**What It Takes to Be in the Top 1% of Earners in the U.S.**
It’s easy to assume what life might look like for the top 1% of earners in the U.S.— the exclusive tag might conjure images of big houses, luxury cars, and exotic vacations.
**Income Threshold for the Top 1%**
According to research published by financial advisors SmartAsset, the average American household needs to bring in $652,657 a year to be classed among the top 1% of earners across the country. The report analyzed 2020 IRS data to identify America’s highest earners.
**Income Disparity by Zip Code**
While the income threshold defines the top 1% on a national level, the research revealed that the requirements to join this elite group vary depending on location. SmartAsset’s findings demonstrated that the income needed to be in the top 1% is determined by one’s zip code.
**State Breakdown of Wealthiest Top Earners**
Connecticut ranks as the state with the wealthiest top earners, where reaching the top 1% means having an annual income of at least $952,902. It’s followed by Massachusetts, with a threshold of $903,401, and California, where the highest earners bring in upward of $844,266 a year. New Jersey came in fourth on the list with a threshold of $817,346, ahead of its neighbor New York.
Next on the list was the state of Washington, followed by New York, where households have to earn $776,662 a year to reach the wealthiest 1%—despite it being America’s second-most expensive state to live in.
**Income Disparity in Southern States**
The report also highlighted that Southern states generally had lower wealth thresholds than their coastal counterparts. The easiest state to reach the wealthiest 1% is West Virginia, where an annual income of $367,582 would suffice. It was followed by Mississippi, where households need to earn $381,919 a year, and New Mexico, where the top 1% make at least $411,395 annually.
**The Increasing Power of the Top 1%**
The top 1% of earners is a group that’s becoming increasingly powerful. According to a 2022 report from the Congressional Budget Office (CBO), the richest 1% owns more than a third of all U.S. wealth, while the top 10% holds 72% of America’s total wealth. This share has increased significantly over time, as CBO data shows that in 1989, the richest 10% of Americans controlled $24.3 trillion in assets, which grew to $82.4 trillion by 2019.
**Defining “Rich” in the U.S.**
While joining the 1% remains an elusive goal for many, the perception of what it takes to feel “rich” in the U.S. varies widely among individuals. A survey from Bankrate revealed that Americans felt they’d need to earn about $483,000 a year to feel wealthy. A third of the survey participants said they’d need an annual income of $500,000, and 21% stated they’d need to earn at least $1 million a year to consider themselves rich.
**Income Expectations for Financial Freedom**
The Bankrate survey also found that the expectation of what it takes to achieve financial freedom increases as a person earns more. For example, those who earned $50,000 or less said they’d need to earn $406,000 to feel rich, while Americans who earned $100,000 or more said they’d need to earn at least six times their salary to feel wealthy.
“For some, being wealthy might be seen as having the ability to buy things they don’t need,” said Mark Hamrick, a senior economic analyst at Bankrate. “If someone attains wealth along the way, more power to them. That doesn’t necessarily equate to being happier, of course. But it makes many things easier to navigate.”
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