I am really shocked by this:
Personally, I am *very *doubtful that I will ever live in a household that will even crack the $100K mark, even for a year, so I guess I’m one of the bottom 23 percent in that category–though I’m somewhat dubious about these numbers.
The book from which the author extracted the information (“Chasing the American Dream”) has been reviewed by exactly 3 people at Amazon.com
The only way I can see that anybody I’ve ever known had that kind of “income” in any year would be by selling the equity in their house for a capital gain, and rolling it over into a new one. I wonder if that’s what is counted.
If it is true that over half of all wealth in America is gained through inheritance, then it stands reason that a number of people will have a single good year (the year Auntie Ernestine kicks the bucket). And get pushed over the $100K or $250K or $1M threshold.
As evidence of the American Dream though…you are either inherit money or you don’t. Not much pulling ones self up by bootstraps there. I suppose it does help to suck up to Auntie Ernestine a bit though…
I am poor. My mother, fathers, step-fathers, and all their various spouses are mostly poor.
But it seems like everyone else I know has broken 6 figures in household income, though the ones that do are all married (and mostly in long term 1st marriages). Take 2 employed middle class people and you have a 6 figure household, in many cases.
Both sets of my grandparents made 6 figures back in the '60s and '70s. Don’t know if they cracked $250k, but definitely if adjusted for inflation. I never knew the paternal family, and my maternal grandfather was broke and bouncing checks to me on my birthdays by the time I was around.
All of my parental people are poor (though most of their siblings live in 6 figure households). I am poor, and my wife doesn’t earn an income. All her siblings are middle-class but single/divorced. if any of them had a working spouse, they would be 6 figure households.
My brother is a chef, and has cracked 6 figures (his wife makes a little more). My best friend works in construction and his wife is a nurse- they are right around 6 figures. My closest uncle and his wife work in journalism and nursing- they’ve been over 6 figures for at least 20 years. I’m sure they’ve hit $250k at some point. Uncle Tom is a bricklayer and his wife works for the cable company- they make 6 figures. Aunt Linda and her husband both retired from the phone company and made over 6 figures most of their careers. My other brother and his wife are both teachers, and they probably make right at or slightly under 6 figures. Same goes with my sister and her police officer husband. Aunt Beth and Uncle Jeff are engineers and 6 figures.
I don’t know anyone who has inherited money, but I do know a lot of people who had really good timing in finding government and/or union jobs for companies in industries in decline and/or jobs they retired from right before they became obsolete. Or educated people who married well.
I could see myself being rich for one year due to fluke business transactions. I’ve made more in 1 day than I have in the last several years, but never over $100k. Outside of that, it’s not likely. I don’t see my wife ever earning an income within our household.
That’s sort of it - two people working full time in a house are pretty likely to crack six figures if they have some sort of skill or a college degree - chef, nurse, engineer. And at some point, most households will have two full time workers.
Back when the 99% thing was big, we did a few percentile threads on this board - and in generally, people in households with two full time incomes did pretty well. But without a second income in a household, then you need not one person making $60k and one person making $40k (both completely doable if your skill set extends beyond ringing things up at Wal Mart) - but one person pulling $100k by themselves - and that is more rare.
However, with a skill set or a college degree $100k is doable for a single person, and if you married someone with a skill set or college degree, then having a few years of a quarter million dollars income becomes within the realm of possibility. (I sort of suspect something is wonky with the analysis in Chasing the American Dream and their numbers are off. But I haven’t read the book and have no idea what their methodology was - inheritance is usually not income though).
One thing I think is interesting - I’d bet your relations with six figure incomes don’t live the lifestyle of what most people think of as “rich” - they are probably “comfortable.” If you are going to make $100k for a year, then go back to a normal $50k income (for instance), you might have an income that puts you in the class of “rich” but almost certainly won’t have the lifestyle.
Not even sure why making $100,000 for one year for Americans would ever be considered rich, particularly when it’s all said and done, about 40% of it will go to taxes in many situations. Not to mention the extraordinary costs of healthcare in this country that could bleed that amount dry with just a few days in the healthcare system if you have a serious condition, and you’re lacking insurance, or it isn’t that good.
Because when you make $30k, more than three times that sounds like incredible wealth - and when you make $30k, you probably don’t pay much in income taxes, so you really aren’t aware of the tax bite - which falls pretty heavily on households with $100k in income who pay all their social security, have phased out (or are phasing out) of a lot of credits and benefits - and are in a higher bracket.
Insurance is also a big deal here. 20% of our gross household income goes to health insurance premiums for my son and husband, and we still have a $2500/person deductible. If I actually made what I take home, we’d qualify for CHIP, and my son, at least, would have insurance that was very low cost (and cheaper to actually, you know, use).
So I can totally see someone with a household income of $40K seeing my household income of $50K and thinking that I have ~$500 more a month to spend than them, after taxes. That would be huge. That would be the life of Riley, relatively speaking. But really, all I get for that money is catastrophic insurance coverage for my husband. And I am happy to have that–grateful that we can afford it. But in terms of what I can afford at the grocery store? No real difference.
I’m single, and I’ll probably never see $100K. But single, no kids, my $45K provides for me reasonably well. I own my home (4 years left on the mortgage and enough in savings to pay it off) and have no other debt. 20% before tax into retirement savings. I’m used to living on little and shouldn’t have a problem continuing to live as I have.
My niece graduated college last year. She had a job lined up as an engineer before she graduated, and she just got married to a fellow engineer last week. Together, at 23 years old, they’re making about $150K.
StG
If my wife gets the job she is looking for right now we’ll be close to the $250K number, and will probably hit it in a few years. It doesn’t seem like that much money for someone or a family in tech. Also, selling a house will easily put us in the bracket.
It’s all perspective though; if you’re homeless and living on handouts, 30k may seem like regal money, but it’s not. Similarly, 100k isn’t rich, even though it may seem that way when you make 30k.
To me, at least, “rich” is what happens when you have enough money or assets on hand that from a financial perspective, you’re calling the shots on your own life and career. That usually translates into having enough cash that you live off the investment income, or having a big enough stake in something successful that you could cash out and live off your investment income. Basically when you don’t have to work for someone else anymore, and you’re not having to bust your ass to make ends meet. Most small business owners don’t qualify as “rich” because they’re still busting their asses and cashing out wouldn’t set them up for life.
You could edge into “rich” if you’re a really highly paid professional like a doctor or lawyer and you save your cash, but merely making 300k a year wouldn’t really qualify you as “rich” in the sense I’m talking about, unless you socked away 100k for a decade or so. Putting arbitrary dollar values on it is kind of misleading for the very reasons that the OP is questioning- just because some household may have cracked some threshold for a few years doesn’t mean that anything significant changed- after all, the difference between say… 85k and 105k is the same as between 35k and 55k in absolute terms, but in practical terms, the 35k-55k jump is much more meaningful to people in those situations than the 85-105k would be to those people I suspect.
Most of my employees have had years where they crack the $100,000 figure after bonuses. I’m not surprised by the OP. I’ve had years where I’ve made a lot of money, and years, like last year, where I literally made zero (that sure sucked).
I had about 5 real good years in my mid to late 30’s. The good years actually broke me as I pulled away from my normally conservative savings and investments. I got into property and lost everything in the crash of 1989 like a lot of others I know.
We’ve had the “what is rich” conversation many times in the past.
I’d say that one of the issues is that we don’t use enough words. To a destitute person, poor looks pretty good. To a poor person, struggling is appealing, to a struggling person, getting by sounds nice. To someone getting by, it would sure be nice to be comfortable. To someone who is comfortable, well off would be great, to someone well off, it would be cool to be rich, and to someone rich, being really obscenely wealthy would be awesome. (And middle class in America stretched from “struggling” to “well off” - because in America, we all want to be middle class - and because we have a really really long tail).
Then there is the relationship between wealth, income and how you spend it. Wealth is not income - you can make a good income and never have wealth because you spend it. You can have a small income and be wealthy because you own a business or a lot of land. You can make a large income, but not have a “rich” lifestyle because you give it away to charity, or support more than one household, or have huge medical expenses, or save it, or… Likewise, you can make a modest income and look much wealthier on the outside because you have parents who gift you cars, made the downpayment on your home - or you have wealth you are spending down, or…
In other words, its really complicated, but we like to simplify it down so that $100k a year is “rich.”
I am surprised to hear that some consider $100,000 to be well off. I would consider that very middle class, or mid middle class. Upper middle class maybe starting around $150,000. Rich would have to include at least 3 million dollars worth of easily converted assets, besides other types of holdings like property and such.
Can we stick with something vaguely objective? $100k household income is at the 80th percentile, higher than a very large majority of other households. How a household manages their money, their relative cost of living, peer groups, etc all factor in to perceptions of wealth and class. But in objective terms $100k is much better off than most.
The elephant in the room is that people have a very strong phobia of declaring themselves to be rich, or even imagining themselves to be rich. This is both for social reasons (“I don’t feel better off or more problem-free than my peers”) and political ones (“If I say I’m rich, the government will feel all right taxing me more”). There is a perception that the term “rich” means nothing less than “aristocratic”, with all the negative connotations of that.
So just to be contrary, I will declare myself to be rich, despite having nowhere near the assets that HoneyBadgerDC would require for that to happen. My fiancee and I are both highly-paid professionals, and if one or both of us were to lose our jobs, we would need to find new ones, but we could take some time in doing so with the savings we have on hand without reducing our lifestyle too much. That is certainly a better position than the vast majority, so we’re rich.
Better off, sure, but hardly “rich”, no more than you’d call a 5’10" man “tall”, even though he’s at the 80th percentile.
I think this would be a fair definition:
Rich = top 25% of income earners
Poor = bottom 25% of income earners
Middle class = everyone in between
No rich and poor depend upon wealth not income. I do include in wealth the value of your human capital.