In America, millions make you middle-class

[flashl]

Source: Reuters

NEW YORK (Reuters) - For most people around the world, earning a million dollars makes you rich. In America, it just makes you middle class.

A new book, "The Middle-Class Millionaire: The Rise of The New Rich And How They Are Changing America" ($24, Currency Doubleday), finds that 8.4 million U.S. households have a net worth of between $1 million and $10 million of money they did not inherit.

While these middle-class millionaires live in regular neighborhoods and send their kids to public schools, they behave very differently from their less-wealthy neighbors.

Middle-class millionaires exhibit four qualities that "have a lot to do with why they are so successful and influential," Lewis Schiff, who wrote the book with Russ Alan Prince, told Reuters.

Reuters

Read more: http://www.reuters.com/article/reutersEdge/idUSN2258603220080229

---

Mr., Ms., or Mrs. Thousandsnaire, did this news cause you to reassess your social standing?

[ixion]

1. 8.4 million out of 350 million is about 1.6 percent

so what these guys are doing is simply changing what defines "middle". If you take middle as median income, the results would be much different.

[flashl]

2. Exactly, raising the bar. The "new" middleclass. nt

[NashVegas]

9. Financially, Yes

It's their lifestyle that differs from the average millionaire / millionaire couples.

They aren't living in major cities - articles says they choose their home by school district, which matters little when busing comes into it. The fact they've even got their kids in public school in the first place is different.

[The Croquist]

41. That's 8.4 million households not people

There is an average of 2.6 people per household in the United States so there are about 115 million households in the US. That puts about 7.3% of the population in households with a net worth of 1 - 10 million dollars.

There are roughly 300 million residents in the US not 350 million.
8.4/350 = 2.4% not 1.6%
8.4/300 = 2.8%

[Xithras]

61. There are 116, 011,000 households in the US. That's about 7.2%

I know another poster averaged it to 115 million, but the actual census data is available as of 2006.

Traditionally the definition of "middle class" has been those who have enough money to enjoy econmic independence, but not enough to enjoy social or political power. It's included everyone from doctors to bankers. You can make quite a bit of money and still be middle class if you live in an affluent region and your neighbors all make more.

Imagine being the only millionaire on a street full of billionaires. Yeah, your comfortable, but nobody is going to take you seriously when you start talking business and politics. After all, if you were as smart as you think you are, you'd be as wealthy as they were (or so the thinking goes anyway).

That same person could move to some rural area and dominate local political and social circles. So you see, middle class status isn't just a measure of dollar bills, it's a measure of power. The middle class has little power.

[fascisthunter]

3. I America, Americans Feed the Wealthy

and if you are a good boy and girl they'll feed you scraps. Remember to bring your brown nose.

[Igel]

23. My aunt died earlier this month.

She had no kids, was married her entire adult life. High school graduate, no college.

She worked as a secretary in a VA hospital her entire life. Her parents' family ran a small grocery store in a working class neighborhood, all the money was left to her younger brother. (She had two sisters, as well, who also got nothing from their parents.)

Her husband worked as a clerk in a steel mill his entire life, another high school graduate. Together, they had a house with a 20-year mortgage in a nice middle class neighborhood and led middle-class lives--bridge one night a week, she'd have her hair done every two weeks, etc., etc.

Her husband left all *his* money to his younger brother (well, in a complicated way--left the money to her, the interest to his brother, with the stipulation that she leave the money to him when she died). Whatever that came to, nobody's saying. And, yes, all the women in my mother's family insisted on keeping all their earnings and savings separate from their husbands'; even now my mother has her checking account, my father has his, and they split the monthly expenses, at *her* demand.

The amount my aunt personally contributed to her estate was $2.5 million.

Not scraps.

[drmeow]

4. Net worth does not equal income

There is a big difference between how much you make and how much you are worth. Unless your net worth is generating income for you (i.e., dividends, interest, capital gains), it may not make a difference vis a vis the type of lifestyle you have.

One of the problems with increases in property values for the elderly is that it raises their net worth but not their income. Their property taxes go up but they are not making any more money. Their lifestyle often deteriorates yet they are "worth" more.

I'm not trying to say that being worth a million doesn't make you rich. Just that lifestyle is as much a function of disposable income as it is of net worth.

[yorkiemommie1]

12. Such is my neighborhood here in SoCal

retired, high property values, houses paid off, and we shop at the dollar stores.

[JeanGrey]

39. When I die I am probably going to leave my husband a million

dollars easy. But we are basically not doing well. We live on SS and disability. Our less than 130,000 home is paid for and so are our 8-10 year old cars.

I have 500,000 in life insurance that will not go away, plus I have about 400 grand in my 401K (that I cannot touch because I'd lose 1/2 to taxes).

Thank god we still have insurance. We have to watch what we spend on our checks every month.

So I fully understand that being "worth" more but having no cash flow. I expect I will be lucky to see two more years as I have cancer and it isn't going away. I'm too young to draw my retirement and when I'm gone my hubby will draw a greatly reduced amount (less than 800 a month) for ten years only.

In the meantime I am grateful to leave him what I have, but I need high cost treatment that will probably not be covered in full so I'm not sure how much we'll have left except insurance and the house. My greatest fear is I will become an invalid and they will take everything if I have to go into a nursing home...................

[The Croquist]

40. I don't know your age but you can tap your 401K without penalty

There is a complicated formula depending on your age / life expectancy that allows you to commit to taking a certain amount out per year without penalty. You have to agree to do it for a certain amount of years or there will be penalties.
You will still have to pay federal and local taxes but your beneficiaries will have to pay that when (not if) you die. Sooner or later you have to pay the taxes anyway.

The money is yours so enjoy it. If it all comes out at once the taxes may be even higher.

[JeanGrey]

42. Yes, I know. But I'm not taking it out unless I have no other

choice. The only comfort I have is that my husband, the most wonderful man in the world, will be on easy street once I'm gone. He deserves it. I even want him to remarry. And I'm only 54.

[renate]

45. I'm so sorry... it sounds like an incredibly difficult and painful situation

I don't know what to say... if your diagnosis really is terminal, I hope your remaining time is full of joy and love and free from worry--the first part sounds likely to happen, and I wish you the best with the second part.

:hug:

[JeanGrey]

49. Well I am stage four cancer, but I am still feeling relatively

good and I am fighting it! There are many Stage four survivors much longer than in the past so who knows, it is truly in the hands of God.

[Xithras]

62. Very good point. I was a paper millionaire for a while.

My big piece of pretty riverside ranchette-land within a few miles of a freeway and in commuting distance of the SF Bay Area shot up to around a million in value when the market was going haywire (the value is primarily for the land, since my old house is considered a pushover for any buyer with that kind of money). Combined with the rest of my investments (mostly for retirement), that made me a millionaire. I still worked 12 hours a day to pay my mortgages and keep my small software company from going bankrupt, I've never done much better than tread water.

When the market deflated, my millionaire status went with it. I didn't mind, I didn't gain anything when I became a paper millionaire, and I didn't lose anything when I was no longer a millionaire. Wealth is not the same as income. Had I SOLD my land and pocketed the roughly $600,000 in appreciation the land had taken, my "wealth" would have become income, but I didn't. Easy come, easy go. I'm just happy that Prop 13 shielded me from having to pay taxes on a $1 million dollar property while the prices were nuts. That would have hurt.

[wordpix]

80. true, especially when your home is worth much less than it used to be

[lumberjack_jeff]

5. I was in Kirkland, WA a couple of days ago.

I was helping my son bring home a truck. While he was test driving it, I walked around the block. It was an okay neighborhood, most of the cars parked on the curb were less than 15 years old. Most of the neighborhood looked to have been built in the 30's or 40's. Every 8th house appeared to be new, or recently had a major remodel.

One of the older houses on the street looked to me to be what I'd consider a starter home. Small lot. The house had a realtors sign in the yard with one of those "take one" flyer thingees which dispense flyers about the house.

I scanned down the features; built in 1935, two bed one bath/1200 sf, 80x100 lot, unfinished basement.

The price: $995,000.

In my neighborhood two hours south of this place, one-tenth of that is the price at which I'd consider a fair price. The main selling point according to the realtor was the fact that if you were to build a two-story house on this lot, you could actually see Lake Washington over the roofs of the neighbors house.

Unbelievable.

I find it unsurprising that 8.4m households have uninherited net worths of between $1m and $10m. Also, it's debatable whether net worth should be used as a determinant of "middle class". Certainly, there are lots of wealthy people who have moderate incomes.

[wordpix]

81. that house used to fetch $450K in CT's Fairfield County---IF it were in fair shape

if it were in good shape, it would have been higher.

Now that house is going for around $300K and dropping like a stone.

[balantz]

6. So let's see, when I have full time work I usually make less than $20,000 tops.

Where does that put me in comparrison to the new "middle class"?

[celestia671]

25. That makes two of us!

I guess we fall into the 'dirt poor' catagory!

[balantz]

26. Hey! Who you callin' dirt poor?!

Howdy friend:hi:

We're great in number, and good at heart!

[provis99]

28. no kidding; I look forward to the day I can rise to the level of "white trash"

Just thinking about being able to afford my own single-wide makes me salivate!

[balantz]

30. There is simplicity in simple pleasures.

And that can be good.

I just want to be treated fairly. Universal healthcare, access to education, a decent wage, employment opportunities, are those too much to ask from an "enlightened Democracy"?

[PassingFair]

33. I married into "riff-raff".

I'm lucky, I guess.

[sandnsea]

7. As opposed to the $200,000+ "middle class"

who are in the top ten percent, as opposed to the top 2%.

The other 90% of America? We're "middle class" when they want your vote, we're ignored when they pass their tax cuts and credits and billion dollar bail-outs.

[debbierlus]

8. Middle Class is disappearing. Those are WEALTHY people

NOT middleclass people....

[KillCapitalism]

10. Well with the crazy high inflation we are having...

$1 million probably just is middle class nowadays.

[Blue_Tires]

11. i don't think that makes them middle class

it makes them millionaires....

if by this definition millionaires are middle class, there there are a hell of a lot of lower-class folks in the world

[Lance_Boyle]

13. these are 'starter millionaires'

The people with real money look down on them. The people with real money are incapable of looking far enough down to see the rest of us.

[Seabiscuit]

16. That's a point I was about to make. These aren't "the rich".

A "net worth" of $1 to $10 million is a pittance compared to the super-millionaires and about 1,000 billionnaires out there.

Plus, their income from their net worth (investment income) is usually a fraction of the minimum $250K/year that would make one "wealthy". And since they choose to live in areas where the best public schools are, their property taxes probably begin at a minimum of $10K/year. Another reason they send their children to public schools instead of expensive private schools.

These people are neither strictly "middle class", nor are they "wealthy".

Here in San Diego one sees the entire spectrum from very poor to super rich. And with housing costs here, only the "wealthy" (I would define that as a net worth of $20 million minimum, and $250K/year income), really have it easy.

[Lorien]

19. By BushCo standards, the "wealthy" are those making $450,000 and above

per year. I know plenty of people who make $250k per year and lead very middle class lifestyles, but my multi millionaire friends and colleagues live very differently then the rest of us (if they have significant yearly incomes. One friend with 2 million in investments brings in only 70k per year, so she's still middle class).

[Seabiscuit]

21. One's day-to-day standard of living is really determined by income more than

by net worth. Most investments generate under 5% in income, many as low as 1%-2%. So if one's net worth is $10 million, to receive a $250K income, the entire principal would have to generate a 2.5% income (really 3.5%, considering a chunk of the principal is the home, which generates a negative income of 1%/year in property taxes and only generates a taxable capital gain when sold). So even at the high end ($10 million) of the "millionaire middle class", in terms of income they're not "wealthy".

[lark]

65. Wealth depends on the area

When I moved from San Jose to FL in 1998, my 1400 sq. ft. townhouse that I had bought 3 years prior for $99,000. sold for $185,000. With that money I was able to buy an all brick, 2500 sq. ft. single family dwelling with 3/4 of an acre, and a beautiful river view for $110,000. and didn't work for 2 years while I stayed home with my babies. Point being, money goes a whole lot further in FL than in CA. because of the cost of real estate. I bet a whole lot of the paper millionaires own homes in CA.

lark

[Karenina]

20. HAL-LO!

:hi:

[FarCenter]

14. The dime is worth a penney

Due to inflation, a dollar is worth what a dime was about 40 years ago.

40 years ago a gallon of gas was $0.299, not $2.999.

We should get rid of the penny and the nickle -- they are pretty worthless. Prices should be in dimes.

In a decade or two, we can drop the decimals altogether and just price in whole numbers, like the Japanese do in Yen.

[pokercat999]

36. A 1967 Chevy Camaro cost about $2800 with a V-8 and

automatic today try $28,000

In 1967 you could buy a new Ferrari GTB4 NART, 12 cyl, 4 cam shafts, over 160 MPH if I remember correctly, for $14,700....I was making $1.00 an hour working for my dad, the same as his adult employees,there was no such thing as overtime or a minimum wage. Gas was about 25 cents per, a new 3 bedroom 2 bath house in my hometown in central PA was about $12,000 including the lot. The local pizza parlor's claim to fame was a 10 cent slice. A burger was 15 cents, coke a dime and on and on. A taxi from my house (just outside city limits) to downtown (5 miles) was 45 cents and a nickle or dime tip. One of the huge differences from today was that coins mattered, today they are just clutter that you put in the donation boxes on the counters next to the cash register, then they were lunch.

Here's a link to that Ferrari http://www.supercars.net/cars/532.html

[Akoto]

15. If a million dollars makes you middle class, I'll be middle class!

With a million, I could clean up my health and take care of my mother.

[Acadia Blue]

If you need one mil to be middle class, then I am poor folk. This is

a way for Hill and others to help the Middle class.....when they are really helping the rich.

[Acadia Blue]

17. If you need one mil to be middle class, then I am poor folk. This is

a way for Hill and others to help the Middle class.....when they are really helping the rich.

[conflictgirl]

18. This is not going to prevent a class war

Telling me that millionaires are just really middle class so that us lower people don't begrudge them their breaks isn't going to do a damn thing to stem the rising sentiment of resentment toward the rich. If anything, trying to convince us that being a millionaire really isn't that rich is just going to make us people making $30,000 a year feel a hell of a lot LESS unity with them.

Also, there's the consumer psychology element at work here. Supposedly if we feel inferior to everyone else advertising is supposed to encourage us to go out and buy more. But now that the easy credit is drying up, that's not going to be possible, so those who have been using credit to mask exactly how poor they are will be faced with their ugly reality. It's not going to be pretty...

[natrat]

74. what breaks? the only breaks i see are for the 300k/year+ folks

[originalpckelly]

22. Even if you invest and get 10%, that's only 100,000 per year...

plus you'd have to put some aside into the principal of the investment to counter inflation.

[daleo]

24. This whole notion of a "middle class (ten) millionaire" is incorrect

That much money puts you into the investor class, or to use a taboo phrase, the capitalist class. That means you don't have to work for wages (i.e you can live off of your investments). That gives you a very different (and generally conflicting) set of interests from the working and middle classes, who must earn wages or salaries.

[Seabiscuit]

27. I hate to deflate your trial baloons like this,

but I am now retired and live off my investments. Does that mean I'm suddenly part of "the capitalist class" instead of "the working and middle classes who must earn wages or salaries"? I don't think so, Tim. I spent much of my life poor (minimum wage and sub-minimum wage), worked my ass off and fingers to the bone scraping my way through college and grad school, and worked for wages for well over 4 decades including many years being self-employed. In the process I built up enough savings to invest over the years. But I still budget my money and my working class progressive values haven't changed one iota just because I'm now retired and can afford to live off investments (plus Social Security). I'm also canceling my Blue Cross insurance because although I can afford the high premiums, my medical care needs at the moment cost considerably less than the premiums and I didn't get to where I am today by wasting money on capitalist swine. Before too long I'll qualify for Medicare. I not only care for myself, but for a wife and child, and two parents-in-law, so I worry every day about managing my investments to provide for their future as well as present needs, and where my much younger wife and son are concerned, especially my son, that's a lot of future needs to worry about.

I also fall into the bottom half of the group of people the author of the article describes as "the millionaire middle class".

Be careful with generalizations when thinking things through. You can overlook a shitload of real people along the way. Being a member of the "investor class" in my retirement hasn't given me a "different (and generally conflicting) set of interests" from the poor and middle class people I've always identified with.

Not all members of the "investor class" are capitalist pigs born with silver spoons in their mouths.

[Stargazer99]

29. You are very lucky and probably have a high intellect

which most "lower class" do not possess. My own experience has been working for low wages which didn't even permit having dental care. I did not come from a family familar with investments and I had to care for children and did not have the time to learn to invest much less any "left over money" from rent, utilities, food, etc. And yes the family inheritance when to the male.
I say to you that you should not judge by your experience others whose lives may have been different in their experience and human gifts or lack thereof.

[Seabiscuit]

31. I agree.

I'm not judging anyone other than the companies that prey off the poor, infirm and uninformed. I had to go without dental insurance as well. And I eventually had to teach myself about investments.

I was merely responding to a post which suggested that the group of people identified in the OP article were "rich", and that their values were somehow inherently in conflict with those of the working class. Finding myself in that group, and knowing I'm anything but rich, I think in retrospect that it is simply now much more expensive to become part of what has customarily been known as "upper middle class". I've experienced everything from poverty to my current situation, except that I've never been what I'd consider "wealthy" or "rich".

[daleo]

32. It is an interesting issue, class interests versus personal political values

In the not too distant future, I will be able to retire with a fairly decent pension myself, as well as some reasonably substantial investment assets. I wouldn't be in the "millionaire middle class", but my investments would be an important component of my standard of living.

Will my interests and political views be subtly altered by that change in status? I imagine some will and some won't. For example, I may look more kindly on the idea that investment earnings should be taxed at a significantly lower rate than employment earnings. On the other hand, I will probably be an even fiercer proponent of public health care than I am now, once I have retired.

Individual people can have different preferences than their class interests would generally indicate. I share that trait with you to some extent.

But it is difficult to extricate yourself from your class interests. Consider investments. You, or your financial adviser, probably move your money to where it earns the highest return for the amount of risk you are prepared to consider reasonable. That means your money will tend to gravitate towards companies that make the highest profits, and in mature industries that usually means companies that pay the lowest wages possible. So, your interests as an investor collide with the interests of the company's workers.

Suppose you have investments in insurance companies. Their profits will be affected by how much they pay out to claimants. So, your investor class interests will tend to collide with the interests of sick people.

I am not saying investors are evil, just that they have a unique set of class interests in a capitalist economy. That doesn't mean decent people can't be investors and still support progressive causes. But it can make things tricky.

[Seabiscuit]

34. Again, I don't fit your paradigms

My personal and political philosophies have remained the same throughout my adult life. Learning about investment is simply another dimension of life which doesn't have to affect one's outlook.

I do all my own investments.

As a matter of principle, I refuse to purchase stocks like GE, Bechtel, Exxon, Halliburton, etc., etc.

OTOH I did invest for a while in tobacco stocks, *after* the tabacco industry paid out a multi-billion dollar settlement of class action suits, and *then* got sued by the feds for the same exact amount, under the RICO statute. These two events naturally depressed all tobacco stock prices. Being an attorney who is quite familiar with the RICO statute (created to target organized crime) I knew that there was no way in hell the judiciary was going to allow the feds to prevail, and sure enough, in 2005 the feds' case was finally tossed out. Naturally, the tobacco stocks I owned went through the roof during the following year, and I eventually sold them all at a huge profit. Although I have no sympathy for tobacco companies, I see nothing unethical about my taking advantage of my knowledge of RICO law and a bungling administration.

Aside from that one venture into tobacco companies which make a product I disapprove of, I choose stocks from companies I approve of personally and politically, including "green" companies. None of which are insurance companies, as I strongly disapprove of how they do business, and in fact fought many battles with them as an attorney, just like John Edwards did (well, not at the quite the same dollar level).

Within that pool there are high growth/low dividend as well as slow growth/high dividend companies, just like in the market as a whole. I tend to favor the latter, because the high growth stocks are also the highest risk stocks, and it's nice to have more income than necessary, so that I can always reinvest the savings every year.

People within the "investor class" do not have to sell out their good principles, and many, like me do not, and there's really nothing "tricky" about it. Just be yourself. People like me don't just invest in the stock market. Other investments may include CDs, bonds, and real estate. The key is managing your own investments which takes time, but it's the only way to keep one's principles intact.

In addition, I don't do this for myself, but rather for family members and their future security. On my own I wouldn't need any of it and could do just fine without any of it.

[bean fidhleir]

43. Off your investments alone, or in combo with SS pension?

Because if it's off your investments alone then yes, you are a member of the "owner class". Maybe at the bottom, but owner class all the same. Something most of us very definitely are not.

[Seabiscuit]

44. Social Security doesn't figure into it.

It's a pittance compared to the income from my investments, and I only began receiving SS benefits three months ago.

If owning stock makes one part of "the owner class", then the friend I knew back when I was 18 whose father helped him buy some stock with his meager savings was an 18 year old member of "the owner class". Not very helpful, useful, or illuminating terminology IMO.

[bean fidhleir]

48. No, "owning stock" isn't what puts someone into the owner class

it's owning ENOUGH stock that you need no other source of income. If you can live off the income from your stock ownership, you are a member of the owner class. You are now living off the labor of others less fortunate than yourself. Horrible thought, I know, but the truth all the same.

[Seabiscuit]

51. Sorry, but I'm not going on that guilt trip for you.

I earned my retirement, and I earned the money that I invest through hard work for over 4 decades, and I'm not falling for some rigid, bizarre ideology that attempts to slap me down for being part of some "owner class" that is "living off the labor of others less fortunate" just because some of my investments happen to be in the stock market (and only in companies that are either "green" or have a track record of demonstrating the kind of social conscience I approve of). I see absolutely no truth in that whatsoever. I've acted ethically all my life and continue to do so, and have never taken advantage of or exploited anyone. And no one's going to come along and lay some "owner class" guilt trip on me. Maybe if and when you've been around the blocks half as long as I have you'll be able to think things like this through without resorting to that sort of ideological baggage weighing you down.

[bean fidhleir]

54. Had you put your hard-earned money into a sock in your closet, would you have as much

as you do now? If not, then the additional money was not earned by your labor, but by the labor of other people. To the extent you live on that, you live on the labor of other people.

I can understand why you don't want to admit it, but admit or deny, that *is* what's going on.


"Maybe if and when you've been around the blocks half as long as I have you'll be able to think things like this through without resorting to that sort of ideological baggage weighing you down."

I'm in my late 60s, and hold the views I hold precisely *because* I've been around the block and have carefully thought things through.


The vehemence of your denial says something about the conflicts you're experiencing -- you don't like the idea of being a parasite, but are unwilling to be poor instead. Just as Jefferson and Mason despised slavery, but refused to free the enslaved people whose forced labor maintained their wealth. It's understandable, even though I wouldn't be in your shoes for a million dollars (ob ref :) )

[Seabiscuit]

55. So, according to your simpleton ideology

only the poor lead ethical lives, right? I was poor for many years before I climbed out of that hole, and no thank you, I don't have any need to experience that again.

Nope, I'm not keeping my money in a sock in the closet, thank you very much. And the fact that I don't does not make me unethical, and does not mean I "live on the labor of other people."

I don't believe you're in your late 60's. You post like someone in their late teens. 219 posts and no bio page. Very telling. If it walks like a phony, talks like a phony and smells up the place like a phony, well...

What a steaming pile of crap you carry around in your head.

:puke:

[bean fidhleir]

57. As the saying goes, de Nial is not just a river in Egypt.

I see you subscribe to the stupid idea often attributed to Churchill, that a person is brainless if, once they've reached middle age, they still care about other people.

It's usually only men, though, who become more conservative and selfish with age, whereas women tend to become more radical. It's theorized that this is because men become richer while women become less burdened.

[Seabiscuit]

58. You've certainly proven your worth here:

and it's a negative number.

The sock in your closet must be very small and very moldy to generate such jealousy and hatred towards others.

So welcome to my "ignore" button. You've at least earned that in your life.

[bean fidhleir]

59. Don't like the message? Kill the messenger! (good thing you're not allowed to *really* kill the

messengers whose messages displease you!)

We cannot begin to improve the world until we can at least acknowledge the part we ourselves play in the current mess. This is not rocket science.

Of course, some people don't mind the current mess at all. They might want a different person signing the death warrants, waging the wars, and milking the poor, but that's the limit of their ambition and their consciousness.

[high density]

67. What about those of us that work for publicly owned companies?

Are we considered slaves or something by your standards? I work for a large corporation and while it's not the best (paying) job in the world, I hardly feel angry about investors (or speculators) who buy our stock and benefit in some tiny way from my productivity. Sure some of the corporate politics ("shareholder value") makes me just roll my eyes, but that's standard for any company with a ticker symbol. In fact if I had a problem with it I'd be a hypocrite, since I have a lot of my savings in the stock market as well.

It's not like these companies were forced to go public, nor are their employees forced to work for them.

[bean fidhleir]

71. I'm really not very sure what you're asking me

Most so-called "publicly owned" companies are in fact owned by a very few people. If you look at Edward Wolff's charts (he's an econ prof at NYU) you'll see that 85% of all wealth-producing instruments (stocks, bonds, mutual fund shares, etc) are owned by the wealthiest 10% of the populace. And nearly all the rest is owned by the next 10%. The public owns buggerall, comparatively speaking.

[mainer]

69. So to be ethical, we have to put our money in sock closets?

In your opinion, are there ANY ethical ways one can invest one's earnings? Are we forbidden from using the stock market? Real estate? What, exactly, may one "ethically" invest in? Inquiring minds want to know.

[bean fidhleir]

70. No, to be ethical you have to acknowledge what you're doing

rather than angrily trying to disclaim it. If you own enough stock that you're living off the income, then you need to acknowledge that you're living off of other people's labor and are a parasite. There is no way on Earth that we can change the system until we are willing to see the system for what it is, and our place in it for what *it* is.

I own some stock. It brings in less than $100/yr (it's a "growth" stock - hah!), so there's no question of my being able to live off of it (I live off my ss pension check).

Yet to the extent that the stock's worth more than I paid for it, that excess represents other people's labor and makes me to that degree a parasite.

I'm not ashamed of it since that's the way the world works right now, and I'm not less worthy than someone else. But I'm doing my best to change the world, and if I succeed I will *happily* watch that stock's value go to zero.

[joeglow3]

60. Wow!!!

Am I supposed to feel guilty because my wife and I worked full time to pay our own way through state colleges? Should we feel guilty because we intentionally choose fields we knew would be in high demand (nursing and accounting)? Should we feel guilty because we put 17% in our 401(k)’s? Should we feel guilty because we live WAAAAAY below our means and save and additional 20% of our income in taxable accounts?

Both of us are children of blue collar families. My mother worked part time for Weight Watchers and my father was/is a union drywaller. We both busted our ass, living in very poor conditions in college. Now, according to your logic, we are only good people if we put our money in our mattress (after all – even investing in a savings account would make us complicit in taking advantage of poor people with unethical lending practices)?

Give me a break.

[bean fidhleir]

72. Read more carefully, please. I'm not saying what you think I'm saying (nt)

[joeglow3]

78. I think I understand it well

My wife and I are in a position to be able to retire at 55 (actually, we are 31 now and on target to hit our goal by the time we are 51). Thus, we will live solely off of our investments without social security. I will not feel an ounce of guilt for our situation, as we busted our asses, planned (both financially AND with our children), ONLY bought what we needed and saved/invested diligently. I don't think I will be any less of a person when I am able to live off of these investments.

[Bilbo Heugan]

35. How many trillionaires are there now?

[Seabiscuit]

37. I want to hear about the brazillionaires!

[Captain Angry]

46. Officially? None.

Richest guy that you'll ever hear about is Carlos Slim of Mexico, followed by Gates and Buffet.

There are wealthy families in Europe however that are doing so well, they don't get listed as they can keep themselves off of those lists. I don't know about anybody hitting the big "T", but with some of the monopolies of the past and royalty issues, there could be some into the 100s of billions.

Think about it, if you were in the top 10 richest people in the world, you wouldn't want anybody to know. You'd be hounded for donations and grants all day long. There would be people trying to get hit by your car just for the payoff. Etc.

[Seabiscuit]

52. Carlos Slim must have jumped over $7 billion in the past year, if he's now #1.

According to the Forbes list, last published about a year ago, he's #3 behind Gates and Buffet:

http://www.forbes.com/lists/2007/10/07billionaires_The-Worlds-Billionaires_Rank.html

There should be an updated Forbes list of billionaires coming out soon, unless it's already appeared but hasn't made it to google yet.

When you add up the numbers for the five members of the Walton family (the deceased Walton patriarch founded Wal-Mart) then that family is #1 by a long shot. Kind of gruesome, huh?

[Captain Angry]

76. Mr. Slim made a big jump.

It was announced a few weeks ago.

And yeah, the Waltons are doing just fine. One of the guys who married into the money is the owner of the Colorado Avalanche, Rapids, Nuggets, Mammoth, etc.

[natrat]

38. a million bucks in some areas is not near enough to survive on

move out to the country and suddenly you really are rich

[Seabiscuit]

53. Indeed, geography is a major factor in the equation.

My house might be worth only 10% of its local value in some rural areas of America.

[Lasher]

47. Age is a big factor

If you're a twenty- or thirty-something and don't have a net worth of a million dollars, don't feel like you're left out in the cold. A decade or two or three down the road maybe you'll have your mortgage paid off just like some of the fifty- and sixty-somethings do today. Likewise you usually have to work most of a lifetime to build up a million dollar IRA, which is actually a pension fund to retired people who didn't get a traditional defined benefit pension annuity from former employers.

It is prudent to limit withdrawals from a retirement IRA to about 5%. Otherwise you'll run a risk of running out of money before you die. So that million dollar IRA should give your household an income of about $50K a year not counting Social Security. That's pretty close to the 2006 median household income of $48,201.

[bean fidhleir]

50. You *can't* limit IRA withdrawals after age 70.5 below the point the IRS says

will deplete your IRA by the time you're predicted (by statisticians, not doctors) to die.

The government wants to get "their" piece of that IRA, so if you try to limit your withdrawals, they penalize you.

The best you can do seems to be to take the minimum distribution each year, pay the @#$%! tax, bank/invest the residue, and hope that you and the money run out together.

[A HERETIC I AM]

56. The Required Minimum Distribution (RMD) schedule is not designed to...

completely deplete an IRA by the time you die, but the percentage of the distribution does continue to rise. (You are correct about taking less than the RMD. The IRS will penalize you 50% of what you didn't take.)

For instance, a person born in 1937 who has $100,000 in an IRA would have an RMD of $3773.58 the first year he turned 71.5 years old. If that IRA was growing at 8%/year, the balance would continue to grow until he reached 86. (balance would be $146,218 and the RMD would be $10,334)

Ten years later (96 years old) the balance would be $113,770 and the RMD would be $14,837.

In this scenario, return would out pace the distribution until age 87 and at that point the growth curve and the RMD curves cross, with returns being less than the RMD and therefore the principal would begin to reduce. If this hypothetical 71 year old lived to be 100, his RMD that year would be $14,439 and the ending balance of the IRA would be $82,653.

If the investments earned 6%/year, the growth curve and the RMD curves cross at age 82. Even in a 6% scenario, the balance would be $47,176 at the end of the year he turned 100. His RMD that year would be $8,397.

Even if the rate of return was only 3%, there would still be almost $20,000 in the IRA at age 100, if only the Required Minimum was taken each year.

These calculations and schedules can be easily found on various websites by simply Googling "IRA RMD" or by going to www.fincalc.com. Click "Consumer Calcs", scroll down and look for the link titled "What is my projected Required Minimum Distribution?" The calculator data entry will open in a new window.

[bean fidhleir]

63. That's very interesting, thanks! I was evidently operating on stale information.

[humbled_opinion]

64. I too get sick and tired of all this tax cut blather...

I am in the thousandaire arena myself middle age 60k per year wife and 3 kids house with 250k mortgage... I need programs to help me afford childcare, so my wife can work, healthcare so I don't lose my house if I get sick, how about some subsidies for groceries once in a while, help at the gas pump? Why can't those that have so much in America help out those that have so little. I am all for taxing the RICH at a much higher rate because they can and do have the money to spare. I never understand this, I am more then willing to donate time and money to the less fortunate then me and then I see how many are so much more fortunate then me and it is discouraging... I find myself invisible until my vote is needed... I have little hope that I will get above this level in my life, I wish I could go to school and get a degree but I can't who will pay the bills, I put in overtime or work part time if I want to take the kids to disney... how come there is no subsidy for that... Lets truly talk about what it means to be fair in the great land of milk and honey. I consider myself middle class until I read stories like this... then I consider myself poor...

[BreweryYardRat]

66. Complete, utter, and total horseshit.

The right wing's trying to drive the same old wedge between the middle-class and the poor.

There are 300 million people in America. 8.4 mill is less than 3% of the population. Not middle-class by any means.

[Psephos]

79. There are 110 million households, not 300 million

lots of other stats here as well:

http://quickfacts.census.gov/qfd/states/00000.html

[BreweryYardRat]

82. My mistake, I'd read it as "people."

But that's still less than 10% of the population.

[ramapo]

68. A million dollars ain't what it use to be

Here in North Jersey you can spend $1,000,000 on a tear-down (buy house, demolish, build new one).

You're not going to live too well on the interest in most areas of the country.

You can spend a huge chunk of it to send one kid to college (got two kids?, good luck!)

You can spend a not insignificant percentage each year on health insurance if you have to buy it privately ($20-25K here in NJ, no drug benefit).

You're not going to retire young with $1,000,000.

No question, $1,000,000 is something that would be very nice to have....

[galledgoblin]

73. modern-day Horatio Alger nonsense

you have to work 70 hours a week in an unstable job you hate to get rich, and if you think that's crazy you shouldn't "be confused anymore about the two different paths you are on"?!

what bullshit, 21st century dressing on the old "work hard and get rich, be lazy and be poor" myths.

it not only pisses me off, I think it's dangerous to still be repeating this garbage, it gives a nice little security blanket to the rich for when they notice someone in shoddy hand-me-downs begging. "hrumph, obviously son, you need to work harder."

[varelse]

75. Pretty much

20k in savings here (that's also my 'net worth' since I own no property) and ~34k annual income, just the one job and I can't say I "love" it but I do like to work. I'm planning to keep working till it isn't possible for me anymore - but no one, including myself, can predict the day that will come.

BTW there ARE many people working 2-3 jobs and raising families without support who are not only not "millionaires" they aren't even "thousandaires" - unless you count debt.

[One_Life_To_Give]

77. Damn few for only $1million, which ain't much

Not for the boomers approaching retirement. To have a total net worth including a primary residence and any IRA/401K/403B exceeding $1 Million is not much today. That modest house bought 30yrs ago in a suburb of LA, Boston, etc worth 1/2 ot 3/4 Million till a year ago anyway.