Incomes have been making news this week. But when you read all those stories about the 5% or the storied 1% – or even the top 10% – how much money do you need to pull in to be in one of those groups? Here's the answer.
The discussion started when the U.S. Census Bureau released data which showed that median household incomes increased 5.2% between 2014 and 2015. The announcement made headlines because it was the first significant jump in earnings reported since the 2007 pre-Recession era (see Incomes Jump, Says Census. Who's Doing Best?) .
According to the Bureau’s 2015 Income, Poverty and Health Insurance Coverage in the United States report, incomes grew across the board in 2015. Those at the lower end of the income scale saw their pay increases, as did those pulling in six-figure paydays.
Among the top 5% of earners, median household incomes climbed by 0.9%. While that boost seems small compared to the 1.9% increase reported among the bottom fifth of all earners, it means that it takes an even bigger paycheck to make it into the relatively small club of Americans who draw the largest salaries.
How Much Do You Need?
The top 5% of households earn an annual income of $214,462 or higher, according to the Census Bureau. That’s nearly four times the 2015 nationwide median household income of $56,516. The average income among those in the top 5% climbed to $350,870. Overall, this group lays claim to a 22.1% share of total household income in the U.S. Source:
To be certified as a one-percenter, you’ll need to bring in even more income each year. According to statistical data from the Internal Revenue Service (IRS), the top 1% had an adjusted gross income of $465,626 or higher for the 2014 tax year. The Washington Center for Equitable Growth put the average household income for this group at $1,260,508 for 2014.
If you want to cross the top 10% mark, you’ll still need a six-figure income but the numbers aren’t quite as high. The IRS sets the adjusted gross income cutoff required to be in the 10% group at $133,445, based on 2014 tax data. Once again, the average household income for the top 10% of earners is higher, at $295,845.
Net Worth Grows, Too
Rising median income is paralleled by an increase in household net worth. Between 2014 and 2015, household net worth rose by 3.6%, according to the Federal Reserve. Collectively, Americans controlled $88.1 trillion in assets through the first quarter of 2016. The gains in income and in net worth can be viewed as evidence of how the economy is continuing its steady recovery nearly a decade after the financial crisis began in December 2007.