The definition of being rich

[Herman Munster]

I've been reading threads about the definition of class on DU and a lot of people seem to be missing the distinction between income and net worth. Income is a meaningless measure for a lot of people. A person making $200,000 a year can be living paycheck to paycheck because they buy fancy cars, eat at fancy restaurants, get into debt, and don't save anything and a person making $40,000 can be a "millionaire next door" getting that way by living below their means for decades and investing that savings wisely in stocks/and or real estate.

I think being "rich" is being able to not have to work. That means saving enough money to live off the interest/and dividends of their savings without taking out principal. That is the definition of financial independence. As long as you still have to work, you are still a slave and vulnerable to the whims of the powers that be.

I'd say $1-$2 million in net assets sounds about right to join the "rich". Assuming a balanced portfolio of stocks/bonds will yield at least 5% a year, that gives the person $50,000 - $100,000 a year to live off of without liquidating principal.

95% of the people you see in fancy cars, nice clothes, and nice houses, are not rich. They are fools buying into the keeping up with the jones' mentality of flaunting borrowed wealth. They are just one step away from economic collapse if they lose their job or face other financial catastrophe.

[NNadir]

1. That sounds about right.

[tsuki]

2. Here we call them the "credit card rich." Zero interest loans on

their million dollar second homes, fancy mortgaged cars and a envious lifestyle...until...

[Warpy]

3. I've had the dubious advantage of being invited to the homes

of some very, very old and serious money. I can tell you that when they drive, they drive Toyotas. They drive top of the line Toyotas, but they're Toyotas. Their houses and grounds are large but the furniture is often old without being antique and in need of reupholstering. Yes, there are antiques and fine art there, generally the old but not yet antique stuff inherited from previous generations.

In other words, they are not the people you'll see tooling down the main drag of town in a Jaguar or even a BMW, although their offspring might do that while they're still in college.

They do inhabit a different world from you and me. Shopping, when it is done, is generally done above ground level and quite privately. Travel is by private jet taking off from private airports. Those small jets at big airports are corporate jets, not private jets. When they get sick and need to go to hospital, they are whisked into VIP wings at big city hospitals.

Above all, they studiously avoid anything they consider flashy or vulgar.
Clothing is tailored but understated. Fabrics are foreign and fine but colors are subdued.

My mother once told me that the people who have money are the ones who know how to hang onto it. From what I've seen in my glimpses "inside," I know that to be absolutely true.

[Karenina]

4. If you DEPEND on a salary

be it 100,000 or a million, YOU are NOT "rich." 20% of Americans think they are in the top 1%. TALK ABOUT DELUSION.

[pitohui]

5. problem with that

$50K a year is nothing if you quit work and have to buy your own health insurance in your 40s or 50s -- you may find you can't buy it at all at a price that you can pay that will actually cover anything -- my situation awhile back

so even if you have the $1 million dollars, unless you're medicare age you can't really retire because of the health insurance cost, so you are not really rich

so you're rich if you have $1 million at age 67 but you're just doing okay but not well enough to quit work if you have it and you're 47 or 57

sometimes one spouse does retire but the other spouse has to keep working to keep the health coverage...so one spouse is rich and the other spouse isn't?

it gets complicated

oh well no way most of us can accummulate such a sum honestly so it's pretty theoretically anyways