Top One Percent? Half a Percent? Tenth of a Percent?

[Dawg52]

I'm nowhere near either $429,000 in income, or $8.4 million net worth.

But I feel rich in that I have what I need. Honestly, life is awfully good with a whole lot less than that.

+1. Although I wouldn't mind having $8.4 million. I imagine my happy meter would go up a bit.

 

[MichaelB]

We’ve had this discussion before, more than once IIRC.

Everyone would like a bit more money, and all other things being equal, it might make life a bit easier. All other things aren’t equal, however, and money doesn’t fall from the sky. More money means either sacrificing more earlier in life or retiring later. That’s one facet of the “happiness trade-off”. Does more money mean more happiness? It depends on what we have to do to get it, and it seems that most of us have found that point where the marginal value of more money isn’t enough to keep our noses to the grindstone.

 

[txtig]

It's not to get bigger houses, or any stinkin' fancy car. It's so that I can pay for business class airfare.

+1. I've made many, many overseas trips to Europe and Asia during my working years and, luckily, have always travelled business class. Now, as DW and I approach retirement, were considering the travel we want to undertake. We're looking at destinations closer to home because I can't stand the thought of: i) sitting in the back of the plane for 10 hours or more; or ii) paying 5 times the price to buy business class tics. It truly would be nice to be able to afford that without worrying about the $$$.

 

[2017ish]

From some of the advice & feedback I have read on this forum, it sounds like a couple needs to be in the top 5% to retire early and have enough money to protect themselves from health insurance, healthcare, and long term care inflation. I know there are many people on this forum who are budgeting $20,000-$30,000/year for health insurance & healthcare. Those numbers plus a 3% ER withdrawal rate adds up to nearly a million on its own. Reading the MMM, website, I thought $1.25 million plus a little bit of rental income would be enough for us to retire on. From the feedback I have been given & read on ther posts, I think we need closer to $1.5 million in savings + 2 houses paid off (main + rental) + a dinky pension in 19 years + a part time job for several years. Is every early retiree couple ages 45-60 shooting to be in the top 5% or close to it? I hope this does not sound negative as I am really curious what others think.

Short answer: Not needed. See FUEGO's posts and blog, among others (He springs to mind because he has three kids and isn't even at your "45-60," but there are many others posting here with less than the numbers you are talking about.) Heck, just look at the posts on this thread.

I am among those budgeting 20-30K for health insurance--but we have no chance of qualifying for ACA subsidies given our other spending desires. IF you can qualify, or if you have retiree medical kicking in at an early age, things change drastically.

Longer answer: You'll often hear that it isn't how much you make (or save)--it is how much you spend. Same is true in retirement. It all depends upon what you want to do with your time/life (and, of course, where you are in the 45-60 age range!). Business/first class travel, multiple homes (or a nice place in San Fran/Vancouver/NYC...), liveaboard diveboats, fine dining, memberships in desired wine clubs, etc. etc. require biggish money. Long walks in natural areas or public parks, diving into the library for a joyous stretch of reading, affordable drinks while cooking fine food with your mate in North Alabama or South Tennessee (for example), extensive use of local museums/concert_venues, etc. etc., not so much. Still have Kids at home? Public schools versus private? HS soccer versus elite traveling hockey teams?

 

[rodi]

The business class travel is my "I have enough" threshold also. Last summer, due to a timely fare sale - we splurged on Business class for our trip to Europe. It was NICE. But our cross country trip this year will be in the back of the plane. Perhaps if the market had done better in Jan and Feb I would have loosened the purse strings....

But - as has been mentioned here - being adaptable and adjusting to market conditions is one of the inputs to ER success. I didn't have to cancel the planned trip... but decided not to splurge on business class.

 

[Senator]

Could we use a little more sunshine? Yup we are in Amsterdam and it is cloudy and cool. Sadly more money cannot fix that problem...

I have never been in Amsterdam, but I have heard that there are plenty of things to buy there, and even things to do to keep you occupied, that would make you forget about any sunshine. A little bit of money would fix the cloudy and cool issue, or at least let you focus on other things...

 

[audreyh1]

Well said. Agree with your sentiment.

I used to travel to Amsterdam regularly for business. Can often be cold and rainy. We were there once for Queen's Day (late April). What a zoo. Everybody gets into a boat and jams the canals downtown drinking themselves silly. Party runs all night.

Oh, that's a great time! Although it it's the King's birthday now, which is late April, and conveniently falls on my brother's birthday. It is also a big garage sale day. And in the morning my brother and nephews head to the sales and buy toys for cheap from other children. How cute! My nephew wants to sell some of his toys next year.

 

[audreyh1]

I have never been in Amsterdam, but I have heard that there are plenty of things to buy there, and even things to do to keep you occupied, that would make you forget about any sunshine. A little bit of money would fix the cloudy and cool issue, or at least let you focus on other things...

It's just a really nice city. More laid back than most European cities. Lots of young families. Extensive parks and green spaces and plenty of people out enjoying them. Great transportation system although crazy bicycle traffic. Tons of things to do. Most people speak excellent English. It's a very wholesome city in spite of the expanded legal vices. I find it far more "American" than the rest of Europe - very casual dress, relaxed attitudes, English spoken and not with a British accent either.

 

[audreyh1]

+1. I've made many, many overseas trips to Europe and Asia during my working years and, luckily, have always travelled business class. Now, as DW and I approach retirement, were considering the travel we want to undertake. We're looking at destinations closer to home because I can't stand the thought of: i) sitting in the back of the plane for 10 hours or more; or ii) paying 5 times the price to buy business class tics. It truly would be nice to be able to afford that without worrying about the $$$.

We survive just fine in economy plus. It's just a short part of what is an annual month long trip for us, and really no big deal.

 

[Car-Guy]

It's just a really nice city. More laid back than most European cities. Lots of young families. Extensive parks and green spaces and plenty of people out enjoying them. Great transportation system although crazy bicycle traffic. Tons of things to do. Most people speak excellent English. It's a very wholesome city in spite of the expanded legal vices. I find it far more "American" than the rest of Europe - very casual dress, relaxed attitudes, English spoken and not with a British accent either.

One of my favorite places to visit in Europe. I agree with the above except those "expanded legal vices" really add a lot to the city and "things to do". I guess it depends on your POV.

 

[EvrClrx311]

It is actually $75K. At least in 2010 it was.
The Perfect Salary for Happiness: $75,000 - The Wealth Report - WSJ

My take away from this is that the quicker I can get to $2.25 million (in 2010 dollars) the happier I'll be. That should be just enough to safely have the optimal $75K (3% rate) a year to remain happy.

 

[daylatedollarshort]

One of the better books I've read that relates to the concept of "enough" was What Happy People Know: The New Science of Happiness Can Change Your Life for the Better by a director at the Canyon Ranch. Most of their clients are pretty wealthy, some even billionaires, and they all thought a little bit more money would make them happy - no matter how much they had.

 

[audreyh1]

One of my favorite places to visit in Europe. I agree with the above except those "expanded legal vices" really add a lot to the city and "things to do". I guess it depends on your POV.

Sure it depends on the POV. It's just that some people seem to think that the main reason to visit Amsterdam is to partake of things that are illegal elsewhere. In other words, that it is not a wholesome city, or doesn't have anything else to offer.

When you visit, it's not noticeable unless you go to very specific areas.

 

[Danmar]

One of the better books I've read that relates to the concept of "enough" was What Happy People Know: The New Science of Happiness Can Change Your Life for the Better by a director at the Canyon Ranch. Most of their clients are pretty wealthy, some even billionaires, and they all thought a little bit more money would make them happy - no matter how much they had.

Right. I think it makes more sense if the term is "happier". Rather than "happy". Happy in a absolute sense is difficult to define or measure. I agree that I would certainly be happier if the market went up rather than down. But I am going to be happy either way.

 

[W2R]

Thanks for your concern. I think you might be mistaking a tendency on my part to describe our lifestyle in somewhat antiseptic of impersonal terms with my desire not be seen to be bragging or being smug. I assure you I enjoy our lifestyle very much. I hope no one takes this post as bragging, certainly not my intention, but I felt I should respond to your post.

Never been to any of the places you mentioned but have been to lots of others. Our trips since retirement have generally been of the active type. Just got back from an excellent biking trip to Umbria, Italy. Great biking, great food and wine, great friends. Other trips have included friends and family on cruises, Europe, Turkey, Southeast Asia, etc. I really enjoy our travels and they tend to be expensive. Have another biking trip to Bavaria and Austria planned for September with a group of friends we met in Arizona.

Our homes are indeed enjoyable. The Arizona house has a very nice pool and gardens. This place is our winter respite from the harsh Canadian winters. Have met new friends and enjoy the excellent restaurants. Our house near Banff offers world class scenery, biking (both types), hiking, skiing ( also both types). I sit on a not for profit board there and have met some wonderful people. Our Lakehouse is our place to get some quiet solitude in a natural setting. Great boating, water sports, fires in the big stone fireplace in winter. We use this a lot for entertaining our family who are still mostly based in Ontario. Lots of fun there. Finally, our Toronto condo is right downtown and walking distance to both major sporting venues, opera house, live theatres, and at least 100 restaurants. Don't spend too much time there. Mostly when we visit our parents who live in Toronto, but when we are there it has an eclectic urban vibe which we enjoy. It also serves as a staging point for visits to the Lakehouse. We often loan our places to friends and family. None of our places would accommodate 100's of guests as you suggest. Wouldn't be our style anyway.

As I said, I am really enjoying our retirement lifestyle. Not suggesting for a moment, that others would or should. We have built this lifestyle over several years since retiring, and although we currently are having a ton of fun, I can certainly see how we will need to simplify at some point. Hopefully we will still be having a lot of fun whatever we do.

I can also see that retirees can have just as much fun for a lot less money. After all fun and happiness are very personal things. But I reject the idea that having more money somehow makes it less likely you will be happy. Certainly money that has come from a lifetime of working when used to generously fund a retirement can help make someone happy and secure. I also reject the idea, sometimes discussed here,that there is a universal "sweet spot" of wealth. Each person decides on their own "sweet spot" which can be quite different from others. Not surprisingly these so called "sweet spots" tend to be around that person's actual wealth.

Again, I apologize if this post seems smug or bragging. I also hope it doesn't sound defensive.

I don't think it sounds smug or bragging or defensive at all! Thank you for answering my questions. I love hearing about the happiness that money is helping to provide to your life. I hope you didn't think it was impertinent of me to ask. I think you make a good point about the "sweet spot" being different for different people. It's hard for me to imagine what another's lifestyle might be like, and how he or she could possibly be getting value from a lot more spending than what I spend. But I can see that you do, and that is terrific.

 

[W2R]

We’ve had this discussion before, more than once IIRC.

Everyone would like a bit more money, and all other things being equal, it might make life a bit easier. All other things aren’t equal, however, and money doesn’t fall from the sky. More money means either sacrificing more earlier in life or retiring later. That’s one facet of the “happiness trade-off”. Does more money mean more happiness? It depends on what we have to do to get it, and it seems that most of us have found that point where the marginal value of more money isn’t enough to keep our noses to the grindstone.

Well, maybe not everyone.... Honestly I can't see how it would make my life any easier, even if millions just floated into my bank account from heaven with no effort on my part.* This is why I asked Danmar about it. I'm honestly trying to understand what everyone else seems to automatically know.

Sometimes I wonder if I am mentally defective for not seeing this instantly. My family sure thinks I'm peculiar when it comes to money, and have pointed that out to me from childhood on. I guess we all have our own weirdnesses, and this seems to be mine.

Earlier in my life, I was around people with large net worth quite a bit and to me, it seemed like their wealth required more work to manage than the enjoyment they got from it. I probably should have asked them about it.

*So if, say, 5 million appeared in my bank account today, I'd have to stop posting on the forum and spend a bunch of time figuring out how many bank accounts I'd need for it to all be FDIC insured. What, 20? I've forgotten the limits. Then I'd have to contact that many banks, get forms to open accounts, and transfer the correct amount to each bank. There goes one whole day or more of my precious time! Ugh, ugh, ugh. I'd rather be here posting stupid posts like this one.

 

[razztazz]

Earlier in my life, I was around people with large net worth quite a bit and to me, it seemed like their wealth required more work to manage than the enjoyment they got from it. I probably should have asked them about it.

Those who work hard and long for lots of money have little to show for their efforts. I consider it merely breaking even. Work more years. Do more crap. Get more dollars. Duh. You can work way less, live on less and be just as happy. Unless you're just trying to prove something. Yawn

 

[Major Tom]

Again, I apologize if this post seems smug or bragging. I also hope it doesn't sound defensive.

You come across as a particularly well-balanced person, Danmar. It's a shame that you feel the need to moderate the tone of your posts so as not to make it appear that you are bragging. That you do feel the need is very understandable though, IMO.

I've said this too many times already, and we're mostly quite nice in how we go about it, but there is a definite element of reverse snobbery in some of the comments here. One could almost be tempted to think that the degree of virtue an individual possesses is in inverse proportion to their NW or annual spend!

I most definitely wasn't thinking of you W2R - I know your curiosity was genuine, and I envy your wonderful life of leisure in New Orleans!

 

[Sojourner]

So if, say, 5 million appeared in my bank account today, I'd have to stop posting on the forum and spend a bunch of time figuring out how many bank accounts I'd need for it to all be FDIC insured. What, 20? I've forgotten the limits. Then I'd have to contact that many banks, get forms to open accounts, and transfer the correct amount to each bank. There goes one whole day or more of my precious time! Ugh, ugh, ugh. I'd rather be here posting stupid posts like this one.

That makes sense to some degree, but I'm not quite sure I fully understand your reasoning if you play it out. I mean, to use your example, couldn't you just stuff the entire $5MM in a Vanguard or Fidelity balanced fund and call it a day? And then sit back and enjoy the additional $100k or so of passive income thrown off each year? With that $100k, you could certainly buy some interesting and unique experiences or just up your spending on certain things you really enjoy. Or, failing that, just donate the extra money to your favorite charities or buy your friends much nicer birthday gifts... and so on.

I know with an extra $5MM in my investment accounts, my life would improve (at least in the short term) in some quite decadent and luxurious ways, like maybe a few first-class round trips to exotic destinations with friends and family each year. Would that make me "happier" in life? To some degree, yes it would, but I don't honestly know if it would fundamentally and permanently raise my happiness "set point". Over time, I think I would get used to the added luxury and decadence and that would become my new normal.

 

[Major Tom]

couldn't you just stuff the entire $5MM in a Vanguard or Fidelity balanced fund and call it a day? And then sit back and enjoy the additional $100k or so of passive income thrown off each year?

That's exactly what I'd do if I came into a sizable windfall. I'm currently living on a 2% WR, which is not too far off what a Vanguard Total Stock Market, or S&P 500 fund throws off in dividends. I'd throw the whole lot into a couple of index funds (one domestic and maybe one international), funnel the dividends into my savings account, and have fun.

If the market (and dividends) took a dive, I'd just dial back my spending, unless I already had enough saved from previous years.

Oh, the joy of having too much money

 

[dunkelblau]

Here's a global perspective--
https://www.washingtonpost.com/news...chest-people-in-the-world-and-not-realize-it/
Wordwide median net worth is 3210 USD, top ten percent starts at 68800 USD, and top one percent starts at 760K USD. If the upper tail of the world distribution follows the same power law as US alone, then the top half percent would be roughly the golden ratio multiplied by the 1% threshold, or 1.23M USD. This measure may not matter either, but I think it's more important than US-alone (or from just your own zip code), as I imagine most here who have traveled internationally would appreciate.

 

[bclover]

From some of the advice & feedback I have read on this forum, it sounds like a couple needs to be in the top 5% to retire early and have enough money to protect themselves from health insurance, healthcare, and long term care inflation. I know there are many people on this forum who are budgeting $20,000-$30,000/year for health insurance & healthcare. Those numbers plus a 3% ER withdrawal rate adds up to nearly a million on its own. Reading the MMM, website, I thought $1.25 million plus a little bit of rental income would be enough for us to retire on. From the feedback I have been given & read on ther posts, I think we need closer to $1.5 million in savings + 2 houses paid off (main + rental) + a dinky pension in 19 years + a part time job for several years. Is every early retiree couple ages 45-60 shooting to be in the top 5% or close to it? I hope this does not sound negative as I am really curious what others think.

I'm thinking it depends on your lifestyle and other factors. I am not in the top 5% (wait what were the levels? lol I don't pay attention to these reports).

lol, I'm 55. I'm retired. I have a mortgage and since I'm looking to pick up a rental investment unit it's a good bet I'll have another. My health care currently is ~8k a year this includes 2 kids on it.
LOL my decisions to early retire were this.
My husband died at 55 in 2013
My little brother died at 53 in 2015
My best friend just passed away March of this year at 57.

so in the last 4 years I've watch 3 loved ones who scrimped saved, sacrificed for some magical day when we are supposedly able to enjoy themselves, that never arrived.

I didn't have a two million dollar target so no I was not shooting to be anywhere near the top 5%.

I took a look at my life and thought about what things would really make me happy and realized it didn't take nearly as much.

LOL, I do have some vices. I love luxury hotels.

 

[audreyh1]

That makes sense to some degree, but I'm not quite sure I fully understand your reasoning if you play it out. I mean, to use your example, couldn't you just stuff the entire $5MM in a Vanguard or Fidelity balanced fund and call it a day? And then sit back and enjoy the additional $100k or so of passive income thrown off each year? With that $100k, you could certainly buy some interesting and unique experiences or just up your spending on certain things you really enjoy. Or, failing that, just donate the extra money to your favorite charities or buy your friends much nicer birthday gifts... and so on.

I know with an extra $5MM in my investment accounts, my life would improve (at least in the short term) in some quite decadent and luxurious ways, like maybe a few first-class round trips to exotic destinations with friends and family each year. Would that make me "happier" in life? To some degree, yes it would, but I don't honestly know if it would fundamentally and permanently raise my happiness "set point". Over time, I think I would get used to the added luxury and decadence and that would become my new normal.

Yep.

Simple!

 

[NW-Bound]

LOL! Happiness is being able to routinely afford business class airfare?

Could be. Could be!!

Especially to get to the point where you don't think much about what else you could spend that money on instead.

I know people who charter private visit planes to wherever they want to go. I don't feel sorry for them. I don't feel sorry for me either, even though that option will always be out of my reach. Happy people adjust to whatever their circumstances are, and make the most of what they have according to their personal goals and values.

No, business class seats are not really happiness, only more comfortable misery. Seating in airplanes is the most negative experience for travel, but it is a necessary evil we all have to endure.

If I were rich enough to fly business class, or even first class, soon I would complain about the hassle of getting through security and customs, the long delay or layovers, the crowded airport, etc... I read somewhere that people with private jets can bypass all that, as they have their own gates. But I will never find out.

I have flown once on megacorp private jet, but it was only for a domestic flight, and it was long before 9/11, so do not know how it works now.

No, my point is that money does not buy happiness.

"Money can't buy happiness, but it can make you awfully comfortable while you're being miserable." - Clare Boothe Luce

The following quote tells the exact sentiment I have regarding business class seats.

"Money can't buy you happiness but it does bring you a more pleasant form of misery." - Spike Milligan

Right. I think it makes more sense if the term is "happier". Rather than "happy". Happy in a absolute sense is difficult to define or measure. I agree that I would certainly be happier if the market went up rather than down. But I am going to be happy either way.

Me too, even though I will keep complaining about the coach seats.

I am not so obtuse to not realize that a lot of people cannot afford to even travel coach as I do. Many still have to worry about the next meal.

 

[NW-Bound]

By the way, we were in Amsterdam once, and walking the red light district was a fun experience (and window shopping ). Do not take photos though, as it was illegal.

We never did MJ in our life, so did not seek out these cafes. Surely, Amsterdam can be an interesting place even if you do not partake in the above vices. The Rijksmuseum was a must-visit place.