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A small portion of Americans earn salaries far beyond the national average. Discover how much income you need to be part of the top 10%, 5%, and 1%.
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Incomes vary quite a bit throughout the United States. The median income was $69,717 in 2021, but households in the top 10% and above make significantly more.
It’s interesting to see how much money these households make — and how your own income compares. Of Dollars and Data released income research earlier this year with the thresholds for the top 10%, 5%, and 1% of household incomes, based on data from the 2019 Survey of Consumer Finances.
The 2019 survey is the most recent that’s currently available. Although it’s a few years old, the median inflation-adjusted income of the top 25% of households increased by just 2% from 2019 to 2022. So, the income data still provides a fairly accurate idea of how much the richest households make.
Incomes of the top 10%, 5%, and 1%
Here are the household income thresholds for the top 10%, 5%, and 1%:
Top 10%: $191,406Top 5%: $290,164Top 1%: $867,436
As you can see, you need an income nearly three times the national median to crack the top 10%. It takes another $100,000 on top of that to make the top 5%. And the 1% is making beaucoup bucks.
Now, these are the nationwide numbers, covering all demographics. They don’t account for location. The average income is much higher in some areas, and much lower in others. Another important factor that isn’t accounted for here is age. The average income increases until the mid-40s to mid-50s. Here’s what the top incomes look like for different age ranges.
Income of the top 10% by age
If you’re under 35, you can break into the top 10% with an income of $122,000. The income threshold jumps up after that, though. Here’s the full breakdown:
Income of the top 1% by age
If you want to break into the top 1%, then once again, your best chance is while you’re young. It still takes an income well above average. Here’s the full breakdown:
Income matters — but there’s much more to being successful
It’s hard to reach the top 10% in income, but you don’t need to earn that much to be successful. Income is only one part of personal finance. It’s an important part, to be sure. But it’s not all that matters. There are lots of other important factors, including your savings rate, how much you invest, and whether you have an emergency fund.
If you’re trying to assess how you’re doing with money, here are the signs that you’re in a good financial position:
You save and invest at least 10% of your income (20% total). This is what’s most important, because it means you’re building your savings and your retirement nest egg.You have an emergency fund, or you’re working on it. It’s recommended that you have enough in your emergency savings to cover three to six months of living expenses.Your regular bills are no more than 50% to 60% of your income. If so, you’ll have some spending money left over to use for anything you like.
If you’re not there yet, or you are and want to keep improving, then increasing your income could be the answer. But if you already earn a large income and the issue is that you spend it all on things you don’t need, then more money probably won’t help. In that case, focus on how you use your money and start automatically saving and investing some of it.
A high income can be an impressive achievement. That being said, it doesn’t tell the whole story. Someone earning $500,000 per year could be working 80 hours a week and feel miserable. It’s good to look for ways to raise your income, while also making sure your money brings you a high quality of life.
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