In both cases the consensus is that the OPs are not rich, just very well-off and/or privileged.
So what’s rich? I define it as being in a situation where nothing short of nuclear war can shake your lifestyle.
Rothschilds, Ford, the Illuminati, etc.
Take even someone fabulously wealthy like, say, Kobe Bryant or Angie Jolie - if they were to suffer some horrible injury (like, requiring a ventilator) could they continue their current lifestyle of pvt. jets and chalets and private vineyards?
My guess is no.
What’s the lowest net worth to be considered rich? $500M?
(I realize this is entirely subjective, and has a whole lot to do with your consumption)
Rich is when you don’t have to work to still live like upper middle class. So your investments, while on average growing as fast or better than inflation, would have to still provide maybe $250K a year.
Rich to me doesn’t mean omnipotent or impenetrable. Which is why I don’t subscribe to the OP’s definition.
My definition of rich, which I literally just made up, is being able to earn off just interest twice the median income of the nation in which you currently reside.
So, according to the US Census Bureau, in 2007 the median family income was $50,233.00. Double that is $100,466.
If one were to earn a modest 2% off investments, it would take $5,023,300.00 dollars to earn that $100,466.
So, for me, 5 million dollars is rich. From there, you can live a really nice lifestyle without ever having to work again. Or you’re now free to pursue other activities which can earn you additional money though that may not be the primary goal of said activities and it won’t interfere with your current lifestyle.
I think it really depends on your vantage point. Is someone who has an 8 million dollar net worth rich? I sure think so. Does Bill Gates agree with me? Maybe not. My salary is comfortable to me but not amazing. Someone earning half my salary and trying to raise a couple of kids probably thinks of me as pretty damn rich.
My personal standards for the word rich would be someone who earns $800,000 or more anually. That is someone who has more than they could ever need, can afford pretty much anything they could possibly want (personal ball washers and rare artwork excepted.) That person probably doesn’t think they are rich because buying a Picasso is out of their range. To me the fact that they could entertain the concept of possibly purchasing a Picasso means they are rich. I can’t imagine the lifestyle Gates and Buffet lead. What the hell do you do with all that money? I assume they shred hundred dollar bills and eat them as a breakfast cereal.
Anyway, to me a good test of someone being rich is if they can afford to privately educate (U.K.) their children in a decent school and not make sacrifices to do it. That’s £10K+ per child per year over here.
To my mind, being able to spend like a person can on a professional’s salary, but without having to work like a professional - that’s rich.
In short, “rich” = capital. Working lawyers are not “rich”, they have a good upper middle class income, not capital. I’m one myself - I know people who are “rich” in the way I describe and their lives are much different from mine.
Rich is one of those relative things and is often contextual. i.e. if I’m talking about private jets and Ferraris, then someone making $200k a year in income is not rich. If I’m talking about not having to mow your own lawn, you can have a lawn service for $200k a year, that looks pretty darn rich to someone eating ramen noodles living in their parent’s basement.
In the U.S. pretty much everyone is “middle class” - just some people are “upper middle class” and some people are “lower middle class.” Someone like Rand (or myself) is “upper middle class.”
I think that too tight a definition of “rich” is being asked for. In my mind, if you can send your child to a private university without any financial aid whatsoever, you’re rich.
My definition was going to be in line with this, on a personal scale it rings true for me insofar as when your at the stage where you don’t have to work to live comfortably, but choose to (perhaps?) pursuing interests, your rich.
But then, for your SO to do the same you’ll need more. If you wanted your children to never have anxiety about money you’ll probably need more again.
So $15M of interest? Hard to say being a subjective thing…
Huh. I just define rich as having significantly more money than the people around you. Relative to me, both RR and LB are rich, and probably some of the rest of y’all are, too. Sure, you worry about money, but you actually have extra money to do something with.
The first is basically a comparison with one’s own situation. Almost no-one thinks that they themselves are “rich”, and so many establish bench-marks of what, to them, is a serious enough step above their financial means as to constitute “rich” in their eyes - private education has been mentioned by a couple of folks in this thread.
I have no problems with this defintion, but it is of course highly subjective.
Another definition is more I would say a matter of classification - “rich” being that stage above “upper middle class”, i.e., a step beyond living on a professional salary. People like doctors and lawyers can, in many cases, afford many of the bench-marks of the “rich” like private education for the kids, but do not really consider themselves “rich” because they still have to work for a living, in the case of lawyers often like any other office-worker.
As many others have said, “rich” means you’re able to support yourself comfortably without working. If you do work it’s for fun or because you want to feel like you’re contributing to society, not because you need to to support yourself.
My wife and I together pull down well over $150K a year. But I wouldn’t call us rich. Partially it’s because we live in a really expensive part of L.A. – even a small single-family house is out of our price range, for example. But mostly I wouldn’t say we’re rich because our ability to sustain our lifestyle is largely dependent on our ability to keep doing our jobs. If either of us had to stop working, we’d have to majorly scale back how we live.
I’d say it takes somewhere between $5M and $10M in assets to be considered “rich”.
I’d bump it up a little from there. Using Enderw24’s formula - $10,000,000 at 2% would earn $200,000 a year. With that income you still couldn’t live in the nicer parts of LA.
Now, financial planners use 4% (instead of 2%) as a draw down on your nest egg for retirement calculations. Using 4% (instead of 2%) on $10M, you would be at $400,000 a year. Again, in LA you still wouldn’t be in a nice house (not even a mansion) on the beach.
To me being able to live where I want is just the starting point to being rich. I want to live in a nice house on the beach.
So, my conclusion - $20M in nest egg, drawing 4% a year would get me there. And that’s only the starting point.
To take it to the other coast, say you want to live in Manhattan.
This place is nice (a steal at $2M) - 2 bed, 3 bath - not ostentatious by NYC standards (well, maybe the 3 decorative fireplaces, but you need *something *pretty in your apt, right?)
Obviously a beautiful place, but nothing insane like maid’s quarters or a helipad.
Say you pay the $2M cash, you still have to pay $55,000 a year, every year, in taxes and condo fees.
You’re down to an $18M nest egg, minus $55K a year, and you still haven’t hunted a man just to see what it’s like, bathed in a hot tub filled with the tears of super models, or paid for cable/DSL.
If you look worldwide, being a millionaire still puts you roughly in the top tenth of a percent (although that was in late 2006; who knows what’s changed since then?). That definitely makes you rich. On the other hand, the distribution of wealth starts dropping off pretty damn sharply after that, to the point where almost no one is worth more than $30 million. I’m willing to put the cutoff for rich at $1 million and the cutoff for wealthy somewhere north of $10 million.
I definitely don’t think the amount of work you do has anything to do with how rich you are. That’s why we have modifiers like “idle”: if you’re rich and you don’t work, you’re not just rich, you’re the idle rich.
A statistical model is good. Rather than simply doubling the median income, I’d want to use a stronger tool. Maybe say that, at least in the US, anyone within one standard deviation of median income for their area is middle-class. Anyone within two standard deviations of median income can modify that “middle class” with “upper” or “lower.” Beyond two standard deviations of median income, you’re rich or you’re poor.
This would put 68% of Americans as middle class, another 27% as upper- or lower-middle class, and 5% as either rich or poor.
Another measure might be quintiles. You could call the middle quintile middle class, the two surrounding quintiles upper- and lower-, and the outer quintiles rich and poor. In the US, this would place rich at $88,030. That may sound low, but remember that factors in the same income in Pittsboro, NC and in Manhattan.
I like the standard deviation model, though, because it captures the difference from a local median, and the nonlinear nature of “wealth distinction”–that is, the difference you notice between your own wealth and that of your neighbor.