How do you rank on the wealth Scoreboard?
While it’s possible to get some ideas from academic articles using data from the regular Survey of Consumer Finances, we can get a better idea by visiting some of the people who take the actual survey data and examine it for their own purposes. That’s why I called Bill Whitt, a consultant with The VIP Forum in Washington DC. The VIP Forum, among other things, does studies of high net worth individuals for financial institutions.
I asked Mr. Whitt if it was possible to find, by age group, the net worth of households at the top of the wealth heap and how finely they might be divided. He said it could be done just about any way I could think of and suggested some percentiles such as households in the top one percent. Then we added top 5 percent, top 10 percent, top 25 percent, and median. The median is the midway point. This means that half the households have a greater net worth, and half have a lower net worth.
The figures, arranged by decade of age from the twenties through the eighties, are shown in the table below. If you are in your thirties and have a family net worth of $267,500, you are in the top ten percent of households your age— and you’ve got a bit less than $1 million to add if you want to be in the top 1 percent for your age group. If you are in your sixties and your household net worth is $356,700 you’re in the top 25 percent of households your age.
The Distribution of Wealth, by Age Group (dollar figures in thousands)
| Age Group | Top 1% | Top 5% | Top 10% | Top 25% | Median |
| 80 or older | $2,957.8 | $ 693.0 | $440.0 | $252.2 | $118.0 |
| 70-79 | $4,338.1 | $1,074.5 | $703.4 | $316.5 | $140.9 |
| 60-69 | $6,263.4 | $1,850.2 | $902.8 | $356.7 | $155.8 |
| 50-59 | $5,791.7 | $1,410.6 | $708.8 | $326.7 | $120.9 |
| 40-49 | $3,402.7 | $ 829.0 | $531.6 | $226.8 | $ 86.2 |
| 30-39 | $1,210.1 | $ 451.1 | $267.5 | $127.4 | $ 34.7 |
| 20-29 | $ 383.3 | $ 148.2 | $78.3 | $ 25.4 | $ 5.2 |
Source: The VIP Forum, Corporate Executive Board, 1998 data
Mr. Whitt cautioned that there are limits to this information. It comes from 1998 survey data, for one thing. Some households— particularly the wealthier ones— are actively saving and investing new money each year. As a result, the entry figure for the top one percent households is probably substantially higher today while the figure for the median household may not have changed very much.
Are there any messages here?
Several.
First, let your eye follow any of the columns from the bottom to the top. Regardless of wealth level, all show net worth rising rapidly from the twenties through the forties— but peaking in the sixties. After that, wealth declines.
Second, the decline in wealth can be pretty steep. Those in their eighties, for instance, have less than half of the wealth of those in their sixties— if they were in the top 10 percent of households or higher. You can’t blame such large declines on prescription drug expenses. Affluent older people give assets away as they age. Perhaps because they feel secure they will be able to meet their needs from their remaining resources.
Third, the wealth mountain is very steep. Multiply your net worth six-fold and you will vault from the 50th percentile to the top 10 percentile, a change of 40 percentiles. To move into the top 1 percent, however, you’ll need multiply it six-fold once more for a much smaller change.
Fourth, if you want to run with the big dogs, you’re going to need a lot of money. This is a very, very wealthy country with literally millions of millionaires. Even so, only one household in twenty has a shot at millionaire status.
Fifth, it doesn’t take much to be in the race. Many of today’s workers will accumulate assets that will put them firmly in the top 5 or 10 percent of households simply by maxing out on their 401(k) plan.
This information is distributed for education purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, product, or service.
Photo: Pixabay
(c) Scott Burns, 2022