I agree with Gumby on this. If you've got a pension or any type of lifetime annuity that generates a stream of income. That should add to the definition of 'wealth'.
When Is A Retiree Considered Wealthy?
- Thread starter Midpack
- Start date
I agree with Gumby on this. If you've got a pension or any type of lifetime annuity that generates a stream of income. That should add to the definition of 'wealth'.
- Joined
- Apr 14, 2006
- Messages
- 23,155
When the census normalizes household income for comparison purposes, they use the square root of the number of people in the household. So a single person household earning $71 k per year is in the same relative economic position as a two person household earning $100k per year (71 x 2^-2 = 100) and a three person household earning $123k per year (71 x 3^-2) and so on.
I don't see why net worth would not work roughly the same, but in the end, I don't really care. As J.D. Salinger is reported (by Kurt Vonnegut) to have said, "I have enough."
I don't see why net worth would not work roughly the same, but in the end, I don't really care. As J.D. Salinger is reported (by Kurt Vonnegut) to have said, "I have enough."
Andre1969
Thinks s/he gets paid by the post
Funny thing is, there's probably plenty of people in the lower 20% who live "wealthier" than many of us do. For instance, if you have a high paying job, but blow every penny of it and don't save/invest. And you either lease a high end car, or owe more on it than it's worth. And your house might be worth $600K. Only problem is, you paid $1M for it, and got into it by rolling the down payment and closing costs into a second mortgage.
Just before the Great Recession, there were a lot of people like that, in my old neighborhood, doing what we always called "Frontin". Or, the "Big Hat, No Cattle" thing.
On the surface, these people might look wealthy, with those big McMansions and leased BMWs and Benzes and Escalades. But put them on a net worth scale used in this video, and they're poor. Of course, it's those salaries that are letting them live that life, and as long as they're employed, they can keep doing it. But, those nice salaries might not last forever.
Just before the Great Recession, there were a lot of people like that, in my old neighborhood, doing what we always called "Frontin". Or, the "Big Hat, No Cattle" thing.
On the surface, these people might look wealthy, with those big McMansions and leased BMWs and Benzes and Escalades. But put them on a net worth scale used in this video, and they're poor. Of course, it's those salaries that are letting them live that life, and as long as they're employed, they can keep doing it. But, those nice salaries might not last forever.
I knew I shouldn't have opened this thread. It's bad enough reading posts from those with $6-8M net worth and wondering if they can retire in their mid-to-late 50s. Ugh.
I have a hard time believing that 1 in 100 households have a net worth (assets minus debts) of at least $16.7M. That's just depressing.
I have a hard time believing that 1 in 100 households have a net worth (assets minus debts) of at least $16.7M. That's just depressing.
Its good to put things in perspective.
I had this conversation with friends when I decided to retire early, I fell in the Well off category and for me thats all I ever dreamed of. They kept working so they can be Wealthy and a few will surely fall into the Very Wealthy soon.
They struggled to understand the concept that having $5-6M isn't "normal". Its great if thats your goal, but by no means are they the struggling middle class they perceive themselves to be.... even more skewed by the fact they don't even live on the west coast, they live in MCOL areas.
I had this conversation with friends when I decided to retire early, I fell in the Well off category and for me thats all I ever dreamed of. They kept working so they can be Wealthy and a few will surely fall into the Very Wealthy soon.
They struggled to understand the concept that having $5-6M isn't "normal". Its great if thats your goal, but by no means are they the struggling middle class they perceive themselves to be.... even more skewed by the fact they don't even live on the west coast, they live in MCOL areas.
The definition of assets used by the FRB is broader than usually used to calculate net wealth:
"we expand the wealth concept to include household claims on defined benefit (DB) pension assets. Wealth as measured here, then, includes all assets over which a family has legal claim that can be used to finance its present and future consumption."
"Prior to allocating the DB pension assets, median family wealth in the SCF Bulletin is a bit more than $121,000 (table A). But DB pensions are a major component of household wealth, representing about 15 percent of the household balance sheet in the Financial Accounts. After allocating these DB reserves across families, median wealth increases to nearly $172,000"
https://www.federalreserve.gov/econres/notes/feds-notes/wealth-and-income-concentration-in-the-scf-20200928.html
OP
OP
Midpack
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Various sources:
- Millionaire households in the USA - 15,298,070
- $5M - 3,592,054
- $10M - 1,456,336
- $50M - 97,28750
- 100M aires - 34,507
- Billionaires - 735 to 927 (Forbes vs Wealth-X)
- $100B - 8 to 9
I'm fine being 'well off' too. When you won the game and your finances can survive a 35-50 year retirement, you can stop working, as Time > Money.
Car-Guy
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I guess I'll believe the numbers (percentile rankings) but I just don't feel wealthy. Never had any jet's, yachts, mansions, etc. Just a 2000sq ft home sitting on a little land with a few vehicles.
street
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- Nov 30, 2016
- Messages
- 9,601
Yes, exactly. A measuring stick or gauge is very informative for a young saver. You don't compete against others you complete with yourself.
stepford
Thinks s/he gets paid by the post
I know we've been round and around this argument many times, but wealth (which does not include income) and 'level of financial comfort' (which does) are two very different things, and I believe most of us are more concerned with the latter than the former.
steelyman
Moderator Emeritus
Ronstar
Moderator Emeritus
I don’t feel wealthy either. No private jet- we fly Southwest Airlines using points whenever we can. No yacht - just a kayak. My ranch is 5 acres. House is 30 years old. DW drives an 11 yo car. We stay at Hampton Inns. I do my own yard work, home maintenance. No cleaning service. I live at the same level now as when I got out of junior college in 1975 with 12 bucks.
ShokWaveRider
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I/We do feel wealthy in more ways than one. Caring Wife, enough to live a very easy and uneventful life, a nice location to live, a nice home, great access to healthcare and reasonable health for our ages.
Last edited:
Koolau
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Heh, heh, I think he got that from some guy who calls himself koolau but I could be wrong.
- Joined
- Apr 14, 2006
- Messages
- 23,155
Sorry, I was wrong. It was Joseph Heller, author of "Catch-22"
By Kurt Vonnegut (first published in the New Yorker, May 2005):
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!
By Kurt Vonnegut (first published in the New Yorker, May 2005):
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!
Alex The Great
Recycles dryer sheets
Listened till the moment he talked about the home equity counted towards the wealth number he publish. I believe this is incorrect unless the property is rented out or someone consider to sell the property and move into lower cost of living area. To be fare, the value of property where the person or family live should not be included.
Obviously, there are different levels of wealthy.I guess I'll believe the numbers (percentile rankings) but I just don't feel wealthy. Never had any jet's, yachts, mansions, etc. Just a 2000sq ft home sitting on a little land with a few vehicles.
Normally your home equity is included in your net worth. I usually make a point of mentioning it if I'm excluding it in a person wealth figure. So, instead of net worth, I usually just say my "stash", which exludes my home. I don't have any other properties.
COcheesehead
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Net worth includes home equity.
Investable assets do not.
Investable assets do not.
Ronstar
Moderator Emeritus
Exactly
Montecfo
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
It is within the definition of net worth. Everything you own is.
For path to FIRE the important measure is "non-home net worth", meaning net financial assets.
Alex The Great
Recycles dryer sheets
Well if this is a case then the net worth number does not mean much correct? Because the home equity is hard to realize and home owners may look wealthy on paper. Especially if someone is living in very high cost of living area where any home worth more than $1M.
Last edited:
- Joined
- Apr 14, 2006
- Messages
- 23,155
I agree with that. My home, even though owned outright, is not creating any income to help me pay my bills. In fact, the property taxes on it are the largest single outlay of cash in my budget. Given the fact that I have no intention of selling it until I can't physically live here anymore, its value might as well not exist at all.
If you really need to know, this calculator will show you what net worth percentile you are either counting home equity or ignoring home equity.
https://dqydj.com/net-worth-percentile-calculator-united-states/
Last edited:
Similar threads
