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.