1 in 7 white households has over a million dollars in assets?

In My Humble Opinion
1

I guess I found this hard to believe, because I’d always heard that the boomers only have about $50,000 or so saved for retirement, and the housing bust that just occurred. However housing and the stock market have supposedly recovered from 2008.

But supposedly 15.2% of white households have over a million in assets (vs about 2% for black and latino families).

I guess if you count the minority of people who get pensions, this is possible. Even a pension of $1000/month will add up to the low six figures in retirement. A 300k home, a pension worth $1000/month and 300k in retirement savings almost adds up to a million just from that. So I guess it isn’t that hard to become a millionaire, especially if you have two people working. I wonder what % of households where both parents work and both have college degree are millionaires. For white families at least, I’d garner 30% or more. But who knows if they broke it down that much.

Either way, we are the 84.8%. At least I am. But my family does ok so I"ll be fine.

2

What’s the figure for blacks, one in fifty maybe?

3

Yup, pretty much exactly 1 in 50.

hispanics didn’t really do any better than blacks. At first I assumed hispanics would do better, but looking at the statistics, blacks are more likely to have a college diploma than hispanics (22% vs 15%). So if anything, blacks should’ve done better than hispanics. Also there are so many hispanic immigrants, that that should pull the hispanic numbers down too (very few illegal immigrants are able to amass a million since property and retirement accounts make up the bulk of assets).

4

Having a million in assets is far from a million in disposable income. My mother just died, and my brother and I divvied up insurance, savings, and an annuity left specifically to us, that totaled about $390,000. We have not liquidated her possessions, and I have inherited her jewelry. We also bother got part of her stock portfolio before she died. She had a $20,000 car, and the house where she lived with my stepfather (plus the property), which he retains, is probably worth $400,000. He bought it when he retired from the Navy after 30 years, about 22 years ago. He has his own savings and pension.

My mother had been a widow, and had assets that were supposed to carry her and my father both through retirement. When he died, she was living off their annuity that had been intended for two. So she had more disposable income than she had planned on, but she still had to be conservative. She didn’t want to touch the capital.

My stepfather doesn’t want to touch his capital either. He also doesn’t want to sell the house. So their joint assets probably totaled just over a million, and their monthly income with annuity, social security, and pensions, was probably around $10,000, with few bills, except when my mother had to take care of her mother in a nursing home.

They both came from working class families, and were in the first generation to go to college. My mother’s parents were immigrants. My stepfather was in the naval ROTC to pay for college, and then went to grad school on the government’s dime, so he had a master’s degree, and she had a Ph.D. He had achieved the rank of Captain in the Navy, which is like a Colonel in the Army.

They both worked very hard. They didn’t live high. They were used to very economical lifestyles as children, and so they were able to save and plan. I wish I were as good at it as they were. My husband and I have tried to work hard and save, but this inheritance has essentially doubled my own assets. Maybe by the time I am in my 70s, I will have $1,000,000 in assets, but I doubt it. However, I do have investments that are increasing, and my husband has a retirement plan at work. I may not be worth $1,000,000 in my 70s, but I will most likely be worth over $500,000.

My brother is already worth over $1,000,000; however, he lives in LA near Hollywood, in a house he just bought, and for a long time he was in a Hollywood apt. He works in the film industry, in the technical side of it, but he still needs to be close to where he works, and that’s an expensive place to live. My husband and I make only about 1/3 of what my brother and his wife make, but we outpace our expenses better than my brother does (even though he has a better head for investments), just because it’s so expensive where he lives.

I’ll bet a lot of the millionaires work in places where it’s really expensive, and a million doesn’t go very far.

5

From the link, here is the answer to this absurdity

Asset inequality boosts the average up quite a bit. The median is a lot more believable.

6

Here’s a new perspective on “millionaire”. How about a WalMart greeter?

An American making $10 an hour will make $20K a year, which is in today’s dollars, a cool million over a 50-year working lifetime from age 18-68. Not even counting the benefits like health insurance. Any worker making less than that will qualify for social benefits, so every American entering the work force is guaranteed a million dollars to live on over a lifetime. Which is basically the minimum cost of living. So if your are not a potential millionaire, you’re not going to make it.

7

Making a million dollars over your lifetime doesn’t make you a “potential millionaire” any more than eating out of dumpster makes you a 'potential raccoon".

8

I’m not shocked at this at all. Intergenerational poverty is a thing. So is intergenerational wealth.

9

Hold up, that’s not the answer. The article isn’t talking about the average, it’s talking about an actual 1 in 7 households.

And I don’t find that all that surprising. My family was on Medicaid a couple of years ago, but I’m working toward a pension slowly, plus I’m putting 10% additional of my pre-tax income into retirement, plus we bought a house on the super-cheap in a rapidly gentrifying neighborhood. There’s a decent chance that in a few decades we’ll be in that inflation-adjusted range, with the main difference in our situation since our Medicaid days being my wife’s return to paid work.

10

Yes it does.

Tens of millions of Americans have negative wealth. Their debts exceed their assets. These people are, technically, poorer than a homeless person in India who at least owns the piece of cardboard he sleeps on, and owes nobody a rupee – positive net wealth. What makes the debt-ridden American wealthier than the Indian? Prospect for future income. The WalMart greeter is richer, by the prospect of future earnings, by a margin of a million dollars.

11

I think the key thing here is that it’s assets not net wealth. Every homeowner in San Francisco has a million dollars in assets, but they might still be eating ramen every night because that million dollar home comes with a hefty mortgage payment.

I feel this sounds surprising because when we thinking “a million dollars!” we think of Scrooge McDuck swimming through gold coins, but the reality is that it’s more a nice house (with corresponding nice mortgage), a couple of decades of retirement savings (compounding interest is amazing) and the rest is made up with an aggregate of other assets, like cars and furniture and stuff. That might be a million in assets but far less in net wealth and may even be at negative net wealth if they have a lot of credit card debt, medical debt, student loan debt, etc.

My wife and I are very fortunate to be in the top 10% of the country in income (just over $200k per year), but all our liquid assets are about the same as our mortgage, so our net worth is the value of our house but our total assets might be 50% higher.

12

A large chunk of immigrants are here legally, and even those who aren’t are perfectly able to buy real estate. You won’t get as good a mortgage rate, but you can still buy a house (or the permanent resident or citizen members of a mixed-status household can get the mortgage).

13

[from the trivia desk via Forbes Billionaires’ List]
The Top 0.0001% of American households averages about $14 billion in net wealth, but their median is only about $8 billion.

The Top 0.001% of American households (roughly those worth at least a billion) averages about $4 billion in net wealth, but their median is a mere $2 billion.

Today was relatively calm on NASDAQ but Jeff Bezos is about $650 million richer than he was the day before. Mark Zuckerberg lost the same amount.

Ten weeks ago Jeff Bezos became the first hominid to ever have $90 billion in assets, but he’s lost $8 billion since then. Very recently Bill Gates joined the $90 billion club. Perhaps it will be Bezos or Gates who will be first to $100 billion, but don’t count out Mark Zuckerberg, who joined the World’s Top Five during the same boom that took Bezos to $90 billion.

Marxists may be intrigued to note that If America’s billionaires were somehow stripped of almost all their wealth — left with a mere $999 million each — each American household could be given about $30,000.

14

No, it’s net worth, assets minus liabilities, see definitions in the appendix of the summary of the Fed survey in the links. The average white household net worth was $933k (as given in the article, and on page 13 of the summary link). Average white household assets was $1.044mil (not in the article, see pg.92 of the pdf file of tables). That relatively small difference is not so surprising either. A lot of better off people don’t have a lot of debt. At the median white net worth was $171k but median gross assets $265k (pg 91 tables pdf), a bigger proportional difference and somewhat more like the relative indebtedness you’d expect. Far above the median you have a disproportionate share of the 29% or so of homeowners that own their homes free and clear, exceptional places like SF notwithstanding.

Summary of Survey

PDF file of tables:

homepage of the survey:

15

This proves that I’m definitely hanging out with the wrong people.

16

As others have pointed out, $1 million dollars is not that much these days. It isn’t even enough to safely retire on if you have good genes. That money is going to have to last a very long time and it will have to include medical expenses and inflation. A single million isn’t enough to support even a couple that retires at 65 and lives to be 90 unless they are very prudent, frugal and invest wisely. You don’t have to cry for them. They are still are part of the 1 in 7 but what that means is that they can maybe maintain a middle class life into old age unless either one of them has a serious health problem.

The part that is sad is that most other people don’t have nearly enough money to retire. That includes the Baby Boomers. It is their own fault for the most part but this is going to be a huge issue in the future when they are too old or sick to work but don’t have enough money to support themselves.

17

Relevant to retirement one thing to note is the calculation doesn’t include Social Security, though it does include the present value of private pensions. The present value of SS varies by how much the person/household has qualified for but is on the order of several $100k typically. It again indicates $1mil is not that gigantic a net worth anymore, though still exceeded by a fairly small % of households: ‘average’ just means total net worth (in the category of households) divided by the number of such households. Though almost everybody distinguishes mean and median intellectually, I think we can still slip into confusing them in cases like this where they are very different.

According to old fashioned rule of thumb, you can spend 4% of initial assets at age 65, adjust that $ amt up with inflation and last through retirement. Many feel that’s on the high side now because bond yields and stock earnings yields are lower than they used to be. But anyway $1mil is $40k/yr inflation adjusted on that basis, plus SS (assuming any private pension’s present value was in the $1mil): not top hat and twirling mustache kind of money, but fine. Just SS plus a few $10’s or a $100k saved up for emergencies along the way, or a little help from kids…many people do it and will do it. It’s mainly a matter of expectations and ‘style you’ve grown accustomed to’.

18

What a silly statement. First of all, millionaire clearly, in even the loosest sense, means $1MM in assets, not lifetime earnings. Second, the definition has absolutely nothing to do with income disparity. I suppose you’re trying to make some kind of point here but it needs quite a bit of clarification.

19

The study is self reported and therefore at risk of serious errors or misunderstandings. Very likely that respondents reported assets without calculating debt/net assets.

20

What are you basing this on? The methodology is described in detail in the links from post 14. It seems pretty clear that it’s based on pretty detailed in person interviews, often of several hours. It sounds more like a meeting comparable to sitting down with your tax professional before they file your returns. Far more comprehensive then you’re suggesting.