There have been a lot of threads lately with a lot of hostility toward the “rich” and “wealthy” and what they do with their money.
A common thread is that “the rich” and “wealthy” are pretty ill-defined. Some people are talking about the 1%, others are talking about the top quintile of income, others are talking about net worth, and yet others are defining it so low as to nearly be anyone who’s well off and not scraping by.
So I ask, what does “rich” mean? What about “wealthy”? I’ve seen anything from anyone making $100,000 or more, up to membership in the 1%.
US income percentiles are:
$39k = median
$69k = top 25%
$114k = top 10%
$153k = top 5%
$300k = top 1%
Obviously context would matter for the absolute numbers (Manhattan vs rural Mississippi), but I’d say colloquially maybe “wealthy” means top 10%, “rich” means top 1%.
“Rich” to me is usually about wealth when I think about it, and “Wealthy” is always about wealth rather than income.
If you’re a newly-minted doctor or lawyer and land a decent job, you might have the income at or near six figures, but I still wouldn’t consider you rich yet especially considering your likely six figures in student loans.
First year major league ball players aren’t rich, either, even though you have fewer or no student loans and a firmly six figure or higher income.
I think around a million and 5 million bucks of wealth would be my thresholds for the two words, but that depends on family size and location, especially for “rich”. A middle-aged, upper-middle class family with lots of kids they have yet to help go to school is not going to be rich at a million dollars. Whereas a retiring single person in a low-cost location would be doing pretty well.
It’s typically not a term of art in academic studies, so YMMV. I found a Charles Schwab study that asked people. Responses varied by city, ranging from $1.8M to $4.2M (Charlotte, NC and SF Bay Area, respectively.)
And of course different forms of wealth can feel different. Someone with their house paid off and the neighbor who doesn’t may have a large wealth disparity even if all else looks equal.
One very rough definition: rich = don’t have to work. (That doesn’t mean they don’t work, necessarily, just that they’d be financially OK if they stopped.)
Not sure why you’d really ask, as it’s trivially easy to find threads with hostility towards ‘the rich’ or that are heated wrt discussions about wealth on this board. Took me about 5 seconds to just skim the threads on this forum to see posts that even in the thread title you could get that vibe.
As for the OP, I think that ‘rich’ and ‘wealthy’ are pretty nebulously defined, and really going to boil down to perception and, probably, where you live in the US. Someone ‘rich’ or ‘wealthy’ in or by California standards (and further defined by living in one of the more exclusive or popular parts of the state…live in some small town in eastern California and the answer would be different than someone living in Malibu or San Francisco, which would both be different than each other as well). than someone living in a small rural town in Arkansas or Missouri. To me, ‘rich’ means making a sufficient salary to cover all of your monthly expenses with enough left over to build a retirement relatively early in life…IOW, to become ‘wealthy’. ‘Wealthy’, to me, means being completely self sufficient, so that you don’t have to work and can live, if you choose, off of your investments. I know a lot of people who make a lot of money wrt their salary…but they spend it all, and so to me they aren’t ‘rich’, even though they have a lot of things. They have to continue to work…some of them until very late in life. They would probably meet someone’s definitely of ‘rich’, but not my own. I know a lot of people who have a lot of investments and a lot of property and stuff, but they still have to work, so to me, they aren’t ‘wealthy’. I also know some folks who live fairly normal, modest lives but don’t have to work another day in their lives because they have sufficient investments and capital to cover their expenses…as I know people who have control of their expenses and debt and make enough and more importantly save enough that they will be able to retire as ‘wealthy’ people by the time they are in their 50’s. They are, IMHO, ‘rich’.
A (small) part of that is because high-income households have, on average, more earners. I only have numbers for quintiles though. 2 per household for the top quintile vs 1.3 or so. I doubt it increases much for the top 5% or 1% though.
No cites, since this is just my opinion. IMHO being rich means having enough money to be able to live an upper middle class lifestyle for 50 years without having to earn any further income and not go into debt. Let’s say about 10 million dollars for a married 30 year old raising 2 children. By upper middle class I’m including things like having two nice vehicles (in the 50-100k range) that are traded in every 5 years or so, eating out at nice restaurants 2-3 times a week, owning a home in the mid to upper 6 figures, a university education for both children, but most importantly not having to worry about money if some unexpected expense comes up. Wealthy means being able to afford extravagant luxuries without going into debt, like the NFL owners who have been in the news recently for purchasing super yachts, or the type of people who bid on original works by Shakespeare or Mozart at the auctions at Sotheby’s.
IMO, Rich starts when you can make 6 figures off your investments without it shrinking your principal. So around 5 million net worth is around where it starts.
Roughly, yes. If you have everything you need, can do what you want and don’t HAVE to work, I’d say you are ‘rich’ (I’d say ‘wealthy’, personally, as my definition differs). Why wouldn’t that be ‘rich’ by definition? If you don’t have to work and are not living in poverty, that seems pretty damned good to me.
Well, I take your point. But lots of retirees live on quite modest expenditures, and neither they nor their neighbours would think of them as “rich”. So, while this is an eminently defensible concept of “rich”, I think it’s not a commonly-accepted one.
I remember an episode of The Cosby Show where the middle girl asks her mother if they are rich and she says “Your father and I work hard for our money. If you’re rich, your money works for you.” (paraphrased). That always seemed like a pretty good definition.
The other thing I remember is an interview of some financial expert on an NPR program a few years ago. The interviewer asked how much money a person would have to have to be securely rich, such that they could weather almost any economic storm or series of catastrophes. If memory serves, the expert said something like $100 million to be able to diversify enough to weather any storm. For what that’s worth.
By the way, I’m retired and I’m doing OK, but I don’t consider myself rich. If I were rich, I could afford to travel anywhere I wanted, first class; I would be able to hire at least a cook and a house-cleaner. I would have a better car. And so on. I can do some of those things once in a while, although I generally choose not to out of prudence, but I can’t do them without worrying about consequences to my later life. That’s not rich. I call it comfortable.
I’ve long been of the opinion that if you are rich, you do not have to work to sustain your lifestyle, and you can make major purchases such as a good car or a flat without saving and budgeting.
If you are well-off you can take more than one long vacation per year if you want to without impacting your lifestyle, and generally make purchases in the expense class below cars and property without saving and budgeting.
An implication of this is that your chosen lifestyle can shift the cutoff by quite a bit.
That was Chris Rock, though he used Shaq as his example. His argument was that the rich can burn through their money and become broke again (citing athletes and other entertainers), while the wealthy own so many income-generating investments it’s almost impossible.
My qualification on the retiree argument would be where the money’s coming from. If you’re retired and could maintain your lifestyle without a pension or social security - yeah, you’re rich. You may not be very rich, but you are. If the government cutting SS or the pension fund tanking would put you back on the job market, not so much.
People tend to look at rich as a number rather than a threshold. Some people are just across the line and since they can easily see the non-rich from where they are, figure they aren’t. Some people are so deep in-country, and can’t see the line.