A top one percent income is a big stretch goal for many go-getters. In 2020, a top one percent income threshold is now about $470,000. Back in 2010, a tope one percent income level was closer to $400,000.

Now that we know how much money you need to make each year to get to the top, it’s time to dig deeper. Let’s take a look at the top one percent income level by age group. After all, nobody goes straight to the top right out of high school or college!

Some People Don’t Even Know They Are Rich

In Why People Who Openly Declare They Are Rich Should Pay More For Everything, a friendly reader mentioned she did not believe a 26 year old making $250,000 a year was a big deal. I responded that telling everyone you make $250,000 as a 26 year old puts him in the top 1%.

Then she replied, “$250k is not in the top 1% even in 2011, according to CNN Money. I have seen numbers as high as $585k to qualify. I am unsure why his age has anything to do with him being in the top 1% or 5% at that?”

Instead of citing CNN Money, there’s an authoritative article highlighting how much the top income earners make by percentage right here on Financial Samurai. It takes time to work your way up to higher income amounts.

If you are making $250,000 as a 50 year old while supporting four kids and a spouse in Manhattan, then $250,000 is no big deal. But to make the same amount at 26 is killing it!

The Top 1% Income Levels By Age Group

Hopefully everybody agrees that everything is relative in finance. If everybody makes a million dollars a year, making a million dollars a year won’t be anything special anymore. $3 million is the new $1 million due to inflation.

Let me share a chart to highlight my point.

Source: Professors Faith Guvenen, Greg Kaplan, Jae Song 2014 (https://fguvenendotcom.files.wordpress.com/2014/04/gks_top_earners_2014_wpsep2014.pdf)

Let’s Discuss The Age Groups

Ages 27 – 31: You are in the top 1% if you make roughly $170,000. You are in the top 0.1% if you make roughly $300,000. Airbnb’s Haseeb Q told the world he makes $250,000 a year, therefore, he is definitely in the top 1%, especially since he’s only 26. Case closed.

Ages 32 – 36: You are in the top 1% if you make roughly $210,000. You are in the top 0.1% if you make roughly $570,000. We are now in the ideal income zone of $200,000 – $250,000 a year per person where maximum happiness is achieved and increases no further the more you make.

Ages 37 – 41: You are in the top 1% if you make roughly $260,000. You are in the top 0.1% if you make roughly $820,000. I’m a little surprised that making only $260,000 at this age puts you in the top 1%. Given the median age in the US is around 34-36 and the median income for the top 1% for all income levels is around $380,000.

Ages 42 – 46: You are in the top 1% if you make roughly $320,000. You are in the top 0.1% if you make roughly $1.1M. This age group finally breaks the $1M income barrier. Nobody is going to deny someone making over $1M a year is rich.

Ages 47 – 51: You are in the top 1% if you make roughly $360,000. You are in the top 0.1% if you make roughly $1.5M. $360,000 is a level which makes the most sense as a top 1% income earner based on IRS data and multiple media reports.

Ages 52 – 58: You are in the top 1% if you make roughly $350,000. You are in the top 0.1% if you make roughly $1.4M. Finally! The income levels are going down because people are finally living life a little more and not so focused on making more and more money.

All these income figures are great if you can get it. The key is to keep and grow what you’ve made!

Top On Percent Income Learning Points

1) Big differences at the top.

The difference between the top 1% and the top 0.1% in terms of income is huge. When society rages at the top 1%, it should really be raging at the top 0.1% who likely pay a lower effective tax rate because they aren’t W2 wage slaves e.g. Warren Buffett. Their income is a combination of investment income, long term stock grants, and business income. To get to a top 0.1% income, you need to make at least $1 million a year in 2020+.

2) Your life stage matters.

Even if you make a top 1% income of $260,000 between the ages of 37 – 41, you probably have dependents. And if you live in an expensive city with dependents, then you probably don’t feel rich. You may be comfortable, but retirement probably feels like a long ways away.

See: How To Make $200,000 A Year And Still Not Feel Rich

3) Location can eat up on earners.

Earning $210,000 as a 35 year old in San Francisco might really be like earning a top 0.1% income if you live in Topeka. This is why the federal income tax system should be adjusted for cost of living. Three zones with different tax brackets will do: low, medium, high.

4) Education is still important.

Despite everything being free now thanks to the internet, getting an MBA from a top school will probably launch you into the top 1% fairly quickly. The median pay packages for 29 yo MBAs in finance, consulting, and tech range anywhere from $120,000 – $150,000. Add on stock grants and you’re close to $200,000, if not over. Settle down with another MBA alumni who makes a similar amount and now you guys have a total comp of between $300,000 – $400,000. Who you spend your life with matters.

5) Easier to reach the top as an entrepreneur.

As an experienced employee and entrepreneur, I believe achieving a top 1% income of $470,000 as an entrepreneur feels easier and probably is easier than as an employee. Both are undoubtedly hard to do, but as an entrepreneur you don’t have a visible cap. There is nobody or compensation structure standing in your way.

See: Income Profiles Of Financially Free People

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Everything Is Relative In Finance

Below is aggregate taxpayer data I compiled from the IRS that shows the income splits for top 1%, top 5%, top 10%, top 25%, and top 50% income earners. It’s a good cross check to the data compiled by Professors Faith Guvenen, Greg Kaplan, and Jae Song above.

My strong belief is that everybody here can make top 10% income ($113,799) if you build multiple income streams, save aggressively, and invest wisely. If you can build a side business and stick with it for a long enough period of time while doing everything else, then a top 1% income might just be inevitable!

The older you get, the more society will allow you to “deserve” what you make and accumulate. Therefore, if you have some strange desire to tell everybody how much you really make if you are doing well at a younger age, use the above charts as a barometer to make sure you aren’t clueless. Making yourself a target is a donkey move if you aren’t already financially independent.

High income earning people who prodigiously accumulate wealth demonstrate a fanatic habit of tracking their net worth and spending habits. They develop a 6th sense of what to do with their money. And what’s great is that everybody can develop good financial habits as well. There is no monopoly on being wealthier!

Track your income and savings. It’s not what you make, it’s what you keep that counts!

Updated for 2020 and beyond.