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Sunday, April 21, 2024

Achieving a high net worth is about more than just income

How do you achieve a high net worth? Hint: It’s about more than just income



    Key takeaways

    • A massive 74% of U.S. adults don’t think it’s likely they will ever achieve their definition of a “high” net worth.*
    • People tend to underestimate “high net worth,” citing $400,000 as the median average, which is significantly less than the broadly accepted definition of a HNWI: someone with at least $1 million in liquid assets. Getting clarity on your net worth is an important step toward financial wellbeing.
    • Retirement investing plays a critical role in many millionaires’ portfolios. Of high-net-worth individuals who use the Empower Personal Dashboard™, retirement accounts – like 401(k) plans and IRAs – contribute 55% of their overall wealth.
    • Tracking your net worth over time can be a valuable indicator of your financial health. Yet only 35% of U.S. adults are confident they understand what “net worth” means, even though most (91%) have heard of it.
    • William van Valzah, a senior wealth advisor who works with high-net-worth clients, comments on the importance of net worth and advises how to build wealth over time.


    Top Google searches around the concept of “net worth” read like a lineup of the rich(est) and famous: Jeff Bezos net worth. Elon Musk net worth. Kanye West net worth.

    Most U.S. adults (91%) have heard of “net worth,” but only 35% are confident that they know what it means, according to a recent Morning Consult survey* of 2,200 adults commissioned by Empower.

    But why does “net worth” even matter?

    Everyone has a net worth. And knowing yours can help you manage your money better, according to William van Valzah, a senior wealth advisor who works with high-net-worth clients.

    “Your net worth is a bird’s eye view of your complete financial situation,” he says. “Tracking it over time is a valuable indicator of your financial stability.”

    What is ‘net worth’?

    Your net worth is what you own minus what you owe. You can calculate yours by adding up your assets and then subtracting your liabilities. Van Valzah recommends Empower’s net worth calculator, which aggregates a person’s financial accounts for real-time net worth tracking.

    Although the concept of “net worth” may sound straightforward, there’s often disagreement about exactly what should be included in a net worth calculation.

    Assets & liabilities

    For instance, only 35% of the U.S. adults we surveyed feel a mortgage should be factored into a person’s net worth, even though 59% agree they’d include home equity.

    Checking and savings accounts, property values, financial investments and retirement funds are the only factors that the majority of U.S. adults would include in a net worth calculation. All of these are assets.

    “It’s interesting that most people include their cash in net worth, but far fewer consider their debt,” van Valzah says. “This is simply incorrect as net worth by definition is total assets netted out against debt. Knowing where you stand can allow you to create a plan for debt management.”

    What’s the average net worth?

    Most (74%) people believe the average net worth of a U.S. adult is less than $100,000. A third of respondents (33%) think the average net worth sits between $10,000 and $29,999.

    People’s net worth often varies by age, first as they increase their income and diversify their assets, and then withdrawal from earnings in retirement.

    This is evidenced by the net worth of people who use the Empower Personal DashboardTM. If the averages seem high, it’s because affluent households drive the figure up. The median net worth may provide a better idea for benchmarking.

    Age by decade

    Average net worth

    Median net worth

























    No age provided



    All ages



    Anonymized user data from the Empower Personal Dashboard accounts as of April 1, 2022

    What is considered high net worth?

    A person with a high net worth is known as a HNWI (“high net worth individual”). U.S. adults we surveyed gave a wide range of responses for what they’d consider a HNWI; the median average landed at $400,000.

    This figure is much lower than the broadly accepted definition of a HNWI: someone with at least $1 million in liquid assets. Despite these discrepancies, the vast majority of adults we surveyed (74%) still don’t think it’s particularly likely that they’ll ever become a HNWI themselves. Only 3% say they already are.

    However, knowing your net worth is an important starting point, according to van Valzah.

    “In many cases, you don’t need to be a HNW investor to achieve your goals and long-term retirement needs,” he says. “The key is to make a plan and have a goal you’re working toward. Most likely, this does entail setting a net worth goal that will allow you to sustain your lifestyle when you retire.”

    What makes a HNWI?

    Here are the top six factors U.S. adults think are important to achieving a “high” net worth:

    • Frequently checking in on and tracking their finances (65%)
    • Having a high salary (64%)
    • Having high earning potential from multiple sources (63%)
    • Maintaining a diversified investment portfolio (59%)
    • Being very frugal with spending (57%)
    • Investing in property (55%)

    Interestingly, nearly 3 in 10 (29%) think that getting help from family or receiving an inheritance is also important to achieving high net worth.

    High earning potential

    Those we surveyed place a high value on earned income. In order to achieve a high net worth, respondents believe a person needs to earn $100,000 a year. Income can certainly help, but it’s not everything.

    “Making money is only part of how a person builds wealth,” says van Valzah. “It’s also important to make sure your money is working as hard for you as you work to earn it.”

    Diversified investing for the long haul

    Van Valzah says that today’s affluent have learned to make money “work” by earning interest, dividends, and returns.

    Although most survey respondents (59%) agree that it’s important to maintain a diversified investment portfolio, fewer (46%) prioritize maxing out retirement accounts.

    This may be to their detriment. Empower data indicates that retirement accounts – like 401(k) plans and IRAs – constitutes nearly 55% of the wealth of high-net-worth individuals.

    Retirement accounts of high-net-worth investors

    Age (by decade)

    Median retirement balance

    Median net worth

    Percent of wealth in retirement accounts






    $589,64 3



























    No age provided




    All ages


    $1,7 81,923


    Anonymized user data from the Empower Personal Dashboard, accounts $1-5M net worth as of April 1, 2022

    “Tax-advantaged retirement accounts can be powerful investing tools,” van Valzah says. “If a 401(k) employer match is available to you, try to at least contribute enough to take advantage of it. As your income increases, consider increasing contributions to your retirement and brokerage accounts – don’t let cash sit idle.”

    *Survey Methodology: This poll was conducted by Morning Consult on behalf of Empower, between March 22-25, 2022 among a sample of 2,209 U.S. adults. The interviews were conducted online and the data were weighted to approximate a target sample of adults based on gender, educational attainment, age, race, and region. Results from the full survey have a margin of error of plus or minus 2 percentage points. The data used for the survey is believed to be accurate; however, Empower does not independently verify the accuracy or ownership of the assets listed on an individual’s dashboard.


    The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. No part of this blog, nor the links contained therein is a solicitation or offer to sell securities. Compensation for freelance contributions not to exceed $1,250. Third-party data is obtained from sources believed to be reliable; however, Empower cannot guarantee the accuracy, timeliness, completeness or fitness of this data for any particular purpose. Third-party links are provided solely as a convenience and do not imply an affiliation, endorsement or approval by Empower of the contents on such third-party websites. 

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    Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it authorizes use of by individuals who successfully complete CFP Board's initial and ongoing certification requirements. 

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