When it comes to money, how much makes somebody rich or wealthy? Lately I’ve been hearing if you make $250,000 or more a year you’re rich.
When I was growing up, and even now, to me being rich means that you’re at least a millionaire. I have a lot names for people making $250,000, like upper class, upper middle class, well off, well to do, and not hurting for money, but rich isn’t one of them.
So, how much money does somebody have to have before you consider them rich?
$X/year isn’t wealth, it’s income.
Generally, “wealth” is defined as assets. More to the point, it’s defined as assets less liabilities. (Somebody with $10 mil in assets and $100 mil in debt isn’t wealthy, regardless of the size of their asset base).
Given a middle-class lifestyle, I can see about $2.5 million in assets as being “wealthy” for that person. If the $2.5 mil can generate a 4% income stream, you’re looking at $100,000/year in income.
However, there’s “Wealth” and then there’s “Fuck You” money. “Fuck You” money is a minimum of $25 mil in assets.
IMHO, of course.
It’s extremely situational and regional. In general I agree with JohnT that a measure of assets vs. liabilities is far more reasonable.
For example I know a couple that have combined salaries in the general vicinity the above figure, but they have a massive mortgage ( they have a “cheap” house in a very, very expensive zip code to take advantage of the superb public school system there ) and contribute to college funds for their kids. As a result they don’t have a whole ton of disposable income. I’d certainly call them “comfortable” in a general sense, but no way do I think of them as wealthy. They’re still both hourly wage-slaves and if they’re not quite paycheck to paycheck, they aren’t really all that far from it. That they have any equity at all in the current housing collapse is due to them cashing in in a timely manner and putting a decent chunk down when they upgraded - but I’m sure they’ve still lost some portion of that.
But that same income in a much less pricey setting might quickly accumulate into very significant wealth.
Sorry I’m taking such a simplistic approach on the SDMB, I really should know better.
I’ve been thinking about this for a couple of years now; ever since the presidential race and taxing the rich. For the Obama administration it’s people making $250,000 or more.
I didn’t want to bring this up in the OP, because I don’t care about the politics, I strictly want to stick to numbers. And to me, making $250,000 a year, even in the cheapest parts of the country isn’t rich.
It varies from person to person, but as a person I personally define wealthy as “capable of enjoying a very comfortable upper middle class lifestyle or better without working”, so in other words with assets that give you an income at least in the low six figures.
250k is what a specialty physician would make in gross income. But after malpractice insurance and taxes, it is less than half that. So that is extremely well off, but not rich.
I guess ‘rich’ doesn’t really apply to annual income because the people I consider rich usually do not earn the same amount every year. Their incomes come more from investments which pay off differently at different times. There are probably very few people who earn a salary who I’d consider ‘rich’. Maybe some of the best corporate lawyers and physicians (plastic surgeons, neurosurgeons, etc), but thats about it. But by and large to be rich chances are you are not a salaried worker and making the same income each year so pinning down X income each year is hard. Truly rich people might earn 10 million one year, but far far less previous and the next.
So the definition I’d use is at least 2 million in assets (not including a house or farmland though). I made that number up.
Or having enough in assets and investments to obtain a net income of 100k a year off of them after reinvesting for inflation.
My sister is a retired businesswoman (healthcare industry) who sold her business and lives very comfortably off of the income from that and what she stashed away before retiring and her rental property. I consider her wealthy because she no longer has to work to pay the bills and her assets are diversified and her income significant enough to fund her comfortable (far from lavish) lifestyle “Indefinitely until further notice”* without having to return to work.
My brother has a lavish lifestyle in comparison to my sister and a much higher income, but it’s because he and his wife work about 120 hours per week in their business. Because so much of his money has gone into nice houses and cars and vacation homes I seriously doubt- unless he earns a lot more than I think he does- that they could come anywhere near maintaining their lifestyle if they sold the business; they could probably have some creature comforts but they’d have to let go of a lot of the less necessary things. I consider him “very well off”, but not “wealthy”.
*“Indefinitely until further notice = 'indefinitely barring some major calamity (war, worldwide economic collapse, zombies) that’s more than just regular market fluctuation and the occasional year or two long recession”
I think also debt plays a major role. I consider somebody who lives in a $100,000 house and drives a 10 year old $5,000 car, both of which are paid for, and has perhaps $100,000 in cash and other assets, to be far wealthier than somebody who has $1.4 million in assets and $1 million in liabilities. While the latter technically has $400,000 in net assets to the other person’s $200,000, liquidating their holdings takes a lot of time and any number of things can cause it to liquidate at less than $1.2 million (fluctuating real estate market being a major one- expensive houses don’t tend to sell fast and currently they don’t sell for top dollar), while the former doesn’t have to liquidate anything.
I consider an annual household income of $100k or more to be wealthy, because I feel anyone with this kind of income probably has the means to accumulate assets whether they start that way or not. There are obviously exceptions, such as those with high medical expenses or several children, but I consider around $100k to be very privileged.
When Prince Charles and Di were getting a divorce, one of problems, IIRC, was that she wanted enough money to continue a jet-setting lifestyle, but the royal family is asset-rich (land?) but cash poor (relatively speaking). The article said it took about $700,000 a year for that lifestyle. I wouldn’t know who much income that would require now.
Of course, that’s filthy rich, not just wealthy.
Unfortunately most Americans don’t understand basic accounting. I think they should maybe teach that in high school instead of how to bake a cake in Home-Ec.
To figure out what you really earn, you need to take all your sources of income, minus taxes, rent/mortgage payments, basic groceries, your commuting costs, heat and utilities and other fixed costs. That is your disposable net income.
Your value is the sum of your revenue generating assets - house, appreciated value of your car, cash, stocks and other investments, your business if you have one minus all your outstanding debts and credit card balances. That is your total equity.
“Rich” is having a high net income. “Wealthy” is having a high total equity. It’s better to be wealthy. There are lots of people living extravagent lifestyles because they earn a little money and spend it two times over.
To put that in Chris Rock words, Shaquille O’Neal is rich. The guy who writes Shaquille O’Neal’s checks is wealthy.
I make more than $100 grand in an area with a rather high cost of living, and I pretty much agree. But then, I don’t have kids.
ETA: and I’d have no problem with raising taxes on people like me.
I can personally say 250K a year does not make you rich, but it does allow you to get on the road to rich. Staying on that road (lately) can be hard.
Just for a slightly different angle, my initial reaction was that I consider “wealthy” different than “rich.”
My personal top-of-my-head-ballparks for annual income:
$100K+ = very comfortable
$250K+ = wealthy
somewhere N of $500+ = rich
It’s in the top 10% of the country, but it’s not in the top 1%. Actually, you mention household income, so it’s not even that high. That’s simply a married couple where each bring in $50,000. Still above poverty, but certainly not indicative of wealth.
I agree with **msmith **and others that it is extremely important to distinguish between income and wealth. And it’s also important to consider what the costs are to you of maintaining that income stream, because that affects your ability to accumulate wealth. I’m fine with $250k, particularly for a single earner, as definition of very high income. If you are earning something like that in the more affordable parts of the country and are NOT attaining wealth, you are probably smoking it or burning it in your fireplace, or perhaps you are the Duggars. There are plenty of places where you can buy a decent house outright for half that. What will you spend your money on next year?
On the other hand, if you are in one of the costly metro areas and in a a field where you need to live in that type of area and maintain a certain lifestyle to succeed, that doesn’t go nearly as far to accumulate wealth. On the other hand, you are experiencing that lifestyle. A great, though older, book on this topic is Die Broke. The *Millionaire Next Door *series also gives good perspective on wealth vs. income.
The US government generally has an easier time taxing income than wealth. Capital gains taxes, inheritance taxes, and property taxes are taxes on wealth. Not surprisingly, the wealthy can bring considerable resources to bear to oppose taxes like that.
John T, here’s a question: What about people who need that $250k in assets for living expenses? I would imagine some people who saved and invested for retirement purposes probably have $250k to spend, but they rather need it to survive the rest of their lives. Is that still considered wealthy?
It can be a nebulous thing, wealth. But I know it when I see it! 
Well, that’s what we’re trying to do, right? Define wealth? You would define wealth then as the top 1% of the population? I realize my conception of wealth is probably lower than most, but I believe most households with an annual income of $100k will be able to accumulate wealth over the course of their lifetime if they make that a priority. Whether they decide to get a mortgage they can’t really afford, or finance an expensive car, or send their kids to private school, whatever, that’s obviously going to eat away at their income, but those are choices people make. My grandfather made 60-70k annually when he was working, and managed to accumulate enough wealth that he supported 8 people on his retirement income for years.
I don’t care how much money or possessions a person has. Wealth is when you have whatever things/people you need in life to make you happy and fulfilled. There is no one yardstick for everyone.