Defining Rich in America

[candrew]

Interesting article in Rolling Stone:

Defining rich in America: What are the income cutoffs?

 

[MichaelB]

How about a snippet or summary so folks don't need to click on the link?

 

[athena53]

Best comment from a reader:

"Anyone who is wealthier than me is a sociopath who lies cheats and steals to get their ill-gotten gains. Anyone poorer than me is a lazy oaf who suckles at the teat of our bloated welfare state."

I gotta save that!

 

[candrew]

Excerpts:

"The most basic way to do it: look at the income distribution and pick a cutoff. According to the World Top Incomes Database, a household income of about $113,000 lands you at the top 10th, while $394,000 makes you a bona fide member of the 1 percent. You could reasonably argue that anybody who earns above those thresholds is, in a sense, rich—or at least makes a relatively uncommon amount of money.

That’s why it’s better to think about the question of who’s rich in terms of accumulated wealth instead of annual income (which in turn is a good argument for a wealth tax). Your net worth will bobble around with the stock market and home prices, but compared with income, it’s a relatively stable marker of how financially set you really are. It also takes into account things such as inheritance that won’t show up on your W-2 each tax season. Estimates tend to vary depending on the source of data, but according to the Russell Sage Foundation, the top 10 percent of American households have a net worth of at least $763,000; the top 5 percent hover around $1.3 million. It’s safe to say that if an American is worth more than three-quarters of a million dollars, she’s at least sort of rich."

 

[aim-high]

Estimates tend to vary depending on the source of data, but according to the Russell Sage Foundation, the top 10 percent of American households have a net worth of at least $763,000; the top 5 percent hover around $1.3 million. It’s safe to say that if an American is worth more than three-quarters of a million dollars, she’s at least sort of rich."

If you're really defining rich you've got to count pensions in that too. There are plenty of people with pensions that create more cash flow than a $1.3 million portfolio will spin-off.

 

[MichaelB]

Excerpts:

Thanks

 

[photoguy]

I think the author could have done a better job making his point clearer and finding supporting evidence. To me, it seems a little like link bait.

 

[dallas27]

Rich - persistent happiness, to live without worry or fear of not having a comfortable future


Sent from my iPhone using Early Retirement Forum

 

[ERD50]

"The most basic way to do it: look at the income distribution and pick a cutoff. According to the ... World Top Incomes Database, a household income of about $113,000 lands you at the top 10%, while $394,000 makes you a bona fide member of the 1 percent. You could reasonably argue that anybody who earns above those thresholds is, in a sense, rich—or at least makes a relatively uncommon amount of money.

That’s why it’s better to think about the question of who’s rich in terms of accumulated wealth instead of annual income (which in turn is a good argument for a wealth tax). ...

TRANSLATION: 'Hey, some of us ( the people this article is trying to attract) make around $113,000, and you sure can't pick on us - we ain't stinkin' rich! So we need another measurement - yeah, accumulated wealth sounds good - we don't have much of that, 'cause we spend it all on fancy cars, fancy vacations, fancy gym clubs, private schools, and the high COLA here. Go get that other guy/gal!'

Your net worth will bobble around with the stock market and home prices, but compared with income, it’s a relatively stable marker of how financially set you really are.

How can I put this eloquently? Let's see- - how about, hmmmm "Bull Stuffing!". I've had my net worth change more in one month than my annual income (when I was working even).

It also takes into account things such as inheritance ...

If you're really defining rich you've got to count pensions in that too. There are plenty of people with pensions that create more cash flow than a $1.3 million portfolio will spin-off.

No! That will hit too close to home for comfort for some of their constituents! Pay no attention to that fully COLA'd pension behind the curtain, or any other retirement benefits! Those people are not 'rich', they want to point to those other 'rich' people!

-ERD50

 

[steelyman]

I think you have two chances to put something eloquently.

 

[haha]

TRANSLATION: 'Hey, some of us ( the people this article is trying to attract) make around $113,000, and you sure can't pick on us - we ain't stinkin' rich! So we need another measurement - yeah, accumulated wealth sounds good - we don't have much of that, 'cause we spend it all on fancy cars, fancy vacations, fancy gym clubs, private schools, and the high COLA here. Go get that other guy/gal!'





How can I put this eloquently? Let's see- - how about, hmmmm "Bull Stuffing!". I've had my net worth change more in one month than my annual income (when I was working even).






No! That will hit too close to home for comfort for some of their constituents! Pay no attention to that fully COLA'd pension behind the curtain, or any other retirement benefits! Those people are not 'rich', they want to point to those other 'rich' people!

-ERD50

+1000.

 

[Car-Guy]

Excerpts:

" according to the Russell Sage Foundation, the top 10 percent of American households have a net worth of at least $763,000; the top 5 percent hover around $1.3 million. It’s safe to say that if an American is worth more than three-quarters of a million dollars, she’s at least sort of rich."

I'm very well above these numbers and I really don't feel sort of rich. Comfortable, but not rich.

 

[6miths]

If I were 33 with 1.3 million and a decent income, I'd feel pretty well off. At 53 with substantially more and little human capital, not nearly so much.

 

[dtbach]

To think that only 10% of American households have a net worth of $763,000 is scary. Heck I had that much by my mid 40's and I never made over $100,000.

Sure would be hard to retire to the good life on an SWR of 4% on that amount.

 

[athena53]

To think that only 10% of American households have a net worth of $763,000 is scary. Heck I had that much by my mid 40's and I never made over $100,000.

Sure would be hard to retire to the good life on an SWR of 4% on that amount.

I know- one if my HS classmates on FaceBook posted when she bought an IPad and and posted again with questions about her iPhone, but once referred to their "meager savings" when complaining about their out-of-pocket medical costs. She's a nurse, my age (61) and retired. Ummm, maybe she retired a little too early?

 

[ejman]

To think that only 10% of American households have a net worth of $763,000 is scary. Heck I had that much by my mid 40's and I never made over $100,000.

Sure would be hard to retire to the good life on an SWR of 4% on that amount.

Two midlevel SS benefits say $25k each (H+W)= $50 K + $25K from that NW and bingo the $75k that is supposed to be the gateway to happiness... easy

 

[Lucantes]

Am I actually supposed to care what other people have?
If I feel that I have enough for me and my family, well isn't that enough?

 

[Turboslacker]

Am I actually supposed to care what other people have?
If I feel that I have enough for me and my family, well isn't that enough?

Nope. It's all emotional not pragmatic. Therefore all that really makes one feel good is yourself relative to other people.


Sent from my iPad using Early Retirement Forum

 

[donheff]

+1 to ERD's comments. Although I still think we should have a reasonable inheritance tax (one that would effect me) - once we solve the pesky family farm thing.

 

[Andre1969]

To think that only 10% of American households have a net worth of $763,000 is scary. Heck I had that much by my mid 40's and I never made over $100,000.

Sure would be hard to retire to the good life on an SWR of 4% on that amount.

I was thinking the same thing. I just hit the $1M mark in investable assets last month, so I'm already in the top 10%? Just doesn't seem possible. Maybe I'm just selling myself short, but I'm figuring that heck, if I can do it this easily (not that it was always easy though), I'm sure plenty of others could as well. And if it only takes $1.3M to get into the top 5%? Well, I'm in striking distance of that, and could conceivably hit it in another couple years.

But, like ejman pointed out, have that be a couple, throw in Social security benefits, possibly a small pension here and there, and the picture is a little rosier.

Plus, I guess you have to consider that figure counts ALL households. It's a safe bet that very, very few earners in their 20's, 30's, and even 40's have much, if anything saved up. A lot of those people probably even have negative net worths, as they're trying to pay off student debt, underwater mortgages, etc. My guess is that it would be weighted more towards people in their 50's and 60's, but by the time you get into the 70's and beyond, you have more people who get pensions, so they never had to save up as much. Or, for those who did save up, they're starting to spend it down.

 

[Amethyst]

I think the main reason it's hard to feel "rich" or to believe that $1 Million = rich, is that people, for the most part, tend to live in the best place they can afford. That means that if you have $1M, everyone working and living around you has that much, or more. You see all the consumption, vacations, etc. going on around you, and feel like you're barely keeping up.

Traveling around the country opened my eyes to how very little most people in the U.S. actually have. They live in vast areas filled with others who also have very little, and only really mingle with the 5% at the Motor Vehicle Administration or the box store. No doubt this contributes to the perception gap between the populace and the people they elect to represent them. Once the representative gets into the big-time, the big-time gets to feel like the norm.

Amethyst

 

[MikeWillRetire]

I think the main reason it's hard to feel "rich" or to believe that $1 Million = rich, is that people, for the most part, tend to live in the best place they can afford. That means that if you have $1M, everyone working and living around you has that much, or more. You see all the consumption, vacations, etc. going on around you, and feel like you're barely keeping up.

Traveling around the country opened my eyes to how very little most people in the U.S. actually have. They live in vast areas filled with others who also have very little, and only really mingle with the 5% at the Motor Vehicle Administration or the box store. No doubt this contributes to the perception gap between the populace and the people they elect to represent them. Once the representative gets into the big-time, the big-time gets to feel like the norm.

Amethyst

Spot on. Most of us don't see the lower class on a day to day basis, so we don't feel as well off as we are.

 

[jkern]

It's not practical to define "Rich" by a particular income or net worth number without taking into account age, family status and regional location. A person making $250K who is divorced with four children living in San Francisco (ex-spouse didn't work) will be POOR!

 

[Bestwifeever]

I was thinking the same thing. I just hit the $1M mark in investable assets last month, so I'm already in the top 10%? Just doesn't seem possible. Maybe I'm just selling myself short, but I'm figuring that heck, if I can do it this easily (not that it was always easy though), I'm sure plenty of others could as well. And if it only takes $1.3M to get into the top 5%? Well, I'm in striking distance of that, and could conceivably hit it in another couple years.
....

Throw your real estate equity into your net worth, not just investable assets, as the Russell Sage foundation does, and you are probably already there!

 

[MRG]

Spot on. Most of us don't see the lower class on a day to day basis, so we don't feel as well off as we are.

Last time I replaced my pickup, they didn't deduct my trade in from my sales tax. I'm at the DMV asking how to straighten it out, the clerk says oh just fill out this form. Then she literally backed away from the counter as she explained it would be 4-5 weeks till I received ~$800 refund.

I was not upset, but evidently prior experiences left her with the notion folks go ballistic in these situations. Thanked her, smiled, said have a great day. Not what she was expecting.

Too many people live on the edge of disaster.