We all like to know how we're doing. That explains why readers regularly ask for an update of the wealth distribution table that appeared in a column written in June 2000. (The table is shown below.)

Alas, the update will have to wait. Most wealth research is based on the Survey of Consumer Finances, which is done by the Federal Reserve every three years. The last survey was in 2001. If it follows the pattern of the 1998 survey, the first breathlessly awaited data will appear in a Federal Reserve Bulletin paper in January 2003.

Until then, we're all flying blind: we could collide with the Joneses' at any moment.

  
The Distribution of Wealth, by Age Group (dollar figures in thousands)
Age Group Top 1% Top 5% Top 10% Top 25% Median
80 or older $2,957.8 $     693.0 $440.0 $252.2 $118.0
70-79 $4,338.1 $1,074.5 $703.4 $316.5 $140.9
60-69 $6,263.4 $1,850.2 $902.8 $356.7 $155.8
50-59 $5,791.7 $1,410.6 $708.8 $326.7 $120.9
40-49 $3,402.7 $     829.0 $531.6 $226.8 $   86.2
30-39 $1,210.1 $     451.1 $267.5 $127.4 $   34.7
20-29 $     383.3 $     148.2 $78.3 $   25.4 $       5.2
Source: The VIP Forum, Corporate Executive Board, 1998 data
  

Not long after this table appeared a friend announced he was deeply pained. A doctor in his mid-fifties with thankful patients and a handsome income--- not to mention a net worth that would target his family for kidnapping in most of the world--- he was disappointed. He was "only" in the top five percent.

He wanted to be in the top 1 percent.

In other words, he was disturbed that his net worth was less than $5.7 million even though it was greater than $1.4 million. Most people with less wouldn't quibble about the difference.   I'm sure he wasn't joking because he mentioned his disappointment more than once.

The issue wasn't unfulfilled material desires. It was the errant notion that the training for his work, the hours he worked, and the responsibility should put him in the top 1 percent.

Many people have similar feelings about why they should be in the top 1, 5, or 10 percent. Their feelings will be reinforced by those in the top 1 percent who believe their wealth was their destiny due to their hard work, brilliance, etc.

In fact, the relationship between our personal actions and our accumulated wealth shrinks as net worth climbs.

If you get an education, marry, buy a home, maintain steady employment, and spend less than you earn, you've got a very good shot at being in the top 25 percent for wealth. As I pointed out in a recent column, you could get to the top 50 percent simply by owning a house. Add regular participation in a company 401(k) plan and there's a good chance you'll get to the top 25 percent.

Between the top 25 percent and top 1 percent, however, the element of chance starts to loom large.

Consider these real life examples:
  • A man with a small inheritance and an aversion to work invested in Microsoft soon after the company went public. He lives well today, his aversion to work is unabated, and he is well into the top 5 percent.
  • A couple in their eighties is defrauded out of their entire nest egg, forcing them to sell a vacation home purchased for $90,000 thirty years earlier. The vacation house brings over $3 million, putting them in the top 1 percent.
  • Two men with equal training join the same company and enjoy lifetime marriages. One stays with the company and retires early with a net worth approaching the top 1 percent. The other looks for greater opportunity with another company but it doesn't work out. His net worth is closer to the top 25 percent.
The closer you get to the top 1 percent, the greater the odds fortune will play a larger role than personal intention.