HENRY: High Earner, Not Rich Yet: The 11 Harsh Financial Truths Henrys Need to Hear

By Michael Carbone, CFA, CFP®

HENRYs (High Earners, Not Rich Yet) often find themselves in a precarious situation. They make a lot of money—but also carry a lot of debt and have high living expenses. They’ve usually built up solid assets in retirement accounts but still feel like they’re not accumulating real wealth—especially the kind that isn’t already spoken for by college costs, debt payments, or other major obligations.

The purpose of this article is simple: to help HENRYs avoid making costly financial mistakes. If any of the above resonates with you, here are what I consider to be the most relevant harsh financial truths:

1. You’re smart enough to figure all of this out—but there’s a very good chance you don’t have the time.

Navigating your financial world isn’t rocket science. And if you’re in this category, chances are you could figure it all out. But doing so would require time—something you probably don’t have. Unless you work in finance—specifically wealth management—there are many nuances, rules, and theories. You don’t need to master all of it. You just need to know what you don’t know—and if you don’t want to (or can’t) figure it out, delegate the decision-making to someone you trust.

2. Maxing out your 401(k) plan may not be enough.

It takes a lot of money to safely finance a reasonable—or exciting—lifestyle in retirement. And if your goal is to leave a legacy to your kids or a charity, it takes even more. Contributing the maximum to your retirement accounts is a great start, but in most cases, it’s not enough.

3. Taxable accounts can be more tax-efficient than retirement accounts.

The default advice to always prioritize retirement accounts doesn’t always apply to HENRYs. Retirement accounts are great—especially if you’re in a high marginal tax bracket and contributing to a traditional

401(k). But you’ll owe ordinary income tax when you withdraw that money in retirement.

Taxable accounts can be extremely valuable too. Maybe you plan to live off dividends and long-term capital gains, taxed at lower rates, while preserving the principal. And if you leave the account to your kids, the capital gains could be erased entirely through the “step-up in basis” at death. The rules are different for you.

4. You probably don’t need that whole life insurance policy someone sold—or tried to sell— you.

Permanent life insurance—whole life, variable life, universal life—is one of the most opaque financial

products out there. I’m a Chartered Financial Analyst, and even I need six hours to reverse-engineer the costs of one of these policies.

Yes, they can sometimes be useful for tax sheltering or estate planning. But those benefits rely on a mountain of assumptions—and there are usually just as many arguments against them. One thing is always true: the cost of insurance is high. And the agents selling them earn commissions on your premiums. So, higher premiums, higher commissions, and so forth.

I’m a term insurance guy. It’s a simple, low-cost way to transfer risk.

5. You’re more likely underinsured for liability, not life.

Umbrella liability insurance is one of the most valuable—and most overlooked—forms of protection. If you’re ever sued for something stemming from your own negligence, this is the policy that protects your future income and assets.

It usually costs around $500 per year per $1 million of coverage. That’s likely why you’ve never heard of it—it’s not a moneymaker for the insurer or agent.

6. Your tax bill is probably too high.

Most high earners leave thousands on the table every year—not because they’re careless, but because they’re reactive. They file their taxes. They don’t plan their taxes. If your income is high, proactive planning can create huge opportunities: owning the right stuff in the right accounts, Roth in-plan conversions, intentionally booking losses on down investments, strategically executing employer stock, etc. But these all require intentionality and timing. The system won’t reward you automatically.

7. If you don’t define “enough,” you’ll never feel financially free.

More money doesn’t always mean more peace of mind. If you don’t get clear on what “enough” means for you—what it costs to fund the life you actually want—you’ll always feel like you’re behind, no matter how much you make.

8. If you want grant money for your kid’s college, you’ll probably need to ask for it.

Financial aid is awarded to families who need it. Many HENRYs are determined (by a formula) not to need it. So, it’s important to understand how private grants work. Private colleges want your kid to go there—and many will be willing to pay up for that. Appealing an offer isn’t begging; it’s part of the process. And yes, you can (and should) negotiate with colleges. But timing, positioning, and how you present your financial story all matter.

9. There isn’t much value in municipal bonds unless you’re in the 35% or 37% bracket.

Muni bonds can seem attractive because their interest is exempt from federal income tax. But that tax benefit comes at a cost: lower rates compared to taxable alternatives like Treasuries or CDs. To justify owning a muni, the tax savings must more than offset the loss in yield.

For most high earners, that math only works if you're in the top marginal tax brackets—35% or 37%. Otherwise, you might be better off with a higher-yielding taxable bond, even after taxes. In many cases, a simple Treasury or CD does the job more efficiently.

10. Your estate plan is probably outdated—or nonexistent.

A basic will was fine when you had no kids, no assets, and no legacy to leave. But now? You may need more. Beneficiary designations, trusts, powers of attorney, guardianship instructions, asset protection planning—it’s all part of the puzzle. If your net worth has grown and your estate plan hasn’t kept up, you may be exposed.

11. High income does not equal wealth.

Wealth is what you keep and control. Income is just a tool. Without margin, structure, and purpose, high income can disappear just as fast as it comes in. Building wealth takes intentional planning, not just earning power. Plenty of people with mid-six-to-seven-figure incomes feel financially stuck—because they never built the systems to convert income from their working years into lasting freedom.

If any of these issues speak to you, we should connect. I’m happy to share my thoughts on your situation. If the idea of speaking to a pushy salesperson makes your skin crawl—don’t worry. My HENRY clients either pay me to manage their money or work with me on a flat-fee retainer. I don’t dance around that, and I never pressure anyone to work with me. If it’s a good fit, great. If not, no harm done. Either way, it could be a worthwhile conversation. If you’re interested, send me your name and phone number, and we’ll coordinate a call.

Hope you found this helpful. Michael