Is Everyone a Multi-Millionaire?

[Senator]

I realize this board is very much a biased sample. We are all mostly looking towards retirement or are already retired; many are looking towards early retirement, which might bias it even more. We should be mostly in our prime earning years or at least close to our high point in our NW curve. A million is not what it used to be either. So more of us should be millionaires that the average population.

However, when I read some of the post here, it appears everyone is a millionaire, or even a multi-millionaire. Some people live in places where a megacorp $200K+ job, plus bonuses, are common, I can see someone being a millionaire with that salary. Yet, demographics say only ~7% of the US households has a net worth of over $1M. And average retirement assets, for someone near retirement age, is significantly less than even $400K.

From someone from Minnesota, who has never made much more than $100K, accumulating a million is a major accomplishment. Especially being single. There is a lot of sweat, saving, and long hours making the pile that large. I worked many different side gigs making an extra few bucks, and took a bunch of risks. And I got lucky in a few things. I can’t see too many people doing what I did, yet everyone seems to have not just one million, but five million.

So it makes me wonder… Are we all really the top 7% in wealth? Are the statistics wrong? Or is being a millionaire very common? Or maybe it’s this group that is almost all in the top 7% of wealth?

 

[LOL!]

Yep, almost everyone I meet is a multimillionaire and that's not counting the value of their homes. It just takes a little time. Anyways, it's not something to dwell on.

 

[2B]

The simple answer is yes, many people here have net worths over $1MM. I doubt the over $5MM population is very large even here. $1MM net worth may be the top 7% but it's a long way from being "rich." Based on FireCalc, a millionaire can only withdrawl $40,000/yr over a 30 yr time frame. Some don't have serious pensions or retiree medical care.

A retired government worker with no savings frequently has more disposable income than a millionaire.

Read the Millionaire Next Door and you'll see that behavior and not income is the greatest factor in achieving wealth.

I work with lots of people making safely over $100K and some don't have anything saved. Some are millionaires several times over. Personally, I have enough (I hope).

 

[eta2020]

If you had inflation adjusted pension of more then 50k at 55 or more then 40k at 40 you would also be millionaire.

So retired O4/O5 at age 44 with pension backed up by Federal Government is in a way millionaire even if he/she has empty bank account.

 

[pb4uski]

It would be a lot easier to tell if everyone just had a sign with their number like in those ING commercials.

 

[REWahoo]

Senator, the answer is no: Early Retirement & Financial Independence Community - Net Worth Poll

Looks like ~50% have less than $2M, the minimum amount necessary to reach "multi" status.

 

[Andre1969]

One statistic I read was that if you have at least $1M in investable assets (which does not include equity in your home(s), cars, yachts, private jets, etc), then you're in the top 8% of households in this country.

And, it would stand to reason, that people who are retired, or getting close to it, would be in that top 8%, 7%, or whatever, since they've focused on being able to retire. So you're probably going to run into more millionaires on this forum than in the general public, since this group isn't a representative sample of the masses. And, as 2B mentioned, don't forget people who have pensions. Most of the the older generations in my family ended up getting pensions, either from the government, the railroad, the aerospace industry, grocery store industry, etc. So there are a lot of people who are comfortably retired, but are nowhere near millionaires. Unless you were to count the future value of their pension, I guess.

I don't know anybody, personally, who has $1M in investable assets. I know a few people who might look rich, but they also have high paying jobs, and most of their money goes into maintaining that rich-looking lifestyle. Of course, there's always the chance that one of my friends/family members could have that much socked away and just not telling, but of the people who have told me what they have (I don't go asking, but we talk about investing, saving, retiring, and it just happens to come up), and none of them are anywhere near it.

 

[Live Free]

I noticed too that this board seems skewed towards those with a higher than average net worth as well as a lot of IT or engineering folks. I suppose the reason so many are "rich" (however you define that) is because most on the board have a goal to retire early, which requires serious saving.

If I include my home in my net worth calculation, I am close to $1M, but for sure far behind many of this board. And I'm not in IT or engineering and my salary is well below $100K.

All of that is A-OK. I've learned a lot so far from others here.

 

[FANOFJESUS]

Well I can say I am not. But I think forums like this attract people like that which is good we can learn something from them.

 

[MichaelB]

What about the value of pensions and Social Security?

 

[eta2020]

Senator, the answer is no: Early Retirement & Financial Independence Community - Net Worth Poll

Looks like ~50% have less than $2M, the minimum amount necessary to reach "multi" status.

More interesting poll would ask "what are your INVESTABLE assets only".

Net worth while counting house, vacation house, cars etc etc is not very meaningful as far as FI goes.

maybe we need one

 

[Andre1969]

What about the value of pensions and Social Security?

What is the proper way to calculate the value of SS or a pension, anyway? Take the annual amount and multiply by 25?

If I retire at 50, which is my realistic goal (my fantasy is much sooner), I'd stand to get around $15K per year in SS starting at 62. So multiplying that by 25 would give me $375K. So should I add $375k to my net worth?

 

[Senator]

I know a few people who might look rich..

LOL, if you know me, you would not mistake me for anything other than someone that is homeless... Once I RE, I might start to look like one of the Duck Dynasty klan. At least going to work every day forces me to look (somewhat) respectable.

What about the value of pensions and Social Security?

Pensions and Social Security definitely have a net prevent value, and it may well be over $1M. But I see so many posts with $1M+ in some retirement account, or home equity, etc.

The poll was interesting. Over 70% of the people have $1M+, and about 35% have $2M+

This group is definitley well above average, according to the research on financial status of retirement accounts.

 

[Fermion]

We are quitting the rat race at $1.4m to $1.5m because that level is enough to provide us with the income we need to retire in our 40s, but we are saving over $120,000 per year without counting market returns so easily could be in the multi status by age 50. Could also get the cancer at age 52.

 

[martyb]

It would take more than 1.5 million in current assets to generate the yearly amount of my 2 COLA pensions, and they are COLA'd. However, I only have 400k in investable assets.

 

[Andre1969]

I think I read somewhere that the average household has something like $121,000 in net worth. So $1M+ in net worth, let alone investable assets, is quite an accomplishment, and not something you see every day.

My investable assets came close to $1M earlier in the month. I think i hit something like $985-990K around July 3. But the recent market blips have taken a bit of that away. But to look at me, you wouldn't notice it either. I live in a 98 year old house that needs a ton of work. The landscaping is nothing fancy. The dusty '79 Chrysler and rusting '85 Chevy truck in the driveway don't exactly ooze class. I cut my own hair, and don't always do the best job. And today I'm wearing jeans that were a Christmas gift, 8-year old cowboy boots, and a hand-me-down short-sleeve button up shirt. I either bring my own lunch to work, or go home, as it's only 2.5 miles.

So yeah, I don't exactly look or act the part...

 

[jim584672]

I went to a popular annuity calculator on the web and a male at 62yo today could buy a 15k/year annuity for about 235k today. Since you have many years to go to get to 62 this amount should be discounted for net present value from your age now to age 62.

I am puzzling about the 2 mil plus group, why they didn't retire sooner?? I guess they have a high expense life style or something. Since I am in the "frugal" category 2 mill plus seems gigantic.

A 50yo male with 2 million could buy an immediate annuity and get $108,720 a year until they die. Who needs 108k/year for a retirement?

 

[eta2020]

I went to a popular annuity calculator on the web and a male at 62yo today could buy a 15k/year annuity for about 235k today. Since you have many years to go to get to 62 this amount should be discounted for net present value from your age now to age 62.

I am puzzling about the 2 mil plus group, why they didn't retire sooner?? I guess they have a high expense life style or something. Since I am in the "frugal" category 2 mill plus seems gigantic.

A 50yo male with 2 million could buy an immediate annuity and get $108,720 a year until they die. Who needs 108k/year for a retirement?

But try to buy that annuity at 40 and make it COLA. Such annuity would cost arm and leg. While if you buy it at 80 it will be a bargain.

That is why pension at age below 50 is extremely valuable thing.

BTW I don't count SSN in any kind of NW computation. But if I had a pension I would count it.

 

[LOL!]

I am puzzling about the 2 mil plus group, why they didn't retire sooner?? I guess they have a high expense life style or something. Since I am in the "frugal" category 2 mill plus seems gigantic.

Maybe they had cushy high-paying jobs that they enjoyed immensely? There are quite a lot of jobs that fit these categories.

This forum seems to attract folks who hate their jobs for some reason.

Furthermore, suppose someone is in a high-paying job that everyone else would hate to do. But the job needs to be done, so the employer has to keep raising compensation or that employee would retire. Did you ever wonder why CEOs or NBA coaches make the big bucks? It's because no one would do a good job at it without the high pay. They have enough, so they would simply walk away unless paid extremely well to keep working.

 

[Senator]

This forum seems to attract folks who hate their jobs for some reason.

The folks who love their jobs post on "late-retirement.org"

 

[ProGolferWannabe]

I am puzzling about the 2 mil plus group, why they didn't retire sooner?? I guess they have a high expense life style or something. Since I am in the "frugal" category 2 mill plus seems gigantic.

For us, a good portion of our net worth is "tied up" in tax deferred investments vehicles---in our case mostly 401K's, so our access is somewhat limited until we hit 59. I know we could access money earlier via 72t distributions, but, I have never really looked into that as an option. We also live in a rather high cost of living area (especially with regard to real estate and property taxes)---if you saw our home, I don't think you would call it a shack, but I doubt you would call it much more than modest either. Unless we moved some place less expensive (and we could but we have personal reasons for staying), housing will continue to consume a pretty decent chunk of change.

 

[haha]

I am puzzling about the 2 mil plus group, why they didn't retire sooner?? I guess they have a high expense life style or something. Since I am in the "frugal" category 2 mill plus seems gigantic.

A 50yo male with 2 million could buy an immediate annuity and get $108,720 a year until they die. Who needs 108k/year for a retirement?

Perhaps this is true. But few people with the sense to become 2x millionaires would plunk it down on an annuity.

Anyway, opinions would vary about the suitability of $ 108,000 gross income. It would be a step up for me, but a step down for many others.

Ha

 

[Andre1969]

I am puzzling about the 2 mil plus group, why they didn't retire sooner?? I guess they have a high expense life style or something. Since I am in the "frugal" category 2 mill plus seems gigantic.

Well, I used to think that if I had $1M, plus a fully-paid off house, I'd be set for life. But I made that estimate back around 1999 or so. Thanks to inflation, that $1M would have to be more like $1.4M today.

So while I'm closing in on $1M, inflation has taken its toll a bit. Plus, I don't have a paid off house...I owe about $156K. I'm also only 44, so if I retired now, there's a good chance I could live another 50 years, even more. So, that's why I'm starting to think $2M might be a better goal.

Now, if I was older, closer to getting SS, and not having as many remaining years to fund, I might be more comfortable with $1M.

 

[NW-Bound]

No, not $5M here, but significantly more than $1M. And the two homes account for only around 20% of total net worth. They are still a drain for operating costs and maintenance. Living in an RV would be a lot cheaper, and more "mobile and hostile" like Unclemick has always said, leaving more money for the joy of counting it.

Oh, and I loved my work too, building some hardware and writing firmware, and doing analysis of electromechanical systems. Would still be working if I did not have problem with the megacorp environment that I worked in.

 

[Meadbh]

My investable assets came close to $1M earlier in the month. I think i hit something like $985-990K around July 3. But the recent market blips have taken a bit of that away. But to look at me, you wouldn't notice it either. I live in a 98 year old house that needs a ton of work. The landscaping is nothing fancy. The dusty '79 Chrysler and rusting '85 Chevy truck in the driveway don't exactly ooze class. I cut my own hair, and don't always do the best job. And today I'm wearing jeans that were a Christmas gift, 8-year old cowboy boots, and a hand-me-down short-sleeve button up shirt. I either bring my own lunch to work, or go home, as it's only 2.5 miles.

So yeah, I don't exactly look or act the part...

Actually you do look the part......of the Millionaire Next Door.

The Millionaire Next Door - Wikipedia, the free encyclopedia