High Earners, Not Rich Yet - HENRYs

DEFINITION of 'High Earners, Not Rich Yet - HENRYs'

High earners, not rich yet (HENRYs) are individuals who currently have significant discretionary income and a strong chance of being wealthy in the future. The term HENRYs was coined in a 2003 Fortune Magazine article to refer to a segment of families earning between $250,000 and $500,000, but not having much left after taxes, schooling, housing and family costs - not to mention saving for an affluent retirement. The original article in which the "high earners, not rich yet (HENRYs)" term appeared discussed the alternative minimum tax (AMT) and how hard it hits this group of people. The term has since been used to describe a younger demographic for the purposes of marketing products and services to them. 

BREAKING DOWN 'High Earners, Not Rich Yet - HENRYs'

The HENRYs segment of the population was a hotly debated topic during the U.S. presidential race of 2008. The Democratic party often classified households earning over $250,000 as the "rich" and "wealthiest Americans". One problem with this classification is that it does not distinguish the cost of living in different areas in the U.S. For example, $250,000 may go a long way in Houston, but wouldn't provide anything like a lavish lifestyle in New York City. These high earners are expected to have much the same lifestyle as wealthier compatriots but they do so by sacrificing their ability to amass wealth.

Many professionals, including lawyers, doctors, dentists and so on, have the potential to be HENRYs due to the income range for their professions. The fact that much of their future wealth is projected off of a six figure income rather than income generating assets makes the HENRYs the "working rich", meaning they won't be as rich if they stop working. More of a HENRYs earnings go into costs than go into wealth building investments, leaving them feeling like they are more like regular people slaving for a paycheck than the wealthy 1% in America. 

HENRYs as Prime Target for Luxury Marketing

​The 2008 election has come and gone, but the term HENRYs has stuck around as a useful way to identify a demographic that is on their way to wealth but not quite there. Marketers see a lot of potential in this transitional phase where a future rich person is still adapting to a rapid increase in disposable income. The transition is seen as the prime opportunity for a luxury brand or service to insert itself into the HENRYs lifestyle and begin creating loyalty that will continue into the future. As there are more HENRYs in the world than ultra-wealthy folks, there is a deeper market there even if the product or services are marked down a bit in price. Marketers believe that HENRYs are more likely to be aspirational buyers, meaning that they are starting to purchase the trappings of the lifestyle they one day hope to be able to fully afford.