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Reuters: U.S. millionaires say $7 million not enough to be rich


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http://www.reuters.com/article/2011/03/14/us-fidelity-survey-idUSTRE72D3RK20110314

More than four out of ten American millionaires say they do not feel rich. Indeed many would need to have at least $7.5 million in order to feel they were truly rich, according to a Fidelity Investments survey.

Some 42 percent of the more than 1,000 millionaires surveyed by Fidelity said they did not feel wealthy. Respondents had at least $1 million in investable assets, excluding any real estate or retirement accounts.

"Every person in the survey is wealthy," said Sanjiv Mirchandani, president of National Financial, a unit of Fidelity. "But they are still worried about outliving their assets."

The average age of respondents was 56 years old with a mean of $3.5 million of investable assets. The threshold for "rich" rose with age.

"They compare themselves to their peer group ... and they are also thinking about the long period they will have in retirement and want more assets" to fund their lifestyle, said Michael Durbin, president of Fidelity Institutional Wealth Services.

Still, millionaires are slightly more optimistic now than they were in 2009, when 46 percent did not feel wealthy.

Respondents were also more optimistic about the U.S. economy. While they thought the current U.S. economy remained very weak, they think it will improve by the end of this year.

Fidelity noted the wealthiest 5 percent of Americans hold more than 55 percent of the nation's wealth.

Sometimes it astounds me to see things like this, but then I remember the tax break debacle and it seems par for course. So what do you guys think, is a million not enough?

Maybe we should cut their taxes more, they seem to need it.

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Median income in the US was about 50K in 2009. Given that rich means the ability to maintain median income in perpetuity without risking or burning the equity, you need about 5M in income producing investments (5M in investable assets).

That's the issue to me...actually defining "rich".

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Median income in the US was about 50K in 2009. Given that rich means the ability to maintain median income in perpetuity without risking or burning the equity, you need about 5M in income producing investments (5M in investable assets).

First of all, your math is wrong. If you are getting 50k a year on 5 million in assets, that is a one percent return on investment. Not so good, even for a bad investor.

Moreover, why would it not be appropriate to burn the equity down a bit as you age? Is there some sort of expectation that you are going to live to infinity?

According to this Money Magazine calculator, if you have $5 million in assets at a 7% rate of return and 3% inflation, and are 55 years old, you can actually spend $250k a year and you still will have a nice fat $1.6 million when you hit the age of 95. And that is assuming no social security, real estate, retirment plans or accounts at all.

http://money.msn.com/retirement/retirement-calculator.aspx

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First of all, your math is wrong. If you are getting 50k a year on 5 million in assets, that is a one percent return on investment. Not so good, even for a bad investor.

To be fair though, he said "without risking" the equity.

I don't know the answer to this question, so I'll risk being an idiot and ask: These days, what's the greatest % return you can get without risking capital? Since the pedantic answer is zero at most, let's assume that an investment fully secured against loss of principal counts as a practical "zero risk." Is there any place to put $5m and guarantee (per gov't) that you'll get more than 1%?

Good point about the idea of keeping the principal forever, though. I think for some people, watching capital dwindle -- even at a tiny rate which they'll never hope to outlive -- is enough to make them feel "not rich" just because the slope is negative.

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Having a million does not make you rich and frankly I'm surprised by thus thread. I would have expected "duh" as the response. Rich and "retireable" aren't the same thing. Sustained moderate income is not rich it's the point at which you can retire and are free and it's more about financial positioning of assets than total assets. NFL player often have far more than 5 mill and no where near that 10 years after retirement. Money is temporary income generating assets are wealth and extremely high income is rich.

Being rich is about having a great deal of money coming in or an absolutely huge pile of money (way larger than a million).

Think of what a million dollar house looks like in Arlington, Va or San Francisco. Is that what you think of when you say "rich"? Not me.

Having said that free is the goal. Enough to live off and work when and how you want to. I don't need a yacht as much as I need to pursue my passions free of salary considerations.

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All that is true Destino, but these people are saying that $7 million is not enough to be rich, EXCLUDING their real estate and retirement accounts. These are people with an average of $3.5 million in liquid investments above and beyond their real estate and retirement.

I'm sorry, but that is rich.

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Someone who already has $7M already has shown "wealth generating potential".

Do you know what the retirement plan of someone used to be (like I guess prior to the mid-1980s)? It was to pay off your house after 30 years and then live off of social security.

You could build your own house with $1M and certainly live off of the other $6M and generate a decent amount of income (maybe not $7M but you could probabaly make median income). I'm sure there are also low-risk ways of generating 5% off that other $6M... in fact lets just assume you put $1M at risk and generated a 5% return... that would be... $50k.

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Depends on where you live. Parts of the Country you live next to the gate on the way in/out.

Others you live like a king.

Anything over 100k not matter where you are and you should be able to scrape by during 3 years of us upping unemployment to 99+weeks?

They do buy lots of "Stuff" that keep us running. I like that Kerry had a fleet of cars and 7 houses with staff and airplanes and Congress Staff etc.. (thats 30 employed people).

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Remember when I was stationed at Fort Hood. Got a small and older single family home in Killeen (the town outside the base) with 3 bedrooms, 2 full baths, a garage, and a fenced in backyard for...$495 a month. I couldn't even get a basement for that much in the DC area.

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They do buy lots of "Stuff" that keep us running. I like that Kerry had a fleet of cars and 7 houses with staff and airplanes and Congress Staff etc.. (thats 30 employed people).

Yeah marrying into wealth like Kerry did with the ketchup chick is an option

Depending on where you live how old you are 7 million is not really rich. its not like they are going to clip coupons while shopping for groceries. drive a KIA, live in a 180,000 dollar home with a modest property tax and deal with a millionaire's tax as they have in Montgomery county which has led to people to flee the area.

Those that have 7 million or less and plan on doing something about it by earning more deserve applause not the typical class envy by those who don't have it.

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Having assets of, say, 3.5 million in your 50's, put you in a very comfortable place. But you are certainly not free to fulfill whatever whim hits you for the rest of your life. I think that is the distinction between "wealthy" and "rich", that these people are making. They certainly are not "pleading poormouth" as some in this thread are suggesting.

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Globally speaking, if you're reading this message board, you're almost certainly rich.

Specifically, I saw this discussed on the finance board I often read, and a very perceptive poster pointed out that what this really says is that people with 3.5 million dollars think that it takes 7 million to be rich, or basically twice as much as they have.

His point, and I agree, is that for most people, "rich" is more than what they've already got, kind of like "old" is around 15 years past where one currently is.

I think there's a lot of truth to that, and I'd suspect that "rich is twice as much as I have now" is probably not a terrible indicator.

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Globally speaking, if you're reading this message board, you're almost certainly rich.

Specifically, I saw this discussed on the finance board I often read, and a very perceptive poster pointed out that what this really says is that people with 3.5 million dollars think that it takes 7 million to be rich, or basically twice as much as they have.

His point, and I agree, is that for most people, "rich" is more than what they've already got, kind of like "old" is around 15 years past where one currently is.

I think there's a lot of truth to that, and I'd suspect that "rich is twice as much as I have now" is probably not a terrible indicator.

Yes, and globally those who make 3.5 million are kings who can buy hundreds of servants.

If your post is true, then it only shows the unimaginable fantasy world that the rich live in. Of course everyone believes that they aren't rich, they are just "wealthy", just like many don't believe they are poor, only "lower middle class." The fact of the matter is, 7 million (in any form) is rich. With that kind of income, you could buy most everything the heart desires. If you were frugal, you could live off of interest alone.

How many people in the US make more than 7 million? 99.99 percentile. How many make more than 3.5 million? 99.9 percentile. Hell, how many make more than 1 million? 99th percentile. If they people aren't rich, then what is the family that makes 50k a year? What is the sweatshop worker that makes 1 dollar a day?

I have no problem with the pursuit of wealth, but that article only shows the delusion that the rich seem to have about money. There is nothing relative about their worth, contrary to their opinion. The idea that they cannot buy something like a cruise ship does not make them only "wealthy." The funny part is that people who will never make 7 million (or 3.5 million for that matter) in their entire life are trying to defend this delusion.

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How many people in the US make more than 7 million? 99.99 percentile. How many make more than 3.5 million? 99.9 percentile. Hell, how many make more than 1 million? 99th percentile. If they people aren't rich, then what is the family that makes 50k a year? What is the sweatshop worker that makes 1 dollar a day?.
I need further clarification. Is the family making 50K a year delusional if they claim not be rich when asked by the guy making a dollar a day?
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Well I think there is a difference between Rich & being truly wealthy. When I think of WEALTHY, I think of people like the Hilton family, who could probably do nothing but sit around for the rest of their lives, their kids lives, grand kids lives etc etc etc and still have enough spare cash sitting around to feed every homeless child in America. That is WEALTHY.

When I think of "Rich" I think more of someone who has enough money to buy nice stuff, but they aren't so over-the-top wealthy that they can coast through life.

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My opinion doesn't count because i am middle class exactly. I have 6 months of funds before i hit the bread lines (and that is from a severance package).

i'd put "Rich" at 1million dollars and making money in assets including the house, cars, boat. (wont last forever but it takes money to make money)

Wealthy is having the money work for you. It's apparently .1% incredibly hard/lucky to do?

---------- Post added March-15th-2011 at 12:58 PM ----------

I need further clarification. Is the family making 50K a year delusional if they claim not be rich when asked by the guy making a dollar a day?

:) you mean when they tell him to get a job? That thing they hate to wake up to everyday so they want others to deal with it also?

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Also, 1 million dollars of total worth aka to live off of and 1 million dollars sitting in some account, gaining capital gains and other types of interest are two different things.

Assuming you have A Million bucks that you can leave untouched, and never have to use it to pay bills or for spending cash, and it can be left alone accruing interest, you are probably going to be fine for life.

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