3.44 million is about 1% of the total US population. In summary, if you have more than $1 million in liquid Net Worth you are in the top 1% in the US regardless of age or income. Im 47 with $1.5 million liquid and $330K income and certainly feel rich since I only spend about $36K per year.

$1.5 million seems low, and it doesnt account for by age. Age is the relative factor here. So for you, the target for a 47 year old would be closer to $4 million.

And then theres the savings and interest rate factors in the next chart.

But if you feel rich, thats all that matters! Have you considered doing something differently given your spend? What are the reasons why you spend only $36K per year?

There is a new report out from RBC Wealth Management confirming the total number of millionaires in the US was 4.4 million (1.3% of US Population) in 2014.

126mm households in the us / 4.4mm millionaries makes one in 29 families a millionaries its amazing that it takes 1mm to get to a 3.4%er and 7.4mm to get to the 1%er. The wealth is really held by few

I think incorporating age makes a lot of sense. I agree that its really unlikely that someone younger than 25-year-old is going to have accumulated 380k. I sure was nowhere close to that and I dont know anyone who is or was at that age either. Really good tables!

Is the NW per individual or per household? If its per individual, a couple with at age 40 must have 4.6M NW. So I have to change my target to hit 18mm by age 65 or maybe even more provided the inflation for the next 25 years.

I am not in the 1% class, but close. Even if you have $2-3M, it doesnt seem like all that much. 30 years of retirement can burn up a lot of money. If the market goes south, or inflation goes north, you are screwed.

We are both retired, and our income is from passive income (rental and dividends) Also our net worth is higher base on you chart compare to our age, however, we dont feel that we belong to 1%.

Sam, I disagree that net worth is more important than income. You qualify for loans based on income, so in a lot of cases you can have a much nicer lifestyle if you have a high income and can qualify for bigger loans. For instance, my husband and I have over 1 million in investable assets, but just have barely above average incomes. In our city, a nice house in a very good neighborhood is *at least* 1.5 million but probably closer to 2 million. We are not able to responsibly achieve this based on our income. Maybe we are too conservative. Our friends with higher incomes seem to be able to easily afford these homes. Im getting tired of having money in the bank and not spending it, and feeling like I constantly need to save more! Maybe its just time to move out of California!

Mina, I think we might be talking different wealth spectrums here.

Thinking you need a high income in order to take on debt to buy a nice home isnt a top 1% rich mindset. Thats a middle class / upper middle class mindset. Nothing wrong with that, and Im part of this class.

This post is a discussion about the top 1% in terms of net worth.These folks just pay CASH.

Paying cash is the mindset everyone should have, regardless of their socioeconomic status.

I once thought Id be happy at $2M liquid NW. We hit that number in our early 30s, and I wasnt happy. I thought When we hit $4M liquid NW, well have it made. Now in our late 30s weve hit $4M, and I dont feel like weve got it made. My vote is for $10M. But Im sure when we hit $10M, that number will go to $20M.

Of course, at our current level, we are not concerned in any way about money. The bills are paid with a fraction of our income, and the rest goes to savings. Worrying about repaying student loans has given way to worrying about wash sales caused by our robo-advisors. I consider us upper middle-class, but no doubt others would consider us rich. And I know some who are better off than we, whom I would consider rich, but who likewise consider themselves to be upper middle-class.

In my opinion Rich does not vary by age. Rich is the number at which you can live without worrying about working for money, so you have to assume you are living off earnings without touching principle. Liquid NW by age is a good measure of where you are on the path to rich. Id consider the numbers you show to be an indicator of affluence, with the endpoint being rich.

May I ask what is your rational for not paying off your student loans with a $4 million+ net worth? It felt so freeing after I paid mine off, even if the rate was sub 3%.

Check out:Overcoming The One More Year Syndrome

You mis read his post: student loans has given way to worrying about wash sales caused by our robo-advisors

What you have learned for yourself is that money doesnt buy happiness! Sure its a cliche, but certainly true. Were 31, nowhere near the 1% income but fairly close to the net worth level in the charts above for our age, and we also have no real worries about money. Having income well above expenses means that even high-spending months are positive months on the net worth front.

What we have found is that the best way to spend our money to bring us actual happiness (joy, really) is to give it away. That, and to find other like-minded people (or nurture those with the means until they too catch the vision) and combine our resources and our networks to truly make a difference for causes we care about. Helping people out of our abundance has become one the primary sources of meaning and contentment in our lives.

I think for most of us our goals and expectations increase as we exceed our previous goals. When we were 30 we sat down a