When Is A Retiree Considered Wealthy?

[GenXguy]

I just had a thought (dangerous, I know.)

The way to decide the "value" of $150K/year, ending at death vs $3.2 M is exactly that.

Which would you rather have??

I would take the $3.2 M in a Roth account vs. $150 K/yr taxable pension.

The "only $128 K/yr" comment earlier was amusing. That calculator posted the other day shows that well into the upper class in the Chicago metro area for a household of my size (1).

 

[karen1972]

To be fair, if we employ the 4% standard, a $3.2 million nest egg can generate only $128k per year. Around here, at least, that's fairly middle class. As of 2021, median household income for a household headed by a 45-64 year old in Connecticut is $104,155. https://www.incomebyzipcode.com/connecticut

True but $128k in investment income is very different that $104,155 in earned income. The couple getting paid $104k would only be taking home $80k after SS, FICA, taxes. So while $128k person may pay some in taxes, they are likely still left with $40k more they can spend each year on fun stuff.

And thats ignoring the fact the $104k earning still likely is putting away for retirement, leaving them far less disposable income.

 

[Phroig]

I don’t think the folks with the $3M+ are saying that they don’t feel fortunate or satisfied or content. They’re just saying they don’t feel monetarily wealthy. As many have pointed out on the thread, there’s a difference, and “feeling” wealthy is relative.

 

[COcheesehead]

I don’t think the folks with the $3M+ are saying that they don’t feel fortunate or satisfied or content. They’re just saying they don’t feel monetarily wealthy. As many have pointed out on the thread, there’s a difference, and “feeling” wealthy is relative.

Someone told me longer ago being rich means having choices.

 

[Gumby]

I know objectively that we are wealthy and have been for a very long time, but I do not "feel" wealthy. I guess some people never outgrow the trailer parks of their youth.

 

[brett]

I do not consider myself wealthy from a financial perspective. My spouse thinks the opposite. She believes that some of her family would call her wealthy. I disagree. More like we have a comfortable life.

I never really think about it in terms of how much we have. I think of in terms of how fortunate I am to be able to do what I want to do in retirement and the good health to enjoy it. We have a very simple lifestyle but we do like to travel internationally.

I have never understood this business of comparing wealth, net worth, income whatever to others. It seems so pointless to me.

We care about our retirement income and our investment balances/performance. We really do not care how it stacks up with anyone else. Really....why should we?? It seems so pointless.

If you compared our two vehicles with what others in our cul de sac own you might come to the conclusion that the are the poor cousins. If you compared the amount of international travel that we do you might arrive at a different conclusion. It is all relative.

The more relevant question might be 'are you happy with your life and your lifestyle'

 

[Koolau]

I know objectively that we are wealthy and have been for a very long time, but I do not "feel" wealthy. I guess some people never outgrow the trailer parks of their youth.

Slum in my case. Oddly, I live in that same slum as I type this, so I guess you never really outgrow where you came from. Of course, full disclosure: DW and I have fixed the old slum up to be a very nice home-away-from-home. Now, from the outside, it looks like a nice old farm house stuck in the middle of a decent neighborhood of older and newer houses. (But upstairs, some of my old toys remind me of the times I have spent here.)

I never wanted to look or seem wealthy. I wanted a nice life style, able to do most of the things I want to do and live where I want to live. I've achieved that so I have enough. Wealthy - it's just a word.

 

[timbervest]

Anyone who is happy in life, and has enough time and resources to do whatever fulfills them is wealthy in my book.

 

[jldavid47]

I have never understood this business of comparing wealth, net worth, income whatever to others. It seems so pointless to me.

We care about our retirement income and our investment balances/performance. We really do not care how it stacks up with anyone else. Really....why should we?? It seems so pointless.

+1

 

[JohnnyBGoode]

I, too, saw this video on my YouTube home page and watched it (skimmed through the mean/median discussion, which is important but I'm clear on). Like others on this thread, I thought it was well done and the numbers seemed right, as far as they go.

However, I have difficulty with these national averages when the COL varies so much. $3.2M in the Bay Area or Midtown Manhattan is nothing like $3.2M in rural Louisiana. At either extreme, the numbers may feel "off". But it is interesting nonetheless.

 

[GenXguy]

I have never understood this business of comparing wealth, net worth, income whatever to others. It seems so pointless to me.

Well, if you're not comparing directly, you can accomplish a similar effect by gloating about how much your stash is, talking about your wealth, how nice of a pension you have, and that you don't even count social security in your retirement because you don't need it.

 

[ChrisC]

I would take the $3.2 M in a Roth account vs. $150 K/yr taxable pension.

The "only $128 K/yr" comment earlier was amusing. That calculator posted the other day shows that well into the upper class in the Chicago metro area for a household of my size (1).

If you won the lottery with a $3.2million jackpot, would you take the lump sum option or the annuity option? I’m pretty sure I’d take the annuity option especially if it had a 100% survivor or heir annuity payment which most lottery jackpots now provide. Isn’t choosing the course of action grounded in a similar analysis if a pension allows you to cash out the pension stream of income. There are various factors to this analysis like using an appropriate interest rate for discounting the present value of income streams or how solvent is the paying entity for the income stream. Or how much interest or COLA adjustment would be paid out each year of payment.

We’re very fortunate to have very generous COLA pensions and Social Security benefits, which completely covers all living expenses, including taxes, which amount to the single largest expense to us. These income streams are force multipliers, permitting us to take greater investment risk without touching our investable assets, thereby increasing our net worth. For instance, since we retired 10 years ago, our net worth has doubled!

 

[scrabbler1]

I considered myself wealthy when I was able to enjoy the same day-to-day lifestyle of living but not having to work any more to enjoy it. This is because, at age 45 (when I ERed) the taxable part of my portfolio could sustain it at least until I could access other income and asset sources years later.

 

[audreyh1]

We’re right at $3.2 M investable assets. This sure isn’t what I think of as wealthy.

Sorry, you are wealthy, ha ha.

 

[brucethebroker]

Comparison is the thief of joy

Originally from Teddy Roosevelt, based on internet research.

 

[jollystomper]

... As your financial standing improves throughout life, you simply get used to it. And while a $3.2M net worth, for example, might not be normal across the general population, it will probably feel "normal" to YOU! And I don't think it means you're out of touch, necessarily. For instance, I realize, even at my relatively paltry ~$2.4M (plus home equity...I'm one of those that doesn't take it into account) puts me into a fairly lucky group. For instance, the next time the car breaks down, instead of whining about it and fixing it, I could afford to go pay cash for a new one. Most people probably can't do that. If I lost my job tomorrow, I'd be okay, and most likely would not look for another, and use that as an excuse to finally retire. Again, most people can't do that, either. If I really wanted to, I could upgrade this aging iPhone 7S with the latest model, and then replace THAT one with whatever comes out next. Oh, wait, that one's not a good example...I know plenty of less well-off people who do that, and it's one of the things that keeps them poor!

I agree with this. Many of the things we look at as nuisances or (even "pet peeves") are major issues for the majority of people. A car break down does not mean we will have to choose what bill to skip payment on, or even to reduce our eating (or go hungry for a few days). The majority of folks who find out I choose not to work are surprised that I can do that; in fact, when I retired and DW kept working, many of her friends thought she had to work because I retired - so were additionally surprised when she retired.

To me, being out of touch would be asking someone with an older car that just broke down..."Why don't you just get a new one?" Or, if their neighborhood is going south, "Why don't you just move?" and so on. Stuff like that. Basically, thinking that if you can do it, why can't others? I think most of us, in the lower millionaire range, are probably in pretty good touch with the way things are. We realize that it's not the norm for most of the world. But, we've just gotten used to it, so it's normal to US.

This is also true. We cannot assume that folks have the resources to handle the issues in the same way that we can. It is fine to be wealthy, just do not be tone-deaf .

 

[aja8888]

Again, I see your point, though many of us (in addition to taking care of our dear spouse) wish to have our money out live us toward some "greater purpose." We have charities that will live on long after we are gone. Naturally, YMMV.

I'm sure the charities will appreciate your gift long after you are gone. The mailings will still continue asking for more, I guess. Now if you have a "foundation", then you can continue to give, unless the people who run the foundation have other ideas!

 

[Koolau]

I'm sure the charities will appreciate your gift long after you are gone. The mailings will still continue asking for more, I guess. Now if you have a "foundation", then you can continue to give, unless the people who run the foundation have other ideas!

Oddly, the ones we give to rarely send dunning notices. We already KNOW what's going on. We get news letters, etc. Rarely do they ask for money. They'll know when we're gone because someone will tell them - we're friends.

 

[ShokWaveRider]

OK. Points made, we are all wealthy here in our own way, us included. Having a little extra money from SS surely helps.

 

[LateToFIRE]

I've mentioned this little story before, but there's an episode of "Newhart", where the spoiled maid Stephanie goes home to see her wealthy parents, and bring her boyfriend, the yuppie/social climber Michael Harris. Michael is just blown over by everything he sees as the Vanderkellen estate, and like every other word out of his mouth is "WOW!"

The father, who I think was played by Jose Ferrer, said something along the lines of "Sometimes you forget to appreciate all the things you have, until you see them through the eyes of someone who is agog."

And, I think there's some truth to that. As your financial standing improves throughout life, you simply get used to it. And while a $3.2M net worth, for example, might not be normal across the general population, it will probably feel "normal" to YOU! And I don't think it means you're out of touch, necessarily. For instance, I realize, even at my relatively paltry ~$2.4M (plus home equity...I'm one of those that doesn't take it into account) puts me into a fairly lucky group. For instance, the next time the car breaks down, instead of whining about it and fixing it, I could afford to go pay cash for a new one. Most people probably can't do that. If I lost my job tomorrow, I'd be okay, and most likely would not look for another, and use that as an excuse to finally retire. Again, most people can't do that, either. If I really wanted to, I could upgrade this aging iPhone 7S with the latest model, and then replace THAT one with whatever comes out next. Oh, wait, that one's not a good example...I know plenty of less well-off people who do that, and it's one of the things that keeps them poor!

To me, being out of touch would be asking someone with an older car that just broke down..."Why don't you just get a new one?" Or, if their neighborhood is going south, "Why don't you just move?" and so on. Stuff like that. Basically, thinking that if you can do it, why can't others? I think most of us, in the lower millionaire range, are probably in pretty good touch with the way things are. We realize that it's not the norm for most of the world. But, we've just gotten used to it, so it's normal to US.

This really resonates with me. In my ~60 year lifetime I've transitioned through a multitude of economic classes (like nearly all of them), ultimately landing somewhere between "wealthy" and "super-wealthy" on the scale under discussion (though I would never describe myself in those words).

FYI, the usual cut-off $$$ for the one-percent I've consistently read is NW around $10-11M (I'm inching closer and closer depending how the market is doing and how aggressively I mark my assets but may never quite make it if I retire shortly as expected). I also saw a credible survey (Knight-Frank) that put the cut-off at $5M (for the U.S.), in which case, hot dog I'm in the 1%, woo hoo... as in really doesn't feel like it but who's complaining.

Just the other day I was at a $12M penthouse apartment (not mine) overlooking the NYC skyline - now that's what I call "wealthy". And that's not even the swankiest city apartment I've been hosted in - not even close. And let's not even speak of the art collections, the designer interiors, the Park Avenue addresses, etc. No one will believe me but, most of these people I'm describing are actually reasonably down to Earth, other than being well... kinda rich (and "gifted" with an overactive degree of ambition).

Anyhow, I'm sure we all suffer from some form of "hedonic adaptation," which is to say that we are centered in our own normal. If my normal acquaintances are multi-millionaires then I feel quite middle class in that crowd. I am not envious of those with a bigger pile than mine - I know what it took for many of those people to achieve what they have, I've seen the multiple divorces, the messed up kids in lifelong psychotherapy, the social anxieties, the broken business partnerships, the fortunes won and lost, and I'm acutely aware that money does not necessarily equal happiness or contentment.

I know that if I kept slogging it out under the hot sun in the salt mines for another few years, I could join the "super-wealthy," but why would I want to do that? The thing I enjoy about reading this forum is the stories people tell about how they think about what is ENOUGH. And that is very refreshing!

 

[Ronstar]

…I never wanted to look or seem wealthy….

Same here. And I think I’ve accomplished it.

We live on a small pontoon boat lake. I was doing yard work in the backyard and I overheard someone in a pontoon boat say to their boat mates “ Look- they gave a gardener”

 

[Koolau]

Same here. And I think I’ve accomplished it.

We live on a small pontoon boat lake. I was doing yard work in the backyard and I overheard someone in a pontoon boat say to their boat mates “ Look- they gave a gardener”

That happened with my dad. Someone saw him w*rking in his garden. They stopped at the house and asked who he was and if they could hire him too. They thought his garden was amazing (and it always was.) My dad got a kick out of it.

 

[street]

Same here. And I think I’ve accomplished it.

We live on a small pontoon boat lake. I was doing yard work in the backyard and I overheard someone in a pontoon boat say to their boat mates “ Look- they gave a gardener”

LOL!

No way do I want to be viewed as a wealthy person either. I also am doing a great job not to be and just feel natural for me any way.

I buy gas with cash and also just put in 20$ worth at a time. The counter people know that and the way I'm dressed I'm sure they feel sorry for me. I appear and fit the Vagabond style and I feel like a pauper most days.

I feel at home with hand me downs and never have had any desire to wear the fancy decked out style or have the best of anything. Used wore out and recycled things is my life.

I always go incognito plan and simple.

 

[Ronstar]

LOL!

No way do I want to be viewed as a wealthy person either. I also am doing a great job not to be and just feel natural for me any way.

I buy gas with cash and also just put in 20$ worth at a time. The counter people know that and the way I'm dressed I'm sure they feel sorry for me. I appear and fit the Vagabond style and I feel like a pauper most days.

I feel at home with hand me downs and never have had any desire to wear the fancy decked out style or have the best of anything. Used wore out and recycled things is my life.

I always go incognito plan and simple.

I go incognito and simple too. But I've noticed that incognito and simple doesn't work in car dealers. I went into a Ferrari dealer in Scottsdale in summer to cool off, and a Bentley dealer in Chicago in winter to warm up. Dressed like a slug both times. Both times a salesman graciously met me , asked me what car I was interested in. They were still nice after I told them that I was just there to cool off (or warm up). Let me sit down and stay as long as I wanted.

But they never know when an incognito and simple looking person is there to buy a $500k car.

 

[explanade]

Wide gap in the top two percentiles.

At 4% withdrawal, it's about $120k?

So the spending for actual living expenses after taxes doesn't seem ... wealthy. Maybe upper middle class or the highest part of the middle class.