If you want to join the list of top earners in Australia, both income and tools like superannuation play a major role. There's plenty of market research that suggests using income to acquire assets in order to boost wealth.
Recent data compiled by Grattan Institute, a think tank based in Melbourne, has shed a bright light on the wealth and income of the Australian population. Within this research, we also get a unique insight into the patterns of some of Australia's top earners.
Let's take a closer look at what it takes to join the list and why superannuation is a vital part of that equation.
How much do you need to earn?
Research from Grattan's "budget cheat sheet" has revealed some interesting stats on income and superannuation here in Australia.
To be in the top 1% of earners, your income needs to be at least $375,378 a year as an individual. If you're looking at household income, that figure jumps to $531,652.
In comparison, the report notes that the median individual income in Australia is around $55,600. Meanwhile, the median household income stands at nearly $92,900.
Interestingly, income levels for the top 1% have risen significantly over the last five years. As The Australian Financial Review reports, household income for the top bracket has grown by 16% since 2019.
The importance of superannuation in wealth
While high income is important, wealth accumulation is also crucial. Superannuation plays a significant role in long-term wealth growth, particularly when it comes to retirement.
The report notes that for individuals between the ages of 25 and 40, you'll need at least $293,000 in super to join the top 1%.
Whereas if you're between 41 and 64 years old, you need $1.4 million in superannuation as an individual, or a $2 million balance as a household.
For Australians over 65, the top 1% in superannuation holds $2 million for individuals or $3.3 million for households.
Aussies are required to contribute to their super through employment. But how much you accumulate depends on your income, how long you've worked, and your investment choices over time.
But alongside shares, like those in the S&P/ASX 200 index (ASX: XJO), home equity also contributes significantly to the nation's wealth.
According to the Finder Wealth Building Report, "consumers hold much of their wealth in their superannuation and the value of their family home."
The report also showed that 74% of Australia's household wealth is held in super and property combined. As for millionaires? We boasted 2.8 million of them as of October last year.
Meanwhile, Grattan's research notes that the top bracket of Australians aged 41 to 64 has $2.8 million in home equity, while those aged 25 to 40 have $1.3 million.
Foolish takeaway
Regardless of where you intend to sit on the wealth spectrum, it requires an effort of diligent saving, wealth-building habits, and long-term commitment.
Keeping this in mind is essential, even through the short-term volatility, as we've seen recently.
