what are high earners not rich yet henrys 
high earners not rich yet henrys are individuals who currently have significant discretionary income and a strong chance of being wealthy in the future the term henrys was coined in a 2003 fortune magazine article written by shawn tully to refer to a segment of families earning between 250 000 and 500 000 but not having much left after taxes schooling housing and family costs not to mention saving for an affluent retirement 1the original article in which the high earners not rich yet henrys term appeared discussed the alternative minimum tax amt and how hard it hits this group of people the term has since been used to describe a younger demographic for the purposes of marketing products and services to them understanding high earners not rich yet henrys the henrys segment of the population was a hotly debated topic during the u s presidential race of 2008 the democratic party often classified households earning over 250 000 as the rich and wealthiest americans 2 one problem with this classification is that it does not distinguish the cost of living in different areas in the u s for example 250 000 may go a long way in houston but wouldn t provide anything like a lavish lifestyle in new york city 3 these high earners are expected to have much of the same lifestyle as wealthier compatriots but they do so by sacrificing their ability to amass wealth many professionals including lawyers doctors dentists and so on have the potential to be henrys due to the income range for their professions the fact that much of their future wealth is projected off of a six figure income rather than income generating assets makes the henrys the working rich meaning they won t be as rich if they stop working more of a henrys earnings go into costs than go into wealth building investments leaving them feeling like they are more like regular people working paycheck to paycheck than the wealthy 1 in america henrys as prime target for luxury marketing the 2008 election has come and gone but the term henrys has stuck around as a useful way to identify a demographic that is on its way to wealth but not quite there marketers see a lot of potential in this transitional phase where a future rich person is still adapting to a rapid increase in disposable income the transition is seen as the prime opportunity for a luxury brand or service to insert itself into the henrys lifestyle and begin creating loyalty that will continue into the future as there are more henrys in the world than ultra wealthy folks there is a deeper market there even if the product or services are marked down a bit in price marketers believe that henrys are more likely to be aspirational buyers meaning that they are starting to purchase the trappings of the lifestyle they one day hope to be able to fully afford 4 this segment s incomes make up about 40 of household spending which makes a good business case for companies to market to them 1luxury brands like watchmaker tag heuer and retailer louis vuitton once catering to society s elite have developed new marketing strategies targeting henrys they use advertising centered around henrys core values uniqueness and identity they also use popular well liked celebrities and athletes to position their brand promote its appeal and communicate a message about status 5many henrys appreciate luxury goods for status and often use social media to flaunt their consumption of these items 4 as a result louis vuitton tag heuer and other luxury brands incorporate social media advertising and the use of social media influencers into their marketing strategies investment strategies for henryshenrys earn substantial wages but have few investments and meager savings developing better spending habits increasing savings diversifying investments and taking advantage of tax credits and deductions can transform them from the not right yet to the wealthy because henrys are high wage earners they typically pay the most in taxes on income henrys should explore deductions and credits that reduce their tax obligations less money for taxes means more money for investing one way to lessen the burden is to contribute to a retirement account such as an individual retirement account ira in 2024 individuals are allowed to contribute up to 7 000 or 8 000 for people 50 years or older and contributions to traditional iras are tax deductible in 2023 this contribution limit was 6 500 or 7 500 with the catch up contribution 6alternatively contributions to a 401 k reduce taxable income as well as long as contributions are made to a traditional 401 k as opposed to an ira these contributions are made with pre tax dollars which reduce the total amount of taxable income reported by the employer for example if a henry earning 200 000 per year contributes 15 000 per year to a 401 k the taxable income reported will be 185 000 henrys benefit dually from a reduction in taxes and an increase in savings and investments the contribution limit for a 401 k in 2024 is 23 000 with a 7 500 allowable qualifying catch up contribution for individuals age 50 and above in 2023 this limit was 22 500 with a 7 500 qualifying catch up contribution 6debt reductionone roadblock preventing henrys from reaching their full rich potential is the accumulation of debt most of the burden comes from educational costs mortgages auto loans and credit card debt large debt can erode earnings limiting what can be invested and saved to reduce credit card debt henrys can pay more than the minimum amount due and limit the use of the cards paying more than the minimum due will reduce the balance faster and the amount of interest applied limiting or discontinuing the use of credit cards can reduce the henrys overall debt and prevent more debt from accumulating applying this strategy to other debt can also have the same effect of quickly reducing debt and freeing up income for savings and investments for example paying more than the required amount on student loans can reduce the debt quickly as well as accrued interest furthermore consolidating student loans can reduce the monthly obligation and save money with a lower interest rate and payment the average amount of a henry s student loan debt 7whereas reducing debt is perhaps the first step towards wealth investing is the way to build it after reducing debt henrys will have more disposable income to invest retirement savings accounts are popular investment vehicles for their tax benefits and investment options for example 401 k s allow the henry to benefit from employer matching various investment options and pre taxed invested dollars which reduce reportable taxable income investing in real estate can generate profits that contribute to wealth accumulation if personal monthly rent or mortgage obligations are not large the henry may be able to pursue real estate investments to generate streams of income that income can be reinvested into other vehicles for growth likewise the henry can invest in real estate investment trusts reit for growth and to avoid the responsibilities associated with owning and managing investment real estate properties henrys can enlist the services of a professional wealth or investment advisor to select investments suitable to their risk tolerance and investment goals developing and following a plan can help them move from being a wealthy prospect to being a tycoon who qualifies as a henry there are no universal rules for qualifying as a henry but most analysts will describe individuals with income between 250 000 and 500 000 with minimal savings as henrys 1