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An interesting article about millionaires
Old 04-03-2012, 02:00 PM   #1
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An interesting article about millionaires

It does have some stats in telling the number of people at different levels..

The American Dream Is Fading, Even for Millionaires


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Old 04-03-2012, 02:10 PM   #2
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Sure. Inflation and health care are a big reason for the uneasiness.

First of all, when one defines a millionaire as merely having a million dollar net worth, much of that might be tied in illiquid assets that don't produce income. And even if it *is* a million in liquid invested assets, that's $30-40K a year in an income stream -- that's not much to live on, especially if you have to buy your own health insurance.

The word "millionaire" conjures up images of the filthy rich, especially since once upon a time, it *was*. But today? It's not that much, and there are a lot of "Millionaire Next Door" types who live modest lifestyles and moderate incomes -- and who need their portfolio to generate that moderate income.

Note that the $5M+ households are growing faster more than the $500K+ and $1M+ households since the start of this graph in 1997. The $5M+ club has grown by about 369% where as the $1M+ club has grown only 62% and the $500K+ by 27%. I doubt that feels like a surprise to many folks.
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Old 04-03-2012, 05:02 PM   #3
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A million ain't what it used to be.....
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Old 04-03-2012, 05:16 PM   #4
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A million ain't what it used to be.....
Yes, it would be very cool to see a similar graph with everything expressed in 2012 dollars; in a graph like that, the $1M line would indicate the number of people each year with the equivalent of one million 2012 dollars.
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Old 04-03-2012, 05:17 PM   #5
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Does anybody remember the TV show "The Millionaire" from the 1950's? (1955-1960) A wealthy individual gave a million dollars to various people. The show was about how the money changed, or did not change, the lives of these people.

Anyway, here is an interesting factoid I picked up while researching the show:

As the series progressed:
  • $1,000,000 in 1955 had the same purchasing power as $8,010,000 in 2009.
  • $1,000,000 in 1956 had the same purchasing power as $7,890,000 in 2009.
  • $1,000,000 in 1957 had the same purchasing power as $7,620,000 in 2009.
  • $1,000,000 in 1958 had the same purchasing power as $7,420,000 in 2009.
  • $1,000,000 in 1959 had the same purchasing power as $7,360,000 in 2009.
  • $1,000,000 in 1960 had the same purchasing power as $7,240,000 in 2009.
So a million in 1955 is worth, approximately, a paltry $125,000 today?!?!!? No wonder you don't feel very rich.
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Old 04-03-2012, 07:47 PM   #6
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If you add the folks with income streams from pensions that represent what a million dollars can produce, the number of millionaires is about half the population.
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Old 04-03-2012, 08:22 PM   #7
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If you add the folks with income streams from pensions that represent what a million dollars can produce, the number of millionaires is about half the population.
+1. Imagine how the dynamics would change if someone with a $40,000 COLA pension was told they would be subject to the 'Buffet Rule"! You're a millionaire!

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Millionaires
Old 04-03-2012, 08:40 PM   #8
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Millionaires

According to census data ~4-6% of the population are millionaires meaning very few people ever achieve that level of wealth.

I'd rather be one that not be one.
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Old 04-03-2012, 09:16 PM   #9
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On a worldwide level, having $1M investible assets puts you at about the 99.5 percentile.
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Old 04-04-2012, 01:47 PM   #10
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Good thread. I agree $1M is not enough these days....but given that so many people have zero saved for retirement...it sure looks pretty good from their perspective!

Grass is always greener on the watered side of the lawn.
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Old 04-04-2012, 02:19 PM   #11
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+1. Imagine how the dynamics would change if someone with a $40,000 COLA pension was told they would be subject to the 'Buffet Rule"! You're a millionaire!

-ERD50
Yep. Many of those folks are from traditional "blue collar" jobs. It would definitely shock them to be lumped in with the rich, even though their retirement benefits actually exceed those possible through having a substantial nest egg (e.g., COLA'd pension and guaranteed healthcare).

The foregoing demonstrates the inherent unfairness of "means testing" for social security, healthcare, etc... Just because you have the means to afford something, doesn't mean you have the income to do so.
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Old 04-04-2012, 11:11 PM   #12
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...
So a million in 1955 is worth, approximately, a paltry $125,000 today?!?!!? No wonder you don't feel very rich.
i think you have that backwards. shouldn't it be "So a million in today's dollars was worth, approximately, a paltry $125,000 in 1955?!?!!?"

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The foregoing demonstrates the inherent unfairness of "means testing" for social security, healthcare, etc... Just because you have the means to afford something, doesn't mean you have the income to do so.
maybe i don't understand the point you are making. since (currently, with the partial exception of medicaid) means testing is a test of income, your point seems to be incorrect
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Old 04-05-2012, 11:28 AM   #13
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Yep. Many of those folks are from traditional "blue collar" jobs. It would definitely shock them to be lumped in with the rich, even though their retirement benefits actually exceed those possible through having a substantial nest egg (e.g., COLA'd pension and guaranteed healthcare).

The foregoing demonstrates the inherent unfairness of "means testing" for social security, healthcare, etc... Just because you have the means to afford something, doesn't mean you have the income to do so.
The pupose of means testing is mostly vote buying. They have no interest in fairness. They also would like everyone to need governemnt payments, so we all will be sufficiently docile.

Ha
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Old 04-05-2012, 11:31 PM   #14
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The pupose of means testing is mostly vote buying. They have no interest in fairness.
Very perceptive Ha. And very, very true.
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Old 04-06-2012, 03:20 PM   #15
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If you add the folks with income streams from pensions that represent what a million dollars can produce, the number of millionaires is about half the population.
I agree that pensions are still a large factor that is often overlooked. From my own perspective I sometimes would like to have the simplicity of a pension vs managing a 401k, IRA, Roth's etc. Of course I could buy an annuity to address this.
On the other hand there's the fact that wealth can possibly be passed on to the next generation which a pension can't accomplish in itself. Not that I have much choice at this stage of the game.
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Old 04-06-2012, 03:22 PM   #16
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I agree that pensions are still a large factor that is often overlooked. From my own perspective I sometimes would like to have the simplicity of a pension vs managing a 401k, IRA, Roth's etc. Of course I could buy an annuity to address this.
On the other hand there's the fact that wealth can possibly be passed on to the next generation which a pension can't accomplish in itself. Not that I have much choice at this stage of the game.
What really worries me is that at some point we could start seeing means-tested benefits based on assets where 401K balances and IRA balances are considered but not the imputed value of a pension. That wouldn't be right, IMO. Of course, there's also the question of whether or not one could avoid the means testing on personal investments if they "bought a pension" with an SPIA or something like that.
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Old 04-06-2012, 03:35 PM   #17
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I agree that pensions are still a large factor that is often overlooked. From my own perspective I sometimes would like to have the simplicity of a pension vs managing a 401k, IRA, Roth's etc. Of course I could buy an annuity to address this.
On the other hand there's the fact that wealth can possibly be passed on to the next generation which a pension can't accomplish in itself. Not that I have much choice at this stage of the game.
Having both a pension AND 401(k) is a nice ride. The pension definitely takes some of the pressure off of managing the 401(k) or other investment vehicle(s). If I didn't have a pension, I would strongly consider an annuity. Money coming in on a regular basis is quite soothing compared to watching investments ride the various constructive and destructive waves of investor whim, general economy, geo-political upheaval and surpluses/shortages of critical commodities. Of course, YMMV.
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Old 04-06-2012, 03:36 PM   #18
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i think you have that backwards. shouldn't it be "So a million in today's dollars was worth, approximately, a paltry $125,000 in 1955?!?!!?"
Yes, my point was that if one has a million dollars today, it was like having 'only' about $125,000 in the 1950's. That was still a lot of money back then but not enough to justify a TV show!
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Old 04-06-2012, 11:19 PM   #19
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Having both a pension AND 401(k) is a nice ride. The pension definitely takes some of the pressure off of managing the 401(k) or other investment vehicle(s). If I didn't have a pension, I would strongly consider an annuity. Money coming in on a regular basis is quite soothing compared to watching investments ride the various constructive and destructive waves of investor whim, general economy, geo-political upheaval and surpluses/shortages of critical commodities. Of course, YMMV.
My MegaCorp offers both, but the pension is a DC, not a DB. Upon separation, you can take it either as a lump sum or an annuity. I have not yet decided. I will definitely have an annuity of some sort...but probably only with about 15-20% of my portfolio...it would at least let me leave above the poverty level if something truly catastrophic happened.
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