What it Means to be a HENRY (High Earner, Not Rich Yet)

Patrick Cote |

You may not have heard the term HENRY before - it refers to a High Earner, Not Rich Yet.  There is no standard definition for HENRYs, however, we at AssetGrade have come to think of them as people who:

  • Make enough money to live a comfortable, but not necessarily lavish, lifestyle.  For much of the US, that is $200K+ per year (top 4% of households)
  • Are not yet wealthy enough to live a comfortable lifestyle solely from their investments.  That would require at least $5M in investable assets if you assume that people have a 3% withdrawal rate and need $150K per year to live comfortably in retirement

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At incomes of $200K+ and assets <$5M, HENRYs typically fall through the cracks for help with their finances.  They often do not meet the minimum asset thresholds, so they do not get the type of help that wealthy families get from fee-only registered investment advisors.  HENRYs often end up sticking with what they set up when they were younger and making less money, such as a brokerage account or IRA with their brother-in-law who works at a big-name broker.

HENRYs’ chief concerns are typically:

  • How much will they need to accumulate to have a comfortable retirement?
  • How much will they need to save each year to get there?
  • How should they invest their savings along the way?

Many HENRYs know about the financial basics, so they do not carry expensive debt like credit cards and they make sure they at least get their full company match for their 401(k).  What most HENRYs need is wealth management:  a financial plan and ongoing investment support to get beyond the basics.  Setting up a tax-efficient savings plan that spans all of their holdings, including brokerage, IRA and 401(k) accounts, is complicated and generally time-consuming to manage.  The one thing most HENRYs lack is time, so unless they have made it one of their top priorities, they are rarely able to stay on top of their finances themselves.

At AssetGrade, we are a fee-only registered investment advisor firm and we have developed a wealth management program specifically geared towards the needs of HENRYs.  Our asset minimum is $100K, which makes us much more accessible than other fee-only registered investment advisors.  In future articles, we will address some of the key components that make up this program.