Poll: What is your definition of wealthy as defined by Annual Withdrawal Rate?

[Theophrastus Bombastus]

Everyone has an idea of what 'wealthy' is, but at what point do you define 'wealthy' as it relates to your annual withdrawal rate or lifestyle spending? I'm not asking for dollars of net worth as a definition.

Example 1: An individual with an investable net worth of $50 million, but an opulent lifestyle (including taxes) that costs $5 million per year is NOT wealthy IMHO - assuming no other sources of income, except the net worth - as the AWR is 10%.

Example 2: An individual with an investable net worth of $600,000 after decades of hard work and living below their means, has Social Security and/or pensions covering $40,000 a year and an annual lifestyle expense of $50,000 (including taxes) might very well be considered 'wealthy' as the AWR is 1.66%.

I guess what I also want to learn is what is your definition of 'wealth' as it relates to 'enough?'

It stems from this interesting story from Kurt Vonnegut about Joe Heller:

True story, Word of Honor:
Joseph Heller, an important and funny writer
now dead,
and I were at a party given by a billionaire
on Shelter Island.
I said, “Joe, how does it make you feel
to know that our host only yesterday
may have made more money
than your novel ‘Catch-22’
has earned in its entire history?”
And Joe said, “I’ve got something he can never have.”
And I said, “What on earth could that be, Joe?”
And Joe said, “The knowledge that I’ve got enough.”
Not bad! Rest in peace!”

— Kurt Vonnegut

Given current stories of celebrities, sports figures, billionaire space tourists, etc, it seems to me that there are a lot of very 'wealthy' people who will never have 'enough.'

Feel free to add your own anecdotes, stories and examples.

 

[Markola]

Not having to work.

 

[COcheesehead]

Having choices.

 

[Car-Guy]

It's probably relative to your desired lifestyle. For me it was enough $ to be able to retire early and not worry about money but still be able to do what I want, within reason. No jet's or yacht's but lots of cars and few houses, keep up with my collectables, etc.

 

[ERD50]

I don't see the point of "definitions" like this. What is to be gained from it?

Anyhow, in your example:

Example 1: An individual with an investable net worth of $50 million, but an opulent lifestyle (including taxes) that costs $5 million per year is NOT wealthy IMHO - assuming no other sources of income, except the net worth - as the AWR is 10%.

That could be fine if the doctors (or judge!) only gave him 5 years to live!

-ERD50

 

[racy]

Some people never have enough, for instance Walt: https://youtu.be/DwIyClDuBgo

 

[G POP]

I don't see the point of "definitions" like this. What is to be gained from it?

^This. ??

 

[38Chevy454]

It's probably relative to your desired lifestyle. For me it was enough $ to be able to retire early and not worry about money but still be able to do what I want, within reason. No jet's or yacht's but lots of cars and few houses, keep up with my collectables, etc.

I like this definition and it pretty much fits my lifestyle. Basically can do almost anything I choose to and not having to worry about the cost.

 

[USGrant1962]

I don't get it either. "Wealthy" is not generally a behaviour-based term, which OP's example tries to make it. The $50M person is wealthy (i.e., can buy anything they want or need without debt; characterized with abundance), until he/she is not.

 

[Still Learning]

Same thought here plus good health that allows us to enjoy our early retirement years, knowing at some point that will change, requiring a major life re-assessment.

 

[W2R]

For me, it was quite amazing when I found that I didn't need or want to withdraw and spend a full 3.5% each year. Most years I withdraw between 0.5%-1.5% instead, and leave the rest in my nest egg. Because of that, my nest egg keeps growing.

Each year, I decide to spend more than in previous years and I do; but since the nest egg keeps growing each year, it's still a small percentage. It's as though I got over a "hump" and now all is golden.

So, I think my definition of wealthy as defined by Annual Withdrawal Rate, is when I can't possibly spend more than 1.5%. At that point it seems that I will always have more than enough.

 

[Humbooster]

Same thought here plus good health that allows us to enjoy our early retirement years, knowing at some point that will change, requiring a major life re-assessment.

That sums it up very well!

 

[G POP]

For me, it was quite amazing when I found that I didn't need or want to withdraw and spend a full 3.5% each year. Most years I withdraw between 0.5%-1.5% instead, and leave the rest in my nest egg. Because of that, my nest egg keeps growing.

Each year, I decide to spend more than in previous years and I do; but since the nest egg keeps growing each year, it's still a small percentage. It's as though I got over a "hump" and now all is golden.

So, I think my definition of wealthy as defined by Annual Withdrawal Rate, is when I can't possibly spend more than 1.5%. At that point it seems that I will always have more than enough.

^this is where I would like to be someday. A place where I can spend X and the porfolio grows by X or X+ each year. Although I have no specific reason for the stash to stay large or grow larger, it is more of just a comfort level/sleep well at night knowing we aren't draining the stash. Not there yet as we are still on the treadmill. We also want enough that we don't have to micro manage the stash/budget/expensies/etc... I don't want to have to think about it after we pull the plug.

 

[timbervest]

It's probably relative to your desired lifestyle. For me it was enough $ to be able to retire early and not worry about money but still be able to do what I want, within reason. No jet's or yacht's but lots of cars and few houses, keep up with my collectables, etc.

I like this. Being able to make any choices you want without having to think about how it will affect future lifestyle or worrying about the money -- but also realizing that there is a lot of stuff out there that I neither need or want to acquire just to make myself happy.

 

[HarryHawk]

A loving family, being able to afford everything I want or need, relatively good health, and a short memory.

 

[W2R]

We also want enough that we don't have to micro manage the stash/budget/expensies/etc... I don't want to have to think about it after we pull the plug.

VERY good idea because you never know what could happen. For example, last September, when I was in the ICU with severe Covid pneumonia and a bad case of "Covid brain fog", I couldn't even remember my age and I thought a 400 mile drive was 2400 miles, as you can see in this post and thread (posted while I was only partly over the brain fog). As you can imagine, I was not even close to capable of my usual micro-managing of my personal finances, but with no spouse to take over such things, what could I do? Just "wing it" and hope for the best. All is well, but I was REALLY glad that I had some leeway.

I am mostly done with the "brain fog" but I would imagine that experience must be what it's like in the early stages of dementia. None of us are guaranteed to be free of dementia in old age. Thus it is pretty smart (IMO) to engineer plenty of "slop" in one's budget as one approaches old age, just in case.

 

[travelover]

What is your definition of wealthy as defined by Annual Withdrawal Rate?

What is your definition of wealthy as defined by Annual Withdrawal Rate?

Wealthy is anyone that has more money to spend than me, though they undoubtedly stole it.
Poor is anyone that has less money than me to spend, though they were probably just too lazy to work as hard as I did.

 

[RobbieB]

I would say a WR over 5%. Push the margins a bit, stay outside the "safe" zone.

Live larger and have fun!

 

[rodi]

Wealthy is more than I have by the thoughts tossed out above.

I *do* have to think about big ticket purchases. Just sold a car to pay for solar for example. Didn't feel comfortable pulling that much from savings.

I could increase my withdrawal rate above the 3.5% that lets us live pretty darn comfortably... But I also have to set limits on our spending. I can splurge here and there... but too many splurges and my stress goes up - and I don't consider stress due to money true wealth.

Another way of putting it... double what I have is wealthy.

 

[Closet_Gamer]

Every year when we're at the beach, I have a moment when I ask myself the question "If i didn't go back to work, how long would it last before we had to leave the beach?"

When the answer is "substantially longer than you're likely to live", you are wealthy.

 

[CardsFan]

Every year when we're at the beach, I have a moment when I ask myself the question "If i didn't go back to work, how long would it last before we had to leave the beach?"

When the answer is "substantially longer than you're likely to live", you are wealthy.

I like this one

Wealthy is anyone that has more money to spend than me, though they undoubtedly stole it.
Poor is anyone that has less money than me to spend, though they were probably just too lazy to work as hard as I did.

But this is good too.

I do think "wealthy" is more in the $50 to $100 million range.

I am happy being "well to do"

 

[GenXguy]

Depending on where you live, size of family, age, unrealized gains, and other factors, it's not a single figure.

For me personally as a single GenXer in a lower cost of living area, I wouldn't even start feeling wealthy until about $5M tax free $. I'm not even half way there, yet some people already call me rich. lol

 

[braumeister]

I think you're talking about "rich".

OTOH, "wealthy" in my mind connotes a completely different level, where you compare your superyacht with someone else's. How many helipads does yours have on it?

 

[Out_the_Door]

'wealthy' to me would be able to dump my wife, lose half my money in the divorce and still live like a king....only kidding, I'm not married but if I was. . .

 

[Sunset]

'wealthy' to me would be able to dump my wife, lose half my money in the divorce and still live like a king....only kidding, I'm not married but if I was. . .

You are being redundant and very optimistic.