Opinion | The $400K conundrum: Why America’s urban rich don’t feel that way (2024)

FAQs

Is 400K a good salary in the US? ›

A 400K in your area makes on average $63,828 per year, or $1 (0.014%) more than the national average annual salary of $61,960.

But if you had to identify the salary it would take to feel rich, though, it's probably significantly more than you currently make. Americans say they would need to earn $483,000, on average, to feel rich or achieve financial freedom, according to a recent Bankrate survey.

In the United States, the concept of being rich is often a subject of discussion, curiosity and, sometimes, aspiration. Charles Schwab's 2023 Modern Wealth Survey provides insights into this topic, revealing that the average American equates being wealthy with a net worth of approximately $2.2 million.

In the U.S., it may take you $5.81 million to be in the top 1%, but it takes a minimum net worth of $30 million to be considered among the ultra-high net worth crowd. As of the end of 2023, this ultra-high net worth population is on the rise, reaching 626,000 globally, up from just over 600,000 a year earlier.

Although $300,000 is a lot compared to the median household income in the United States of ~$76,000 in 2023, it's not an outrageous sum of money. Once you pay taxes and look at the realistic income statement I've put together for this article you'll see the income is reasonable.

An individual needs $96,500, on average, to live comfortably in a major U.S. city.

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.

LOS ANGELES - Are you considered "middle class" by California standards? A study by Consumer Affairs has tabulated the minimum annual income require for a family of four to be considered middle class in each state, and in California, that income is $69,064.

But data from the U.S. Census Bureau cites a different number as the average salary: just under $75,000. What does this all mean? By the Census data, it means that if you earn between $50,000 and $150,000 a year, you are considered middle class.

For example, individuals with $1 million in liquid assets are generally classified as having a high net worth. To be considered very high net worth, one might need assets ranging from $5 million to $10 million, while an ultra-high net worth status could require $30 million or more.

How rich is America in 2024? ›

Average Net Worth by Age

The average net worth of someone younger than 35 years old is $183,500, as of 2022. From there, average net worth steadily rises within each age bracket. Between 35 to 44, the average net worth is $549,600, while between 45 and 54, that number increases to $975,800.

The income of those in the top 1% is many multiples above that of the average American. According to a Congressional Budget Office report, you need at least $652,657 in income per year to make the top 1%, but this varies by where you live.

Amazon founder and chairman Jeff Bezos, who has an estimated net worth of $199.6 billion, is once again the second-wealthiest person in the world as of Thursday, overtaking Tesla CEO Elon Musk, who has an estimated net worth of $197.4 billion, and marking the second switch of the week for the battling billionaires.

This proposal could potentially affect millions of high earners in the U.S. It has been widely reported that 1.8 percent of taxpayers—nearly 2.5 million people—earn $400,000 or more, though Newsweek has been unable to find a source for that specific figure.

According to the IRS, a $400,000 or more annual household income represents America's top 1.8% income-earners. Per IRS Publication 6292, there were 154 million tax returns filed in 2019, thus approximately 2.8 million people earn over $400,000. 330 million people live in the United States.

The answer is, maybe. This money can generate a modest income that might be enough to pay your bills depending on your standard of living. But this will not be a generous income. It won't leave you much room for either luxury or emergency spending.

Using our portfolio of $400,000 and the 4% withdrawal rate, you could withdraw $16,000 annually from your retirement accounts and expect your money to last for at least 30 years. If, say, your Social Security checks are $2,000 monthly, you'd have a combined annual income in retirement of $40,000.