Comfortable or Wealthy?

[Tekward]

New survey updates the numbers: "To be financially comfortable in America today requires an average of $1.4 million, up from $1.2 million a year ago, according to the survey. The net worth needed to be “wealthy”? That’s an average $2.4 million, the same as last year in the online survey of 1,000 Americans between age 21 and 75."

https://www.bloomberg.com/news/arti...ch-money-do-you-need-to-be-wealthy-in-america

But this was the best line: Joe Duran, chief executive officer of money manager United Capital, said he likes to think of “wealth.” After building and selling his first company, “I realized that money is nothing more than fuel,” he said. “It is a resource that lets you have choices, but if you don’t think about what you are working for, you will die rich but not live rich.”

 

[TwoByFour]

Not sure what your point is, but "wealthy" and "comfortable" are just labels that don't mean a whole lot. I don't know where I fall on the wealthy/comfortable spectrum, but I do know I am very happy, and to me that is all that matters.

 

[FlaGator]

Wonder how many people who consider themselves "comfortable" would be seen as "wealthy" by outsiders, irrespective of the thresholds in that article?

No good way to know. My guess it's >75%

 

[brucethebroker]

New survey updates the numbers: "To be financially comfortable in America today requires an average of $1.4 million, up from $1.2 million a year ago, according to the survey. The net worth needed to be “wealthy”? That’s an average $2.4 million, the same as last year in the online survey of 1,000 Americans between age 21 and 75."

More HCOL, "rule of thumb", big city nonsense. Is there a definition of 1.4M? Investable assets vs. net worth, for example?

In many parts of the USA, 2 SS checks, paid off house and car(s), no debt and $600,000 of investable assets will produce a comfortable life style. Total net worth would be well under $1M. 1.4M of investable assets, using the same scenario, would be princely.

These writers need to take a month long trip, by car, across the US-avoiding any city of more than 1M people. It might just add common sense to their articles.

 

[marko]

This is a poll of what other people consider wealthy, right?

Lots of people out there who think anyone with a thousand bucks is 'rich'.

 

[Amethyst]

I surmise that such articles, in fact most articles, are aimed at people who live in high-employment "bubbles" (like the one I live in), are probably fairly comfortable, and have spare time to read such articles.

I only need to drive 50 miles in any direction to see where $14,000 would be considered a fortune, let alone $1.4M.

 

[joeea]

More HCOL, "rule of thumb", big city nonsense. Is there a definition of 1.4M? Investable assets vs. net worth, for example?

"To be financially comfortable in America today requires an average of $1.4 million, up from $1.2 million a year ago, according to the survey. The net worth needed to be “wealthy”? That’s an average $2.4 million, the same as last year in the online survey of 1,000 Americans between age 21 and 75."

Net worth.

Clearly the definition is meant to apply to both the $1.4M and $2.4M amounts.

 

[Maenad]

More HCOL, "rule of thumb", big city nonsense. Is there a definition of 1.4M? Investable assets vs. net worth, for example?

I don't think you even need to add the qualifiers of HCOL and big city - it's just nonsense. The people they asked certainly haven't thought about investable assets vs. net worth, it's just the adult version of "when I grow up, I want to have a million dollars!". Most people don't think about money all that much, other than whether they can pay their bills this month.

There was a philosophical article making the rounds earlier this fall that stated, "Most people don't want to have a million dollars, they want to spend a million dollars". Those are the people interviewed here.

 

[marko]

I don't think you even need to add the qualifiers of HCOL and big city - it's just nonsense. The people they asked certainly haven't thought about investable assets vs. net worth, it's just the adult version of "when I grow up, I want to have a million dollars!". Most people don't think about money all that much, other than whether they can pay their bills this month.

There was a philosophical article making the rounds earlier this fall that stated, "Most people don't want to have a million dollars, they want to spend a million dollars". Those are the people interviewed here.

+1 Everything you just said. Bold mine.

 

[gauss]

I don't think you even need to add the qualifiers of HCOL and big city - it's just nonsense. The people they asked certainly haven't thought about investable assets vs. net worth, it's just the adult version of "when I grow up, I want to have a million dollars!". Most people don't think about money all that much, other than whether they can pay their bills this month.
...
Those are the people interviewed here.

+1

That was also my first thought. The people responsding to the questionairre likely are not as sophisticated financially to split the hairs that we do here http://www.early-retirement.org/forums/images/smilies/wink.gif

 

[COcheesehead]

If you are on the outside of either of those categories, both look nice. If you are in the middle of either, it just feels normal.

 

[marko]

+1

That was also my first thought. The people responsding to the questionairre likely are not as sophisticated financially to split the hairs that we do here http://www.early-retirement.org/forums/images/smilies/wink.gif

"Hey, he lives in that big, big house and drives a luxury car. Dah?! He's obviously very rich!" Why can't you see that?

 

[Milton]

"Wealthy" and "comfortable" are just labels that don't mean a whole lot.

Sure. It's all relative.

FWIW, such labels were addressed a couple of time in Lee Eisenberg's The Number: a completely different way to think about the rest of your life (add ~25% to the following figures to allow for cumulative inflation since the 2006 publication date).

Page 8:

'Rich' (is) a hundred million. Rich is having all the houses and a plane, with no need for a job. You owe nothing. That's rich.

'Well-off' is fifteen million, without debt and no further expenses on kids, or old parents, or friends who might run into trouble.

'Comfortable' is below that. Six million. That's with a little bit of housing debt but no other major obligations. Or three million with no debt at all. But three million isn't enough to withstand a big hit, like loss of a job, (or) a big health problem.

Page 234:

'Comfortable': lives in one place, eats/travels modestly though better than most, etc. Capital of $1-2 million, yielding $50,000-$100,000/year;

'Comfortable+': likes occasional upgrade, mid-priced country club, maybe small second home, etc. Capital of $2-5 million, yielding $175,000-$250,000/year;

'Kind of Rich': likes finer things, eats/drinks/travels well, gives $ away, picks up checks, couple of nice houses, etc. Capital of $7-10 million, yielding $350,000-$500,000/year;

'Rich': spends weeks/months abroad, exclusive gated golf communities, place for every season, fractional jets, sits on boards, etc. Capital of >$20 million, yielding >$1 million/year.

 

[pj.mask]

More HCOL, "rule of thumb", big city nonsense. Is there a definition of 1.4M? Investable assets vs. net worth, for example?

In many parts of the USA, 2 SS checks, paid off house and car(s), no debt and $600,000 of investable assets will produce a comfortable life style. Total net worth would be well under $1M. 1.4M of investable assets, using the same scenario, would be princely.

These writers need to take a month long trip, by car, across the US-avoiding any city of more than 1M people. It might just add common sense to their articles.

I think ~63% of the US population live in cities. One can always live for less in less desirable locations (Latin America, Thailand, India) but a critical factor is access to quality medical care.

My mom wants to live out in the country but she sure doesn’t like the 1.5 hour one way drive to see (good quality) doctors. I imagine if she had chronic issues, or as she ages and needs more care combined with limited ability or comfort driving herself this will become more critical.
Most of our family lives in the country and about 75% of them have had major medical issues (some close to death and amputations) as a result of their small town doctors but thankfully recovered after driving (some of them 6 hours) to the big cities for medical care.

YMMV

 

[happy2bretired]

These writers need to take a month long trip, by car, across the US-avoiding any city of more than 1M people. It might just add common sense to their articles.

I think so too. Oh, and please get off the interstate for parts of that trip too. I love visiting cities for this very reason. I have to get out of my bubble to see how others live once in awhile. It helps me open my mind and explore other perspectives.

 

[Bigdawg]

Sure. It's all relative.

FWIW, such labels were addressed a couple of time in Lee Eisenberg's The Number: a completely different way to think about the rest of your life (add ~25% to the following figures to allow for cumulative inflation since the 2006 publication date).

Page 8:

Page 234:

I'm page 234 comfortable but NOT page 8 comfortable.

 

[Andre1969]

Wonder how many people who consider themselves "comfortable" would be seen as "wealthy" by outsiders, irrespective of the thresholds in that article?

No good way to know. My guess it's >75%

My guess is, probably a lot. One thing I've noticed about myself, is that as my position in life improves, it might feel great for a moment, but then, once I get used to it, it seems like no great shakes. For instance, I remember one morning, the car had a flat tire, so I had to take the truck to work, and I was a bit annoyed. But, to someone who only had one vehicle, or NO vehicle at all, they'd wonder what I was whining about!

 

[GravitySucks]

Labels are important
I'm happy that I now fall into the eccentric category instead of the crazy category.
Eccentric is just Crazy with the resources to follow through.

 

[Sojourner]

Sure. It's all relative.

FWIW, such labels were addressed a couple of time in Lee Eisenberg's The Number: a completely different way to think about the rest of your life (add ~25% to the following figures to allow for cumulative inflation since the 2006 publication date).

I'll have to read this book to find out where these (seemingly) very subjective labels come from. Someone passively earning $250,000/year from their investments is only "Comfortable+"? That's over $20,000 per month. I'd say that level of wealth and income is at least "Kind of rich" -- unless it's for a family of 4 with two college-age kids in Manhattan. For the vast majority of the rest of us, however, it's at least borderline rich... IMHO.

 

[Andre1969]

I'll have to read this book to find out where these (seemingly) very subjective labels come from. Someone passively earning $250,000/year from their investments is only "Comfortable+"? That's over $20,000 per month. I'd say that level of wealth and income is at least "Kind of rich" -- unless it's for a family of 4 with two college-age kids in Manhattan. For the vast majority of the rest of us, however, it's at least borderline rich... IMHO.

Agreed. I can't even wrap my mind around the idea of what it would be like to have $20,000 reliably coming in every month. Of course, you have to consider taxes and such, but if it's all qualified dividends and long term capital gains, that's in the 15% nominal bracket. Throw in state/local taxes, and I'd imagine you're still taking home around $15K monthly, even in some of the more high-tax areas.

 

[gauss]

"Hey, he lives in that big, big house and drives a luxury car. Dah?! He's obviously very rich!" Why can't you see that?

"Obviously"

Actually, I dug into the Charles Schwab survey and their press releases. I found that 3/5 of the respondents say they live paycheck to paycheck.

Probably good at putting square pegs into round holes too.

 

[Bir48die]

We are a society and people that like to measure things. Especially one to another. Im in the camp of just knowing that I should be able to survive until my untimely death comfortably.

 

[jazz4cash]

Quite a lot to dig into here beyond the comfortable vs wealthy labels. Good job by Schwab, I think. Thanks for posting.

 

[kgtest]

There was a philosophical article making the rounds earlier this fall that stated, "Most people don't want to have a million dollars, they want to spend a million dollars". Those are the people interviewed here.

So true! I am from St Paul, hello neighbor.

 

[footenote]

+1 for LCOL + SS + paid-for-house strategy, which I am living here in LCOL Central Minnesota resort country.

[ at kgtest and Maenad]