Closing the Savings Gap: How High-Net-Worth Individuals Build and Maintain Liquidity

The stark disparity in U.S. household savings-where the median bank account balance stands at $8,000 while the average is $62,410-reveals a critical divide in financial preparedness according to Bankrate. For high-net-worth individuals (HNWIs), particularly those in the top 10% of income earners, liquidity is not just a convenience but a strategic cornerstone of wealth preservation. These households, with median transaction account balances of $111,600, exemplify how disciplined liquidity planning can bridge the savings gap and secure long-term financial resilience.

The Income and Age Divide in Savings

Income and age are inextricably linked to liquidity outcomes. The 2022 Federal Reserve Survey of Consumer Finances (SCF) underscores that households earning over $245,400 annually hold median transaction account balances more than 120 times higher than those in the lowest income bracket according to Bankrate. This gap widens with age: for example, the median retirement savings for Americans aged 55–64 is $185,000, while the average balloons to $537,560. Such figures highlight how high-income households leverage compounding advantages, starting early and consistently allocating resources to both liquid and long-term assets.

Retirement savings further illustrate this trend. The average 401(k) balance for individuals aged 55–64 is $244,900, with the top 1% in this cohort holding $3.1 million to $7.4 million in retirement savings. These figures are not merely the result of higher earnings but reflect strategic asset distribution-balancing tax-deferred accounts, taxable brokerage holdings, and liquid reserves to optimize flexibility.

Liquidity Strategies of High-Net-Worth Individuals

HNWIs prioritize liquidity through a combination of tax-efficient tools and proactive planning. One key strategy is Roth conversions, which allow retirees to convert traditional accounts into Roth IRAs during periods of lower tax brackets. The 2025 One Big Beautiful Bill has extended favorable tax rates for retirees, making this approach particularly advantageous. By locking in today's rates, HNWIs ensure tax-free growth and avoid forced withdrawals later in life.

Another critical tool is home equity utilization. Unlike traditional withdrawals, home equity loans, HELOCs, or reverse mortgages are not treated as taxable income, offering retirees a flexible cash flow without increasing their tax burden. For instance, a 70-year-old with a $500,000 home equity stake could access funds for healthcare or travel without triggering ordinary income tax.

Taxable brokerage accounts also play a pivotal role. Retirees often liquidate these accounts before tapping into tax-deferred retirement savings, benefiting from lower long-term capital gains rates. This approach preserves tax-deferred accounts for later, allowing for greater control over taxable income streams.

The Case for Early Liquidity Planning

The data is unequivocal: early and consistent liquidity planning is a linchpin of wealth preservation. Consider the median net worth for households aged 55–64: $364,500 versus an average of $1.57 million. This discrepancy reflects the compounding power of disciplined savings and strategic asset allocation. HNWIs begin building liquidity decades before retirement, ensuring they can weather economic downturns or unexpected expenses without depleting long-term investments.

For example, a 35-year-old earning $150,000 annually might allocate 20% of income to a combination of high-yield savings accounts, Roth IRAs, and taxable brokerage accounts. By age 55, this approach could yield a $111,600 liquidity buffer-far exceeding the median $8,000-while preserving growth in retirement accounts.

Conclusion: Bridging the Gap Through Strategy

The savings gap is not insurmountable. While 19% of Americans have no emergency savings, HNWIs demonstrate that liquidity is a product of intentionality, not just income. By adopting tax-efficient strategies, leveraging home equity, and prioritizing early planning, individuals can build the kind of financial flexibility that safeguards against volatility. In an era of rising healthcare costs and market uncertainty, liquidity is no longer a luxury-it is a necessity for sustainable wealth.