A fresh look at high-net-worth spending and saving

A fresh look at high-net-worth spending and saving
Survey of younger HNWIs offers insights on spending habits, income sources, and the pursuit of financial independence.
OCT 14, 2024

Long Angle, an online platform that touts itself as a private community of high-net-worth individuals, has published a new report profiling the income, savings and spending behaviors of the younger affluent population.

Long Angle's inaugural "2024 High-Net-Worth Income and Spending Report" draws from a survey of primarily HNWIs in the US aged 30 to 49 years old – including entrepreneurs, corporate executives, technology professionals, and investment managers – with portfolios ranging from $5 million to $100 million.

According to the report, respondents save nearly two-thirds of their post-tax income – $621,000 on average – out of a typical post-tax income of $924,000. However, spending tends to level off at higher income levels.

“Once annual income surpasses $1 million or net worth exceeds $25 million, spending flattens out,” the report noted.

Breaking down respondents' income profiles, the report found active income constituted 68 percent, including 33 percent from salaries and 15 percent from private businesses. Passive sources made up the remaining 32 percent, with brokerage dividends from stocks and bonds making up a substantial 14 percent, and another eight percent coming from private and alternative assets.

Through a net-worth lens, the report found the lion's share of HNWIs worth less than $25 million got their income from active sources. Beyond that, the story reverses, with passive income making up 70 percent of total after-tax-income.

"Respondents spend 37% of their after-tax income and save the remaining 63%," the report said. It said a quarter of the savings were in the form of “structural savings,” which included paying down mortgages, retirement plan contributions and life insurance cash value increases, with the rest manifesting as net free cash flow.

Among survey respondents, high earners taking in more than $1 million yearly after tax said they realize more than 80 percent of that income as net free cash flow. In contrast, the report found those earning less than $250,000 after tax said they have a 15 percent free cash flow rate.

Looking at respondents' spending, Long Angle found housing was the top area of focus, reportedly accounting for 28 percent of total outflows. Across all participants, the median amount spent on primary residences totalled $59,8000; those with a net worth above $25 million had the highest median expense at $94,000, compared to $43,950 for those with a portfolio of less than $5 million. 

Vacations and childcare were tied for a distant second on HNWIs' priority lists, each representing 13 percent of spending. For respondents under the $5 million net worth bracket, vacation budgets averaged $18,397, which tended to increase before leveling off at the $10 million net worth mark.

When it comes to their financial philosophy, a decisive 80 percent majority of participants said they're looking for financial independence, relying purely on passive income to cover their expenses. Another two-thirds shared a focus on maximizing their net worth, while around one-third said they want to leave a significant estate to their heirs.

Latest News

SEC bars ex-broker who sold clients phony private equity fund
SEC bars ex-broker who sold clients phony private equity fund

Rajesh Markan earlier this year pleaded guilty to one count of criminal fraud related to his sale of fake investments to 10 clients totaling $2.9 million.

The key to attracting and retaining the next generation of advisors? Client-focused training
The key to attracting and retaining the next generation of advisors? Client-focused training

From building trust to steering through emotions and responding to client challenges, new advisors need human skills to shape the future of the advice industry.

Chuck Roberts, ex-star at Stifel, barred from the securities industry
Chuck Roberts, ex-star at Stifel, barred from the securities industry

"The outcome is correct, but it's disappointing that FINRA had ample opportunity to investigate the merits of clients' allegations in these claims, including the testimony in the three investor arbitrations with hearings," Jeff Erez, a plaintiff's attorney representing a large portion of the Stifel clients, said.

SEC to weigh ‘innovation exception’ tied to crypto, Atkins says
SEC to weigh ‘innovation exception’ tied to crypto, Atkins says

Chair also praised the passage of stablecoin legislation this week.

Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest
Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest

Maridea Wealth Management's deal in Chicago, Illinois is its first after securing a strategic investment in April.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.