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 ```I want to find out statistics about an individual. I want to know where that individual would fit in on a percentage basis for the United States. The person is 39 years old. The person it is not a high school graduate. The person has a net worth in excess of \$5 million. The person makes \$3 million per year. Where does this person rank on a percentile basis. Such as the top two tenths of 1 percent? What would this statistic be if that person made \$5 million per year.```
 ```Hello gapgapgap-ga. Nice to see you back here, and nice to have a very intriguing question to sink my teeth into. Let me say at the outset that we are diving into very murky waters. There are sources of reliable statistics on wealth in America, but they originate primarily in everyone’s favorite government agency – the Internal Revenue Service. IRS data tends to be very tedious to wade through, and vey tough to make sense out of. I've done my best to extract the relevant information and present it here as clearly as I know how. But let me say at the outset, if anything at all needs additional discussion or elaboration, just let me know by posting a Request for Clarification, and I'll be happy to assist you further. ---------------------------- At this link: http://www.irs.gov/pub/irs-soi/98pwart.pdf you will find the IRS' most recent report on "Personal Wealth". Unfortunately, even though the report is recent (April 2003), the data are from 1998. But for many of the types of questions your are asking, this is most recent year of data available. The report starts off this way: "There were more than 6.5 million individuals in the United States with gross assets of \$625,000 or more in 1998. These "top wealth holders" represented about 3.4 percent of the total U.S. adult population. As a group, top wealth holders owned more than \$11.1 trillion in assets, or almost 32.6 percent of total U.S personal asset holdings. Almost 4.0 million, or 61.2 percent, of these wealthy individuals were male, and 2.5 million were female." So right away, we know that the subject of your question is at least in the top 3-4% of Americans, in terms of personal wealth, and probably a good deal higher. We also know the odds are almost two to one that the person in question is male. From additional information provided in Figure A of the report, we can also see that 70% of the men of wealth are married, making it more likely than not that your subject is a married man. ------- The report also gives a detailed description of where the data comes from. This is of interest if for no other reason, that to clarify the difficulty that even the IRS faces in trying to paint a statistical portrait of the nation’s wealthy: “The distribution and composition of personal wealth in the United States are topics of great interest among researchers and policy planners. Unfortunately, these issues are difficult to research, since there are few sources of data on the wealth holdings of the general population, especially the very rich. Federal estate tax returns (Form 706) provide a unique source from which to study the nation’s wealthiest individuals. The estate tax return contains a complete listing of a decedent’s assets and debts, as well as a demographic profile of the decedent and information on the costs of administering the estate.” ------- Let’s turn now to the table labeled: "Table 1.--Personal Wealth: Type of Property by Size of Net Worth". This table – which is unfortunately rather difficult to follow – details the distribution of wealth in the United States according to different categories of net worth. From it, we can glean the following: Of the 6.5 million wealthy people included in the report, 3.7 million of them had a net worth of under a million dollars. In addition: --2.1 people million had a net worth of from \$1.0-2.5 million. --440,000 people had a net worth of \$2.5-5 million, and --another 166,000 people had a net worth of \$5-10 million. Adding up the numbers from the table of all those with incomes of five million dollars or more, we can see that: --only 246,000 -- about 1/4 of a million -- people in the US had a net worth of \$5 million or more. Put another way, about one-tenth of one percent of the population was worth \$5 million or more. The individual you inquired about in your question belongs in this very rarified group. -------- The report goes on to describe differences among the assets held by different categories of wealthy individuals: “Portfolio composition varied substantially by sex and wealth class among America’s top wealth holders... Compared to those in higher net worth groups, individuals with less than \$1 million in net worth devoted a larger percentage of their portfolio to personal residences, investment real estate, and retirement assets. In contrast, top wealth holders with more than \$10 million in net worth, dedicated more of their portfolio to closely held stock than less wealthy investors... Women’s portfolios contained a greater proportion of stock in public corporations than those of men, while stock in closely held corporations made up a larger share in the portfolios of male top wealth holders.” From Figure C of the report, we can put together an even more detailed portrait of the portfolio of America's richest people. For an individual man with a net worth in the range of \$1-10 million, 22.6% of his portfolio would be in stocks. Other percentages are: Real estate.........14.7% Closely held stock..12.4% Retirement funds....12.1% Bonds/funds..........9.3% Cash/money market....8.9% along with some other, smaller categories, including personal residences valued at 8.0% of total net worth. Interestingly, individuals in this wealth-range who are female (Figure F) keep a larger portion of their wealth in common stock (30.7%) and a much smaller proportion (6.7%) in closely-held stocks....I suppose they still have a hard time getting into the club! ----- The report goes on to discuss the influence of age, another factor you inquired about: “In general, personal investment goals tend to change as one ages. Younger investors are usually interested in asset growth opportunities and are often willing to accept higher levels of risk than older investors, who may be more focused on reliable income sources and who tend to prefer investments that are eligible for preferential income tax treatment. In 1998, the value of investment real estate and investments in closely held corporations made up smaller percentages in the portfolios of older top wealth holders than in portfolios held by younger individuals in the same wealth classes, while the portfolios of younger investors included smaller percentages of Government-issued bonds than those of older investors. Publicly traded stock was the dominant asset in the portfolios of wealth holders in every age group and for both genders...” Figure H in the report provides more details for the comparison of assets by age. Your 39-year old millionaire would fall into the "Under 50" category used by the IRS, and would tend to have more of his or her assets in high-growth opportunities -- real estate and closed corporation stock -- rather than some of the investments preferred by their older colleagues, such as government bonds. ------------------------------ Another IRS report that covers the 2000 tax year also sheds a bit of statistical light on the world of the wealthy. The report is: Individual Income Tax Returns, 2000 and you can find it at: http://www.irs.gov/pub/irs-soi/00indtr.pdf The nice thing about this report is that it discusses income as well as net worth, so it gets to the other aspect of your question. However, the breakout of income categories only goes as high as “a million dollars or more”. In other words, everyone reporting more than a million dollars of income is lumped together into one, big, wealthy category, so there's no way to breakout the data to provide a statistical comparison for, e.g., individuals earning \$1 million vs \$3 million vs \$5 million. Out of 129 million individual returns filed for tax year 2000, a mere 240,000 reported incomes of a million dollars or more. That is, two-tenths of 1% of all taxpayers reported incomes of over a million dollars for the year 2000. Once again, the subject of your question belongs to this small club. Your question was incredibly prescient on this account, since you mentioned two-tenths of a percent as a possible figure...or had you, perhaps, already seen the IRS data? Before leaving the IRS. I want to mention two other sources of information that can be found at: http://www.irs.gov/taxstats/article/0,,id=97067,00.html Both of them sound promising, but for the reasons I'll describe, really don't add to the statistical picture that you're looking for. The first report is: High-Income Tax Returns for 2000 This report provides a tremendous amount of detail for all tax filings with an adjusted gross income of \$200,000 or more. Unfortunately, everything's pretty much lumped together in the "above \$200,000" and "below \$200,000" category, so there's no real way to tickle out any detail to distinguish the ordinary wealthy, from the pretty wealthy, from the stinkin' rich. And speaking of stinkin' rich, the other report is: The 400 Individual Income Tax Returns Reporting the Highest Adjusted Gross Incomes Each Year, 1992-2000 which deals, obviously, with the returns from some very wealthy people -- people who's wealth is generally in the hundreds of millions or more, and who, therefore, cannot shed much statistical light on the individual you inquired about and his/her measly few million. -------------------------------- I hope the information I’ve presented here meets your needs. I know it does not touch on every base you mentioned -- education level for instance -- but I trust it still provides a comprehensive look at the available statistics. But as I said earlier, if anything here is unclear – or if you simply need additional information – just let me know and I’ll be happy to assist you further.``` Request for Answer Clarification by gapgapgap-ga on 09 Sep 2003 06:17 PDT ```Thank-you, I really appreciate the information. Most of this information I have found on my name own hence the 2/10ths prediction. I should've a elaborated and more fully explained my request. The key indicator that I was trying to get statistical data on was the fact that this individual did not graduate high school. I could not find this on my own that is what led me to pay such a high amount for the question. Can you help?``` Request for Answer Clarification by gapgapgap-ga on 09 Sep 2003 09:12 PDT ```Request for Answer Clarification by gapgapgap-ga on 09 Sep 2003 06:17 PDT Thank-you, I really appreciate the information. Most of this information I have found on my name own hence the 2/10ths prediction. I should've a elaborated and more fully explained my request. The key indicator that I was trying to get statistical data on was the fact that this individual did not graduate high school. I could not find this on my own that is what led me to pay such a high amount for the question. Can you help?``` Clarification of Answer by pafalafa-ga on 09 Sep 2003 13:14 PDT ```Ahh...so *that's* what you wanted. I'll have to refine my "reading between the lines" skills. No problem, though. I can provide you some information about wealth and education levels. I think it will provide the type of perspective you're looking for. A warning, however: most of this stuff is highly academic (read "obtuse") in nature. I'll give you some plain- English interpretations here, but if you want to check out the original documents yourself, be prepared for some heavy slogging. Might as well start off with probably the densest paper of the two, because it's also probably the most informative. ------------------ The Federal Reserve Board conducted a study called: DISENTANGLING THE WEALTH EFFECT: A COHORT ANALYSIS OF HOUSEHOLD SAVING IN THE 1990S http://www.federalreserve.gov/pubs/feds/2001/200121/200121pap.pdf This looked at who made money in the booming 1990's, and what factors (education included) were associated with household wealth. If you drop down right to Appendix B at the end of the paper, there's a table titled "Share of Aggregate Net Worth" broken out by education categories for the year 2000. In a nutshell, the table looks at the total net worth of all households in the U.S., and divides it up by education level (of the head of household). The numbers look like this for the year 2000: College degree........60.1% Some college .........22.3% High school degree....14.3% No H.S. degree.........3.4% In other words, those who have college degrees hold well more than half the total wealth in the country as measured by aggregate net worth. Those with some college education (but no degree) hold almost another one-quarter of the wealth. Those with a high school degree, another 14.3% Those who haven't graduated high school don't fare very well in this respect, as they cumulatively only hold a paltry 3.4% of national wealth. Note that the table also includes the same data for 1992. The numbers are not greatly different from 2000. Not surprisingly, the rich got richer, and the poor got poorer, but not by a tremendous degree of change. Overall, the pattern holds over time -- a college degree opens doors to increased wealth accumulation, while lack of a high school degree ordinarily is a significant barrier to accumulating wealth. Thus, the subject of your question should -- as far as statistics are concerned -- have access to only a very small portion of society's overall accumulated wealth. Clearly, he or she is something of a statistical anomaly. ------------------------ Another statistical portrait of wealth and education stems from a dataset known as PSID -- the Panel Study of Income Dynamics -- which can be found at the University of Michigan website: http://www.isr.umich.edu/src/psid/TrendsIndynamics1999-2001.pdf where you will find a report entitled: Trends in household wealth dynamics, 1999 - 2001 Table 5 of the report is: "Household Financial Wealth" and includes a breakout of wealth by educational categories as well as by age of the head of household (a twofer!). For 2001, the numbers for average (mean) household financial wealth look like this: College degree........\$237,900 Some college ..........\$83,100 High school degree.....\$72,100 No H.S. degree.........\$27,600 About a 9 to 1 difference in household income between the college graduates and the high school dropouts. The age data are: Age of Head of Household 20 to 29.................\$14,500 30 to 39.................\$52,000 40 to 49................\$101,600 50 to 59................\$128,600 60 to 64................\$263,400 65 or more..............\$196,300 So again, the subject of your question stands out as anomaly, having reached significant personal wealth well before the peak years of wealth accumulation, at the ages 60-64. ------------------ I hope these additional statistics provide the type of perspective you are looking for. If anything here is not clear, or if you need additional information, please let me know through a Request for Clarification. I'll be glad to continue working on this until we can find you just the information you need. pafalafa-ga```