We hear about the top 1% all the time, people with yachts, pen houses, and investment portfolios bigger than most people's life savings. But in Australia, what does that actually look like in real numbers? Today, we're digging into the latest report from the Graten Institute to break down what it takes to be the top 10%, 5%, or even top 1% of Australians. Not just by income, but by super, home equity, and net worth. Let's start with income. the number most people focus on, but often the one that tells the least about someone's financial situation. If you're a typical Australian taxpayer, your income is around 52K a year. But to be in the top 10%, you need about 137K. Top 5% 181K, and to hit the top 1%, 364,000. Of course, individual income only tells part of the story. A lot of Australians live in dual inome households. So, let's look at household income. The medium household income sits around $92,856. The top 10% of households earn $235,000. Top 5% they earn over 305,000. And to be in the top 1%, your household needs to earn more than 531,000 annually. To put that into perspective, about 92,000 households in the country fall into that top 1% category. So where are these highincome households located? Western Australia has the highest share of top tier earners about 5.5% followed by New South Wales and CRA. Tasmania on the other hand has the smallest proportion of people in top income brackets. Basically your odds of joining the top 5% look a little better in Perth or Sydney than in Hobart. High income doesn't always equal high wealth. Someone making 200K might be spending most of it. Meanwhile, a retiree with no income might be sitting on a 5 million property portfolio. So, let's look at the data from wealth starting from super. Super annuation is one of Australia's most powerful wealth building tools and one of the least understood. If you're between 25 and 40, the typical super balance is just 25,000. That's because you're early in your career and contributions take time to grow. But if you have more than 158,000, you're in the top 5%. over 293,000. That puts you in the top 1% of your age group. For middle-aged Australians, the numbers rise dramatically. The average super balance from age 41 to 64 is 90,000. Top 5% over 626,000. Top 1% 1.4 million or more. And retirees, most have very little super because the system only became mandatory in 1992. 75% of retirees have less than 149,000 in supera. The top 1% nearly 2 million. So if you're in your 20s or 30s and looking at a 20k balance thinking you're behind, don't panic. The gap widens with time, not just income. The secret with super is to start early, contribute consistently, and let compound interest do its thing. Now let's look at the data for the household super balance. A typical young household have 60,000 in super balance and 75% of them have less than 130,000 in super. If your household super balance is more than 279,000, you'll be in the top 5%. To be on the top 1%, your household super balance needs to be more than 473,000. How about the household super balance for middle age group from 41 to 64 years old? A typical household in this age group have 79,000 in super balance. 75% of them have less than 384,000. To be on the top 5%, your household super balance needs to be more than 968,000. If your household super balance is more than 2 million, you'll be the top 1%. Now, the retirees, do they have enough to have comfortable retirement? A typical retired household, they have 9,000 in super balance. 75% of the retired households have less than 260,000. If a retired household have more than 1.3 million, they will be on the top 5%. To be on the top 1%, their household super balance needs to be more than 3.2 million. We can see the same trend among three age groups from the 50% to top 25%. You need to double your household super balance with the exception for the retiree group which is shocking 28 times. But the top 1% has doubled the super balance of the top 5%. It gets harder and more difficult to climb up the wealth ladder on the top for sure. In Australia, wealth often lives in the roof over your head, especially in places like Sydney or Melbourne. Among young households 25 to 40 years old, the medium home equity is zero. That makes sense. Many are still renting or just getting into the market. But if your home equity is over 650,000, you are in the top 5%. Over 1.3 million, you are top 1%. For middle-aged households, typical home equity is 325,000. Top 5%, 1.4 million, top 1%, 2.8 million. And retirees, medium home equity is 450,000, top 5% is 1.7 million, top 1% almost 3 million. Property is the greatest Australian wealth engine, but it's also why the wealth gap is growing. Those who got into the market early, especially in high growth areas, are seeing exponential gains. Those locked out falling further behind. Net worth is where the truth comes out. It's everything you own minus everything you owe. Super property, share, savings minus the debt is the full picture. Across households, young families from 25 to 40 years old have a typical net worth of 238,000. Middle-aged 89,000. Retirees 817,000. But to join the top 1%, young households have to have more than 3 million in net worth. Middle-aged households needs to have more than 7.7 million and retired households needs to have more than 10 million. A millionaire might feel rich, but to reach the top 1%, you need to be a multi-millionaire, especially once you factor in debt. Based on the data, we can easily calculate the size of other assets with no debts. To be in the top 1%, you need 1.2 million invested, 2.9 million by middle age, and 4.7 million in retirement. This is where smart investing really comes into play. The more wealth you build outside your home, the more flexibility you have. Recently, a conversation went viral that was a debate between Gary Stevenson and Daniel Presley on the Diary of a CEO podcast, which I watched twice. Gary worked as an interest rate trader for City Bank for six years and now has his own YouTube channel as an inequality economist. His argument is that the system in the UK is rigged, taxing more on the rich people and redistribution is the only solution. Okay, welcome back to Gary's Economics. Today we are going to ask the question, is the UK government bankrupt? Daniel is a successful entrepreneur who agrees with Gary the fact that the wealth disparity is getting larger, but he believes in personal agency building your own wealth through entrepreneurship or smart work. He argued that if the UK government simply taxes more on the rich, they're going to relocate to other tax friendly countries. If you do not do not tax very wealthy individuals and very wealthy families, their share of the pie will obviously grow over time and they will and they are as we are watching squeezing out ordinary families. My friend sold his company in the UK. It's a company everybody knows. Um and he I remember him saying to me at the time it was in the middle of the pandemic. He had got this big exit event. I think he'd made 300 million and he goes, "I'm off." I go, "Where are you going?" He goes, "I'm going to go to Dubai and Monaco and live between the two." And I I said to him, explain to me why. He goes, "Well, the amount of tax I'd have to pay in the UK is equivalent to me paying 20 million rent in the UK for the next six or seven years." My friends have moved out of the country. They don't come back to the UK. They've left and they leave with their built a company here. They typically build globally and pay no tax. They typically build globally business. It's not that they was a global business. They don't pay no tax. They pay extortionate amounts of tax, right? They both have a point. Yes, the gap is widening. But sitting back and waiting for policy to save you, that's not a strategy. That's a store. So, I don't appreciate Gary's negative victim mentality and his intention to get more people angrier about the government, about the rich, which indeed is quite dangerous and would not solve anything. The debate was a bit hard to watch as Gary constantly interrupted Daniel, which is a bit childish and rude. Gary, how much money did you make for City Bank at the age of 24 years old that year? So that year, 2011, I put this big bet on that it would get worse forever. And I was City Bank's most profitable trader in the world that year. And I made them just over $35 million. You made them $35 million. You eventually decide to leave City Bank. Yeah. Why? I mean, I think that's an interesting question, right? You know, Daniel later commented on a LinkedIn post from Ken Bray, who was Gary's former manager at City Bank. He says, "I was smart. Gary was wise. He understands that for most people the facts don't matter. Outrage is a place to connect. Have you watched the debate? What do you think? Now we have the local data. Do you think Australia's wealth inequality is becoming serious as well? Drop your thoughts in the comments. But be nice. Any hat ones will be deleted. If this helped you rethink what wealth looks like, drop a like and subscribe and tell me in the comments, would you rather have a high income or high net worth? If you want to start tracking your wealth, I'll build a simple Google sheet with automations. It tracks income, savings, and investments visually, and it has advanced features like wealth projection and when you can retire. Link in the description. My name is Irene. I'll see you next week. Bye. [Music]