Net Worth of the 10%, 1%, and 0.1% Households

[OldShooter]

... I DO think inflation calculators going back that far are inaccurate,

Well, strictly speaking we can probably say that the calculators are just fine. The math is pretty simple after all. The issue is what to use for input data. What time period and what index?

but that is at least partially because we buy different things today than 50 years ago.

Yes. CPI attempts to adjust for this but it is inevitably a judgment call. Car prices have increased but power windows and AC have become standard. So, apple and apples what increase should the CPI use? The whole price difference? A reduced difference to reflect the betterment of the product?

And whose costs should be averaged? College students' costs have increased wildly as the institutions have fed at the trough full of student loan money. Seniors consume more drugs than the average population, so should they have their own inflation index (IIRC they do). Households substitute chicken when beef gets expensive; should those choices be reflected in the index?

 

[Markola]

Interestingly, perhaps, my DW worked on the very same Fed’s 2019 Survey of Consumer Finances referenced by the OP. Her enjoyable part time gig is with an outfit that contracts with the Fed every 3 years for that major survey. She travelled around and conducted in-person interviews all over the country and loved doing it. I was worried for her safety but the participant candidates are identified very specifically and then reasonably well vetted so she always felt comfortable. She talked with the full, colorful range of wealth, from poor to billionaires and felt that every tier had its share of distressed to quite-content people.

 

[CardsFan]

Well, strictly speaking we can probably say that the calculators are just fine. The math is pretty simple after all. The issue is what to use for input data. What time period and what index?

Yes. CPI attempts to adjust for this but it is inevitably a judgment call. Car prices have increased but power windows and AC have become standard. So, apple and apples what increase should the CPI use? The whole price difference? A reduced difference to reflect the betterment of the product?

And whose costs should be averaged? College students' costs have increased wildly as the institutions have fed at the trough full of student loan money. Seniors consume more drugs than the average population, so should they have their own inflation index (IIRC they do). Households substitute chicken when beef gets expensive; should those choices be reflected in the index?

I think we are mostly in agreement. Your point about car standard equipment (50 years ago) vs standard equipment today (add computers, etc.) is a good example of what we buy today IS different.

IMHO, year to year "inflation" numbers probably closely reflect the inflation for that time period. Too much changes over 50 years (re: your input data comment) for that to be accurately reflected 50 years later.

Not that any of this really matters to the thread topic.

 

[Sunset]

I have little faith in those inflation calculators. My feeling is that $1M in 1970 is more like $15M today. For example, the house I grew up in has increased in value 40 to 1 from 1970 to today and housing is the largest expense for most.

Anyone can cherry pick.

25 inch color tv was $739. now: $129 -> and its twice as sharp with more channels.
About 1/6 the cost.

The inflation calculators use some blended values as people buy more items than your old house.

 

[CSdot]

Amazing how the presentation of rich on TV differs from real life or the "Newsweek rich" (many on this page).

The rich on TV take world class vacations, live in up scale houses, spend time at the country club, drive around in their high dollar convertibles, and spend inordinate amounts of time shopping (Jay and Gloria Pritchett on Modern Family).

Even middle class characters on TV seem rich to me. The house the Griswalds (from Christmas Vacation) live in is as nice or nicer than the homes in my neighborhood. Clark Griswald's job normally generates enough of a bonus (except for the jelly of the month year) to put in an in ground pool. How many non-millionaires have an extra $100,000 (after tax) bonus to afford a pool?

In the real world, even those in the 1% know their real wealth is stored in their home equity and their retirement accounts, and you are lucky to have enough left over to send your kids to college, to pay your health care costs, and not go bankrupt when the roof needs replacing or the hvac breaks.

 

[Golden sunsets]

It’s a hard feeling to adapt to. We’re in the top 1% for our state too. My husband was out today and really wanted a Whopper. When I asked him why he didn’t stop and get one he said, “I was going to but I didn’t have any coupons with me!”

He cracks me up. Old habits are hard to break.

Ha! Oh I so identify with this.

 

[jkern]

There are other items, such as a television. I paid less for a 45" lcd TV last year than I did in 1978 for my 15" CRT TV. And the price of a gallon of gasoline in the Boston area was $3-$4/gallon. Remember the cost for a long distance phone call? Now they are "free".

I DO think inflation calculators going back that far are inaccurate, but that is at least partially because we buy different things today than 50 years ago.

Home computers and smart phones did not exist back then, now everyone has one (or 2 or 3)

So true, it's definitely not comparing apples vs apples in several cases. TV's have clearly dropped in price along with other electronic devices. Although gasoline in 1970 was about 25 to 30 cents in the SF Bay Area. Today is about $3.50.

 

[jkern]

While inflation may be higher than the stated rate I do think that house prices in the SF Bay Area are a bit of a special case. The place where I grew up in the NYC area (which is no slouch in house prices) has "only" gone up by 15x or so since 1970, by way of comparison, while I know of other areas where the factor is well under 10x.

I would agree that the SF Bay Area housing costs aren't the best numbers to use with respect to inflation. IMO, it just goes to show that statistical averages can be quite meaningless.

 

[USGrant1962]

So true, it's definitely not comparing apples vs apples in several cases. TV's have clearly dropped in price along with other electronic devices. Although gasoline in 1970 was about 25 to 30 cents in the SF Bay Area. Today is about $3.50.

Inflation-adjusted gas prices are interesting. They are volatile, but over the very long term average $2.86/gal according to one source. More than the current price, setting aside the taxes and special blends in CA.

EDIT - there was a low-point in 1972 of $2.22/gal, gasbuddy.com says the closes station to me is at $2.25/gal.

 

[CardsFan]

So true, it's definitely not comparing apples vs apples in several cases. TV's have clearly dropped in price along with other electronic devices. Although gasoline in 1970 was about 25 to 30 cents in the SF Bay Area. Today is about $3.50.

I was quoting 1978. Check the data. Can you say Oil Embargo?

 

[jollystomper]

Amazing how the presentation of rich on TV differs from real life or the "Newsweek rich" (many on this page).

The rich on TV take world class vacations, live in up scale houses, spend time at the country club, drive around in their high dollar convertibles, and spend inordinate amounts of time shopping (Jay and Gloria Pritchett on Modern Family).

Even middle class characters on TV seem rich to me. The house the Griswalds (from Christmas Vacation) live in is as nice or nicer than the homes in my neighborhood. Clark Griswald's job normally generates enough of a bonus (except for the jelly of the month year) to put in an in ground pool. How many non-millionaires have an extra $100,000 (after tax) bonus to afford a pool?

In the real world, even those in the 1% know their real wealth is stored in their home equity and their retirement accounts, and you are lucky to have enough left over to send your kids to college, to pay your health care costs, and not go bankrupt when the roof needs replacing or the hvac breaks.

Its simple. Being real life rich is, for the most part, boring . Portraying that kind of lifestyle would garner few, if any, viewers. Can you imagine a show "Modern LBYM Family", portraying people living below their means for long term goals and happy about it? It would draw far more criticism than viewers.

 

[CSdot]

Its simple. Being real life rich is, for the most part, boring . Portraying that kind of lifestyle would garner few, if any, viewers. Can you imagine a show "Modern LBYM Family", portraying people living below their means for long term goals and happy about it? It would draw far more criticism than viewers.

Good point. Even TV's representation of the common working man (e.g. Everyone Loves Raymond or King of Queens) lives better than how I imagine 40% of our country (those who can't come up with $400 in the case of an emergency) live.

 

[Amethyst]

"Free" due to a monthly subscription cost, which in 1978 would have been a week's salary for most.

But your points are well taken.

Remember the cost for a long distance phone call? Now they are "free".

I

 

[CardsFan]

"Free" due to a monthly subscription cost, which in 1978 would have been a week's salary for most.

But your points are well taken.

And that is why "free" was in quotes.

Regarding the bold: now we get back to inflation. $100 today gets a pretty good plan. Still less than a lot of weekly salaries in 1978, and adjusted for "inflation" a lot more less.

 

[OldShooter]

If you're really bored: CPI fact sheets: https://www.bls.gov/cpi/factsheets/

Particularly interesting IMO "hedonic adjustments:" https://www.bls.gov/cpi/factsheets/common-misconceptions-about-cpi.htm

 

[ArmchairMillionaire23]

Amazing how the presentation of rich on TV differs from real life or the "Newsweek rich" (many on this page).
Even middle class characters on TV seem rich to me. The house the Griswalds (from Christmas Vacation) live in is as nice or nicer than the homes in my neighborhood. Clark Griswald's job normally generates enough of a bonus (except for the jelly of the month year) to put in an in ground pool. How many non-millionaires have an extra $100,000 (after tax) bonus to afford a pool?

As an avid Christmas Vacation fan I feel the need to point out that Clark Griswold's (correct spelling) bonus was only to help cover the down payment on the pool. And while he might have lived in that nice big house, he mentions that without the bonus he didn't even have enough money in the bank to cover that down payment.
So that's why he snapped and did that amazing rant that is one of my favorite parts of that movie.

 

[Amethyst]

I think of the young marrieds in 1930's (Depression-era!) movies, who always seem to have a cook and somebody who comes in to clean, even though she stays home and he has some entry-level job.

Amazing how the presentation of rich on TV differs from real life or the "Newsweek rich" (many on this page).

The rich on TV take world class vacations, live in up scale houses, spend time at the country club, drive around in their high dollar convertibles, and spend inordinate amounts of time shopping (Jay and Gloria Pritchett on Modern Family).

Even middle class characters on TV seem rich to me. The house the Griswalds (from Christmas Vacation) live in is as nice or nicer than the homes in my neighborhood. Clark Griswald's job normally generates enough of a bonus (except for the jelly of the month year) to put in an in ground pool. How many non-millionaires have an extra $100,000 (after tax) bonus to afford a pool?

In the real world, even those in the 1% know their real wealth is stored in their home equity and their retirement accounts, and you are lucky to have enough left over to send your kids to college, to pay your health care costs, and not go bankrupt when the roof needs replacing or the hvac breaks.

 

[CardsFan]

I think of the young marrieds in 1930's (Depression-era!) movies, who always seem to have a cook and somebody who comes in to clean, even though she stays home and he has some entry-level job.

And, of course, movies always mirror reality?

 

[tdv2]

https://dqydj.com/average-median-top-net-worth-percentiles/

 

[statsman]

And, of course, movies always mirror reality?

Hollywood and its stars would like for you to believe it and that they know better than most.

 

[Perryinva]

I don’t think ANYONE in the 1% worries one whit about a new roof. I’m in the 10% and don’t worry about anything like that.

 

[CaptTom]

I think of the young marrieds in 1930's (Depression-era!) movies, who always seem to have a cook and somebody who comes in to clean, even though she stays home and he has some entry-level job.

Disregarding for a moment that movies aren't reality, I think there's a grain of truth there.

My impression is that labor used to be cheaper (relatively) than it is today.

I'm sure someone has statistics on this, so I'll stand corrected if necessary. But it seems that more businesses, and even people, had more staff in the past. Farm laborers, busboys, elevator operators, bathroom attendants, gas pump jockeys, even in-home staff for middle-class families. Every step in almost every manufacturing process used more labor.

I wonder how this impacts or is impacted by cost-of-living calculations.

 

[GravitySucks]

You didn't see movies or tv shows about the in home staff people. They lived in tenements or actual shacks.

 

[Andre1969]

I am assuming uphill both ways.....

Well, the road out that way does go through a valley, so technically yeah, it IS uphill, both ways

 

[Music Lover]

And, of course, movies always mirror reality?

Don't forget TV shows where unemployed or low wage earners in New York live in massive apartments.