Investment Manager View of America's top 1% - Even High Professional Income and Saving does not cut it

An Investment manager has written his view of the top 1% in 2011 and in 2014

The average (median) American family has pre-tax income in the low to mid-$50k range and net worth around $120k.

High end professionals at 99 to 99.5 percentile

The 99th to 99.5th percentiles largely include physicians, attorneys, upper middle management, and small business people who have done well. Everyone’s tax situation is, of course, a little different, but on earned income in this group, we can figure that somewhere around 25% to 30% of total pre-tax income will go to Federal, State, and Social Security taxes — leaving them with around $250k to $300k post-tax. This group makes extensive use of 401(k)s, SEP-IRAs, Defined Benefit Plans, and other retirement vehicles, which defer taxes until distribution during retirement. Typical would be yearly contributions in the $50k to $100k range, leaving our elite working group with yearly cash flows of $175k to $250k after taxes, or about $15k to $20k per month.

Data on net worth distributions within the top 1% indicate that one enters the top 0.5% with about $1.8M, the top 0.25% with $3.1M, the top 0.10% with $5.5M and the top 0.01% with $24.4M.

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