SHOULD THOSE OF US who are better off financially feel guilty? When I read about income inequality, folks living paycheck to paycheck and the like, I occasionally feel a twinge of guilt. But it quickly passes.
This lack of guilt doesn’t imply a lack of empathy on my part or that of others who have been financially successful. Indeed, wealth is frequently used to help others. Society has benefited greatly not just from the jobs created by the Rockefellers, Carnegies, Fords and others, but also from their philanthropy. In modern times, the Gates foundation, and the work of Michael Bloomberg and other billionaires, have helped millions.
Even folks with moderately high incomes give a fair amount to charity. According to IRS data, among those with incomes between $100,000 and just under $200,000 who deducted charitable contributions in 2016, the average amount was $4,245.
Wealth that’s honestly earned is nothing to be ashamed of: It takes hard work, years of discipline, a modicum of luck and—most important in my view—consistently good life decisions. But, yes, that wealth also comes with responsibility. Wealth is never accumulated alone. I had mentors who helped me greatly in my career.
What counts as financial success—and hence who should be in a position to help others? If you earn $100,000, you earn more than 87% of Americans. At $250,000, you’re above 98% of your fellow citizens. Then we have net worth. The median net worth of American families, those at the 50th percentile, is $97,300, but it varies greatly by age. Those ages 45 to 54 have an average $124,200, while folks 75 and older have $264,800. These numbers include the value of homes and retirement savings.
A Charles Schwab survey found that, to be considered wealthy, people—on average—believe you need a net worth of $2.3 million. On the other hand, many people who have $1 million in investments don’t feel wealthy. Some say they’re middle class.
That perception may be driven by where people live. The median home in Anniston, Alabama, costs $139,900. (I lived there during my army days.) Meanwhile, in my town in New Jersey, it’s some $700,000, so you need a much higher net worth to be wealthy in New Jersey.
What about inheritances? Should we feel guilty if we inherit wealth? Again, I say “no.” But I think there’s greater responsibility to share wealth that’s given to us, rather than being earned. Still, the headline-grabbing billions inherited by a few are decidedly the exception. For the vast majority of Americans, inheritances aren’t a big source of wealth. Retirees expect to leave an average $177,000 to their heirs, based on 2013 data.
My wife and I inherited three times. The first inheritance was my mother-in-law’s funeral bill. The second was $30,000 from my mother, which we gave to our four children to help with college. The third inheritance was $12,500 from an aunt. That money became my wife’s personal “don’t touch” emergency fund.
I think it’s fair to say that the people who write for HumbleDollar aren’t financially average. Many are professionals who have worked long careers to build wealth. One is a curmudgeon with 76 years of life experience to reflect upon.
Likewise, I suspect many HumbleDollar readers aren’t average—and that’s a shame. What is written here would be valuable to anyone with a desire to manage their financial life today and into the future.
Accumulating millionaire-next-door-type wealth is nothing to feel guilty about. It’s a reasonable goal that benefits not just the individual, but also society. As folks strive to amass wealth, they help the economy to prosper and they share their success with others, both through charity and through the taxes they pay.
Moreover, all this handwringing over inequality strikes me as misdirected, because it gets people focused on the wrong thing. The fact is, true wealth has nothing to do with money. Instead, wealth is best measured by family, friends, health and a life well-lived—and that’s a possibility for almost everybody, no matter what size their bank balance.
Richard Quinn blogs at QuinnsCommentary.com. Before retiring in 2010, Dick was a compensation and benefits executive. His previous articles include Matter of Degree, Lesson Unlearned and Making It Work. Follow Dick on Twitter @QuinnsComments.
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Many of us in the middle class and above think we have a fairly good understanding of poverty and how people can pull themselves out of it if they really want to. But, in fact, few people who aren’t born into or are living in poverty understand its nature. I challenge any reader of this article and HumbleDollar to read just two books that have been published in the past couple of years: EVICTED by Matthew Desmond and MAID by Stephanie Land. You will be enlightened, as I was.
Great article. Again.
On unearned wealth such as inheritances vs. responsibility; in my opinion it goes beyond sharing the blessing. Another story: I spent a couple of weeks working in an Atlanta shelter for the homeless years ago and got close to a guy that had a similar, successful and gifted life as myself but got into drugs, lost everything and everyone, then crime. He was on the upswing by the time I met him and at the end of my visit I asked the director of the shelter if I could give my watch to the guy (mid level Rolex). He agreed and I did so and as far as I know it brought nothing but joy to him.
Then I got home and my Dad, who had given me the watch almost 20 years earlier asked me where it was and I told him. He was not happy. It was his gift to me and as such had a place in his heart that I didn’t consider. That was a painful lesson that I told each of my children. Not only do we have a responsibility to share in our blessings, but we have a responsibility not to take them for granted and to seriously consider the wishes of the benefactor.
We are all glad that you are able to sleep well at night(if only you could get over your obsession with shopping carts). You will be glad to hear of the following:
In 2013, the benefits of 10 of the largest tax expenditures will equal 11.7 percent of income for households in the lowest income quintile, 9.4 percent for the highest
quintile, and under 8 percent for the middle quintiles, CBO estimates.”
Those poor people are once again getting more and more of the gravy train!
https://www.cbo.gov/publication/43768
“Guilt” is a political tool used to fund failed ideologies…..I don’t know of any poor people creating jobs and/or supporting charities.
Are you implying something about poor people? Or simply reporting your personal experience and allowing readers to draw their own conclusions? From what I have read over the years, the poor give twice the percentage of their income to charity as the wealthy. So am I to view your other statements as reliable?
You’re free to believe whatever you’re willing to accept.
Lot of wisdom here! Thanks Dick!
I agree with you that wealth should not incur guilt; but neither should it incur any sense of moral superiority. You seem to claim a moral superiority when you say “[i]t takes hard work, years of discipline, a modicum of luck and—most important in my view—consistently good life decisions.” But that “modicum of luck” is the main factor in determining your wealth; in particular, to whom and where you were born. The other ingredients are important in maintaining those advantages; but to imply you need only work hard, be disciplined, and make good decisions and you will be wealthy is inaccurate. Then to claim that what is really important is “family, friends, health and a life well-lived” without considering how poverty can be a serious barrier to the ability to have just those things is almost mean. : )
I freely admit that luck (being in the right place at the right time) was a major component to success, BUT, if I hadn’t had discipline and saved enough to take advantage of that lucky opportunity it would have amounted to nothing.
Please tell us more about “to whom and where you were born” in determining wealth …??
When you say “The other ingredients are important in maintaining those advantages; but to imply you need only work hard, be disciplined, and make good decisions and you will be wealthy is inaccurate.” it discredits those that were born into poverty and did rise above it using those ingredients. From my own experiences and observations having grown up in and surrounded by low income families is that there are two attributes that need to be included in that ingredient list: the believe that you can overcome vs. victimhood and a the ability to understand and grasp financial concepts and calculations.
As a low income individual I was much happier to have affluent people tell me I was able to chart my own course (I wasn’t even offended!) than to be told life is full of barriers so it’s highly likely I can’t escape it. From my perspective, being told I’m a lost cause because I was born into poverty is almost mean. Barriers are real, but an empowering mindset is key to overcoming them.