Rich VS Wealthy

Major Tom said:
A million dollars can generate income of around 25-40K a year,
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So my pension IS worth a million dollars... And if one of us manages to live another 26 years we will collect it all.
 
Car-Guy said:
So again, two people, with a net worth of 100k each today, will retire from the same company tomorrow. Person #1 takes the lump sum retirement settlement that is worth 1m. Person #2 takes the annuity that is calculated to be an equivalent that's paid out over his retirement.

So person #1 is now worth 1.1m on the day he retires but person #2 is still only worth 100k when he retires?
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Correct once again, proving that Net Worth is not the best metric for all occasions.

Now while person #1 is drawing down his investment balance year after year, person #2 could be building up his balance with excess income. Exact numbers matter in this situation...
 
finnski1 said:
That's correct.:)
Person 1 gets hit by a bus the next day. His heirs get 1.1 million
person 2 gets hit by a bus the next day. His heirs get .1 million
note: this would be assuming single with no spouse getting a JS annuity.;)
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...and also without a ten year guarantee period...
 
marko said:
In our area you need $30k just to rent a somewhat decent apartment. $2500 a month doesn't get you much in Boston. Needing a roommate or three isn't what I'd call middle class.
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I agree.
My property taxes are just over $10k per year now.
An older single person with just $30k income would qualify for the senior citizen low income tax credit, definitely not middle class...
 
marko said:
In our area you need $30k just to rent a somewhat decent apartment. $2500 a month doesn't get you much in Boston. Needing a roommate or three isn't what I'd call middle class.
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I wasn't referring to someone having to rent an apartment, a challenging task for many, especially in HCOL areas. I own my apartment outright, so my housing cost is the monthly maintenance payment, far less than rent. Furthermore, I qualify for a state property tax rebate which knocks off about $100 per month, or about 40% of the property tax portion of the monthly maintenance. That rebate would be higher if I were at 65 years old, which I am not, yet.

Major Tom, my annual spend is about $21k (in a HCOL area) and I do consider myself middle class even though I don't live in a house with a backyard and a private garage, etc.
 
scrabbler1 said:
Two points: (1), are you referring to per person or household? $30k for one person is surely enough to live middle class... And I live in a HCOL.
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The median household income in my town is $97,785 (Source https://www.incomebyzipcode.com). Pew defines the middle class as those earning from two-thirds to double the median household income. ( https://www.investopedia.com/financial-edge/0912/which-income-class-are-you.aspx)

Using that data and definition, a middle class household income around here would be between $65,190 and $195,570. If we follow the lead of the census and use the square root of the number of people in a household to normalize income, assuming there are two wage earners in most households, that means a single person household would need about 71% of the median (1/(2^-2)), or around $46,221 to $130,139 per year.
 
Gumby said:
The median household income in my town is $97,785 (Source https://www.incomebyzipcode.com). Pew defines the middle class as those earning from two-thirds to double the median household income. ( https://www.investopedia.com/financial-edge/0912/which-income-class-are-you.aspx)

Using that data and definition, a middle class household income around here would be between $65,190 and $195,570. If we follow the lead of the census and use the square root of the number of people in a household to normalize income, assuming there are two wage earners in most households, that means a single person household would need about 71% of the median (1/(2^-2)), or around $46,221 to $130,139 per year.
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So, when I sold off my actively managed stock fund which had been generating enough investment income to put my overall income at $46k and bought into a comparable stock index fund which generated nearly no investment income, thereby lowing my total income to $30k (so I could qualify for a big ACA premium subsidy), I somehow dropped out of the middle class and became lower class? :confused:
 
scrabbler1 said:
So, when I sold off my actively managed stock fund which had been generating enough investment income to put my overall income at $46k and bought into a comparable stock index fund which generated nearly no investment income, thereby lowing my total income to $30k (so I could qualify for a big ACA premium subsidy), I somehow dropped out of the middle class and became lower class? :confused:
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The numbers in my post are, to my knowledge, based solely on reported income, not unrealized capital gains or, indeed, any type of asset. But if it is important to you to be considered middle class, then I say you are.
 
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Car-Guy said:
Wow, using the same link it says the nearest town to me has a median income of 27k but for the entire county it's 48k. Sort of puts things in perspective for me.
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If you really want some prospective, look at a chart that breaks down the percentages for the US. For example, the top 1%, 5%, 10% . . . Then, look at the same chart for the world.

A net worth of $93,170 U.S. is enough to make you richer than 90 percent of people around the world
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And it takes a net worth of $871,320 to join the global 1 percent.
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https://www.cnbc.com/2018/11/07/how...o-be-in-the-richest-10-percent-worldwide.html
 
Gumby said:
Pew defines the middle class as those earning from two-thirds to double the median household income.
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I'm right in between the median and the mean for my town, so I guess that's about as middle class as you can get. But I feel more affluent than that because it's more than enough for my needs.
 
scrabbler1 said:
Major Tom, my annual spend is about $21k (in a HCOL area) and I do consider myself middle class even though I don't live in a house with a backyard and a private garage, etc.
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I consider myself middle class too, though I don't own my home, and my annual spend is around $27K. To make it more complicated, I grew up in the UK, where class is thought of as much in terms of social concerns as it is in terms of financial ones. I always had the impression that in the US, class is defined more in terms of income.

Who knows. Financially, I am not middle class. Socially, I do consider myself middle class. These class distinctions could form the basis of a whole new thread.
 
Gumby said:
The median household income in my town is $97,785 (Source https://www.incomebyzipcode.com). Pew defines the middle class as those earning from two-thirds to double the median household income. ( https://www.investopedia.com/financial-edge/0912/which-income-class-are-you.aspx
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For my zip code, that source says the median household income is $64,513. So, middle class would be from $43,009 to $129,026. How about that! Following Gumby's explanation of the methodology for single people, I can multiply by 0.71 so that makes the range for a one person middle class household $30,536-$91,608. My AGI puts me solidly in the middle class, and above that (I guess lower-upper class?) for 3 of the past 5 years.

No wonder I feel "whipped" after doing my taxes each year. I'm (supposedly) upper class? :ROFLMAO: And I'm worried about the cost of a new roof if I can even find a roofer with the time to do the work. The people that create these definitions need to get out into the real world, IMO.

Socially, well, I was brought up with much wealthier people than I will ever be ("old money" vs the academic/professional classes like my family). I know how old money behaves and their expectations, although I also know BS when I see it. I don't hang out with many people of any class, but probably some people think I am upper middle class and others think I am lower upper class socially. Which means nothing. You all probably know me better than they do.
 
Major Tom said:
I grew up in the UK, where class is thought of as much in terms of social concerns as it is in terms of financial ones.
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Personally, I'm very happy to be a mere commoner. If not, I'm sure I would struggle to figure out which fork to use with my foie gras. :LOL:
 
Major Tom said:
I consider myself middle class too, though I don't own my home, and my annual spend is around $27K. To make it more complicated, I grew up in the UK, where class is thought of as much in terms of social concerns as it is in terms of financial ones. I always had the impression that in the US, class is defined more in terms of income.

Who knows. Financially, I am not middle class. Socially, I do consider myself middle class. These class distinctions could form the basis of a whole new thread.
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As someone born within the sound of Bow bells, my social class in the US is far higher than it would have been had I remained there. I am ever thankful that my mother had the courage and wisdom to strike out for a new land of better opportunity.
 
My household income is at 382% of our zip code median, and 266% of zip code median by age group. Our friends and neighbors have some idea but you'd never guess based on how we dress and drive. We're still behind where we should be for networth, but that's another story.
 
braumeister said:
Personally, I'm very happy to be a mere commoner. If not, I'm sure I would struggle to figure out which fork to use with my foie gras. :LOL:
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Well, in truth, I think that most middle class folk wouldn't know that either as, by default, the majority of people consider themselves middle class these days, if they even bother to think about such things!

Gumby said:
As someone born within the sound of Bow bells, my social class in the US is far higher than it would have been had I remained there. I am ever thankful that my mother had the courage and wisdom to strike out for a new land of better opportunity.
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I remember you saying that before Gumby. I grew up with the unspoken rule that it wasn't considered polite to talk about class (a very British middle class sensibility). I noticed that a lot of the working class folk I knew were very proud to be considered working class. Who wouldn't be? There is great value and honor in working. I would have considered it improper to refer to them as working class, but they were more than happy to be considered as such.

I could say so much more on this subject, but I can't decide whether it's interesting, or terribly dull.
 
old medic said:
Do you see them as the same or different? If you're like me, richness doesn't equate to money, But then the question becomes how much $ is needed to be wealthy? I have seen friends and family fight and struggle through life, working for a future that never comes. Not enjoying the little things in life because they were working too hard for that future. I must admit to it, but I did some of the same things at times.
Years ago, I did a lot of property maintenance work for a man that was a multiple millionaire. He was the most miserable person I've ever dealt with. The other end of the spectrum was a lady down the road that had 3 sons I went to school with. They lived in a tiny trailer, surviving off their Dads SS death benefits and PT work. The daily love and happiness in that Home was absolutely infectious. There is nothing wrong with working hard for a good future, But remember to enjoy your life while doing it.

Yesterday is a cancelled check
Tomorrow is a Promissory note
Today is the only cash you have, spend it wisely.
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I am sure you can find many examples that support your original post, and an equal amount that contradict your original post.
 
EH, I don't think you know Buffet very well.

Car-Guy said:
Rich/wealthy is relative. If Gates/Buffet/Musk lost everything except for 1 or 2 million they would probably think the world had ended... OTOH, many folks here would probably think their ship had come in "for life" if they had 1 or 2 million.


And from their POV's, they are probably all correct.
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He lives in a fairly modest home & lives a very modest life.
He would do just fine on 1-2 million!
 
Agree & disagree..

Major Tom said:
A million dollars can generate income of around 25-40K a year, which doesn't strike me as very middle class. If you have 2 or 3 million, with a paid-off house, then you're talking. YMMV, of course, depending on which area you're living in.
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I live in Lincoln NE.
$25K is NOT middle class here.
$40K is.
DD lives in Fort Worth & I'd say those figures are accurate there as well.
I realize small towns can run a lower cost of living, so it really does matter where you live.
 
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