$10M. 3%/yr is a fairly safe number for passive investment returns, accounting for inflation. That gets you $300k/yr, which goes pretty far even in high cost-of-living areas.
I base this on the idea that rich people can get all the best versions of “ordinary” things without needing to work. So no private jets or giant yachts or private villas, but they can easily afford $100k cars and multi-million dollar houses. And can obviously travel wherever they wish and so on. Private jets put you in super-rich territory.
Not to get into a semantic debate, but maybe we should say that they are “wealthy” (I see **marshmallow **beat me to the Chris Rock bit). The difference is creating and maintaining that self-sustaining source of future passive income. The challenge is keeping that wealth going from generation to generation without having it eroded through inflation, taxation, and mismanagement.
As someone else pointed out, that’s absurd. Unless he is totally mismanaging his money MC Hammer style, he could never make another dollar and not go poor in his lifetime.
Yeah, private jets are absurdly expensive. I looked it up and a Gulfstream V goes for something like $40 million. And that doesn’t even include maintenance or fuel.
See one reason I don’t agree with any income numbers is outgo is far more important, What good is a $million a year if you’re in debt so that you can live like you make $2 million? Anyone with a paid off home and no debt is rich.
Again I agree, hard to imagine someone who isn’t in the tiny %* with a lot more than $10mil seriously thinking of someone else they know who has $10mil as ‘not rich’. I don’t see how where you live figures into it at that level since with $10mil you can live very comfortably where ever you want.
In a couple of posts above people got more real on what sustainable after tax and inflation return you can get without excessive risk, saying 3%, rather than 5-8% or 7% which are way too high. I would still say south of 2% is more realistic (‘classic’ 60/40 stock/bond): yields are very low, stock valuations are very high, pointing to lower returns in the future than the past. But even $200k on $10mil, and assuming the person owns their home, and for most people in NY or SF with that kind of money they bought it awhile ago and it’s been a spectacular investment itself: that’s rich.
*definitions of ‘the 1%’ in the US by net worth vary, since it’s harder to nail down than %-tiles of income reported on tax returns. In most such analyses though the 1% threshold in net worth is less than $10mil, per most recent US Fed estimate it was $8.4mil. So you’re better off than 99+% of the people in one of the world’s richest countries, but you’re not actually rich…hard to see IMO.
I considered 2% as being the realistic number. It doesn’t take a lot of effort to earn more than that over time, but if I was trying to determine if I could give up a job as a source of income I wouldn’t go higher than that.
People may be interested in this interactive map of the US that I just found this morning. You can zoom in as needed; point your cursor to a specific county, and for that county you can see:
-average income of the top 1%
-average income of the bottom 99%
-minimum income of the top 1%
Some of you guys should never run for office. Claiming that being a millionaire doesn’t make you “rich,” but middle class? That’s a gaffe on par with Romney’s 47% comment.
Being “rich” isn’t a relative thing though; if the majority of the populace was mired in developing country style poverty, and we had some 10% of the population that was leading middle class or above lifestyles, that still doesn’t make the guy living the lifestyle afforded by a household income of 80k “rich”.
I think part of it is that there probably needs to be another definition in there that describes people who aren’t “upper middle class”, but who aren’t “rich” either, and that describes people with household incomes in the 300-500k range, but who would still be devastated by unemployment. Maybe something like “Working Wealthy” or upper-upper middle class? I probably classify as upper middle class, and there are definitely income tiers above me- there are two that I can see regularly- the “working wealthy” that drive BMWs, live in 4000 sq ft. houses in the tony suburbs, etc… but still have to go to work every day and work for someone else. Then there’s the stratum who owns shit, and derives their income from that ownership, be it stocks, bonds, companies, etc… In terms of lifestyle, there’s’ not too much difference, but the “working wealthy” would quickly drop out of that lifestyle and category if they lost their jobs, or some calamity befell them. This isn’t the case for say… Ross Perot or Jerry Jones (to name a few local rich guys).
Ultimately in my view, being “rich” comes down to whether or not one can live a “rich” lifestyle and sustain it off the earnings of your accumulated wealth. In other words, you don’t *have *to work for a living (although many “rich” people still do), but you can still live the life of a “rich” guy indefinitely.
I agree. I think some people are viewing it as what they’d be happy getting, and or where the return is not taxed per se (like in their 401k), forgetting to subtract inflation, but most of all not considering the risk situation if you’reprobably damaging your future employability or income by leaving the workforce, should you ever need to return to it. It’s got to be a fairly conservative number. I would (I do ) assume less than 2%, but wouldn’t have a knock down drag out argument with somebody who says they assume 2%, or even 3% if they’re fairly well along in years assuming a goal of being ‘rich’ doesn’t include passing on the fortune wholly intact. But higher than that and you’re counting on luck or running your own business, which means you’re still working.
IME a lot of people who get to anywhere near the ranges we’re speaking of get pissed if other people say they are rich, at least pretend to. But if a person with solid six figure job and mid seven figure net worth says to themselves ‘I’m rich’ I wouldn’t say they’re kidding themselves, even if they’d have to lower their standard of living a bit if they lost that job and could never find another like it. You could also get hit by a bus, it doesn’t mean you aren’t alive.
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That’s supposed to be a serious question? Who cares if he lost his practice? He has 100 millions. He can live an extremely affluent lifestyle until his last day without ever working again. What percentage of the world population has 100 millions? If he doesn’t quaify as rich, who does?
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[QUOTE=msmith537]
As someone else pointed out, that’s absurd. Unless he is totally mismanaging his money MC Hammer style, he could never make another dollar and not go poor in his lifetime.
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The question asked earlier was whether people whose incomes were tied to occupation or job were actually rich. I pointed out (an admittedly extreme) example of someone who has a lot of money by any standard but who also made that through professions. Someone else called them the “working wealthy”.
Top tier sportsmen often end up bankrupt a few years after retirement so losing their profession or job is enough to send them to the poorhouse if they are not careful. Just ask Mike Tyson. Or Holyfield. Or Diego Maradona.
Its less likely for a highly experienced and successful lawyer, but if he loses his practice, he loses the base of his fortune; he is no longer re[presenting Oil/Gas and IT and aerospace companies and getting paid millions in fees and stock. Which will have a cascading effect elsewhere.
Globally, an income of $34,000 a year puts you in the top 1% of earners. We’re all rich by any standard that considers humanity as a whole. Richness is relative.
If you are talking just about money, net worth should be the determining factor for a question like this. Not income.
In America I think many would say that a net worth $1million would be the threshold. Then again, what is a millionaire? A person with $1million in cash or a person with $1million in total assets including cash?
) assume less than 2%, but wouldn’t have a knock down drag out argument with somebody who says they assume 2%, or even 3% if they’re fairly well along in years assuming a goal of being ‘rich’ doesn’t include passing on the fortune wholly intact. But higher than that and you’re counting on luck or running your own business, which means you’re still working.