Maybe it would be a silly statement, if I had said what you said I said. But I didn’t. I did not characterize anyone as a millionaire. I said earning potential is an asset, and I don’t know how you can need more clarification than that.
noun
1.
a person whose wealth amounts to a million or more in some unit of currency, as dollars.
2.
any very rich person.
If you’re maxing out your IRA ($5500 for most) over 40 years, you would need about a 7% return to build up a million.
Start saving early, kids. Oh right, student loans…
I’d imagine a good percentage of that 1 in 7 is folk who own their homes outright. Another factor would be kids out of school. In a whole bunch of the Chicago area, it doesn’t take too much house to be worth half a million. Anyone who bought more than 15 or so years ago and hasn’t been using their home as a piggy bank, stands to have a good chunk of their home’s value as equity.
And if you have kids you are helping through college, your worth will likely take a huge hit during those years. But I’ve been astounded at how quickly ours rebounded after we finished with that!
So - I guess both of those factors would contribute towards older white folk.
Except that you started your post by:
“Here’s a new perspective on “millionaire”, how about a Wallmart greeter”.
You then go on to argue that earnings potential is an asset. Someone with a 20 k job and no other assets or earnings is not a millionaire. Because they don’t have (que Dr. Evil) one MILLION dollars. The term “potential millionaire” defined as the earnings potential over a lifetime is at best not very useful, and I think muldoonthief hit the nail on the head most succinctly.
If true that explains the problem and heartless greed with the medical system in the US. There is a big pool of money that 1 in 7 (white) people have they want to get their hands on, and everyone gets sick it’s just a numbers and waiting game to suck those millions away from people.
OK,l so you disagree with my perspective (one of many) on millionaires;. This would be a sorry forum if everyone had to limit their viewpoints to one poster’s perspective and got shouted down for daring to offer another one. And if earning potential is not a form of wealth, then the Indian guy with his title to his piece of cardboard to sleep on is really richer than a doctor with heavy student loan debts.
And that was not how I started the post that zoid had commented on, to which I drected my reply.
Not really. Unless you own your home free and clear, your “asset” is only a fraction of the home’s worth. That is, if you sell the home, what are you left with?
Does this thread make anyone else think of Dr Evil (in Austin Powers) saying one million dollars? And everyone looked at him like he’s a total goober for thinking that’s a lot of money?
A million just isn’t that much if you have retirement ahead of you. I’m in my mid-50s and my wife and I have been saving pretty aggressively for more than 30 years (no cable TV, cheap vacations, dinners at home), and we’re accumulated somewhere north of $4M in assets, of course not counting the PV of Social Security. If you start early it’s not that hard.
That survey didn’t break down the numbers by age, which I think is really important. By the time people reach their mid-50s like me, I would hope it’s a lot higher than 1 in 7.
Just to clarify, since it’s relevant to the asset numbers reported in the survey as well as the net worth numbers from both the survey and WAPO article, according to the Fed survey’s described methodology (see post 14 links), if a household has a $1mil home and a $500k mortgage that is recorded as asset=$1mil, liability=$0.5mil, net worth=$0.5mil. However if a person has their own company, or investment properties, worth $2mil with debt of $1mil against that company or properties (not personal debt of the owner), that is simply counted as $2mil-$1mil=$1mil asset. That’s one of the explanations why the average assets for white households was $1.04mil, not much higher than the average net worth of $933k. For the very rich households pulling up that average (v the median of $171k net worth) there typically isn’t a lot of personal debt.
Either way though debt is being subtracted from the net worth numbers given in the article: lots of assets but lots of debt is not the explanation why the number seems so high for white average. The explanation is a lot of wealth. US household net worth is ~$96 tril (2nd Q 2017, a Fed top down number separate from the 2016 survey). In 2016 there were ~126mil households, $768k per household before you start breaking down by race, etc. But again avg and median are very different for this stat.
The summary does break it down by age and other factors, there just isn’t AFAICT a matrix break down by more than one factor at a time. In the survey sample 2016 avg US household NW was $692k (as opposed to ~$768k you’d get using 2017’s top down down total NW number). White NW was $933 v black and Latino both below $200k as emphasized in the article. The highest NW age of household head bracket, all races, was 55-64 yrs: $1.17mil. College degree, all races, was $1.51mil. You can infer from that higher %'s than 1/7 above $1mil in the categories with avgs further above $1mil. but probably not dramatically more than 1 in 7.
This is something I have always wondered about. Where do you draw the line for how much sacrifice to make in order to have a quality retirement. How much could you enjoy it now as opposed to how much could you enjoy it in retirement. I like to think that having everything paid off and a secure income that could sustain you on its own for the rest of your life is the basics. Then you take the savings and estimate how many years you might want to splurge a bit and how much you want to splurge each year. I lost most of my investments in the 1989 property crash and divorce then had to rebuild from there. I figure about $10,000 annual splurge money until I am about 76 years old. So far I usually stay below that. In my case $400,000 is plenty enough, I won’t spend that.
One statistic I’ve read is that 30% of people over age 55 have no retirement savings.
26% of them have less than 50k. 18% have 50-200k and only 26% have 200k or more in retirement assets.
Combine that with the fact that outside the coasts that real estate is cheap (decent houses for under 200k) and the figure is surprising.
I know if you put 10k a year into savings, over 40 years you’ll probably have a million. But with low retirement savings as I mentioned above, a lot of people do not do that.
As was mentioned median white household net worth is 171k. So 50% are under 171k, 35% are 171k to a million and 15% are over a million.
I’m guessing many of the over a million households are dual income college graduate households in areas with a high cost of living.
At 5% withdraw a year, four million would provide 200k a year. Do you need that kind of income in retirement?
Just in case someone is wondering why whites have so much more wealth:
The GI bill was affirmative action for white people for a long time.
The federal government implemented racist housing policies for a long time.
Black people continue to be discriminated against in home loans.
The 7% example I worked out to show my kids was this:
Invest the following amount each week for the the ages listed and you will be a millionaire at 67.
$25 : 22-30
$50 : 31-35
$75 : 36-40
$100 : 41-45
$150 : 46-50
$200 : 51-67
Increase it by $25/week and it is almost $1.5M.
This theory is contradicted by the article. It says that the percentage of white millionaires doubled in the last 25 years and that the primary reason was the doubling of financial assets such as stocks. It also says that blacks and hispanics are less than half as likely to have funds in stocks.
Well, duh!
You’re here.
A million dollars is not really that much money in assets.
A couple in their 50s who have worked and managed and contributed to their 401k and own their home probably has a million.
A close friend just retired at 62 from working in a mill for 39 years has $1.7 million just in his 401k. And property and a couple houses. Mill worker, college drop out.
If you’re not “throwing away money” on rent (as smug homeowners like to say when lecturing the fiscally irresponsible renter), then it is not that hard to imagine that you are able to do extra things with that money. Like investing in stocks.
I know someone who lives in a home her parents bought for her. How were her parents about to buy a house for her? Well, their parents were able to buy them a house. Guess what this person is able to do with the money she doesn’t have to spend on a mortage? In addition to investing, she has been able to buy up properties that she then rents out. She is both smart AND enormously lucky.
Furthermore, housing is tightly correlated with educational opportunities. If you live in a good zip code, your kids get to go to good public schools, which then means they can take advantage of good universities, which then means they can access to good jobs. If you live in a poor neighborhood, your kids get to go to crappy public schools, which means that they won’t be able to take advantage of good universities, which means they won’t end up with good jobs. Which then means they won’t have any money for a normal savings account, let alone investing in the stock market.
I really love how indifferent you are about the importance of real estate in a discussion about wealth. There is a reason why whites have been able to exploit the stock market over the past 30 years and it has everything to do with the advantages their parents, grandparents, and great-grandparents (see Homestead Act) had in acquiring land and property. Those gains were disproportionately enjoyed by whites. Not by accident but by design.
A lot of unionized mill workers pull down some serious scratch. My last job I had 28 hourly employees working for me most of whom made over $80,000 a year, and there were a dozen or so making in excess of $100,000. Overtime was a very significant portion of these paychecks, but if you were willing to put in the hours you could make six figures pretty easily.
Jesus, this just oozes white entitlement. Educational opportunity, inherited wealth, parental contribution to property deposits, cohort career assistance, societal presumption, institutional and social racism, etc, etc.
Not got a first clue clue what I’m talking about, right?