U.S. millionaires say $7 million not enough to be rich

[e86s54]

Well the quoted $7.5M portfolio would (using our standard 4% SWR) give an income of ~$300k/year.

That is certainly a very very nice income but perhaps not "rich".

I can see the logic of those quoted.

Hmmm, $300K/yr plus $7.5 mil to spend, so that's another $300k/yr or so for a 60yr/old planning on living to 85. I understand that does not quite work, but you know what I mean. Its hard to blow $500k a year and not have something to show for it. For example you buy a $1mil vacation home...you still have the $1mil, just now in real estate. So that's more than enough for anyone to do 'what they want'.

To me $4 mil is my rich line.

 

[photoguy]

Top 10%, or top 5% ought to do it. Being better off than every tenth person, or every 20th person should qualify you as "rich" in any sensible conversation. Even at top 1%, you're still very far short of having $7MM in the bank.

I like the idea of defining rich by percentiles since it's objective and quantifiable (assuming you adjust for cost of living appropriately). However, another way of thinking about what is rich is how much money do you need to have a qualitatively different lifestyle?

I know many couples who would be at the 200k mark and be in the top 5 or 10% by that measure. However, their lifestyle may not be that much different than others with lower incomes. They still worry about saving for retirement, paying college costs for their kids, losing their jobs, etc. While their lifestyle is certainly comfortable, they don't really feel rich because they still have to worry about the exact same things.

 

[sheehs1]

I suspect that most of those desired goodies are not that appealing once one has enough money to afford buying them.

I think you may be correct. For myself, I thought "once I reach"...I will buy "x". Well..I reached it and haven't bought "x" because for some odd reason...it really is not that important to me anymore. I think LBMing helped me realize I was happier with less stuff and a simpler way of life.

I'm still in accumulation phase for the next 3 years....but this year started a practice run...of seeing if I could live and run our home life on an amount ...that allows me to continue to live as I currently am and still save...even once the mass accumulation phase is over.

This amount is currently only 21% of what I grossed last year. Doesn't include my husbands income or his numbers.

I think I might be addicted to this LBMing.

 

[youbet]

I am most definitely living The Good Life, and not spending the entire amount dictated by my SWR despite feeling quite free to spend it.

Sometimes spending "more" isn't dictated by wanting a bunch of small things but rather because one component of a lifestyle is expensive. For example, we have friends building a new home in northern Wisconsin. They love to fish, boat and kayak and would have preferred to have a home on a large lake. But lake lots and taxes/maintenance on lake homes are very expensive up there and would have easily added $15k to their annual expenses. (That's a lot of rice cookers every year.) So they are building on a 3 acre wooded lot instead to stay within their SWR.

They're happy with what they're doing but I'm not sure it's The Good Life. He confided in me recently that he'd sure like to be building on the lake.......

I think that sometimes the thrill of LBYMing as an end in itself can wear thin in retirement. While DW and I are certainly frugal livers (or we wouldn't be FIRE'd), I admit that we'd rather go on a camping trip than sit at home relishing the fact that we didn't spend the money. the act of not spending just doesn't generate the thrill for us that it used to when we were accumulating in order to FIRE.

When we were accumulating, friends might invite us to join them for dinner at a restaurant we like and we'd say no thanks. We'd put the $50 we saved into the FIRE account and actually get goose bumps over our good fortune of being $50 closer to FIRE. Now if friends call and invite us to join them for dinner and we don't go because the budget is tight that month and we don't feel we should spend the $50, I'm truly disappointed. Time passes and things change....... DW has been retired 8 yrs. Almost 5 yrs for me.

 

[NW-Bound]

...I would say that I should learn ... the secret of continual day to day bliss?

Ha

Because I do not hate my work, I do not experience continual bliss from retirement either. As my part-time work has always been sporadic, there have been periods where I was completely free for a few months at a time, and I really did not feel overwhelmed with joy during those periods.

... I suspect that most of those desired goodies are not that appealing once one has enough money to afford buying them.

I would still say having $7M is rich, as it is quite a bit more than my net worth. However, it is true that I would not (might not?) change my lifestyle much if I had that. But I would enjoy seeing that bottom line everyday with Quicken though. It would be really nice, even if I would look at it on my laptop inside a modest 8'X25' motorhome parked somewhere in the NM mountain.

As an author has nailed it, "Money is much more exciting than anything it buys" - Mignon McLaughlin

 

[haha]

Sometimes spending "more" isn't dictated by wanting a bunch of small things but rather because one component of a lifestyle is expensive.

Once we know what answer we want to get, it is easy to interpret life and our own feelings to give us that answer. We only have to be very strongly committed to that answer for this magic to work.

Ha

 

[youbet]

Once we know what answer we want to get, it is easy to interpret life and out own feelings to give us that answer. We only have to be very strongly committed to that answer for this magic to work.

Ha

OK, you lost me this time. Give that to me in words a simple, blue collar guy can understand........

What I was trying to express was my feeling that spending "more" might not be driven by a lust to own lotsa "stuff," but rather by some single circumstance. For example, needing to live in a higher cost area leads to higher spending even if the person is not a "spender" and collector of stuff, toys, do-dads and rice cookers.

 

[haha]

OK, you lost me this time. Give that to me in words a simple, blue collar guy can understand........

What I was trying to express was my feeling that spending "more" might not be driven by a lust to own lotsa "stuff," but rather by some single circumstance. For example, needing to live in a higher cost area leads to higher spending even if the person is not a "spender" and collector of stuff, toys, do-dads and rice cookers.

Agree completely. Like you say, consumer crap is so cheap today that it is almost never what is standing between us and a better material life. It is that house with its own dock, better care for a handicapped spouse or child or parent, even a top grade education or a close in home that is still in an attractive, safe neighborhood. Maybe the ability to have the mechanic send someone over to pick up your car at work at your house, rather than somehow getting it over to them and finding your way home or to work. Maybe buying your way into a situation in a completely different country that seems less annoying.

Ha

 

[obgyn65]

Agree. The problem is that we all have different lifestyles. Hence I do not believe there is a single answer to your question.

another way of thinking about what is rich is how much money do you need to have a qualitatively different lifestyle?

 

[brewer12345]

I saw a poll once done across all income classes. They asked "How much more would be the minimum needed to live The Good Life".

The answer, surprisingly enough, was that each person believed that they needed about 40% more minimum to. live well. And that was for pretty much all of the groups regardless of income.

Hedonic treadmill defined.

Funny. If someone asked me this question my response would not directly be about money. I could live the good life right now if I knew healthcare was taken care of.

 

[brewer12345]

Agree completely. Like you say, consumer crap is so cheap today that it is almost never what is standing between us and a better material life. It is that house with its own dock, better care for a handicapped spouse or child or parent, even a top grade education or a close in home that is still in an attractive, safe neighborhood. Maybe the ability to have the mechanic send someone over to pick up your car at work at your house, rather than somehow getting it over to them and finding your way home or to work. Maybe buying your way into a situation in a completely different country that seems less annoying.

Ha

Very astute, Ha. I could care less about upgrading my 8YO station wagon or wearing a fancy watch, but if I had not had the considerable financial wherewithal to give my two old dogs the very best in vet care over the last couple of years I would have been in considerable distress.

Different strokes.

 

[youbet]

Agree completely. Like you say, consumer crap is so cheap today that it is almost never what is standing between us and a better material life. It is that house with its own dock, better care for a handicapped spouse or child or parent, even a top grade education or a close in home that is still in an attractive, safe neighborhood. Maybe the ability to have the mechanic send someone over to pick up your car at work at your house, rather than somehow getting it over to them and finding your way home or to work. Maybe buying your way into a situation in a completely different country that seems less annoying.

Ha

Thanks for the clarification.

Yes, exactly.

 

[GregLee]

Rich people have servants.

 

[photoguy]

Rich people have servants.

I once went to a brunch at a friends girlfriends house high up in the beverly hills. Having servants in a private home to take your plate away was very otherworldly for me.

 

[Sconie]

Rich people spend their money to obtain time-----the "not rich" spend their time to obtain money.

 

[Westernskies]

Rich people have servants.

Hmmmm... couldn't find that anywhere in the tax code. Maybe I missed it?

 

[unclemick]

Rich people have servants.

Now I know I'm rich - my parents were servants at one point early (Depression) in their lives.

heh heh heh -

 

[Danmar]

Sometimes spending "more" isn't dictated by wanting a bunch of small things but rather because one component of a lifestyle is expensive. For example, we have friends building a new home in northern Wisconsin. They love to fish, boat and kayak and would have preferred to have a home on a large lake. But lake lots and taxes/maintenance on lake homes are very expensive up there and would have easily added $15k to their annual expenses. (That's a lot of rice cookers every year.) So they are building on a 3 acre wooded lot instead to stay within their SWR.

They're happy with what they're doing but I'm not sure it's The Good Life. He confided in me recently that he'd sure like to be building on the lake.......

I think that sometimes the thrill of LBYMing as an end in itself can wear thin in retirement. While DW and I are certainly frugal livers (or we wouldn't be FIRE'd), I admit that we'd rather go on a camping trip than sit at home relishing the fact that we didn't spend the money. the act of not spending just doesn't generate the thrill for us that it used to when we were accumulating in order to FIRE.

When we were accumulating, friends might invite us to join them for dinner at a restaurant we like and we'd say no thanks. We'd put the $50 we saved into the FIRE account and actually get goose bumps over our good fortune of being $50 closer to FIRE. Now if friends call and invite us to join them for dinner and we don't go because the budget is tight that month and we don't feel we should spend the $50, I'm truly disappointed. Time passes and things change....... DW has been retired 8 yrs. Almost 5 yrs for me.

Very good point about LBYM in retirement. Seems to me that after many years of LBYM many people start to confuse the journey with the destination. Once retired our spending habits might become hard wired and the expected "fun" of being able to afford some luxury in our lives during retirement doesn't manifest itself. Wasn't a problem with us though.

 

[Hamlet]

Why does anyone still wear a watch when we all carry cell phones everywhere that serve the same purpose?

Very astute, Ha. I could care less about upgrading my 8YO station wagon or wearing a fancy watch, but if I had not had the considerable financial wherewithal to give my two old dogs the very best in vet care over the last couple of years I would have been in considerable distress.

Different strokes.

 

[haha]

Why does anyone still wear a watch when we all carry cell phones everywhere that serve the same purpose?

I'll tell you why I do. I can see it in bright sun; the battery rarely goes dead; I can see it while I am talking to someone; I don't have to unlock any keys to see the time; and I don't have to reach into my pocket to know what time it is.

To me, this is just one more of those personal preference issues.

Ha

 

[donheff]

I'll tell you why I do. I can see it in bright sun; the battery rarely goes dead; I can see it while I am talking to someone; I don't have to unlock any keys to see the time; and I don't have to reach into my pocket to know what time it is.

To me, this is just one more of those personal preference issues.

Ha

+1 Technophiles often have inflated views of the utility of their gizmos. Of course, watches were cutting edge a while back too

 

[LARS]

Why does anyone still wear a watch when we all carry cell phones everywhere that serve the same purpose?

Because a fine watch is a working piece of art.

 

[aaronc879]

Why does anyone still wear a watch when we all carry cell phones everywhere that serve the same purpose?

I consider watches,nowdays, to be a status symbol with no other purpose. I think they are worthless as I have no interest in showing off my status. I wouldn't spend $5 on a wristwatch let alone the hundreds or even thousands that some people spend. Sometimes these aren't even people who have a lot of money. Such a waste.

 

[kcowan]

Very good point about LBYM in retirement. Seems to me that after many years of LBYM many people start to confuse the journey with the destination. Once retired our spending habits might become hard wired and the expected "fun" of being able to afford some luxury in our lives during retirement doesn't manifest itself. Wasn't a problem with us though.

We have good friends who inherited an Italian show business from his parents. We were talking to them about other friends who were bought out of his company for $10 million. He has all the toys: 58 foot yacht, 38 foot RV, a Harley, home in West Vancouver, condo in PV MX where we met him. She said that $10 million is not enough to sustain that lifestyle! It was then that we knew we were out-classed!

But we have a great life and we spend $80k a year.

 

[mbooth]

I consider watches,nowdays, to be a status symbol with no other purpose. I think they are worthless as I have no interest in showing off my status. I wouldn't spend $5 on a wristwatch let alone the hundreds or even thousands that some people spend. Sometimes these aren't even people who have a lot of money. Such a waste.

Whilst you may consider watches to be a 'status symbol', I just wear one because I always have. Despite the view that there is no need for one, because 'everybody' now carries a mobile/cell-phone that has an inbuilt watch, I don't have the latest iPhone, Android or Crackberry to wave around. To my mind they are just a PITA and no less a status-symbol than a watch! Ha mentioned a number of pros for wearing a wrist-watch, all of which I agree with.... IMHO it's just easier to tell the time with in the main.

I guess it's just a generational thing, but I feel 'incompletely dressed' without a wrist-watch. And these days you can pick up a pretty decent no-name time-piece for around $15-$25, so a status-symbol it ain't. No Rolex, Omega, Tag-Heuer or even Timex for me, a wrist-watch does not a multi-millionaire make!

But, whatever gets you through the night

Cheers - Mick