You Need This Much Money to Be Rich in America, Data Reveals (2024)

You Need This Much Money to Be Rich in America, Data Reveals (1)

Earning more money can make it easier to pay the bills, fund your financial goals and spend on hobbies or “fun,” but what income is considered to make you rich? The answer can depend on several factors, including where you live, what type of job you have, how much you save or invest and how you typically spend your money. If you’re looking for help to reach your financial goals and be considered “rich” in your own eyes then consider building a plan and working with a financial advisor.

What Income Is Considered Rich?

Pinning down an exact income level that qualifies you as “rich” is difficult, as there are numerous studies and surveys that attempt to measure it. To keep things simple, let’s consider where the Internal Revenue Service (IRS) sets the bar for the top 1% of earners first.

According to the most recent data available for fiscal year 2019, an income of $540,009 per year puts you in the top 1% category. Based on that figure, an annual income of $500,000 or more would make you rich. The Economic Policy Institute uses a different baseline to determine who constitutes the top 1% and the top 5%. For 2021, you’re in the top 1% if you earn $819,324 or more each year. The top 5% of income earners make $335,891 per year.

What Is a Rich Monthly Income?

The amount of money you need to make each month to be rich depends on which metric you’re using. If you’re going by the IRS standard, then you’d need to make approximately $45,000 a month to be rich. On the other hand, if you’re aiming for the top 1% as measured by the EPI, you’d need a monthly income of $68,277.

To reach that level of income, you’ll likely need to have something more than the typical 9-to-5 job. Examples of people with monthly incomes in that range can include successful business owners, celebrities, athletes and online influencers or content creators.

How Much Income Do You Need to Be in the Top 20%?

The real median household income in the U.S. is around $71,000, according to the latest Census Bureau data. In order to be in the top 20% of income, you’d need to earn nearly double that amount or an average of $130,545 per year.

That’s according to a SmartAsset study of income distributions in the 100 largest U.S. cities. The study found a wide range of income distributions geographically, with residents of San Francisco needing an income of $250,000 or more per year to land in the top 20%. Meanwhile, you’d need an income of $70,444 to be a top 20% earner in Detroit.

It’s important to remember that the definition of what it means to be rich is subjective. Someone who makes $250,000 a year, for example, could be considered rich if they’re saving and investing in order to accumulate wealth and live in an area with a low cost of living.

If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.

Rich vs. Wealthy: What’s the Difference?

Being rich is one thing, but being wealthy can mean something entirely different. Someone who’s rich may have cash available to spend on luxury goods or take expensive vacations. A wealthy person, on the other hand, might be more focused on increasing their net worth and creating a long-lasting financial legacy.

So, what’s the cutoff to be considered wealthy? Again, it’s subjective and there are lots of different numbers that may be tossed around. Someone who has $1 million in liquid assets, for instance, is usually considered to be a high net worth (HNW) individual. You might need $5 million to $10 million to qualify as having a very high net worth while it may take $30 million or more to be considered ultra-high net worth.

That’s how financial advisors typically view wealth. The average American, on the other hand, sees $774,000 as a sufficient net worth to be financially comfortable and a net worth of $2.2 million to be wealthy, according to Schwab.

How to Become Rich

If you’d like to reach millionaire status or join the ranks of the rich, you’ll need a strategy for achieving that goal. Short of winning the lottery or inheriting a fortune, becoming rich takes some effort. Just how much effort can depend on where you’re starting from.

Here are some of the most impactful steps you can take to become rich.

  • Earn more:Increasing your income means you’ll have more money to save, invest and pay down debt, all of which can help to boost your net worth. There are different ways to increase income, including negotiating a pay raise, pursuing higher-paying roles, taking on a part-time or second job and starting a profitable business or side hustle.

  • Budget:Budgeting is one of the simplest ways to take control of your money and become rich. When you budget, you’re deciding how to allocate the income that you have each month. That makes it easier to work toward your goals of saving and increasing your net worth.

  • Reduce debt:Your net worth is calculated based on how much you owe versus what you have in assets. Paying down debt can help you get on the path to becoming rich if you’re able to free up more money for saving and investing. If your debt is expensive due to high-interest rates, consolidating or refinancing it or using a 0% APR balance transfer could make it easier to pay down what you owe.

  • Invest:Investing and saving money are both important but they’re entirely different. When you save money, you’re typically putting it into a savings or CD account at your bank where it can earn a little interest. When you invest, you’re putting your money into the market where it has the potential to earn much higher returns. If you’re not investing yet, the easiest way to get started is to contribute to your retirement plan at work. You might have a 401(k), for example, which you can contribute to from your paychecks automatically. As an added bonus, your employer might match some of what you put in, which is free money for you. In addition to a workplace retirement plan, you can also begin building wealth through an Individual Retirement Account (IRA) or a taxable brokerage account.

  • Get professional advice:Talking to a financial advisor can help you formulate a plan for saving and investing in order to build wealth. Your advisor can also guide you through the basics of making a budget and creating a workable debt payoff plan.

The Bottom Line

You Need This Much Money to Be Rich in America, Data Reveals (3)

In terms of what income is considered rich, there’s no single number to go by. How you define being rich for yourself can depend on the amount of money you need to feel financially comfortable and how you use the income and assets that you have. To one person it means not worrying about money while to others it just means having enough money in retirement to not impact their lifestyle. Once you define what rich means to you then you can build a financial plan to help you reach that goal.

Financial Planning Tips

  • Consider talking to your financial advisor about the best ways to approach financial planning if becoming rich or wealthy is one of your goals. If you don’t have a financial advisor yet, finding one doesn’t have to be hard. SmartAsset’s free tool matchesyou with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

  • Earning a higher income can mean paying more in taxes. So while you might be rich from an income perspective, you could be handing back a large chunk of your earnings to the IRS. You can use SmartAsset’s free income tax calculator to estimate what you might owe.

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The post What Income Level Is Considered Rich? appeared first on SmartAsset Blog.

You Need This Much Money to Be Rich in America, Data Reveals (2024)


You Need This Much Money to Be Rich in America, Data Reveals? ›

The amount of money you need to make each month to be rich depends on which metric you're using. If you're going by the IRS standard, then you'd need to make approximately $45,000 a month to be rich. On the other hand, if you're aiming for the top 1% as measured by the EPI, you'd need a monthly income of $68,277.

How much money do you need to be considered rich in America? ›

According to Schwab's 2023 Modern Wealth Survey, Americans perceive an average net worth of $2.2 million as wealthy​​​​. Knight Frank's research indicates that a net worth of $4.4 million is required to be in the top 1% in America, a figure much higher than in countries like Japan, the U.K. and Australia​​.

How much money do you need to make to be in the top 1% of America? ›

The Pinnacle: The Top 1%

Entering the top 1% of earners requires an average annual income of $819,324. In the highest echelon — the top 0.1% — the average income is $3.3 million.

Do recent studies reveal that the richest 1% of Americans own more wealth than the bottom? ›

The top 1% holds $38.7 trillion in wealth. That's more than the combined wealth of America's middle class, a group many economists define as the middle 60% of households by income. Those households hold about 26% of all wealth. Low-income Americans, representing the bottom 20% by income, own about 3% of the wealth.

What percentage of US population has $2.5 million dollars? ›

Additionally, statistics show that the top 2% of the United States population has a net worth of about $2.4 million. On the other hand, the top 5% wealthiest Americans have a net worth of just over $1 million. Therefore, about 2% of the population possesses enough wealth to meet the current definition of being rich.

What salary is upper class? ›

Upper middle class: Anyone with earnings in the 60th to 80th percentile would be considered upper middle class. Those in the upper middle class have incomes between $89,745 and $149,131. Upper class: Finally, the upper class is the top 20% of earners and they have incomes of $149,132 or higher.

What salary is upper middle class? ›

Middle class: Those in the 40th to 60th percentile of household income, ranging from $55,001 to $89,744. Upper middle class: Households in the 60th to 80th percentile, with incomes between $89,745 and $149,131. Upper class: The top 20% of earners, with household incomes of $149,132 or more.

What income is middle class? ›

Middle-class income currently ranges from a little under $40,000 to a little over $119,000. The definition of middle class extends beyond income to factors like education, location and marital status.

What is considered upper class? ›

The term upper class refers to a group of individuals who occupy the highest place and status in society. These people are considered the wealthiest, lying above the working and middle class in the social hierarchy.

What percentage of Americans make over 100k? ›

In the U.S. 18% of individuals earn more than $100,000, according to Zippia, a career advising company, and like the cost of living, income varies greatly between cities and states.

What race holds the most wealth in America? ›

Total household wealth grew in 2022, but white households still hold the vast majority. Since 2010, the wealth disparity between Black and white families has persistently expanded.

What is considered wealthy? ›

According to Schwab's 2023 Modern Wealth Survey, its seventh annual, Americans said it takes an average net worth of $2.2 million to qualify a person as being wealthy. (Net worth is the sum of your assets minus your liabilities.)

Are the rich in the US adding more years to their life than the poor? ›

For those that were in the bottom 10%, life expectancy was just 76. This means that the richest Americans live 12 years longer than the poorest. Though both poor and rich people gained years of life since 2001, this 12 year difference was 1.4 years greater than in 2001.

How many people have $3,000,000 in savings in usa? ›

1,821,745 Households in the United States Have Investment Portfolios Worth $3,000,000 or More.

How many US citizens have $3 million dollars? ›

According to the MacroMonitor, by 2022-23, the number of U.S. households with $3 million or more in financial assets represents 3.2% of all households, totaling 4.6 million.

What percentage of retirees have $2 million dollars? ›

According to EBRI estimates based on the latest Federal Reserve Survey of Consumer Finances, 3.2% of retirees have over $1 million in their retirement accounts, while just 0.1% have $5 million or more.

Is $100 000 considered rich? ›

The concept of being "rich" can vary widely depending on different factors like location, lifestyle, and individual perceptions. $100,000 can be a significant amount for some and not enough for others, but it's not an absolute measure of being rich.

Is $50000 considered rich? ›

A Middle-Class Income Is $50,000 to $150,000

“The definition of middle income ranges from earning two-thirds to double the median household income,” said CFP and The Ways To Wealth founder R.J. Weiss, who cited the Pew Research Center's widely accepted definition of the term.

Is $1000000 considered wealthy? ›

Only 8% of investors with $1 million consider themselves wealthy, a recent report from Ameriprise Financial found. Instead, 60% categorized themselves as upper middle class, and a notable 31% considered themselves middle class. The study revealed wealth is more than just hitting a specific dollar number or lifestyle.

Is making 300k a year rich? ›

An income of $300,000 a year is generally considered to be upper-middle class or even rich, particularly in regions with a lower cost of living. This classification can vary based on geographic location, family size and the local cost of living.

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