Maybe I should have quoted the post instead of just being below it. Apparently, telemark thinks you have to live a rich lifestyle to be rich. That seems laughable on its face just based on the Buffet example.
Maybe this is kind of a naive POV, but I generally consider anybody who has $1 million+ in liquid assets to be rich, so I am not counting property or real estate but I am counting retirement and/or investment holdings. Indeed, for most people with that kind of net wealth, such money is likely going to be held in various investment vehicles no matter what. At that level, one can work or not work depending on how much one wishes to continue building the amount of those holdings, but living off the interest would also be an option.
About 10% of US households have net worth >$1mil*. 10% ‘rich’, 90% ‘not rich’? That doesn’t seem wildly off base. That includes real estate though OTOH I don’t see any reason to exclude rental properties (that provide a rental income stream and potential appreciation) from a person’s wealth if you’d include stocks…which provide an income stream and potential appreciation.
Anyway the two problems with that definition would IMO be
a) wouldn’t it be kind of strange if ‘millionaire’ was a semi-synonym for ‘rich’ say 100 years ago, which it was I think, when the purchasing power of $1 was around 15 times times higher than it is now, but millionaire would still be the dividing line now?
b) at today’s yields $1mil will fairly conservatively sustain withdrawals of around $20k/yr indefinitely. Numbers like $40k assume you spend the principal within a few decades. You can stop working at age 25 and live on $20k/yr for decades, but is that really the image of ‘rich’? Even if you quibble with the 20k and say it’s 30.
I’d again project it from what a quite upper middle class life costs, at least $200k, so something like $10mil, which would mean somewhere around the 99% tile, which is also the currently popular socio-political packaging ‘the 1%’.
*the average US household net worth is not far short of a $1mil, though the median is much lower.
A net worth of 1 million would result in about $40,000 a year in investment earnings per year, arguably for perpetuity. Thats solidly middle class, but IMO not rich. Plus a million dollars can be eliminated pretty fast in the American health care system.
“Middle class” is $56,000 a year income with a median net worth of $97,300.
$5 to $10 million would let you earn enough passive income to be one of the highest earners in most parts of the country.
Again, I don’t have a number, but to me “rich” signifies a certain degree of wealth where it’s almost hard NOT to be an asshole as you spend it. Like this article I read in the NY Times about some wealthy family that bought a group of Manhattan townhouses, tore down everything except the historical facades and are in the process of jackhammering for an indoor pool. Apparently it’s driving the entire block crazy with the noise from the construction. And these neighbors aren’t “poor” either. They are lawyers and doctors and media people and whatnot.*
The point being, the wealthy couple paying for what will probably be a $50 million mansion likely didn’t say “let’s fuck all these people”. They probably just figured they were building a nice home. Much in the same way children don’t care about accidently trampling an ant hill while out playing.
So…I guess that’s what “rich” means to me. Having so much wealth that you are like an oblivious child stomping ants while you play, with no thought as to the lives you are inadvertently destroying as you pursue your whims.
*In all fairness, the article did read a bit like “whiney rich Manhattan Liberals complaining about even richer person disrupting their whiney Liberalness.” They build all sorts of buildings in Manhattan all the time and people don’t complain.
Maybe a nitpick in terms of order of magnitude, but again you have to assume fairly optimistic returns for 4% (of the initial amount, subsequently adjusted up for inflation) to last in perpetuity. The ‘4% rule’ for retirement besides being based on historical returns not the lower expected returns of now, assumes the goal is reasonable safety against spending the whole principal over around 30 yrs (typical retirement age to death of a relatively long lived person).
For actual perpetuity 2% is more like it IMO. Thus a windfall of an after tax $million early in life only sets you up to live fairly minimally or modestly anyway ‘forever’ without working. We agree on that.
The problem I have with including real estate is that it is in no way a liquid asset; people can’t just go and spend as cash the apparent value of their property at the drop of a hat. Including passive income from rental properties is fine because it’s actually cash, but it needs to be weighed against however much, if anything, is still owed on the purchase of those properties.
I agree, which is why somebody living this way would have to automatically deduct the price of a robust health insurance policy from their yearly $40k payment, or otherwise work part-time for an employer that provides such insurance. Of course, if we get some form of Medicare-for-all in the next 10 years then this would be a moot point. And in any case, having $1 million+ on hand would be one helluva cushion.
I consider my father to be rich. He’s a retired Army general that did 36 years in the military. His monthly base pay when he retired as a two star was $8633 a month. He gets two thirds of that (about $5750) a month plus healthcare benefits for he and my mom for the rest of their lives.
When I sold my Dad his Subaru he had to disclose to me his monthly income as he was taking advantage of a 0% financing deal. Between his retirement pay, he and mom’s social security money, and what he draws off his investment accounts each month, the household income was $14,000 a month. They vacation when they want, and do so often between trips to Europe, cruises and the like a few times every year, host really nice parties in their “active adult country club lifestyle” gated community (of which my dad is the president of the HOA…no surprise there really) and own lots of nice things, cars, etc. I think that fits the definition.
Depending on location, a bespoke suit can cost as much or less as buying off the rack, but you need to spend the time to get it made and have the time to wait for it. For those of us with “non-standard bodies” (as my uncle was once informed he was), it can actually mean less money; sometimes, even less time (there have been trousers I’ve had to resend to the fitters twice because they simply would not pull the waist in as much as needed).
That’s just an example of one of the ways in which location marks a big difference on what is done at different economic class levels; many stuff such as financial amounts involved or housing size will also vary enormously by location.
To me, “comfortable” is being able to drop whatever on something you want without having to worry about whether you do have the amount. “Rich” is when you can do that on stuff that other people have to ask credits for. I just bought a computer that most people in my location wouldn’t be able to get without a credit; it cost more than any three of my four siblings (bros plus sils) make in a month: my financial worth wouldn’t make me rich if I was a couple or had kids, but it does put single me at the bottom end of rich.
If you have to ask the price, you are not rich.
It’s all relative. $14,000 a month ($168,000 a year) in New York is a crappy salary for a first year lawyer, associate investment banker or manager in a Big-4 accounting firm. A 20-something a year or two out of business or law school compared to your dad who is at the top of his profession with 30+ years experience.
And even that’s not a lot of money when you look people who can afford all the $10 million+ condos in Manhattan.
What you describe is “upper middle class” lifestyle. Comfortable enough that you don’t need to think about money day to day, but not so affluent that you can just buy whatever you want.
What’s his net worth, though? In Michigan at about 83% of that monthly income, I’m nowhere close to rich, except to people that make 30% of what I make. Making up the difference to your father’s level would either (a) allow me to become rich by saving it, or (b) allow me to stay a wage slave by spending it on vacations, cars, parties, etc.
He may be rich, but income alone isn’t really an indicator.
My point was that posters were saying that they were basing being rich on having the ability to live a comfortable middle class lifestyle without working. IMO, that is no where close to being rich; that’s comfortable. My parents live a comfortable upper middle class lifestyle in retirement and they’re not rich. To me, in order to be considered rich you need the ability to live well beyond a comfortable middle class lifestyle.
Warren Buffett has the ability to live a wildly extravagant lifestyle without ever working again, whether he chooses to exercise that option doesn’t really matter. A Ferrari is a fast car even when it’s parked.
I kind of suspect that retirees are a special case; I can think of a lot of retirees who were never independently wealthy in their own right, but who, due to lower expenses and pensions and what-not, actually do as well in retirement as they did when they were working.
That’s NOT what I’m talking about when I say “live an upper middle class lifestyle without working”. Technically it meets that criteria, but that’s not the intent of what I’m trying to say. Maybe we should limit it to some arbitrary age person- like say, 50 years old or younger?