The New Rich

[imoldernu]

It's not just the wealthiest 1 percent.
Fully 20 percent of U.S. adults become rich for parts of their lives, wielding outsize influence on America's economy and politics. This little-known group may pose the biggest barrier to reducing the nation's income inequality.
The growing numbers of the U.S. poor have been well documented, but survey data provided to The Associated Press detail the flip side of the record income gap - the rise of the "new rich."
Made up largely of older professionals, working married couples and more educated singles, the new rich are those with household income of $250,000 or more at some point during their working lives. That puts them, if sometimes temporarily, in the top 2 percent of earners.

Even outside periods of unusual wealth, members of this group generally hover in the $100,000-plus income range, keeping them in the top 20 percent of earners.

My Way News - Rising riches: 1 in 5 in US reaches affluence

The article goes on to discuss the lifestyles of the "affluent" which it defines as those in the top 20% of income.

 

[Greencheese]

Soooo... working hard, having 2 household incomes, and making some career path plans early in life can lead to a nice ending career? Who would have thought!

 

[ChiliPepr]

I find this quote very interesting....

[FONT=Verdana,Sans-serif]New research suggests that affluent Americans are more numerous than government data depict, encompassing 21 percent of working-age adults for at least a year by the time they turn 60. That proportion has more than doubled since 1979.[/FONT]

more than double the number of people will be considered "rich" in their lifetime now compared to 1979.

It is always interesting that people think of the top "2%" as a singular group when in reality people move in and out of that group all the time. The thing is, once you get there you always want to get back and that colors your thinking.

 

[timo2]

Did the 1%ers pay for this study, to show that they are not so special after all?

 

[ERD50]

Soooo... working hard, having 2 household incomes, and making some career path plans early in life can lead to a nice ending career? Who would have thought!

The nerve of those people! Don't they realize they are just making others feel bad? They need to knock off this hard work, planning, and education stuff - it just leads to inequality, and we can't have that!

-ERD50

 

[target2019]

Being in the top 20 percentile does not mean affluence. Keep in mind that the numbers always must add up to 100. At one time you were affluent if in this category, but the growing disparity between segments is something to consider.

 

[REWahoo]

Adding more fuel to the fire, here's an article that says all the fuss over the growth in income inequality is overblown and that a better measure of equality/inequality may be individual ("consumer unit" ) spending :

On a per-person basis, households in the top fifth of the income distribution spent 2.5 times the amount spent by the bottom quintile. That was about the same as 25 years ago. There is no increase in inequality. In addition, the overall level of inequality is remarkably small. A person moving from the bottom quintile to the top quintile can expect to increase spending by only 146%.

The income-inequality problem is overblown - Diana Furchtgott-Roth - MarketWatch

 

[Meadbh]

The people in this story are not "rich". They are upper middle class.

 

[Gatordoc50]

Any bubble or downward economic cycle that comes around which would threaten the wealthiest Americans causes the government to step in to protect their tax base. It's gotten worse over the past six years so it's not a party specific scheme.

 

[eytonxav]

The people in this story are not "rich". They are upper middle class.

+1, also if it takes 2 working incomes to hit $250K, that is far from being rich in my mind

 

[Danmar]

This type of topic, ie who are "rich", how many there are, how they got there, etc always is good for a lively discussion. Do you think maybe we(I certainly include myself)are a little obsessed with this kind of thing?
Anyway, income inequality is a serious issue in the US, however you define it. Social stability(which is very good for the rich) depends on the least wealthy accepting their status. Historically, this acceptance was based on a sense of "anybody can make it big" with hard work,etc. not the case so much anymore, I think.

 

[Hamlet]

Well, the households making $250k on two incomes certainly live in an entirely different world than the ones making $40k on two incomes.

The scale of the wealth above them tends to obscure that fact though. It's hard to feel rich when you interact with people that make orders of magnitude more money than you do.

The stratification of wealth and income in this country has reached truly amazing levels. I just look at people I know and it boggles my mind.

My brother makes x. My other brother makes 2x. I make 6x. My dad makes 18x. My Dad is friends with a local business owner that has an order of magnitude more wealth than him, and that business owner has a friend that has an order of magnitude more weath than he has.

Both my Dad and my brother would probably say they are middle class, but they live in entirely different worlds.

+1, also if it takes 2 working incomes to hit $250K, that is far from being rich in my mind

 

[timo2]

My Way News - Rising riches: 1 in 5 in US reaches affluence

The article goes on to discuss the lifestyles of the "affluent" which it defines as those in the top 20% of income.

Why can't this can be simplified by just having 2 categories 'Haves' and 'Have-nots'. For instance, when I go to an NHL game, at the prices of a sporting event, everyone there is basically a 'have'. It doesn't matter the stratification of wealth represented by the Suites, club level, or nose-bleed seats. If a person can afford to be in the arena, they would be a 'Have'.

 

[eytonxav]

Well, the households making $250k on two incomes certainly live in an entirely different world than the ones making $40k on two incomes.

The scale of the wealth above them tends to obscure that fact though. It's hard to feel rich when you interact with people that make orders of magnitude more money than you do.

Of course! But I guess most of us on here would probably equate the true measure of being rich in terms of happiness vs $s. But on the monetary scale, $250K aint much.

 

[Andre1969]

It looks like this is another one of those articles that focuses more on income rather than assets to determine "wealth", and that just doesn't seem right to me.

For instance, I have a friend who lives in Washington DC, who makes about twice what I do. Yet, I have more equity in my house than he does in his condo. He has no car; I have several. And, I also have about 2.5X more in investments/retirement than he does. So, financially speaking, who's really "wealthier"?

And, I consider myself anything BUT wealthy. When I look around and see the situation of others who are not as well off as me, I consider myself lucky, fortunate, grateful, etc. But not wealthy. I'm also nowhere near $250K in annual income, and probably never will be in my lifetime.

 

[Silver]

Why can't this can be simplified by just having 2 categories 'Haves' and 'Have-nots'. For instance, when I go to an NHL game, at the prices of a sporting event, everyone there is basically a 'have'. It doesn't matter the stratification of wealth represented by the Suites, club level, or nose-bleed seats. If a person can afford to be in the arena, they would be a 'Have'.

I agree with this concept. I also believe that those who have, get. While those that don't have, don't get. Wealth brings wealth.

 

[jetpack]

It's very interesting. Of course a lot of people have some success, but then either blow it, or retire on it. It's funny though, the government will help you out more if you blow it, than if you're responsible with it.

I've had the crazy idea of at least part of your taxes to be based on LIFETIME earnings, and not just a yearly slice of it. Young kids starting out should pay less taxes (even with a six figure salary) than those who've been making six figures for decades. I know that investments and things should push the later higher, but not for those that blow their entire salary.

 

[Lsbcal]

Sometimes I wonder ... why we like to rank ourselves in the herd? Why does it matter so much?

 

[jkern]

Generally, I believe that a household income of $250K is upper middle class with sufficient income to make a good financial plan.

However, the level of wealth is highly dependent on location, age and situation. For example, a couple in their early 60's located in a low cost area with no debt, kids grown up, large pension looming and retirement savings full, a $250k yearly income could be rich. On the other hand, a couple in their early 40's living in San Francisco with two kids approaching college age, no future pension and haven't begun saving for retirement, would probably be considered middle class.

 

[W2R]

Sometimes I wonder ... why we like to rank ourselves in the herd? Why does it matter so much?

And especially, why we like to rank ourselves in terms of dollars income! I consider myself to be rich, in a sense, but my idea of what it takes to be rich has almost nothing to do with income. Having oceans of free time, more than the bare necessities, and feeling completely content with every aspect of life is where it's at IMO. I have that, and let the Donald Trumps of the world eat their hearts out.

 

[Midpack]

Sometimes I wonder ... why we like to rank ourselves in the herd? Why does it matter so much?

Not everyone does by any means - based on The Millionaire Next Door among other evidence. However, it does seem to have become more common over my lifetime (associates with materialism?).

I'd guess those who do worry about "rankings" are certainly more vocal/visible that those who don't - so the phenomena seems more common than it really is.

And % of "rich" and wage inequality aren't exactly one in the same IMO. But that's another thread...

 

[daylatedollarshort]

If you want to feel wealthy on a global scale, check out where you stand in terms of wealth and income -

Global Rich List

For grins just enter your household SS income alone and see where that gets you, which explains the popularity of retiring outside the U.S.

Or compared to just OECD countries -

OECD Better Life Index

Average household disposable income is 23K and net worth $40.5K.

One thing we have realized is middle class has a different meaning in the U.S. and many countries in the E.U. Our relatives there who would consider themselves middle class have in general much smaller houses, cars and appliances.

 

[ERD50]

Sometimes I wonder ... why we like to rank ourselves in the herd? Why does it matter so much?

Do we? Does it? Or is it just a discussion topic, fueled by articles like this?

In a similar vein, it seems that 'everyone' has to put a label on music types. I don't care what you call it, I think Duke said "There are only two kinds of music, good music and the other kind" (or was that Country and Western?)

But that doesn't stop people from discussing it.

-ERD50

 

[Hamlet]

This reminds me of the intro to Bogle's book--

"At a party given by a billionaire on Shelter Island, Kurt Vonnegut informs his pal, Joseph Heller, that their host, a hedge fund manager, had made more money in a single day than Heller had earned from his wildly popular novel Catch 22 over its whole history. Heller responds, "Yes, but I have something he will never have . . . Enough.."

- From Introduction, Enough, by John C. Bogle.​

And especially, why we like to rank ourselves in terms of dollars income! I consider myself to be rich, in a sense, but my idea of what it takes to be rich has almost nothing to do with income. Having oceans of free time, more than the bare necessities, and feeling completely content with every aspect of life is where it's at IMO. I have that, and let the Donald Trumps of the world eat their hearts out.

 

[2soon2tell]

W2R,

Well said. Being rich is a state of mind that has little to do with annual income. Maybe we need a satisfaction index rather than an income scale to compare ourselves to others.