$2.27 million to feel wealthy - 3% withdrawal rate

[AnonEMouse]

Just another fluff piece, but this year's survey says it takes $2.27 million to feel wealthy.

https://www.cnn.com/2019/05/31/success/feel-wealthy/index.html

What I found most interesting though is this:

"For many people, being wealthy means being financially independent and not having to work for a living, says Bradley Nelson, of Lyon Park Advisors. He says a family with a net worth of $2.27 million could easily be wealthy.
If that family spent a conservative 3% of their assets each year, they would have $68,100 a year to live on. That's more than the median household income in the United States of $61,000 -- without even having to work."

Notice the 3% in there? I'm surprised to see it in a mainstream publication instead of the typical 4%.

The full report with a lot more statistics is here for the statistic hounds:

https://content.schwab.com/web/reta...9-Modern-Wealth-Survey-findings-0519-9JBP.pdf

 

[Ronstar]

....it takes $2.27 million to feel wealthy.....

It would take a lot more than that at our house to feel wealthy.

 

[aaronc879]

I would feel wealthy with half that but i'm single and have always been a low spender since I have never made $50K+/yr in my life.

 

[athena53]

I retired 5 years ago in a LCOL area with about $2.6 million, and it's now a little over $3 million. I don't think of myself as "wealthy" because I drive a 7-year old Nissan Sentra, bought used, I'm wearing a T-shirt right now that's over 30 years old, I get my hair cut at Great Clips, etc. Ah, but then there's my travel budget.

Yes, I guess I AM wealthy. I prefer to be quiet about it, though.

 

[NW-Bound]

It would take a lot more than that at our house to feel wealthy.

+1

The more you have, the more it takes to feel wealthy.

 

[ShokWaveRider]

Does $2.27m include a home equity? I hope not. $2.2m CASH would be a little different.

Disclaimer, this is my initial observation based on the OP, I have not read the whole article yet.

 

[NW-Bound]

Yes. One needs to have $2.2M in cash, as a buffer to the stock/bond AA to feel wealthy.

Now, that would be RICH!

 

[JustCurious]

He says a family with a net worth of $2.27 million could easily be wealthy. If that family spent a conservative 3% of their assets each year, they would have $68,100 a year to live on.

Does he understand the difference between net worth and liquid savings and investments?

A family with a net worth of $2.2 million may have a house worth $500,000 and savings of $1.7 million, and their withdrawal rate would be 4%, not 3%.

 

[monte1022]

Yes. One needs to have $2.2M in cash, as a buffer to the stock/bond AA to feel wealthy.

Now, that would be RICH!

....until you factor in the cost of healthcare. Fix my HC costs until medicare age and I'm finished...otherwise

 

[Car-Guy]

Well over that just in cash and I don't feel wealthy. Comfortable yes, but not wealthy.

 

[karen1972]

I think my definition of wealthy if very different than the articles.. I mean being able to generate slightly above the average American salary puts one in upper middle class, not wealthy status.

To me wealthy means never having to look at what something costs before you buy it. $68k would still require a fair amount of budgeting.

I think you have to be uber-wealthy before you buy your own jet and own a yacht with staff, but a wealthy person should be able to fly first class, go to galas, get an expensive hobby, etc without limits.. no way you are doing that on the numbers they proposed.

Of course, MOST Americans will never get anywhere close to $2.27M so for them they think they would feel wealthy until they have that and the harsh reality of "but you are not" sets in. I call it comfortable, someone with $2.27 is comfortable and can get nice things occasionally and doesn't struggle day to day.

 

[karen1972]

Well over that just in cash and I don't feel wealthy. Comfortable yes, but not wealthy.

Ha funny we both thought the same word at the same time.

 

[braumeister]

Wealthy where the median income is $115,000, or wealthy where it's $20,000?

 

[NW-Bound]

Does $2.27m include a home equity? I hope not. $2.2m CASH would be a little different.

Disclaimer, this is my initial observation based on the OP, I have not read the whole article yet.

Yes. One needs to have $2.2M in cash, as a buffer to the stock/bond AA to feel wealthy.

Now, that would be RICH!

....until you factor in the cost of healthcare. Fix my HC costs until medicare age and I'm finished...otherwise

Well over that just in cash and I don't feel wealthy. Comfortable yes, but not wealthy.

When an earlier poster says $2.2M in CASH (in capital), I take that as cash in addition to stocks and bonds, like in an AA of 60% stock, 35% bond, 5% cash.

If I had that, yes I would feel rich. And I would not worry about healthcare cost.

PS. But then, someone with that still could not afford a real yacht nor a jet, which is more than his total networth. He might not feel rich either.

 

[Dtail]

If one has 2.2m in investments plus some SS and possibly pensions, one might not be wealthy but could be very comfortable.

 

[FreeBear]

Nuts, I already thought I was wealthy, sitting here in my PJ's at noon still drinking coffee on the deck! I feel rich just workin' at nothin' all day.

With 2.27 mil I'd really go crazy, like move to San Diego, or at least buy an RV or, heaven forbid, a boat. Oh well, folks always said I was a slow learner...

 

[Souschef]

Yes, I guess I AM wealthy. I prefer to be quiet about it, though.

+1 We live in a +55 MHP, with a lot of people living on SS. NOBODY has any idea what we have, and we will keep it that way.
It was a little difficult last year, when we bought 2 new cars, and I made an offhand remark about car payments.
I was talking to someone the other day, who asked how long we had lived here. He said,"Do you mind if I ask you how much you paid?". I said , "yes", and that ended that discussion. At least he had the courtesy to ask.

 

[LOL!]

.... He says a family with a net worth of $2.27 million could easily be wealthy.
If that family spent a conservative 3% of their assets each year, they would have $68,100 a year to live on. That's more than the median household income in the United States of $61,000 -- without even having to work."

Notice the 3% in there? I'm surprised to see it in a mainstream publication instead of the typical 4%.

I am not surprised since 4% was for someone in their 60's and not for a family. In this context I will assume "family" means a household with school-age children iiving at home.

 

[NW-Bound]

Nuts, I already thought I was wealthy, sitting here in my PJ's at noon still drinking coffee on the deck! I feel rich just workin' at nothin' all day.

With 2.27 mil I'd really go crazy, like move to San Diego, or at least buy an RV or, heaven forbid, a boat. Oh well, folks always said I was a slow learner...

With that money, if you move to SD, you can buy a little condo of less than 1,000-sq.ft.

Anything bigger, you will not have enough left to eat.

 

[NW-Bound]

Ah, last night I was surfing youtube looking at travel videos. I watched some intrepid travelers who went to Belarus, Moldova, Southern Urals, etc.... There was a guy who ventured into the forbidden radiation zone of Chernobyl, and found an old man living there alone.

Boy, seeing how people live in this day and age makes me appreciate what I have. Just came back from a car trek through the countryside of Portugal and Spain, which was nowhere as bad as the above, I knew how people lived.

Heck, just in my extensive RV trips through the corners of US and Canada, I saw plenty too.

Rich, rich, rich... It's all a state of mind.

 

[audreyh1]

There is always another higher bar to exceed......

 

[AnonEMouse]

I am not surprised since 4% was for someone in their 60's and not for a family. In this context I will assume "family" means a household with school-age children iiving at home.

Bill Bengen said this last year (emphasis mine):

"So far, I have not seen any indication that the 4.5% rule will be violated. Both the 2000 and 2007 retirees, who experienced big bear markets early in retirement, appear to be doing OK with 4.5%. However, if we were to encounter a decade or more of high inflation, that might change things. In my opinion, inflation is the retiree's worst enemy. As your "time horizon" increases beyond 30 years, as you might expect, the safe withdrawal rate decreases. For example for 35 years, I calculated 4.3%; for 40 years, 4.2%; and for 45 years, 4.1%. I have a chart listing all these in a book I wrote in 2006, but I know Reddit frowns on self-promotion, so that is the last I will have to say about that. If you plan to live forever, 4% should do it."

https://www.reddit.com/r/financiali..._bill_bengen_and_i_first_proposed_the_4_safe/

For context, he updated the 4% to 4.5% for a 30 year run. I know many folks here use much lower rates and are proud of it.

Of course there is a conflict of interest for a FA citing a 3% vs 4% rate - a lower rate would naturally mean you'd need the FA's service for a bit longer. Though I wonder if general attitudes are shifting towards a lower withdrawal rate and cause a self-fulfilling prophesy since as more capital is shifted to investments, the returns would tend to be lower.

 

[Mdlerth]

CNN: doling out shame since 1991

What is it about CNN that compels them to festoon their articles with sanctimonious irritants?

Russ Ford considers himself wealthy, but it has taken him a while to say it without feeling guilty.

What a crock. "Feeling guilty"? The only people who should "feel guilty" are people who actually ARE guilty of something.

It's not a crime to work and earn and save and invest and improve your financial position. It's not a crime to inherit a pile from a relative you hardly knew. Nor is it a crime to pick the winning lottery ticket.

It's not even a crime to stumble into undeserved celebrity riches via reality cable shows (although maybe it should be).

Nobody should "feel guilty" except criminals... and CNN, for their relentless blame-mongering.

I feel better now.

 

[gwraigty]

What is it about CNN that compels them to festoon their articles with sanctimonious irritants?


What a crock. "Feeling guilty"? The only people who should "feel guilty" are people who actually ARE guilty of something.

It's not a crime to work and earn and save and invest and improve your financial position. It's not a crime to inherit a pile from a relative you hardly knew. Nor is it a crime to pick the winning lottery ticket.

It's not even a crime to stumble into undeserved celebrity riches via reality cable shows (although maybe it should be).

Nobody should "feel guilty" except criminals... and CNN, for their relentless blame-mongering.

I feel better now.

+1

 

[6miths]

It would take a lot more than that at our house to feel wealthy.

+2

In my mind, the idea that 68K spending a year would equate to being 'wealthy' is a bit off. Not consistent with the general idea of wealthy that one sees. We are lucky to have no significant concerns about healthcare costs but it would take much more than that to feel wealthy. Add four kids to the mix and a great deal more! We are wealthy in family, friends, health, etc - and very content to be so.