Who counts as Rich?

[traineeinvestor]

I've always thought of "rich" as a comparative term, not an absolute one.

Rich = (1) sufficient financial resources to sustain one's desired standard of living indefinitely without getting out of bed in the morning or (2) more money than the in-laws.

 

[yakers]

I tell my son I am rich. I am satisfied with what I have, even with LBYM maybe have too much stuff. He looks at me and sort of gets it, at least for me. But I think he would prefer a higher financial contribution from me.

 

[sheehs1]

i think there are two facets of being rich: How much you have, and how much you need/want to be satisfied. If you have enough money and income to buy anything you need/want for the rest of your life, you are rich no matter how much or how little that is.

One person might be rich with $1,000,000 if his wants are few and he is a happy, contented person. He only spends $25k out of his $40k/year swr and can't think of a single thing that he wants and doesn't have.

Another person with the same $1,000,000 might not be rich at all, because he has developed a taste for big houses and expensive cars (boats, private planes, high maintenance women, etc) and feels deprived without them.

"my greatest skill in life has been to want but little” ― henry david thoreau, walden

+1 w2r2....

 

[clifp]

Two ways to be rich; Earn more or desire less.

 

[Spanky]

Another person with the same $1,000,000 might not be rich at all, because he has developed a taste for big houses and expensive cars (boats, private planes, high maintenance women, etc) and feels deprived without them.

I would agree if this person only has $1M without other source of income. If income exceeds expenses by a significant margin, this person is "rich".

 

[ratto]

The world is not enough. It all depends on a person's desire.

The most common vehicle driven by
mllionaires is Ford Taurus and F150 pickups.(According to an article I read).

Real rich people don't want to show off their wealth for two reasons: [1] they don't want to be targeted for their wealth; stay below the radar. [2] material wealth is no longer important to them, they're already financially secure, so they don't need to show off.

Who knows, maybe they even have push reel mowers in their garages.

 

[WestLake]

Plus it's tacky to show off and it looks foolish to other rich people.

 

[sheehs1]

Don't know about the rest of you but I'm really getting tired of the "rich" mantra and of articles trying to carve, slice and report percentages...etc. Kind of like "see...you have too much money" because your income or net worth is in the top 20% or 10% or 5% ...so "we will tax you and take more" or "give it to the rest of the people" or "you should share with the rest...even though you worked your butt off for it, didn't make stupid decisions, saved and lived below your means for 30 plus years"....etc.

I think some have taken advantage of the system...some of those in the top 0.5% and the corporations and large investment banks but those are few and far between. Most of the so called "millionaires" came by it honestly in my humble opinion.

 

[tightasadrum]

“Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery.”
― Charles Dickens, David Copperfield

 

[ziggy29]

... or "you should share with the rest...even though you worked your butt off for it, didn't make stupid decisions, saved and lived below your means for 30 plus years"....etc.

Or yes, maybe they *did* win the birth lottery; maybe they *were* born on third base and act like they hit a triple to get there...

 

[haha]

Well, $150K per year of household income and/or a net worth of $1M is a lot more than most people have, so I can understand how it would seem like "rich" to them. But, I have a feeling that if they ever got to that income/asset level, they'd come to the realization that it doesn't feel as "rich" as they once thought it did.

Not only does it not feel rich, it does not even provide a secure, comfortable living in many areas of the US.

 

[jkern]

As everyone has stated, you cannot define rich by income alone.

However, if I was posed the survey question and had to give an answer. I would assume that the person/family are in their 20's, no significant assests, will reach a high standard of living in the SF bay Area ($1.5M house, luxury items and plenty of spending money) in a short time frame and be able to save and invest to reach financial independance in 20 to 25 years.

My answer is: $450,000 per year

 

[glippy]

It turns out Newt Gingrich's 2.6M/year doesn't qualify him as rich either.

What I'm seeing in the thread is an aversion to calling yourself rich. - Rich is perpetually other people. But it all depends on who you're comparing yourself to.

I lived for 4 months in central China surrounded by poverty. In striking contrast, less than a year after I returned to the US I got a job making well over $100k while still in my early 20's. I think it would be an incredible insult to my Chinese friends I left behind to not consider myself rich. "Yeah, I make more in a month than you make in 10 years, but I'm not rich, you should hear about this other guy I know who makes every month what I make in 10 years, now he's the rich one."

Of course if you compare yourself to billionaires you're not going to consider yourself rich.

But if I compare myself to everyone I've ever met in my life, even people I've just bumped elbows with, I'd have to estimate I have more assets and income than about 95% of them. I've thought of myself as rich ever since I was a teenager. Even though my parents never would have dreamed of putting that label on themselves.

 

[Mulligan]

There's an interesting contradiction between the income number and net worth in that I'd only be comfortable taking $40k or maybe $30k income a year given a net worth of $1M. When I ER I expect to have $1M in investments, but my income will be $30k. I suppose I'll be capital rich but income poor.

Nun, we are the exact polar opposite. Thanks to an improvement in late in my career, I have a generous pension, but modest assets. Which is " better"? I have no idea, but I suspect my daughter would prefer me to be in your shoes, since the pension dies with me.

 

[ziggy29]

What I'm seeing in the thread is an aversion to calling yourself rich. - Rich is perpetually other people. But it all depends on who you're comparing yourself to.

Part of this is because "the rich" is a term often used somewhat pejoratively in terms of perceived greed, selfishness and gluttony... so some people who are quite affluent don't want to "own" the label and feel like one of "them".

 

[FIREd]

As everyone has stated, you cannot define rich by income alone.

However, if I was posed the survey question and had to give an answer. I would assume that the person/family are in their 20's, no significant assests, will reach a high standard of living in the SF bay Area ($1.5M house, luxury items and plenty of spending money) in a short time frame and be able to save and invest to reach financial independance in 20 to 25 years.

My answer is: $450,000 per year

That must be the after tax number!

 

[marko]

I just find it interesting that level for 'the rich' seems to be lowered every time you turn around.

What happened to the 'rich' making $250K a year? Now it is $150??!!!! Before you know it, people making $75K will be considered rich and 'not paying their fair share'.

It just seems that while the cost of everything keeps going up the price of being rich keeps going down!

 

[scrabbler1]

In my early days of working, I felt rich when I was earning more than I spent so I was able to sock some money away. In my later years of working (full-time, not part-time), I felt rich when one not two biweekly paychecks covered my monthly bills.

In my final years of working (part-time), I felt rich because I could take a big pay cut and still cover my expenses (like in my later FT working years), while having more time to myself, and seeing my assets grow immensely.

But when I ERed in 2008, I felt rich when my assets could generate the same amount of income my (P/T) job did without any sacrifice in my lifestyle. Like what Nun wrote, my $1M (about 2/3 of it in taxable accounts) generates more than enough to cover my expenses even if it is less than when I was working FT. Being able to do that without working is the big plus.

 

[67walkon]

Tiger Woods' ex wife Elin is apparently rich. The paper reports she just tore down the house she paid over $12 million for when they got divorced. She's rebuilding.

We're all rich or we wouldn't be paying attention to web sites like this. My younger brother figured it out about 10 years ago--he has been striving to get to the point where if everything goes south, he can sell burgers at McDonalds and still get by. You get rid of car payments, pay off your mortgage and don't have any debt.

I and my wife are definitely rich, we just don't seem to have a lot of cash in our pockets at any given time. Or are we just cheap? Definitely not that. Frugal? Maybe, but we have some nice things and two houses. A better word might be intentional, most of the time. We intentionally don't carry debt and we intentionally save money consistently. We intentionally avoid taking money out of savings except for a real emergency and there aren't many of those. But yeah, we're rich, we just don't feel like it. So are you.

 

[marko]

I think you're spot on and your profile/outlook represents 90% of the people on this forum...as you say, if not, we wouldn't be here.

We used to call any interest paid (mortgage, cards, etc) as 'paying the man'...any time we paid off a debt, we called it 'stikin' it to the man'.

 

[gcose]

clearly subjective, but...

I would say "rich" generally connotes having the financial resources to live in an affluent manner (very nice, big house; nice car; driver, housekeeper, nanny; first class travel) without deminishing their asset base to do so. Thus, rich varies with the costs of the area the person chooses to live. In some lower cost areas, someone could live an affluent lifestyle for ~$1-2mm for housing and ~250k per year for an affluent lifestyle. This would mean a net worth of $8mm (1.75mm +250/.04) would make someone "rich". In manhattan to be considered rich the person would probably need closer to 10mm for housing (6mm for nice place in the city and 3-4mm for hamptons house) and probably need 800k-1mm per year, thus requiring more like 30mm to be considered rich. That is not to say that these are ideals everyone should aspires to, just a way of quantifying the concept of "rich" in objective way.

 

[Koolau]

It occurs to me that defining rich in OUR society is difficult. It's only when we compare to the 3rd world that it becomes obvious how "rich" most Americans are. But, to compare to our fellow Americans, it gets much more difficult. I think the problem stems from the fact that (with the exception of the very lowest financial rung - those living in cardboard boxes under the overpass) all Americans have access to essentially all the same things (except for those few at the very, very top who can afford, say, a private jet of their own). Let me explain my point of view.

Even the poorest Americans (assuming they play the "game" - maybe stand in line at a gummint office, etc.) have enough food to eat (food stamps), a place to live (rent control, housing subsidies, etc.) and clothing (Walmart or Salvation Army - hey, don't knock it! Some of my finest Aloha shirts came from Salvation Army.) So, realistically, what in America, can the "rich" have that the "poor" can't have. I'm sure you can find a few things (but, saying 2 houses is a cheat - you can't live in two at once.)

I mentioned a personal jet. But, realistically, "poor" people in America fly. Maybe not as often, maybe not to as exotic destinations, but they do fly.

So, my point is that it actually IS very difficult to say what is "rich" and conversely, what is "poor" in the "Western world". The real distinctions, for the most part, between rich and poor are in quantity and quality. These may be difficult to define ("How many houses can you use?" or "Would you actually PREFER to fly to Vale for skiing or would a gambling junket to Vegas be more fun to you?") Your answers to these questions may reveal YOUR definition of rich, but not everyone's definition of rich.

But to be specific about my situation, the richest I ever felt was before we got kids in the mid '90's and my assets were growing so fast that my results exceeded my salary several years in a row. THAT felt rich.

 

[tightasadrum]

This is going to sound strange, but the richest I have ever felt was as a 21 yo LTjg, with 5 yrs longevity due to being in the reserves through college. I rented an apartment in a Newport, RI mansion, drove a 911T Porsche, and could fit everything I owned in my car. I'd go skiing on the weekend, eat out whenever I cared to, and was paid to travel to exotic places. Women invited ME to their college dances and parties. I had very little responsibility, and I loved what I did. Yep, I've never been that rich since.

 

[ShortInSeattle]

Interesting thoughts, all. I'll throw a couple things in the mix.

I teach freshman at university and we do a class on financial management. One of the questions I like to ask is "Do you want to be wealthy?" and to have a discussion about their answers. Most of them say no. They associate "being rich" with greed, superficiality, being a slave to the job, and not caring about people. They say " I want to pay my bills with a little extra for fun." in my mind, FIRE is exactly that, minus the requirement of working. I wonder if this "wealth makes you a bad person" mindset is growing more pervasive.

Another thing that came to mind in reading your posts was the fact that DH and I have talked about how our high income is in some ways more stressful than when we were just starting. When you're 20 and broke you don't worry about losing it all. When you finally land a sweet gig you are keenly aware it can't easily be replaced. We've also talked about how the delta between our financial security and that of our extended family makes us a tad uncomfortable. When your brother saves for 6 years to afford a very modest vacation, it makes you feel bad to share your excitement about a fancy trip to Spain. The tendency is to clam up.

I suppose what I'm saying is that the tendency to not want to say you are rich may exist, in part, because identifying as a rich person has some baggage associated with it.

siS

 

[haha]

I would say "rich" generally connotes having the financial resources to live in an affluent manner (very nice, big house; nice car; driver, housekeeper, nanny; first class travel) without deminishing their asset base to do so. Thus, rich varies with the costs of the area the person chooses to live. In some lower cost areas, someone could live an affluent lifestyle for ~$1-2mm for housing and ~250k per year for an affluent lifestyle. This would mean a net worth of $8mm (1.75mm +250/.04) would make someone "rich". In manhattan to be considered rich the person would probably need closer to 10mm for housing (6mm for nice place in the city and 3-4mm for hamptons house) and probably need 800k-1mm per year, thus requiring more like 30mm to be considered rich. That is not to say that these are ideals everyone should aspires to, just a way of quantifying the concept of "rich" in objective way.

I agree. I get so tired of hearing about how rich we are because we don't live on the sidewalk in Calcutta and eat an occasional 2nd hand lentil.

Ha