How much does it take to be ‘rich’ now?

[Sweet]

Hope this thread doesn’t come across as crude or tasteless, it’s not meant to me.

 

Decades ago to a millionaire was to be considered very wealthy.  It would have bought you just about anything you might have wanted in life short of a private jet.

 

Today I’m not so sure that being a millionaire is that big of a deal.  Of course if you are living paycheque to paycheque a million in the bank is a lot.

However it’s also true that million in 1970 bought you a lot more than it does today.  The prices of everything are much higher.

 

Obviously it depends on location to a large degree, so for the purposes of this discussion let’s keep it to countries with a high standard of living.

 

My guess, a millionaire in 1970 would probably need about 5-10 million to be in the same percentile group.

[rkbabang]

47 minutes ago, Sweet said:

Hope this thread doesn’t come across as crude or tasteless, it’s not meant to me.

 

Decades ago to a millionaire was to be considered very wealthy.  It would have bought you just about anything you might have wanted in life short of a private jet.

 

Today I’m not so sure that being a millionaire is that big of a deal.  Of course if you are living paycheque to paycheque a million in the bank is a lot.

However it’s also true that million in 1970 bought you a lot more than it does today.  The prices of everything are much higher.

 

Obviously it depends on location to a large degree, so for the purposes of this discussion let’s keep it to countries with a high standard of living.

 

My guess, a millionaire in 1970 would probably need about 5-10 million to be in the same percentile group.  

 

~$7.82M according to this.

”$1 in 1970 is worth $7.82 today”

https://www.in2013dollars.com/us/inflation/1970?amount=1
 

But that’s probably based on CPI which isn’t great.  I’d guess $10-$12 million is probably more accurate.

[Gregmal]

Yea but at the same time, I don’t know any poor people with $100k let alone a million. 
 

You can still buy a $500k home at 50% ltv in a decent market and if you have $750k of that million left over life is pretty easy assuming you aren’t hell bent on living extravagantly 

 

I am not shocked that folks think shit is hard though because every finance jerkoff tells you you need millions to retire and all the poor people making less than 6 figures demonstrate it’s close to impossible…but the reality is that if you get a little money in the bank and just live modestly and invest it’s actually easy. 

[Guest]

Not "rich" but Schwab surveyed people and they said "wealthy" was $2.2 million. 

 

https://www.barrons.com/advisor/articles/schwab-survey-investors-define-wealthy-values-51652903203

[mattee2264]

Depends on what age you are. In the first half of your life I think an annual income figure makes more sense. And in a big city you probably need at least a couple hundred thousand a year to live like rich people with all the trappings such as kids in private education, big house in a desirable area, luxury holidays, eating out regularly at the best restaurants and so on.  

 

If we are talking in terms of a net worth figure then it is more relevant to the second half of your life and really I think a few million is more than enough to present as rich as your kids have probably left the nest and your house is probably paid off and you're probably able to downsize or more somewhere cheaper given you don't have the need or even the desire to live in a big city for your work

[Sweet]

53 minutes ago, Gregmal said:

Yea but at the same time, I don’t know any poor people with $100k let alone a million. 
 

You can still buy a $500k home at 50% ltv in a decent market and if you have $750k of that million left over life is pretty easy assuming you aren’t hell bent on living extravagantly 

 

I am not shocked that folks think shit is hard though because every finance jerkoff tells you you need millions to retire and all the poor people making less than 6 figures demonstrate it’s close to impossible…but the reality is that if you get a little money in the bank and just live modestly and invest it’s actually easy. 

I agree living modestly is important, but is rich being able to live on little income?  I suppose in some ways it is.

[Gregmal]

I would just define it as being able to do what you want. You don’t have to be cheap and you don’t have to have this high waste, materialistic lifestyle either. 
 

Most of the wealthy people I see complaining about needing to have more spend 80% more than they need to on frivolous stuff.

[Parsad]

3 hours ago, Gregmal said:

Yea but at the same time, I don’t know any poor people with $100k let alone a million. 
 

You can still buy a $500k home at 50% ltv in a decent market and if you have $750k of that million left over life is pretty easy assuming you aren’t hell bent on living extravagantly 

 

I am not shocked that folks think shit is hard though because every finance jerkoff tells you you need millions to retire and all the poor people making less than 6 figures demonstrate it’s close to impossible…but the reality is that if you get a little money in the bank and just live modestly and invest it’s actually easy. 

 

+1!  I would imagine that's why most people think $7M is rich now.  But $7M for a spendthrift is probably still poor.

 

Once you can cover your living expenses, have manageable debt and that capital will continue to grow...you're wealthy.  And if you have significantly more...you're rich.

 

Cheers!

[pricingpower]

Looking at a similar question this was a nicely done recent article breaking out today's costs for some specific aspirational lifestyles:

 

https://www.curbed.com/article/cost-of-living-nyc-calculator.html

[LC]

Depends what you want. I am not a big fan of travel- but 3 homes in 3 locations I love, and  income enough to dine out in each…I don’t want more! I ski, I hike, i fish for recreation. Good food, cheap wine, a smoke, a beautiful woman, I am a happy man. Only people who care about stuff like Davos are egotists and sycophants. 

[thepupil]

I define rich as top 5% ish. everyone else will define differently. So take a given geography, take a top 5% household income.

 

So in DC that's like $400K, in Mississippi that's like $180K

https://dqydj.com/income-percentile-by-state-calculator/

 

then you tax affect that. So like $400K of W-2 income in DC is after tax ~$240K. 

 

and take the assets one would need to generate $240K from investments. $240K*25=$6 million. Rich in DC $6 million. 

Mississippi = $135K after tax. $135K*25 = $3.4 million. Mississippi Rich is $3.4 million.
 

Maybe adjust down a little as one doesn’t have to save once you have the assets. Maybe decrease by 20% or so, gets you to $2.5-$5mm which feels about right to me, particularly if out of the childcare/school years, then thats just a shit ton of money!

 

Can one lead a wonderful life with less in these places? Of course! But just to try to put some rough numbers on it. 
 

Edited June 5, 2023 by thepupil

[Gregmal]

4 hours ago, thepupil said:

I define rich as top 5% ish. everyone else will define differently. So take a given geography, take a top 5% household income.

 

So in DC that's like $400K, in Mississippi that's like $180K

https://dqydj.com/income-percentile-by-state-calculator/

 

then you tax affect that. So like $400K of W-2 income in DC is after tax ~$240K. 

 

and take the assets one would need to generate $240K from investments. $240K*25=$6 million. Rich in DC $6 million. 

Mississippi = $135K after tax. $135K*25 = $3.4 million. Mississippi Rich is $3.4 million.
 

Maybe adjust down a little as one doesn’t have to save once you have the assets. Maybe decrease by 20% or so, gets you to $2.5-$5mm which feels about right to me, particularly if out of the childcare/school years, then thats just a shit ton of money!

 

Can one lead a wonderful life with less in these places? Of course! But just to try to put some rough numbers on it. 
 

What if you wanna live in Monaco or on Fischer Island? 

[thepupil]

3 hours ago, Gregmal said:

What if you wanna live in Monaco or on Fischer Island? 

then you’ll “need” to have much more…

 

this is why I like top 5% ish. It’s broad enough. More realistically achievable . Of course there’s always someone with more $.
 

But I’m talking your  everyday rich people in the US. 

 

[flesh]

My buddy and I have talked about this forever... for us in Utah it's 2m and a home paid for. We assume 5-10% returns annually on the 2m although weve both done better since the gfc unsurprisingly. If you have no debt and 100-200k in income, I really don't get what more you're looking for. Personally, I can't even think of anything I care about buying that I don't have. I have trimmed costs strategically by figuring out what I actually care about. I did experience spending 2-300k/year for a few years so I know I don't care about that. Alot of it was wasted on dumb clothes, unhealthy dinners, lame vacations, new cars, undesirable women, all of a lifestyle I give zero F#$%% about now. 

 

I guess my ideal is much more realistic to achieve and nobody would think of it as rich. The books I won't read and the 

interesting things I won't learn/see/experience are a much larger problem than whether I have 2m or 20m.

 

That said, alot of us will end up rich, 10m, some of us are there no doubt... it's inevitable. 

 

 

 

 

 

[Jaygo]

This stuff is all so relative. Here in the northern burbs of Toronto  I would say around 20 million. Some guy on my street has that much Parked in his garage and I’m over here with a mortgage and leaving the house at 530am every morning. When I was in Spain this past winter I’d put it around 2 mill or less in most places (not Marbella or Madrid) 
 

my number is 2 mill and no mortgage, I couldn’t care less about displaying wealth so that helps. I’ll be rich enough not to worry and poor enough my kids will still have to work

 

on average I’d say 12 million is the new millionaire. 

[Blugolds11]

I share the same way of thinking as @thepupil, if you're top 5% of income you should be pretty comfortable. Combine that with taste/spending habits that are less than the avg top 5% of people and you're even more comfortable. 

 

Remove the big ticket expense trap that the majority of people fall into. (Hopefully childcare is done), new expensive vehicle upgrades regularly, other toys, and even if you have a note on your home, hopefully you locked in when rates were unbelievably low, or you've had the note for long enough and area rents have increased exponentially that the payment has became insignificant...you're set. 

 

There is also a human tendency to always think "comfortable, wealthy, rich" (chose you're adjective) is just a "little bit more". Tendency to think just a little bit more and then you'd REALLY not have to worry. 

 

EX:

$500k → $1M

$1M is alright but you'd need $2M to really not have to worry

$2M but you dont feel rich/wealthy, but think those with $5M are

$5M you know you're doing fine, but you need double digits to really be considered "wealthy" ( >$10M)

$10M + and You know you're good, but the real "Wealthy" make 5X what you have as a bonus every year...

$100M probably consider yourself up there...but you're not in the Billionaires club

Billions...and then you start playing the "list" game, jockeying for position

 

So like @Jaygo said, its all relative, and thats human nature. 

 

To me personally, when you can conservatively cover all your living expenses via passive income/investments, and it allows you to participate in the activities you enjoy regularly without feeling like you have to be concerned or super mindful of spend within reason..then I'd say thats it. If you're activities are sitting in a canoe, camping and fishing...thats quite different than if you "need" to have a six figure yearly country club membership and dine out every night @ a couple hundred $ a pop. 

 

I honestly dont find the specific number as interesting as the human psychology of it all. When someone feels comfortable, take the foot off the gas, transition from building to spending/enjoying..the ability to say, thats enough. Thats different for everyone and there are many influences, including childhood, social circle etc. If "wealthy/rich/top 5%" in your area is $250k/year...but your closest cohorts are all making $50k/year and you're pulling down $100k...you're the "rich" guy/friend and you might not feel rich but your circle is going to disagree. 

 

This can be a challenge personally, the majority of my circle comparatively, I feel a certain way...but there are a handful that make me feel inept. Depends on who you chose to use as a baseline. Hard to remember that those few making me feel inept, if used as a baseline for 99% of people would make them feel the same.  

[Paarslaars]

A life shared with friends and family in good health is all you need.

 

Everything else is gravy...

[james22]

3 hours ago, flesh said:

The books I won't read and the interesting things I won't learn/see/experience are a much larger problem than whether I have 2m or 20m.

 

Time is a far greater constraint than money above $2M.

[Gregmal]

Yea I guess theres two ways to looks at it. Statistically like some do, sure. But also in terms of how one lives. Frankly, I know people with way more than me, who are slaves to their jobs and careers and stuff. Not talking business owners or folks who choose to immerse themselves in that stuff, but think EY Partners who make 7 figures annually who travel 5 days a week and cant even attend their kids baseball games. I'd hardly call that rich. Its sad. 

[Castanza]

Wealth is always relative to lifestyle and location. I know a few people who are retired with paid off houses (200-350k) and a retirement account valued anywhere from 500k-1.5m. All of them seem pretty happy and live frugal lives. They still budget obviously, but seem to go on vacations a few times a year, have a few hobbies and spend a lot of time with their families. A lot of these people also have family cabins, upstate NY lake properties, spend all spring/summer golfing, fall winter hunting, hiking, going to the beach etc. I bet most live on 30-50k a year. Throw in a pension of 35-65k a year and you're sitting pretty in most of the country. 

 

Different strokes for different folks. The need for 10-12m seems wildly excessive in 95% of the country. Maybe it's a difference in perspective on what retirement is? 

 

Personally, I'm a simple guy. Don't need a lot to keep me happy. Good friends/family, a few vacations, some travel, good food cheap drinks, hunting, fishing, hiking, volunteering etc. Don't really picture myself driving a Lambo or jet setting even if I had the money. Give me that gritty life with some taste of refinement here and there. 

 

edit: Healthcare is the big issue in the US. Don't see how the current racket/cartel system is going to change for the better so I'm not opposed to some type of universal catastrophic or something. 

Edited June 5, 2023 by Castanza

[RedLion]

18 hours ago, Gregmal said:

Yea but at the same time, I don’t know any poor people with $100k let alone a million. 
 

You can still buy a $500k home at 50% ltv in a decent market and if you have $750k of that million left over life is pretty easy assuming you aren’t hell bent on living extravagantly 

 

I am not shocked that folks think shit is hard though because every finance jerkoff tells you you need millions to retire and all the poor people making less than 6 figures demonstrate it’s close to impossible…but the reality is that if you get a little money in the bank and just live modestly and invest it’s actually easy. 

On this point. Let’s say you own a house for cash and have a mil invested. If you don’t want to work, your income from

investments should be low enough to qualify for an affordable care act subsidy so you get extremely cheap insurance as well. Not that hard to live on dividends if you’re paying 0% tax bracket, have no mortgage in a modest property tax location, get subsidized insurance, and don’t have to drive to work. 
 

This even works for high tax blue states, as long as they don’t have exorbitant property taxes. West coast states would be good examples. 

[Ulti]

19 minutes ago, RedLion said:

On this point. Let’s say you own a house for cash and have a mil invested. If you don’t want to work, your income from

investments should be low enough to qualify for an affordable care act subsidy so you get extremely cheap insurance as well. Not that hard to live on dividends if you’re paying 0% tax bracket, have no mortgage in a modest property tax location, get subsidized insurance, and don’t have to drive to work. 

Works even better  once retired with SS and gov insurance

[RedLion]

34 minutes ago, Ulti said:

Works even better  once retired with SS and gov insurance

No doubt. I’m over 25 years out from either of these option assuming no changes in eligibility ages, so the only ways I’m going to get government insurance is via a subsidy if I decide to live on investment income or disability (so let’s hope to god that doesn’t happen). 

[Intelligent_Investor]

However much annual income you need pre-tax and multiply by 50, so you are essentially assuming a 2% withdrawal rate on your investments. So if you think you need 150K/year you would need 7.5M I think this withdrawal rate is sufficiently low to provide a buffer if stuff goes wrong/you have an unexpected expense. While you might be able to get away with say 1 or 2 million, one large, unexpected expense and most of your wealth is gone and you need to go work again.

[KCLarkin]

'Rich' is probably at least $5M of liquid assets. But you aren't really rich until >$20M. The term millionaire from the robber baron days is more akin to billionaires today.

 

This is easy to see when you translate capital into income. $5M at 5% is 'only' $250k per year. That is a nice, upper middle income. But nothing extravagant. You are dentist rich.

 

$1M is only $50k per year. That is literally the poverty line, where I live.