What You Can Learn From 1,000 Millionaires

Nords · 12-19-2005, 08:28 PM

Desperate for content, Fidelity put out a "10 best articles of the year" article this week. One of them is a Marchan interview with Jim Trippon, who wrote "How Millionaires Stay Rich Forever". (I haven't read it yet, but I think it has something to do with not spending all their money.) The key was savings & tax-sheltered accounts.

His 1000 millionaires were chosen for liquid assets, not including home equity. Their secret belongs in the "well, duh" category: "If you look at the studies, more than 80% of the millionaires in the United States did not inherit their wealth but are self made. The 1,000 millionaires I interviewed all had savings plans, and made regular contributions into an investment account of some type. Whether it's $25 or $300 a month, they do it month-in, month-out."

Here's a scary quote: "More than 20% of retired millionaires are forced back to work within five years. The major reason is uninsured health care costs. People retiring in their 50s don't realize that they have until 65 before Medicare insurance becomes available. Unless they're picking up health care benefits from their company, they could have huge expenses in buying insurance. In some cases, they may not even be able to find it, because of pre-existing conditions. Unless you are a multi-millionaire, long-term care insurance is a basic requirement to help protect your assets."

**REWahoo** · 12-19-2005, 08:37 PM

Quote:

Originally Posted by Nords

...a Marchan interview with Jim Trippon, who wrote "How Millionaires Stay Rich Forever". ...People retiring in their 50s don't realize that they have until 65 before Medicare insurance becomes available.

Which proves either you don't have to be intelligent to be a millionare or you can spend every waking minute working, saving and investing and be clueless to the reality of RE. Or both...

Spanky · 12-19-2005, 11:00 PM

It's amassing that millionares cannot afford medical insurance and are therefore returned to work for that purpose.

There are other ways to protect your assets without long-term care insurance:
1. Stay healthy by taking care of yourself.
2. Transfer all your assets to people you can trust.

MRGALT2U · 12-20-2005, 06:24 AM

Quote:

Originally Posted by Spanky

It's amassing that millionares cannot afford medical insurance and are therefore returned to work for that purpose.

There are other ways to protect your assets without long-term care insurance:
1. Stay healthy by taking care of yourself.
2. Transfer all your assets to people you can trust.

I agree with Spanky. No one in our immediate family has LTC insurance.
There are ways to work around it with a little thinking
and creativity.

I will go further. I think most folks are overinsured in general.
I have no data to back this up, but believe there are many ways
to protect against an economic disaster other than traditional
insurance.

JG

Outtahere · 12-20-2005, 06:30 AM

So millionares go back to work because of the cost of healthcare? If they are millionares can't they afford it? Sounds to me like they didn't really want to stop working in the first place and use that as an excuse.

maddythebeagle · 12-20-2005, 06:41 AM

Quote:

Originally Posted by Outtahere

So millionares go back to work because of the cost of healthcare?* If they are millionares can't they afford it?* Sounds to me like they didn't really want to stop working in the first place and use that as an excuse.

I think that is probably it. The quote seems to be written in a way to jump to the conclusion. The guy lost me at LTC insurance.

Spanky · 12-20-2005, 07:14 AM

Quote:

More generally, an entry-level millionaire is independently lower-middle-class today

Huh? Lower-middle class?

**Martha** · 12-20-2005, 08:05 AM

The insurance issue is really a big issue for some. Depends so much on what state you live in and the status of your health. Say you retire healthy at 45. You buy an inexpensive health insurance policy. You live in a state where premiums can increase if you become ill or as you age. Those premiums can become huge. I have heard of situations where the premium increases to a couple of thousand dollars a month. That sure cuts into the $40,000 SWR.

Another situation. You retire. Get insurance through COBRA for 18 months. You have a chronic condition. You can't even find affordable insurance in your state. HIPAA may require insurance plans be offered to you but there is no limit on cost. It could be several thousand a month. You buy insurance instead that excludes your condition. You get sicker and the costs are not covered by insurance.

One possible solution short of returning to work is to move to a state that has better and cheaper health plans available to you.

Dawg54 · 12-20-2005, 08:06 AM

My definition of "rich", from a financial stand point, is one who can spend their savings without any concern of running out of money. Now for many, that is almost impossible on 1 million. I do have health insurance, therefore I feel I could easily budget the rest of my life on 1 million. Just not rich.*

Tadpole · 12-20-2005, 08:29 AM

Back in the 50s there was a program "The Millionaire". It represented a gift, tax-free, of instant wealth. Based on this benchmark, you need 7-8 million dollars to be wealthy today.

SteveR · 12-20-2005, 08:43 AM

Quote:

Originally Posted by Tadpole

Back in the 50s there was a program "The Millionaire". It represented a gift, tax-free, of instant wealth. Based on this benchmark, you need 7-8 million dollars to be wealthy today.

I think this was the topic of a thread not too long ago. How much $$ makes you wealthy?

If you make $3k per year, $1Millon looks rich.
If you make $30,000 per year $10 million looks rich.
If you make $300,000 per year $100 million looks rich.

It all comes down to perspective of what you can afford to purchase at the various income (new worth) levels without depleting your net worth doing so. For some it would be a McMansion for others it might be a private jet. How much wealth does it take to be rich? It all depends on what you believe rich people can do that you cannot.

RockMiner · 12-20-2005, 08:48 AM

Assuming a SWR of 4% or less, I don't think anyone 50-ish is completely "bulletproof" without $2MM or so :P Yet I'd bet that $1MM liquid looks rock solid to most people...and it should be! This health insurance situation has to change, so eventually it will.

Spanky · 12-20-2005, 09:09 AM

Instead of focusing on affordability of health insurance, how about providing adequate health care for all? The questions: what is adequate? who will fund it?

MRGALT2U · 12-20-2005, 09:13 AM

Quote:

Originally Posted by SteveR

It all depends on what you believe rich people can do that you cannot.*

My position is that I can do anything rich people can do, just for a shorter time and on a much smaller scale. *

*

JG

Spanky · 12-20-2005, 09:17 AM

Wealth is a moving target. Someone may say if I have X, I would consider myself rich. However, when X is achieved, he/she will establish another goal, say Y. When Y is attained, another goal is set.

MRGALT2U · 12-20-2005, 09:47 AM

Quote:

Originally Posted by WhodaThunkit

Just in a financial sense -- less than $30,000 per year.* Where would this put a person (who was still working) on the economic ladder?* Not rich by any stretch of the imagination* . . .

I wish I had real numbers, but you will get my drift. Of those who post
here (FIREed or close), I would guess my net worth is in the bottom 5%
easily. However, if you look at the whole country, I am pretty sure I am
in the top 5%. It's all perspective.

JG

MRGALT2U · 12-20-2005, 09:56 AM

Quote:

Originally Posted by WhodaThunkit

JG -- in terms of net worth, maybe.* In terms of income, I doubt it.

Two totally different things, not necessarily any connection at all
between them.

JG

Jay_Gatsby · 12-20-2005, 10:14 AM

Not to hijack the thread too much, but we all know that insurance premiums are calculated by spreading the risk among large numbers of people. I really resent the fact that my insurance premiums are based in part on the voluntary conduct of others. Smoking, drinking to excess on a regular basis, not exercising 2-3 days a week, eating artery-clogging junk food, etc... are all voluntary behaviors that contribute to substantial health problems later on in life.

Spanky · 12-20-2005, 10:16 AM

Top 10% holds over 71% of wealth.

http://www.faculty.fairfield.edu/fac...ome&wealth.htm

Mean and Median Wealth and Income in 2001 (according to the article):
The amount in 2001 dollars.
median Mean
Net worth: 73.5K 380.1K
Income: 42.2K 58.2K

Number of millionaire households in 2001: 106,494K.
1 Mil: 5,892K
5 Mil: 1,067.8K
10 Mil: 338.4K

Net Wealth Distribution in 2001 (in 2001 dollars):
Top 1% = 13 mil
Next 4% = 2.45 mil
Next 5% = 937K
Next 10% = 490K

Top 20% = 1.6 mil
4th 20% = 215K
3rd 20% = 75K
Bottom 40% = 2.9K

Spanky · 12-20-2005, 10:52 AM

It is so difficult to live without insurance nowadays. We have medical, dental, vision, life, auto, and house insurances. It's about 10% of our household expenses. It will be more expensive when bot

12-19-2005, 08:28 PM	#1
Nords Moderator Emeritus Join Date: Feb 2004 Location: Oahu Posts: 15,988	What You Can Learn From 1,000 Millionaires Desperate for content, Fidelity put out a "10 best articles of the year" article this week. One of them is a Marchan interview with Jim Trippon, who wrote "How Millionaires Stay Rich Forever". (I haven't read it yet, but I think it has something to do with not spending all their money.) The key was savings & tax-sheltered accounts. His 1000 millionaires were chosen for liquid assets, not including home equity. Their secret belongs in the "well, duh" category: "If you look at the studies, more than 80% of the millionaires in the United States did not inherit their wealth but are self made. The 1,000 millionaires I interviewed all had savings plans, and made regular contributions into an investment account of some type. Whether it's $25 or $300 a month, they do it month-in, month-out." Here's a scary quote: "More than 20% of retired millionaires are forced back to work within five years. The major reason is uninsured health care costs. People retiring in their 50s don't realize that they have until 65 before Medicare insurance becomes available. Unless they're picking up health care benefits from their company, they could have huge expenses in buying insurance. In some cases, they may not even be able to find it, because of pre-existing conditions. Unless you are a multi-millionaire, long-term care insurance is a basic requirement to help protect your assets." __________________ * * For more info see "About Me" in my profile.

12-19-2005, 11:00 PM	#3
Spanky Thinks s/he gets paid by the post Join Date: Dec 2004 Location: Minneapolis Posts: 2,800	Re: What You Can Learn From 1,000 Millionaires It's amassing that millionares cannot afford medical insurance and are therefore returned to work for that purpose. There are other ways to protect your assets without long-term care insurance: 1. Stay healthy by taking care of yourself. 2. Transfer all your assets to people you can trust. __________________ May we live in peace and harmony and be free from all human sufferings.

12-20-2005, 06:30 AM	#5
Outtahere Thinks s/he gets paid by the post Join Date: Sep 2005 Posts: 1,677	Re: What You Can Learn From 1,000 Millionaires So millionares go back to work because of the cost of healthcare? If they are millionares can't they afford it? Sounds to me like they didn't really want to stop working in the first place and use that as an excuse. __________________ Dogs aren't our whole lives, but they make our lives whole. - Roger Caras

12-20-2005, 08:05 AM	#8
Martha Administrator Join Date: Feb 2004 Location: minnesota Posts: 10,065	Re: What You Can Learn From 1,000 Millionaires The insurance issue is really a big issue for some. Depends so much on what state you live in and the status of your health. Say you retire healthy at 45. You buy an inexpensive health insurance policy. You live in a state where premiums can increase if you become ill or as you age. Those premiums can become huge. I have heard of situations where the premium increases to a couple of thousand dollars a month. That sure cuts into the $40,000 SWR. Another situation. You retire. Get insurance through COBRA for 18 months. You have a chronic condition. You can't even find affordable insurance in your state. HIPAA may require insurance plans be offered to you but there is no limit on cost. It could be several thousand a month. You buy insurance instead that excludes your condition. You get sicker and the costs are not covered by insurance. One possible solution short of returning to work is to move to a state that has better and cheaper health plans available to you. __________________ . Do not rely on the information provided--my posts are not to be taken as legal advice. Needless to say you must consult with your legal representative. I am not responsible for errors. If I offended you with cya I apologize. If I did not, I tried.

12-20-2005, 08:06 AM	#9
Dawg54 Thinks s/he gets paid by the post Join Date: Feb 2005 Location: Mississippi Posts: 3,335	Re: What You Can Learn From 1,000 Millionaires My definition of "rich", from a financial stand point, is one who can spend their savings without any concern of running out of money. Now for many, that is almost impossible on 1 million. I do have health insurance, therefore I feel I could easily budget the rest of my life on 1 million. Just not rich.* __________________ Full time golf bum.......

12-20-2005, 08:29 AM	#10
Tadpole Recycles dryer sheets Join Date: Jul 2004 Posts: 346	Re: What You Can Learn From 1,000 Millionaires Back in the 50s there was a program "The Millionaire". It represented a gift, tax-free, of instant wealth. Based on this benchmark, you need 7-8 million dollars to be wealthy today.

12-20-2005, 08:48 AM	#12
RockMiner Recycles dryer sheets Join Date: Oct 2004 Posts: 214	Re: What You Can Learn From 1,000 Millionaires Assuming a SWR of 4% or less, I don't think anyone 50-ish is completely "bulletproof" without $2MM or so :P Yet I'd bet that $1MM liquid looks rock solid to most people...and it should be! This health insurance situation has to change, so eventually it will.

12-20-2005, 09:09 AM	#13
Spanky Thinks s/he gets paid by the post Join Date: Dec 2004 Location: Minneapolis Posts: 2,800	Re: What You Can Learn From 1,000 Millionaires Instead of focusing on affordability of health insurance, how about providing adequate health care for all? The questions: what is adequate? who will fund it? __________________ May we live in peace and harmony and be free from all human sufferings.

12-20-2005, 09:17 AM	#15
Spanky Thinks s/he gets paid by the post Join Date: Dec 2004 Location: Minneapolis Posts: 2,800	Re: What You Can Learn From 1,000 Millionaires Wealth is a moving target. Someone may say if I have X, I would consider myself rich. However, when X is achieved, he/she will establish another goal, say Y. When Y is attained, another goal is set. __________________ May we live in peace and harmony and be free from all human sufferings.

12-20-2005, 10:14 AM	#18
Jay_Gatsby Thinks s/he gets paid by the post Join Date: Oct 2004 Posts: 1,101	Re: What You Can Learn From 1,000 Millionaires Not to hijack the thread too much, but we all know that insurance premiums are calculated by spreading the risk among large numbers of people. I really resent the fact that my insurance premiums are based in part on the voluntary conduct of others. Smoking, drinking to excess on a regular basis, not exercising 2-3 days a week, eating artery-clogging junk food, etc... are all voluntary behaviors that contribute to substantial health problems later on in life. __________________ He had one of those rare smiles with a quality of eternal reassurance in it . . . It faced, or seemed to face, the whole external world for an instant and then concentrated on you with an irresistible prejudice in your favor. -- The Great Gatsby, F. Scott Fitzgerald

12-20-2005, 10:16 AM	#19
Spanky Thinks s/he gets paid by the post Join Date: Dec 2004 Location: Minneapolis Posts: 2,800	Re: What You Can Learn From 1,000 Millionaires Top 10% holds over 71% of wealth. http://www.faculty.fairfield.edu/fac...ome&wealth.htm Mean and Median Wealth and Income in 2001 (according to the article): The amount in 2001 dollars. median Mean Net worth: 73.5K 380.1K Income: 42.2K 58.2K Number of millionaire households in 2001: 106,494K. 1 Mil: 5,892K 5 Mil: 1,067.8K 10 Mil: 338.4K Net Wealth Distribution in 2001 (in 2001 dollars): Top 1% = 13 mil Next 4% = 2.45 mil Next 5% = 937K Next 10% = 490K Top 20% = 1.6 mil 4th 20% = 215K 3rd 20% = 75K Bottom 40% = 2.9K __________________ May we live in peace and harmony and be free from all human sufferings.

12-20-2005, 10:52 AM	#20
Spanky Thinks s/he gets paid by the post Join Date: Dec 2004 Location: Minneapolis Posts: 2,800	Re: What You Can Learn From 1,000 Millionaires It is so difficult to live without insurance nowadays. We have medical, dental, vision, life, auto, and house insurances. It's about 10% of our household expenses. It will be more expensive when bot