Recently, John McCain said that “rich” was someone making $5 million/year +.
While I think that is too high, I don’t consider $250,000 a year “rich” as some suggest as an alternative. I’m ok with it as a tax threshhold, but it isn’t quite rich. Affluent? Well off? Wealthy? Yes. But not quite RICH. Especially in California or NYC. Here in Texas, you are well on your way, but CoL can really lessen 250k.
I think the magic number at which you can no longer feign upper middle class is somewhere between 500k and a million. At that point, you pass “well off” into rich guy territory. Personal income tax policy doesn’t really affect your bottom line. It may annoy you, but you are still rich.
What do you think? Do you think the answer depends on where you are in the socioeconomic spectrum? Everyone’s definiton of rich is usually a tax bracket or two above them.
Ask Bill Gates if he is rich and he will say, “Me? Rich. Nah! Now, China. That bitch CHINA is rich!”
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This will probably end up in Great Debates, but I’m being optimisitic[/sub]
I dunno if you can really put a number to this. Here in NYC, $250K would be considered fairly standard if you were raising a family in Manhattan. I’ve traveled to some places in this country, though, where $250K/year is a king’s ransom. I guess it would have to depend on the cost of living in your particular corner of the world.
Probably true. To me, having grown up in an American middle class family, I’d say that anyone making over $75,000 a year would be my idea of “rich”.
Of course, in a lot of other countries, my own standard of living would seem insanely affluent and decadent to the locals…while, on the other hand, some of my medical school peers (who frequently wound up there because they’re carrying on the tradition of a family of affluent professionals) will feel like they’ve failed unless they ultimately end up making at least $200,000 or more.
I read that book a few years ago, and found it very informative. But I wonder if the numbers would need to be adjusted a bit now?
My parents bought a house 35 years ago in California, for $28,000. When my mom sold it, a few months shy of the 30 year mortgage being paid off, it was worth over $850,000. Adding up life insurance policies and a decent stock portfolio would have put her net worth at over $1 million. But she basically lives on Social Security, with the cost of the retirement home she lives in and prescription drug costs, eating away at her net worth each month.
I know she is much better off than many people her age, but I can’t imagine her as being even close to rich.
Properly invested she should easily be seeing $60K a year in income from that $850K. Thats really good for most of the country. She could afford a basic house plus paid live in help in decent areas of probably 30 states.
It’s not a question of income. In my book, being rich means having enough money to do what the average person would do if they had unlimited money. But that’s not the same as being one of the rich, which is a much harder concept to articulate.
I think citing certain big cities like NYC and San Francisco is a bit of a cheat in discussions of what makes someone rich. That 250K/per year would be a king’s ransom in every other city in New York state, some that are just a few miles outside the Big Apple.
So I think the exceptions should be counted as exceptions rather than the rule so as to say “nuh-uh, you ain’t rich.” If you make 250K a year, you’re rich, but you’re looking up at people who are wealthy.
Except that it isn’t “some guy” signing their checks. Shaq is worth hundreds of millions and Oprah is worth over a billion. Their wealth comes from a combination of multimillion dollar salaries paid by media corporations, endorsements and other personal ventures. In fact, it is entirely possible that she made more than the CEO of King World Productions.
In it’s strictest sense, the truly wealthy own the means of production. For example, Oprah has since formed her own production company, Harpo Productions. Bill Gates owns a majority share of Microsoft. And Shaq pretty has so much money it doesn’t matter what he does.
So in other words, if you’re still thinking in terms of “income” or “salary” you aren’t truly rich. There’s a lot of people making multiple six figures salaries in NYC, but they also have to work pretty damn hard. If their investment banking or lawyering job disappeared tomorrow (as in the case of Bear Sterns), there would be a significant hit to their lifestyle.
You are “rich” when you can live off of the interest on the interest that your wealth is generating. In other words, you are living well yet your net worth continues to increase. Until then, you are just a poser.
I dunno. I think of myself as an average person, but my dream is to fill two 747’s with nitroglycerine and remotely fly them to a head on collision, to make the biggest single fireworks ever. I’m thinking that’s probably 20 or 30 million to do, which seems too high a number for calling someone rich.
I think the problem in reaching agreement is the problem of separating income from wealth (or “net worth” is maybe a better term). My sister has never earned more than $80K, but she has a house in a nice neighborhood that was recently appraised at $400K. I don’t think she’s rich.
Since any number we all choose is going to end up being pretty arbitrary, I’ll say that a steady income of a quarter million per year makes you rich. OTOH, somebody who wins a quarter million in the lottery isn’t rich, but someone who wins 5 million is.
If someone nets, not grosses, $1 million from a lottery ticket rich? I’m not sure of the answer to this, but I’m willing to win that amount and find out.
well, it isn’t exactly the OP, but in my mind rich means not having to do anything (more) to earn a living. That is, your interest income from all sources allow you to do what you want. You may be able to do that on 20K/yr or need 200K/yr. Doesn’t matter. You are rich if you decide whether to get out of bed in the morning or you decide whether you are going to stay here or move. Wealthy on the other hand is someone who is so rich that economic reverses-a stock market crash, interest rates falling, inflation increasing, health emergencies, etc won’t change your lifestyle. I don’t think 5 mill even comes close to wealthy, while in my mind 2mill in the ‘bank’ makes one rich.
But it could be 200K in the bank. Just depends on the CoL for you.
Sorry, but this is sooooo wrong. Risk free rate is just over 2% (Treasuries). your scenario has a retiree invested in something with an 8% yield or with 500 basis points of risk. more realist is that $850k yielding less than $20k afte tax income. it ain’t fuck you money.
I dunno about the $1 million net worth + rich. I am at or pretty close to that right now, largely on my paid-for house’s appreciation. But it is likely to drop over the coming years as I pay for 3 kids’ college and my house will undoubtedly depreciate. We live extremely comfortably on a household income of significantly less than $150K. i consider myself VERY well off by any possible measure. But I sure don’t consider myself “rich.”
I agree that as your income gets north of $500K, it would become harder and harder to classify yourself as “middle class.” Wherever you are living and if you are still living paycheck to paycheck, well IMO you are enjoying a hell of a high lifestyle.
I read something recently ago about impact of today’s economy on retailers who catered to the wealthy and super wealthy. I believe they classified them in terms of “discretionary” annual income - after housing, food, and other expenses are paid. I believe they described “wealthy” as folks with somewhere around $250-500k discretionary income, and super wealthy as above $500K. Seems to me that anyone who has $250K to save or spend after their basic needs are covered certainly ought to qualify as “rich” in anyone’s book.
It also assumes you spend the income from your investments - which may mean you can afford to live - until inflation hits. You need to make 8% - reinvest 4% and spend 4% to keep up - and as you indicated 8% means risk - particularly over a short horizon.
Wow, I suppose there is no correct interpretation of the concept of “rich”, but in my mind it has nothing to do with income. It’s about assets. Income is irrelevant to the truly rich.