When the Rich have it all

Mark your calendar. The rich will truly “have it all” just 33 years from now.

Yup, that’s when the top 10 percent of all households may have 100 percent of all the net worth in America.

I learned that when I projected the rate of gain over the most recently reported three-year period from the Federal Reserve Survey of Consumer Finances. The last survey was completed in 2016. In it, they measured the change in shares of net worth from 2013 to 2016. They also showed the changes in every three-year period since 1989.

However you slice it, the rich have been getting richer. Lots richer.

Here are the basic facts. From 2013 to 2016, the top 10 percent of households increased their share of total wealth from an amazing 75.3 percent to a stunning 77.2 percent. That’s a share gain of 1.87 percent in just three years.

If they continue to gain share at that rate, they’ll have the remaining 22.8 percent of net worth held by the other 90 percent in just 12 more surveys, give or take an upheaval or two.

But don’t be depressed. Look on the positive side. When that moment comes, most people won’t be concerned with mortgage or car payments. College for kids? Fuhgeddaboudit. Retirement savings? What’s that?

Nope, 90 percent of Americans simply won’t have to worry about junk like that anymore. Talk about easy living!

But don’t get over confident. As a newspaper reader, a person known to actually read, you may not qualify to be in that bottom 90 percent.

Fortunately, it’s easy enough to find out. Just go to one of my favorite number-freak websites, www.dqydj.com, and use their online calculator to see where you stand on the net-worth pyramid. (Dqydj, by the way, stands for “don’t quit your day job.”)

The broad figure for being in the top 10 percent is $1,182,390.36. You can also get an age-appropriate figure by using another version that calculates net worth by age. You’ll be in that worry-ridden top 10 percent zone, for instance, if you are 35 to 39 and have a net worth in excess of $368,093.19.

Some readers will think these figures are pretty low. There are ZIP codes in this country where that much is parked in the driveway. But in real America, the net worth air gets thin really fast. If you have a net worth of $97,225.55, you’re ready to join the top 50 percent.

A still closer look at the share of net worth figures reveals another problem. The table below shows the changes in net worth shares from 1989 to 2016. While the share of the top 10 percent has grown consistently over the period, the share held by the next 9 percent – the folks who don’t quite make it into the top 1 percent with $10,374,030 – peaked in 2013 and declined slightly in the last reporting period.

What does that mean for the next 9 percent?

Maybe nothing.

But here’s my guess.

If your quest is infinite, unlimited wealth – a quest that seems to define the central life goal for many members of the top 1 percent – then you have to be thinking about the source of your future wealth gains. With the bottom 90 percent now holding only 22.8 percent of all wealth, the pickings are pretty slim.

The next 9 percent, however, look like low-hanging fruit. After all, it’s a small group – only one-tenth the size of the 90 percent — and they hold 38.53 percent of the wealth.

So if you’re in the next 9 percent, gird yourself. The squeeze is on and you’re next.

It will stay that way until we no longer worship wealth.

Sources and References:

Federal Reserve report on changes in family finances:  https://www.federalreserve.gov/publications/2017-September-changes-in-us-family-finances-from-2013-to-2016-accessible.htm#scfBox3FigB

The DQYDJ net worth percentile calculator   https://dqydj.com/net-worth-percentile-calculator-united-states/

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: Scott Burns

(c) Scott Burns, 2019