Starting your career? What it takes to be in the Top 1% of Net Worth by Age (U.S. and Canada)

Firstly, you don't have to have a top 1% income to be in the top 1% of net worth. In general, the longer you are invested, the higher your statistical probability of growing your money. To maintain a long-term investment approach, it's imperative to understand that time invested is critically important to your financial success.

You might just be starting out your career and don't have much of a net worth to speak of, and you say to yourself, "I'll invest later when I have more money." Well, just so you know, this is flawed thinking and you will suffer the consequences in the years to come.

Unless.

Unless you take action today when you are younger to improve your financial strength in the future. Time is your friend, now. But time will be your enemy when you are older with little savings because you just didn't start in your twenties. If you are just starting out and fearful of investing your hard-earned money, developing an investment strategy will help you take action. To?beat inflation and grow your nest egg, you must consistently invest over a long time horizon. If you don’t overcome your fear of investing, then you will likely fall way behind.

Further Reading: Avoid this costly mistake if you want to be financially secure

Many want to assess their financial position and learn where they stand regarding wealth. The questions you might ask yourself are, "How do I compare to my peer age group?", "What is the average net worth?" or "What does it take to be in the top 1% of net worth?" It is basic human nature to think of your standing relative to others, and is a smart way to assess if you need to be doing something different in order to reach your financial and life goals.

Many factors can affect net worth, including age, education level, family structure, location, etc. If you’re a young worker, for instance, you haven’t had the time to accumulate assets or amass debts, and therefore don’t benefit from an average of all age groups combined. As such, it makes more sense to see how you stack up to those of a similar age.

I typically like to view the statistics from both the United States and Canada taken from their respective government agencies for analysis.

What Is the Average and Median Net Worth by Age of Americans?

According to the Federal Reserve's Finance Survey available, the average and median net worth for families in the following age groups are:

The Federal Reserve Consumer Finance Survey shows the?average American household is now a millionaire with a net worth of $1.06 million. But the median American household net worth is about $193,000.

What Is the Average and Median Net Worth by Age of Canadians?

According to Statistics Canada , the average and median net worth for families in the following age groups are:

The average Canadian household net worth is surprisingly huge at roughly $955,610 in 2023, up from $400,151 in 2012 according to Statistics Canada . The average Canadian household net worth is roughly 2X the average U.S. household net worth.

Not only is the average Canadian net worth larger than the average American net worth, the Canadian housing market is also hotter (inflated bubble) than the American housing market. This has pros and cons since too many Canadians have a majority of their net worth tied up in real estate. Canada has the third-highest household debt in the world along with a debt-to-income ratio that's nearing 170% which is 30 percentage points higher than it was in the U.S. back in the mid-to-late 2000s. And, since you always need a place to live, this is not an ideal asset allocation and can still leave Canadians living pay cheque to pay cheque.

For both countries, this level of net worth (and how it is allocated) can leave many families financially challenged if an unexpected life event occurs or require the need to continue working later in life.

Envy Will Significantly Reduce Your Wealth?

In a prior article, I discussed that envy can significantly reduce your ability to save and invest . Everyone can get envious at any given moment and try to justify spending money on things you can't afford to impress people you don't know. Don't give up the opportunity of creating significant wealth from the power of the "8th wonder of the world", compound interest over time.

Again, you don't need a top 1% income to be in the top 1% of net worth. In general, the longer you are invested, the higher your statistical probability of growing your money and securing your financial future. Let's look what it takes to reach the Top 1% of net worth in both the United States and Canada.

Net Worth of the Top 1% by Age in the United States (Pop. 335M)

Net Worth of the Top 1% by Age in Canada (Pop. 40.5M)

The point of sharing this information is to help you assess where you are at today, and what you need to do for improving your financial situation. If you are in your twenties, then you have the most potential to achieve your goals given the time value of money and, as Albert Einstein put it, the "8th wonder of the world, compound interest."

According to a 2023 Gallup poll, about 61% of Americans own stocks. In 2022, it was 58% and in 2021 56%. Notably, with higher income and net worth, the larger the percentage of Americans who own stocks. In 2022, the top 10 percent of Americans owned an average of $969,000 in stocks. The next 40 percent owned $132,000 on average and the bottom half of families had just under $54,000 invested in stocks.

High Net Worth Categories in the US and Canada

Once upon a time, being called a millionaire meant you were doing well. Today, millionaire sounds almost quaint. The "mass affluent" are loosely defined as having between $100,000 and $1 million in investable assets. The new terms for wealthy are categorized as High-Net-Worth Individual (HNWI), Very-High-Net-Worth Individual (VHNWI), and Ultra-High-Net-Worth Individual (UHNWI). For clarity, to be considered in the high net worth categories, it is defined as people with liquid investable assets in each of the below ranges:

Number of High Net Worth Individuals in the US (Population: 335M) $USD

• Individual Net worth between $1 million and $5 million, HNWI = 6,739,918
• Individual Net worth between $5 million and $30 million, VHNWI = 714,431
• Individual Net worth greater than $30 million, UHNWI = 692,100

Number of High Net Worth Individuals in Canada (Population: 40.5M) $CAD

• Individual Net worth between $1 million and $5 million, HNWI = 764,033
• Individual Net worth between $5 million and $30 million, VHNWI = 91,823
• Individual Net worth greater than $30 million, UHNWI = 10,395

Getting To The Top 1% Net Worth Is Possible

Invest to take advantage of the time value of money and compounding interest

The average stock market return is roughly 10% per year for nearly the last century, as measured by the S&P 500 index. Without investing, you will be challenged to grow your net worth in a meaningful way. Investing should be a learned habit with having a minimum 20% of your income earmarked for future savings and investments.

Setting up a systematic investment strategy and putting in money every month can provide outsized investment portfolio over time. For example, a 25-year-old needs only save $158 per month to have $1 million at age 65—assuming a 10% annual return on investment. At 35 the number is $442 per month, so the benefits of investing early clearly matters.

If you aren't on track, understand that you don't need high net worth to feel financially secure. If you have enough to pay for your living expenses, family and friends who love you, and your health, then you are doing well ... no matter what your net worth tracker says.

Take control of your financial future starting now.

Disclaimer

This advice is of a general nature only and may not be relevant to your particular circumstances. As always, you need to do your own research before making any decisions.