$6 Million Gets You Into 1% at 40, But Not at 60

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The price of being a One Percenter might seem like a simple number. For income, it’s around $380,000 a year. For wealth, it’s a total net worth of $8.4 million.

But those numbers are for the total U.S. population and don’t take into account people’s local economy. Making $380,000 might make you feel wealthy in South Dakota, but not in Manhattan.

There are also big differences in wealth cut-offs depending on age.

According to data from the Federal Reserve (learn more), first highlighted by Scott Burns of the Statesman Journal, the cost of being in the top one percent for income escalates dramatically as people get older.

For people in their 40s, it takes a total net worth of $5.8 million to get into the one percent. For people in their 50s, it takes nearly $10 million. For people in their 60s, it takes around $11.6 million.

In other words, it takes twice as much wealth to be in the one percent for someone who’s 65 compared to someone who’s 45.

This matters for two reasons. First, it tells us that there are really two wealth gaps in America — the gap between the rich and the rest, and the gap between the young and the old. Of course, it’s natural for wealth to accumulate over a lifetime. Yet the wealthy gap by age is growing rapidly. (Read More: How ‘Lynching’ the Rich Could Hurt the Rest of Us)

Census data shows that the wealth gap between 35-year-olds and 65-year-olds is double what it was in 2005, as the recession (learn more) hurt opportunities for younger workers and college grads.

If you factor in the expected costs of government debt, student loans and other macro-economic factors, the ability of the young to close this gap with the old may become even greater in the coming decades. (Read More: Did the ‘Lost’ Middle Class Get Rich?)

The second reason the age gap matters is that it speaks to people’s perceptions of their wealth. I often hear from older millionaires in Palm Beach or Carmel who insist that $8 million is not “rich” where they live. Though we shouldn't feel sorry for anyone worth $8 million, we now know that in the “grey millionaire” economies of these posh enclaves, $8 million is not stand-out wealth.

Being rich is all relative — even relative to one’s age.

—By CNBC’s Robert Frank
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