Coins2Day Archives: Meet the Henrys (high earners, not rich yet)

This essay originally published in the Sunday, Aug. 25, 2024 edition of the Coins2Day Archives newsletter.

A wealth advisor in Illinois paying $100,000 in income taxes on a $350,000 salary. A dentist from Charlotte putting $750 a month per child into college funds. Neither had the savings to be called truly “rich”; neither thought they’d ever achieve a more than comfortable retirement. But this economic cohort, whom I interviewed just before Barack Obama surged to victory in the 2008 election, also didn’t need to worry about the next credit card or mortgage payment, as so many Americans did, and still do. So, what to call them?

The name had come to me a few years earlier, in a flash of what Winston Churchill called “lightning across the brain.” HENRYs: High Earners, Not Rich Yet.

Back in 2003, I was trying to get a handle on this demographic: self-made professionals and small business owners earning large incomes. These super-hard-working, affluent folks were regularly branded by politicians as “the rich,” and targeted for big tax increases, including the ever-expanding alternative minimum tax. With the weight of these elevated levies sharply curbing their take-home pay, and the big expenses that defined their lifestyles—from saving to send two or three kinds to private colleges to owning a four-bedroom colonial in a tony suburb—they’d face a tough struggle to become truly rich: so well-off that they didn’t need to worry about money. They probably would never get there.

These weren’t the “hedge fund managers, investment bankers, CEOs or trust fund babies who boast net worths in the multi-millions that would qualify as rich right now,” I wrote in 2008. Rather, they’re the “consultants, doctors and attorneys, marketing managers and CIOs,” as well as the owners of plumbing and construction outfits, that form the nation’s professional and entrepreneurial class. They’re the children of middle-class families without a lot of generational wealth who did everything right: They got the best grades in high school and logged long hours as medical interns and associates at law firms. In 2008, I put the HENRYs’ household income range at between $250,000 and $500,000. Adjusted just for inflation, those numbers would equate to $375,000 and $750,000 for today’s HENRYs.

The article also set a rough threshold for what qualified as “rich”: I pointed out that wealth isn’t defined by income, but by net worth in savings of cash, stocks, and bonds, as well as the biggest asset for most Americans: their homes. Back then, I calculated that a current nest egg of $3 million would make a family rich, since Mom and Dad could retire immediately and reap around $200,000 in income. That was “take this job and shove it” in 2008 money. Of course, the net-worth benchmarks are much higher today due to 16 years of cost increases, some of which—like housing and college outlays—rose much faster than inflation. The $3 million “wealth” bar would rise to $4.5 million.

So how are today’s HENRYs in their mid-thirties and mid-forties likely to fare versus the boomer and older Gen X HENRYs I wrote about in 2003 and 2008, who are now retired or getting close? Here’s where the difference is greatest: The elder HENRYs feasted on the best stock and housing markets in history. Today’s home-owning HENRYs will pay much more of their salaries in mortgage payments and property taxes at today’s extremely elevated prices and interest rates. It’s also highly unlikely they’ll pocket the same kind of gains on their investments that the past HENRYs collected.

It’s hard to feel sorry for a group living as well as the HENRYs. On the other hand, it would be great to provide an open road for more and more of our citizens to achieve the American Dream. For millions, that dream’s fulfillment means joining that once nameless group.