LA Times: Number of millionaires in US reaches a new high

[dvalley]

Number of millionaires in U.S. reaches a new high - latimes.com

I too felt most people have more money these days than I remember in the past but thought it was may be because I hang out on sites like ER and I live in SoCal? I don't see any old cars on the roads anymore. My upper middle class neighborhood has mostly BMWs/Mercedes and every house has at least 2 cars plus toys (RVs, dirt bikes, SeaDoos etc). The lines at Starbucks are longer than I ever remember. Should I be worried that the trend will make inflation higher and my $1M target for ER won't suffice? Or are the two unrelated? Or is this nothing new because every generation has had similar trends

[pb4uski]

I'm not sure that the data is very relevant since it isn't inflation adjusted. Since $1m in 2013 is worth a lot less than $1m in 1997 it isn't surprising there are more millionaires today than in 1997.

[Andre1969]

Yep, before even pulling up the article, my first thought was inflation. FWIW, having $1M just in 2007, at the peak just before the crash, is like having $1.123M in 2013. And having $1M is 2013 is like having $890K in 2007.

I started getting really serious about investing in 1998, and at that time, I put my goal at $1M. But, adjusting for inflation, that's more like $1.429M today.

So, needless to say, as my investable assets approach $1M (I prefer to keep value that's tied up in the house, cars, etc separate), it doesn't seem like that big of a whoop anymore.

[FIREd]

Woohoo, I belong to a club with nearly 10 million members in the US alone! It doesn't sound like much of an accomplishment all of a sudden. One of the reasons I keep investing more aggressively than I probably need to is because I see a lot of people getting richer and I don't want to be left behind.

[REWahoo]

I changed your quote to fit my situation:

"One of the reasons I keep investing more less aggressively than I probably need to is because I see a lot of people getting richer and I don't want to be left lose my behind."

[dvalley]

That's exactly what I'm alluding to. Those of us with the goal of reaching $1m for ER in the next 10 years (even at 4% SWR) might need to recalculate. I feel with the number of people reaching the $1M+ mark will only make inflation higher. The thing to also keep in mind is that the data consists of those with "at least" $1M (without counting home values), so many of these folks could easily have $5M+.

Just when I think I have a plan to get to my ER goal it nudges itself out of my reach

[FIREd]

Quote:

Originally Posted by REWahoo I changed your quote to fit my situation: "One of the reasons I keep investing more less aggressively than I probably need to is because I see a lot of people getting richer and I don't want to be left lose my behind."

It's a valid argument. When I lived in the south, I felt the same way. I felt well off with no pressure to keep up. But California is a different world all together. If a BMW is not trying to run me over at a crosswalk, a Tesla might. Widespread wealth is putting pressure on prices from real estate to groceries to healthcare. I can't afford to lose too much ground or I'll be squeezed out of here.

[Andre1969]

Quote:

Originally Posted by dvalley That's exactly what I'm alluding to. Those of us with the goal of reaching $1m for ER in the next 10 years (even at 4% SWR) might need to recalculate.

Oh, I definitely plan to recalculate as time goes on. Focusing on the income side of things, I had always figured that I'd be happy living on about $40K per year, adjusting for inflation. And FireCalc says I have a 100% chance of hitting that in two years when I turn 46. However, that also takes into account my SS benefit at 62, plus a small non-cola'ed pension I get at 65. Both of those could be reduced, who knows? And, I'm starting to see more and more that $40K per year doesn't go as far as it used to.

When I do hit $1M, which could easily happen this year or next with even moderate growth, about the most drastic thing I'll probably do is post it on our "Celebrate Your Milestones" forum. But I won't be pulling the plug on w*rk, most likely. Maybe when i hit that $1.427M, I'll think about it! Depending on what it's worth at the time, inflation-adjusted.

[REWahoo]

Quote:

Originally Posted by FIREd When I lived in the south, I felt the same way. I felt well off with no pressure to keep up. But California is a different world all together. If a BMW is not trying to run me over at a crosswalk, a Tesla might. Widespread wealth is putting pressure on prices from real estate to groceries to healthcare. I can't afford to lose too much ground or I'll be squeezed out of here.

My four letter response: move

[38Chevy454]

While the $1M nestegg goal is held by many, what really matters is: a) what other income you may have (pensions, SS, etc), b) what your expenses are, and c) your area COL. In high cost locales, without additional monthly income, $1M is probably way too low. But a lower cost locale, it may be sufficient.

Your spending and monthly expenses are really the key. Keep expenses low and you can potentially get by with $1M nestegg. A bit of extra help from pension or other income makes a big difference, that is less money needed from the nestegg.

I agree with the others that the non-inflation adjusted number of millionaires is not an accurate number. It is still a nice goal, but it is probably short for many people to have the quality of life and lifestyle they wish to have in retirement.

[FIREd]

Quote:

Originally Posted by REWahoo My four letter response: move

In due time.

[dvalley]

Quote:

Originally Posted by Andre1969 Oh, I definitely plan to recalculate as time goes on. Focusing on the income side of things, I had always figured that I'd be happy living on about $40K per year, adjusting for inflation.

Me too ($40k in today's dollars) - provided my house is paid off.

Quote:

But I won't be pulling the plug on w*rk, most likely. Maybe when i hit that $1.427M, I'll think about it! Depending on what it's worth at the time, inflation-adjusted.

I'm with you there too, $1.5M ought to do it. I only need to cover about 22-25years (I'm 39, wanting to retire by 50). So I figure if I can fund age 50-72 on my own and then rely on SS I'll be OK. Anything more is just icing. Problem is I'm way behind and need to make up a lot of ground I lost in my divorce.

[pb4uski]

Quote:

Originally Posted by FIREd ....But California is a different world all together. If a BMW is not trying to run me over at a crosswalk, a Tesla might. Widespread wealth is putting pressure on prices from real estate to groceries to healthcare. I can't afford to lose too much ground or I'll be squeezed out of here.

Quote:

Originally Posted by REWahoo My four letter response: move

I was having a similar thought. Being squeezed out of California might be a blessing in disguise (and I happen to like California - I just would not want to live and pay taxes there).

[dvalley]

I've heard the CA arguments before but honestly when I sit down with a clear head I don't see it as being outrageously expensive especially for retirees. For e.g. if you own your home all you would pay is the RE taxes which are far less than many other states. My RE taxes are only $4500 per year. A paid for house worth at least $500k is good to have in retirement I would imagine. HELOC on it or the option of selling and moving to a cheaper state later if needed is a great plus. Food is food, I can't imagine a BigMac costing less elsewhere than here. Sure gas is a bit more but in retirement you're probably not driving all that much. Non tangible things, the weather is a huge plus but the traffic is a huge minus at least in the big cities. So what am I missing?

[Major Tom]

Quote:

Originally Posted by FIREd It's a valid argument. When I lived in the south, I felt the same way. I felt well off with no pressure to keep up. But California is a different world all together. If a BMW is not trying to run me over at a crosswalk, a Tesla might. Widespread wealth is putting pressure on prices from real estate to groceries to healthcare. I can't afford to lose too much ground or I'll be squeezed out of here.

On the other hand, you don't need to own things in order have good experiences. You can let others own the nice shiny expensive things and still have the pleasure of looking at them, while they take on the responsibility of owning them.

However, there's not much that can be done about the high cost of housing, unless you were lucky enough to have bought a long time ago - or you're very creative and sociable, and don't mind living with a lot of people.

[Amethyst]

A lot of my peers are coming into inheritances as they prepare to retire. Even if they weren't already millionaires, they soon will be.

Amethyst

[Miranda]

I remember being a kid in the seventies when the term millionaire seem to imply a living large style of financial independence. At the moment I think you could still be financially independent, with no debt and frugal lifestyle. I wonder when that will no longer be the case and the term "millionaire" will hold no magic?

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[Major Tom]

Quote:

Originally Posted by Miranda I remember being a kid in the seventies when the term millionaire seem to imply a living large style of financial independence. At the moment I think you could still be financially independent, with no debt and frugal lifestyle. I wonder when that will no longer be the case and the term "millionaire" will hold no magic?

Certainly, a million is already worth a lot less than it was when Cole Porter wrote his song for "High Society in 1956. According to the CPI Inflation Calculator, you'd need $8.6M to have the same buying power today. In another 50 years or so, a million won't exactly be chump change, but it won't even be an amount that anyone in the developed world could consider retiring on - not even Jacob!

[Options]

Quote:

Originally Posted by dvalley Number of millionaires in U.S. reaches a new high - latimes.com I too felt most people have more money these days than I remember in the past but thought it was may be because I hang out on sites like ER and I live in SoCal? I don't see any old cars on the roads anymore. My upper middle class neighborhood has mostly BMWs/Mercedes and every house has at least 2 cars plus toys (RVs, dirt bikes, SeaDoos etc). The lines at Starbucks are longer than I ever remember. Should I be worried that the trend will make inflation higher and my $1M target for ER won't suffice? Or are the two unrelated? Or is this nothing new because every generation has had similar trends

If you live in CA, particularly in the coastal cities, you live in a different world than the rest of the country. I'm sure you're aware of the bifurcation of the CA economy, where SoCal is no different than NorCal. Where I live (but not much longer), it's all the Bentleys, Hummer stretch limos, etc. "Upscale" bars and restaurants always full, huge new "upscale" living projects going up, the very latest trendy clothes that the rest of the world hasn't even caught on to yet, Paparrazzi chasing "stars" out with their kids, ad nauseum. The scene is surreal. Then you read the 2014 OECD report "Society at a Glance 2014" and see how badly the majority of the world hasn't recovered from the Great Recession. It provides some real perspective.

Society at a Glance 2014 - Statistics - OECD iLibrary

[robnplunder]

In Bay Area, by definition, if one owns a detached house, most likely the person is a millionaire.

US population is increasing every year. So does inflation. More people, more inflation lead to more millionaires. Not so surprising.

Read it somewhere that when "millionaire" word was first coined, it was worth $4M in today's dollar.