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. 

RELATED TERMS
  1. Prisoner's Dilemma

    A paradox in decision analysis in which two individuals acting ...
  2. Rich Valuation

    An asset that is being valued by investors at a very substantial ...
  3. Recession Rich

    A slang term used to describe an individual who manages to do ...
  4. United States Natural Gas Fund ...

    An exchange-traded security designed to track percentage changes ...
  5. Henry Paulson

    Henry Paulson served as the 74th U.S. Secretary of the Treasury. ...
  6. Young And Wealthy But Normal - ...

    A class of self-made millionaires that live relatively modest ...
Related Articles
  1. Financial Advisor

    9 Top Tips on How to Retire Like the Rich

    What can you learn from the wealthiest investors when it comes to saving for retirement? Here are their top tips.
  2. Managing Wealth

    Why High Earners Still Live Paycheck-to-Paycheck

    Despite making six figure incomes, many high earners still struggle to get ahead financially, living paycheck to paycheck.
  3. Managing Wealth

    5 Things the Wealthy Can Teach Us About Money

    Building and managing wealth starts with habits we've noticed among many of our successful clients. Habits you can develop too.
  4. Managing Wealth

    Are You Earning Income or Building Wealth?

    Simply having income does not mean that you also have significant wealth.
  5. Managing Wealth

    What Does it Mean to Be Wealthy?

    Wealth is not a set amount of money or possessions, it is having the income you need in retirement.
  6. Investing

    Investment Choices For Wealthy People

    Here is an overview of some investment vehicles that are available to wealthy investors.
  7. Managing Wealth

    Henry Ford: Industry Mogul And Industrial Innovator

    This man made his dream of bringing the automobile to the masses a reality.
  8. Investing

    Hedge Funds Look Bearish on Natural Gas

    A sharp rise in natural gas stock prices at the start of the summer season may be responsible for the hedge fund snub.
  9. Insights

    About that Henry Ford Tweet

    A bit more context on Henry Ford and the 8-hour workday.
  10. Managing Wealth

    America's Compensation Gap Shows No Signs Of Slowing

    The gap between the rich and the poor and middle classes is rapidly increasing in America. Historically this is not a good sign, as a strong middle class has been the backbone of the U.S. economy ...
RELATED FAQS
  1. What are the differences between regressive, proportional, and progressive taxes?

    Learn about the three basic types of tax systems, all of which are used in the U.S., and how they affect different income ... Read Answer >>
Hot Definitions
  1. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs are often issued by companies seeking the capital to expand ...
  2. Cost of Goods Sold - COGS

    Cost of goods sold (COGS) is the direct costs attributable to the production of the goods sold in a company.
  3. Profit and Loss Statement (P&L)

    A financial statement that summarizes the revenues, costs and expenses incurred during a specified period of time, usually ...
  4. Monte Carlo Simulation

    Monte Carlo simulations are used to model the probability of different outcomes in a process that cannot easily be predicted ...
  5. Price Elasticity of Demand

    Price elasticity of demand is a measure of the change in the quantity demanded or purchased of a product in relation to its ...
  6. Sharpe Ratio

    The Sharpe ratio is the average return earned in excess of the risk-free rate per unit of volatility or total risk.
Trading Center