The huge market drop may cause me to rethink our category (only half kidding).
In other words, being able to retire comfortably using your own assets and investment income therefrom, rather than being dependent on others (e.g. family, charity, or government programs like Social Security and Medicare), right? I.e. you have moved from the labor class to the capitalist class.
I collect SS and I’m on Medicare. What does that have to do with me having enough to pay my own bills? Medicare isn’t free…and neither is my total health care plan. I get a huge $220 a month SS benefit…woohoo.
I am rich enough…and i really don’t care what that article rated me.
Social Security and Medicare benefits are subject to being cut for political reasons, which may not necessarily be predictable. So, especially for younger people who look forward to more years of political risk, relying on the existence of Social Security and Medicare when planning retirement savings may not be the best idea. Your health care costs could be a lot more expensive if Medicare is reduced in the future.
In the end it all comes down to your own definition of rich. This calculator really only helps you define what rich is to you. I can say, based on the clients I work with every day, I will never meet my own definition of risk. I could win the largest powerball, receive an inheritance from a lost lost relative, etc. and I would never have a hope of getting there based on my admittedly skewed perception of wealth.
My clients are the 1% (with maybe a few falling into the second %). The wealth they have involves 8 figure yachts, 9 figure art collections, multiple homes on almost every continent, etc. Working in this world for 25+ years has skewed my perception of rich. My wealth is very much above average and by most metrics would be classified as rich however it is often times a tough pill to swallow when shopping for new cars or jewelry to see what is actually in my price range as opposed to what I see from my clients. Tuition bills that cause me to choke a little bit are a Saturday night out for my clients.
In the end you have to take a step back and not worry about being “rich” but rather being content with what you have and what you can afford.
Only rich and wealthy people overly debate the difference between wealthy and rich. (That opening sentence is, I admit, a simplistic and sarcastic retort. Please feel free to point out how non-rich people can also debate the topic.)
It’s difficult to imagine someone saying with a straight face, “we may be in the top 10%-to-5% of earners but we’re not rich. Being rich means owning a few million dollars worth of assets.”
I understand the difference between being a high earner and having wealth, especially as it relates to assets. And I know the article/quiz is mostly a diversion and not truly useful.
However, whether we say “rich”, “wealthy”, or “well off”, can’t we all agree that one family of four earning a yearly income of $200K+ is, regardless of assets, for all intents and purposes, “rich” in the sense that 90% of Americans would behold it? Can’t we agree that a family of four earning a yearly income of $45K, with less than $20K in non-primary home assets, is not “rich”? If not, the game of semantics may have blinded some of us to reality.
Yes, $200K/yr is rich. Yes, having $5M in assets is wealthy. Yes, having a yearly income of $150K/yr and $10M in assets is wealthier.
BTW, I love this thread. 
I’m not in the top 10% of earners in my area. Not in the top 25%. Yet I feel very good about my financial situation. I’m thankful for what I have, though I would like to earn a little more.
I feel like I should maybe pre-apologize for the opening half of this post, but I’m not sure why. But seriously, does anyone who earns $200K/yr actually consider themselves as a low-income or middle-income earner? That strains the limits of credulity.
This is interesting. I’m slightly above middle (55%) in my area, so I also plugged in NYC in case I want to retire to one of the highest costs of living areas in the world - and came up with smack 50%.
So does suggesting that the threshold to be considered rich is owning an 8 figure yacht.
Quiz says I’m top 5% for my area. I do not consider myself rich. I still have to work and budget. I consider those who don’t have to do those things rich. They said, I do recognize that I am well off compared to most and am grateful.
It doesn’t matter what anyone thinks, unless you have enough to take care of all responsibilities without worrying about loss of job or retirement, you aren’t rich. No matter what EFC colleges come up with, without several millions in bank, you’ll be in trouble as soon as salary check stops coming. What you earn, most of it goes towards taxes, mortgage, private education etc.
^^^ See, that’s the thing. The fact that we (my household, I mean) make enough to pay taxes, qualified for a mortgage, and were able to even consider private education, makes me feel rich.
That may be the rub. If 40% (to pick a number totally at random) of society can live contentedly in a $150K home, drive two vehicles with a combined value of $30K, have multiple yearly vacations that total $3K, etc, etc, etc, … yet a family that earns significantly more chooses to live in a $350K home, drive two vehicles with a combined value of $100K, send their children to private schools instead of public, whose yearly vacations total $11K, etc, etc, etc, then the decision has already been delivered. The second family is rich and living rich. Their lack of savings and financial security come not from a lack of opportunity, but from a lack of taking advantage of the opportunity already in front of them.
I’m not criticizing anyone for spending as much of their income in any manner they see fit. I’m just saying that to earn $200K as a family and cry poverty because one is living paycheck to paycheck is disingenuous.
Just as that $200K/yr family can claim to not be rich because they need their jobs to continue their lifestyle, a $1M/yr family can live an even more expensive lifestyle, but still claim to not be rich for the same reason of needing a regular income to continue their lifestyle. Ditto for a $5M/yr family. I don’t think a lack of fiscal responsibility should be factored into the decision of whether or not a family is “rich”. At some point, doesn’t lifestyle * help * determine who is rich and who is not?
At what point can we objectively agree that $X/yr is a “rich” income, regardless of how a family chooses to spend/save/invest that income?
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$X/year depends on cost of living in the area you’re in (which is why it was included in the quiz). There are many areas of the country in which $100K is indeed rich. But in Manhattan? Won’t even get you a 1 BR apartment to rent, never mind owning one. In LA? Don’t even think about buying a house.
“Rich” is not an absolute value; it’s all relative.
“My clients are the 1% (with maybe a few falling into the second %). The wealth they have involves 8 figure yachts, 9 figure art collections, multiple homes on almost every continent, etc.”
These people aren’t the top 1% they are the top .01 percent. Households making around $400K a year don’t have expensive yachts, homes around the world, and art collections. Yet, they are still rich.
Cost of living is an factor, but not as large a factor as is often presented. The largest factor in calculating CoL is housing. Even workers in Manhattan get to choose how they spend their money on housing. Hundreds of thousands of people who work in Manhattan choose to live not in Manhattan … to save the expense. Just because someone chooses to live in Manhattan instead of commuting 20-40 minutes doesn’t mean we get to ignore their $110K salary.
Choose to live in a 2BR apt in Queens for $230K, or choose to live in midtown Manhattan for $550K-$900K. That is a choice. The income is sufficient – the chosen residence may or may not be affordable with that income. This type of dilemma is not isolated to NYC and SF. People make such choices all over the country: Work in DC, live in Silver Spring; work in Dallas, live in Ft Worth. I once commuted 55 minutes each way, and the housing cost difference was not even close to the difference between Manhattan and commuting 1 hour away from Manhattan. We can all make choices.
Also, let’s not ignore the inherent value of living in a place like Manhattan or SF. People choose to do so because the locale puts them in close proximity to many things that enrich their lives – the arts, sporting events, career opportunities, nightlife, singles mingling, education, etc. It can be argued that being able to afford such a lifestyle is as much a sign of being “rich” as much as having a six-figure savings account. Make the choice to have a more “enriched” lifestyle, or choose to have more savings. Neither choice forces us to ignore the actual income.
Making the wrong spending choice does not necessarily negate the income. Having the opportunity to make the choice in the first place is a sign of being “rich” or of “wealth”. A Manhattan worker earning $40K does not get the opportunity to make the choice to live in midtown Manhattan and have less money, or commute from a less expensive location and save/invest money. That worker is forced to commute from afar AND is unable to save/invest the difference in housing costs. The lack of choice is a sign of having a lack of “riches”.
A richer income allows the opportunity to make choices. Making one spending choice or a different spending choice should not factor much into whether the income is “rich” or not.
This test seems so flawed. I filled it out with my household information and we’re in between the 80th and 85th percentile. When I picked rich as 1 percent, it told me i’m not rich. When I changed it to 20 percent, it told me I might be. Lol. It is interesting to see the income distributions, though. Clearly it knows nothing about monthly bills or various other expenses.
@fendergirl, rather than a bug, I think this is a feature. To me, the most interesting data would be the statistics of where people define rich to be! Kind of like those college social science experiments where they tell you that they are measuring variable 1 but really are measuring variable 2.
I put in my definition for what I thought was rich and I wasn’t. But my percentile was about what I expected.
To be honest, if I had an assurance of health care, I believe I would retire as soon as DS 20 finished college. I would be rich enough. As things stand now, I will need to work until I become Medicare eligible.
Am I rich…yes. Especially after a windfall inheritance. But do I feel it? Should I? I think so. But do I? Honestly no. I don’t think this is uncommon if you aren’t a true one percenter in terms of assets. I read that many people don’t feel “rich” until their assets are north of 10 million.
There are a few ways I feel rich. Being able to pay for college is certainly one way( though we saved like heck before we came into money…few vacations, House about 60 percent of what we could afford…12 year old cars etc…so we could and did pay fir it without the inheritance without it).
People judge their status relatively not absolutely. Thus, the way to feel rich is to live with poorer neighbors.
When we moved from the city to a suburb/exurb, we found a quite affluent town that had a lot to like. But, we intentionally moved to the less affluent part of the town (folks were software engineers and worked at the public radio station or were administrators at a private schools etc. rather than biotech CEOs or tech CFOs, lawyers or mutual fund execs). We wanted our kids to grow up with a more normal sense of spending: We did not want them to think that going to the Caymans for spring break was a birth right
I recently saw an article or the headline of one that claimed that only the top 15% of Americans have any disposable income (I think that was how it was phrased)… or the ability to have fun purchases beyond necessities. I guess that doesn’t really surprise me now given how much the middle class seems to be disappearing and yet it saddens me. When I answered this quiz I put in 5% as my threshold for ‘rich’… clearly 20% is way too big of a category if the people in the 80-84% group don’t have any ‘fun money’.