I offer this blog post with some reservation because it brings attention to the dubious human predilection for comparing ourselves to others. Regrettably, the financial press is full of stories along the lines of Have You Saved Enough? and Are You on Financial Track? Too often, these Do I Measure Up pieces are counterproductive.
As a financial advisor, I’m often asked a variation of “How am I doing?” Clients aren’t necessarily asking about their own plans, but want to compare their finances to others in their demographic. While the question comes from a good place—we all want reassurance that we are doing okay financially and not getting left behind—worrying about how we compare to others doesn’t accomplish much good.
And frankly, comparisons soon fall apart when you examine the details. Decades of drafting financial plans has shown us that two families with similar financial statements can experience drastically different retirement outcomes as the result of different spending patterns, asset mixes, urban environments, and myriad other factors. Comparisons may make you feel good (or miserable), but without context, they’re pretty much useless. And they do nothing to help you move closer to your financial goals.
Nevertheless, we are all naturally curious about where we fit into the big picture, and today, big data provides us with some answers. Recently, we blogged about the new aristocracy—the so-called 9.9 percent—and the social implications of a widening wealth divide.
Today, we’re going to jump right into the cold, hard stats to find out what it takes to become a one-percenter. A recent post on personal finance site DQYDJ slices and dices the numbers (mostly garnered from data compiled by the Federal Reserve Consumer Finance Survey) to help you find out.
So how much net worth do you need to make the coveted 1 percent?
How does $10.37 million sound?
What about income? Try $430,600 a year.
It might make you feel better to know you can reach the top 10 percent with a net worth of $1.18 million and/or $170,432 in household income.
If you would like to dig deeper, read the article and compare away.