What is "wealthy?" Most millionaires say they're not

People get so worked up about this stuff. A couple years ago, the superintendent of my wife's school system called herself "middle class." She makes $135K. Big honking mistake on her part. To this day, all of the teachers gripe about it.

A little secret: People always compare themselves to the income bracket above them. People in the third world would think that the people here, griping about their $15K entry-level newsroom pittance, were living high on the hog.

 

When you start getting to put qualifiers on your minimum acceptable lifestyle that most people don't get to, that's what makes you wealthy.

 

To me, wealth is what makes you wealthy. As opposed to income. Now, income may lead to wealth. But income alone does not equal wealth.

 

I am not sure exactly which way you're leaning here. Is $1 million in the bank wealthy? Is homeownership or "I don't want to live in a world without premium cable" wealthy?

In any case, I think the fact that people don't consider $1 million to be a wealth standard is a good indicator of how they got to $1 million in the first place and why they're likely to go a good bit higher than that.

 

We did a complete, down to the studs remodel of our kitchen. It didn't wasn't anywhere close to that. Of course, your mileage may vary.

 

My in-laws spent $20k on their kitchen remodel. Nothing fancy - my father-in-law did much of the labor himself - and they did it 15 years ago.

 

The deal is there really is no good definition of "wealthy" or "middle class," which is why politicians who throw those terms around regarding policies or taxes or anything else often aren't talking about what people think they're talking about. And often that is by design.


Wow, that didn't come out right. Edited version above hopefully makes a bit more sense.

 

When you start having to say "Yeah, it sounds like a lot of money, but after you consider X, Y, and Z," and those are things that, say, 85% of the population doesn't have, then you may just be wealthy.

 

But the things we've pointed out (primary residence, college tuitions, car), I doubt that 85 percent of the population forgoes those items. I haven't seen anybody putting luxury items into the discussion in that way.

My initial point was that $1 million in the bank yields an annual retirement income of $40,000, using the 4 percent rule that most advisers say is the best way to make sure you don't outlive your savings. And $40,000 in annual income, plus the $20,000 or whatever that a person would get from Social Security, does not constitute wealth.

 

Hmm. We're at a bit of an interesting crossroads. I have no idea what the actual number is, but my gut instinct is that way less than 15% of people can afford to pay for their kids' college.