How Much Income Is Rich?

[Evil_Captor]

@Sam Stone

Yeah, and I’ve seen other estimates that put the amount of wealth due to inheritance at 8%.

Unh-huh … Your 8 percent is what YOU would like to believe. Frankly, I ‘d rather see some solid numbers based on rationales that are clearly explained. 20-80 percent is a huge range. I had expected to be able to google better numbers up in a trice. Instead it was a search of 50 or so sites to get that pathetic figure. Somethin’ aint right. Could be poor google foo, or could be that the people who are in a position to bestow large amounts of inheritance tend to hide information about their money. For whatever reasons.

You realize that the number for the top 1% is probably skewed by a handful of tremendously wealthy families - the Gettys, Rockefellers, etc. I’d like to see that top 1% broken down into the top .1% and the other top .9%.

I agree, those would be good numbers to have.

And what do you think the Gettys, Rockefellers, and Hiltons do with their money? Hide it in a sack so they can crawl around in it and cackle evilly? No, the vast bulk of those family’s assets are tied up in investments managed by professional money managers. Paris Hilton will only touch a tiny fraction of her wealth. The rest will be at work in the economy. And even the money she spends helps prop up things like the yappy dog and videotape industries.

If you took all their money away in a fit of egalitarian zeal, just what do you think would happen? Suddenly the poor would be farting through silk? Nope. It would be government revenue, and not much revenue at that. They’d blow it on pork, all you’d have is a one-time wealth transfer from a small group of stewards to a larger group of people who manage to win government contracts. In the meantime, lacking the incentive to build major wealth, all the people farther down the ladder would stop striving to climb it. And they’re the productive ones.

C’mon, this is bullshit. Some people made a case for the wealthy being a club composed exclusively of determined achievers. It is no such thing, that’s what those figure show. Now what remedies we make are another point entirely.

[/quote]
As for that other top 10%, 396,000 doesn’t make you rich, and I’ll be willing to bet you a big chunk of that comes from inheriting family homes and such when parents die, not being a ‘trust fund baby’ and not having to work. A lot of people live middle class lives and then when their parents die they get a reasonable inheritance that they can use to help pay for their retirement and pass the rest down to their own kids when they die - sort of a familial safety net, rather than kids growing up in wealth from inheritances. In fact, every single person I know who inherited wealth came upon it this way - getting a nest egg to retire on when their own parents died.
[/quote]

Almost half a million dollars IS a nice chunk o’ change, though. How people treat it is their affair. The people what gets it have a considerable advantage over them what don’t. You’re probably right about much inheritance coming about late in life through a parent’s death. Doesn’t change the basic inequity in the system. See, I’m all about meritocracy, Sam. Thing is, I don’t think it’s efficient to put wings on some kids’ feet as they start through life, and lead weights on others. Or fair for that matter. Especially when the wings/weights thing has nothing to do with the kid’s own merits.

It’s THEIR money. THEIR property. They can do what they damned well please with it. Class warfare is just another ugly form of jealousy.

Yeah, you’re OK with social injustice. I get that.

[Evil_Captor]

@Sam Stone

Yeah, and I’ve seen other estimates that put the amount of wealth due to inheritance at 8%.

Unh-huh … Your 8 percent is what YOU would like to believe. Frankly, I ‘d rather see some solid numbers based on rationales that are clearly explained. 20-80 percent is a huge range. I had expected to be able to google better numbers up in a trice. Instead it was a search of 50 or so sites to get that pathetic figure. Somethin’ aint right. Could be poor google foo, or could be that the people who are in a position to bestow large amounts of inheritance tend to hide information about their money. For whatever reasons.

You realize that the number for the top 1% is probably skewed by a handful of tremendously wealthy families - the Gettys, Rockefellers, etc. I’d like to see that top 1% broken down into the top .1% and the other top .9%.

I agree, those would be good numbers to have.

And what do you think the Gettys, Rockefellers, and Hiltons do with their money? Hide it in a sack so they can crawl around in it and cackle evilly? No, the vast bulk of those family’s assets are tied up in investments managed by professional money managers. Paris Hilton will only touch a tiny fraction of her wealth. The rest will be at work in the economy. And even the money she spends helps prop up things like the yappy dog and videotape industries.

If you took all their money away in a fit of egalitarian zeal, just what do you think would happen? Suddenly the poor would be farting through silk? Nope. It would be government revenue, and not much revenue at that. They’d blow it on pork, all you’d have is a one-time wealth transfer from a small group of stewards to a larger group of people who manage to win government contracts. In the meantime, lacking the incentive to build major wealth, all the people farther down the ladder would stop striving to climb it. And they’re the productive ones.

C’mon, this is bullshit. Some people made a case for the wealthy being a club composed exclusively of determined achievers. It is no such thing, that’s what those figure show. Now what remedies we make are another point entirely.

[/quote]
As for that other top 10%, 396,000 doesn’t make you rich, and I’ll be willing to bet you a big chunk of that comes from inheriting family homes and such when parents die, not being a ‘trust fund baby’ and not having to work. A lot of people live middle class lives and then when their parents die they get a reasonable inheritance that they can use to help pay for their retirement and pass the rest down to their own kids when they die - sort of a familial safety net, rather than kids growing up in wealth from inheritances. In fact, every single person I know who inherited wealth came upon it this way - getting a nest egg to retire on when their own parents died.
[/quote]

Almost half a million dollars IS a nice chunk o’ change, though. How people treat it is their affair. The people what gets it have a considerable advantage over them what don’t. You’re probably right about much inheritance coming about late in life through a parent’s death. Doesn’t change the basic inequity in the system. See, I’m all about meritocracy, Sam. Thing is, I don’t think it’s efficient to put wings on some kids’ feet as they start through life, and lead weights on others. Or fair for that matter. Especially when the wings/weights thing has nothing to do with the kid’s own merits.

It’s THEIR money. THEIR property. They can do what they damned well please with it. Class warfare is just another ugly form of jealousy.

Yeah, you’re OK with social injustice. I get that.

[Trunk]

This was an interesting piece by Ben Stein (yes, that Ben Stein) in the New York Times business’ section yesterday.

He talks about the distribution of wealth and how to be rich, but also recommends to stop worrying about because you’ll wind up being a grump.

[mazinger_z]

@Giraffe

I think you’re answering a different question than the one I was trying to ask. DrDeth and I were commiserating about living in an area with sky-high real estate prices, and comparing ourselves to people in other areas who make less money but have big houses. The total worth of each person is not the question, but rather how we perceive how wealthy someone else is (regardless of actual bank balances/paychecks). People in expensive areas tend to look at housing as a standard of wealth for people in that area, while people in cheaper areas tend to look at other things, like cars, electronics, vacations, etc. to judge how well off their neighbors are. I was wondering how people perceive wealth in different areas where the balance is skewed, i.e. if you have a huge house in Tennessee, do you feel richer or poorer than the guy in San Francisco living in a small apartment, but who has a nicer car, television, etc?

Ahhh, I see. I thought that was what you meant. But, I still think that owning a house still lends itself to more wealth at all income levels and strata, and is generally perceived as more wealth. For example, comparing two people in TN, the person without the house will be less wealthy. Comparing someone in San Fran to someone in Knoxville, the comparrison might not be so obvious. Of course, (and no knock to SF’ers), but I can totally see one seeing the guy in TN and saying, “Yeah, so what, he lives in TN.” I try to stay objective, especially about these things, or else you fall into aspects of Evil Captor’s misaligned views.

[JohnT]

Maz, you live in K’ville?

[mazinger_z]

@JohnT

Maz, you live in K’ville?

No, I actually had a long distance girlfriend who lived in TN when I was in college. She actually went to the CofC.

[Alex_1]

Having lived in several countries I have a slightly different perspective. If you have enough money to never worry about basic needs (food, medical care, shelter, etc.) and still have some left for things you want (restaurants, movies, flights, etc.) then you are rich.

You can quibble over what kind of shelter is acceptable, but in general this is my philosophy. I am definitely rich although we’re a four-person family living on one double-digit income in a two-bedroom flat. I wouldn’t mind being richer, but absolutely consider myself rich.

[Left_Hand_of_Dorkness]

@Alex_

I am definitely rich although we’re a four-person family living on one double-digit income in a two-bedroom flat.

Quintuple-digit, right? Cuz otherwise, hon, you ain’t rich :).

Daniel

[DrDeth]

@Sam Stone

One of the issues to consider is how old you are. Retiring on 2 million at age 35 isn’t going to work out so well. Doing it at 60 is fine. If you earned 5% on the money, you could draw $100K per year without touching the principle. Assuming you’ll live another 30 years, you could draw down the principle at another 3% per year, giving you another 60K. .

Right. But a* annuity *of $2M @65yo will bring in a monthly income of around $10,000 per month+ for live. That’s $120K/yr, which is a very nice retirement income.