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A great deal of wrath these days seems to target the wealthy although that generally means billionaires or close to it. However, being wealthy is very relative. I suspect many HD readers are looked upon as wealthy by their peers while perhaps not feeling so themselves. I admittedly fall in that trap.
Many comments on HD by those retired indicate to me being relatively wealthy or pretty close to it.
So, look at the data as estimated as it may be, and see for yourself. Would your friends, neighbors and relatives be justified in viewing you as wealthy – with a touch of envy?
For reference, latest data indicate:
Median household income:
$80.6k overall:
peaks near $95k (45–64)
and drops to $57k (65+).
Median net worth:
$39k (<35)
$409k (65–74)
$336k (75+).
Average net worth:
$183k (<35)
$1.79M (65–74)
down to $1.62M (75+).
Overall median net worth: $192.7k; average is $1.06M.
I’d say having a net worth in the 90th percentile makes a person wealthy in most people’s view.
Approximate 90th percentile net worth by age:
Age 45-54 $1.4 million
Age 55-64 $2.2 million
Age 65-74 $2.5 million
Age 75 + $2.00 million
These figures are estimates based on Federal Reserve and Census data, adjusted to 2024 dollars
Recent surveys suggest that a net worth of $2.2 million to $2.5 million is often cited as the threshold for being considered wealthy by the general public. However, this can vary significantly by location and by generation. I say it also depends on what is included In the numbers. If it is mostly one’s home, that makes a difference in my opinion.
There is a difference between income and net worth of course. Someone can have a high income but not be truly wealthy if they spend it all or have significant debt. Conversely, someone with a modest income but significant assets may be considered wealthy.
Wealth is not financial health. Just as having more doesn’t necessarily make one happier.
Everything is relative. According to the World Inequality Database I am certainly “rich”. Here in the U.S., where one lives makes a difference, too. Housing has distorted wealth calculations, so it might be best to remove the value of a home asset because it isn’t liquid. On the other hand, if one’s home is paid off (no mortgage) and real estate taxes are low (<$5,000) then it may be reasonable to include the home in any calculations. However, after seeing how easy it is for this asset to go up in smoke (California) or float away (hurricanes and floods) it seems that including the house in certain calculations is questionable.
Income is a factor as is net worth, but there are certain areas of the country in which money simply doesn’t go as far. I use net worth, annual income and expense numbers for determining my financial “Health”. If I am financially healthy I do feel better and that is what really matters to me, and always did. I don’t care about any comparison to the situation of others.
Furthermore certain U.S. politicians would say I am not only rich, but very greedy because “I don’t pay my fair share.” I’m not alone as just about everyone in the top 10% in the U.S. is put in this basket by greedy politicians (yes, greed is relative too!).
https://wid.world/income-comparator/
Good morning! I’m Kenn and I live in Richmond, VA. I’m a long timer reader, first time posting.
In his book The Psychology of Money, Morgan Housel draws a crucial distinction between being rich and being wealthy. He argues that understanding this difference is key to making better financial decisions and achieving true financial well-being.
Here’s a summary of his points:
Being Rich:
Being Wealthy:
In essence, while being rich is about income and visible consumption, being wealthy is about accumulated assets and the freedom and control over your time that those assets provide. It’s a psychological state of security and optionality, rather than a display of material possessions.
Having lurked around this site for the last 5 years, it is my impression that most Humble Dollar participants are more focused on the benefits of wealth which provide freedom and control over their own destiny rather than shiny riches.
Just my thoughts.
Kenn
Based on the two definitions I guess I am wealthy, definitely not rich.
BTW there was an old TV show called Lifestyles of the Rich and Famous. I never got the concept of why someone would want to watch someone show off their wealth. I just don’t care
Kenn, welcome and a very relevant post to this subject. I have also read Housels book, a while ago, but had forgotten about this distinction described. AnD I agree with your assessment of the Humble Dollar community.
That looks a lot like what I read on Gemini
Read this:
https://capitalismmagazine.com/2002/08/franciscos-money-speech/
That about says it.
From a great novel.
For me:
Good health – good foundation for most things and very valuable.
Wealthy – highly ambiguous term depending on your total circumstances. You can be “wealthy”, however, in other ways besides $. Faith, family, friends, etc.
Happy, satisfied, content – good partners with good health. If I can get out of bed in the morning on my own, pour out and enjoy a decent cup of coffee while enjoying the sunrise, I’m off to a very good start.
I admire the beauty and master craftsmanship of Patek Philippe (and other) very fine timepiece’s but it doesn’t mean I need to own one. I can afford a nice one, maybe two, but it wouldn’t make me feel wealthy to do so. (And yes, you could state that it’s an investment, so perhaps this not the best example.). However, I’d feel I’d need a security detail with me wherever I wore it. Keeping it locked up in a safe would not make me feel, or even be wealthy, in my opinion. Can you imagine parking your Lambo at the Walmart? 🙂
To each their own.
“Keeping it locked up in a safe would not make me feel, or even be wealthy, in my opinion.”
Watching Antiques Roadshow I often hear people say their treasures are locked up in a safe deposit box, they go to the bank and look at it once or twice a year, or say they haven’t opened the box in years and I kind of think to myself, what’s the point?
According to those stats we’re in the 90th percentile, but I know plenty of people who are definitely worth way more than that.
I have one friend who’s a partner in a law firm. His house alone is worth $7MM. Having known him since we were young, I know how hard he worked to get where he is, and I never had the desire to do that myself, so I don’t envy him at all. I remember him saying how he hated when WiFi finally became available on transatlantic flights, because that six hours was the only time he was ever left in peace.
There are doctors in my friend group who think nothing of going out and spending $25k on a new Rolex every so often. Again, no jealousy here – I pass out at the sight of blood and anyone who made it through med school deserves whatever they want to buy 🙂
I actually feel very content with where we stand. I’ll be quite happy to retire and spend time slow-traveling and catching up on the 500+ books on my kindle.
“Content” is how we feel also, David. And blessed. Chris
You’ve had my initial thoughts, and after some reflection, I can say it depends. At my permanent home, I don’t know my neighbors well enough to answer. Among my friends and social circle, I’m probably at the top end of the wealth gradient. It’s been that way for a long time, and I don’t think there’s envy, it certainly doesn’t present that way, anyhow.
At my holiday home, I’m definitely not in the top quintile of the wealth gradient amongst my neighbors. That gives me the ability to invert your question, and I can definitely say I’m not jealous of my more affluent neighbors, with whom I do socialize on a regular basis
I’m not sure if I’m wealthy because i think wealth is relative depending on expectations. I think I’m wealthier than some of the people in my life but never do I feel envy.
But we are all greedy, if we were not we wouldn’t be investors.
Wrong. Completely wrong. I am an investor because my pension doesn’t have a COLA and I have a good chance of living well into my 90s. If I hadn’t invested I would run out of money. I certainly couldn’t afford my CCRC.
“Of course none of us are greedy. It’s only the other fellow who’s greedy.” – Milton Friedman.
You may accept Friedman as an authority, I do not. In any case, he was an economist, not a psychologist.
There is nothing to be ashamed off having a little greed in your character. In fact it is beneficial in strengthen your financial goals.
Greed defined:
“An excessive desire to acquire or possess more than what one needs or deserves, especially with respect to material wealth.” American Heritage Dictionary
“a selfish and excessive desire for more of something (such as money) than is needed” Merriam Webster
“excessive or rapacious desire, especially for wealth or possessions.” dictionary.com
Also, one of the “seven deadly sins”. I”ll pass.
Does it matter? We are regular folks and I don’t care that a lot of the HD folks have more than we do. I have learned from so many of you. We have enough. Chris
But do you have more than the folks around you and does that ever matter?
We do not, but I don’t care. Agree with what Kathy said about keeping up with the Jones’s. C
Surely it only matters if you let it. It’s the whole “keeping up with the Jones” thing, which has never interested me – and also depends on which Jones. I am 100% sure there are people living in my CCRC with higher net worth and higher income than me, and some with lower income and lower net worth (after all, some are on charity care). I don’t know which is which, and what’s more, I really don’t care.
I’ve convinced myself that the “Joneses” on my block all have huge mortgages, car loans and credit card balances.
My initial thoughts. If you have sufficient assets to support your lifestyle without working your wealthy. It’s irrelevant what you spend or what you net worth is. As long as you can support your chosen lifestyle period.
That’s a rather broad, perhaps narrow definition don’t you think? There are a wide range of lifestyles. I guess the key word is chosen. If you can sustain your desired lifestyle maybe you have something, but then what will others say of your lifestyle?
Why do you care what others say? Honestly, it’s the Brits who are supposed to be status conscious. Seems the Americans have them beat.
I believe the traditional view was that the UK has a centuries old class system and that people could easily be defined by class. schooling, accent etc almost regardless of actual financial standing. in fact “new money” was regarded as something rather vulgar.
The US didn’t have so much of this, so replaced it with money and displaying how much of it you possessed.
I like your style…broad and narrow definition at the same time? Are you in training to be a politician 😂
LOL
Yea, I see these stats on sites like Yahoo Finance and Motley Fools, and while I find them mildly entertaining, I take them with a grain of salt. You correctly point out that factors such as cost of living or home equity may impact wealth. Also, if we monetize the value of guaranteed income we might get a very different picture of net worth.
I suggest another method to determine wealth. Income vs. Expenses, how much money do we have left over at the end of the month and after all the bills are paid.
The first home that Chris and I lived in was an immaculately maintained 1100 sq.ft. brick house in a solid Toledo neighborhood. It last sold for $90k in 2018, the current property taxes are about $100 per month. Particularly if the house is paid for, and if a person has no other debt, the living expenses are laughingly low. Even with a modest income, these folks would have a lot of money left over after all the bills were paid.
In my way of thinking, people such as these, even without massive new worth, seem pretty wealthy.
Does anyone think we are wealthy? Is anyone at least a bit envious of us? We don’t project wealth. Our cars cost about 60% of what average new cars cost, I buy most of my clothes at Costco, our house, though new, is only 1900 sq. ft. People can’t see how much of our income is left over after we pay all the bills. So, if forced to answer those questions, I have to say I don’t know, and I don’t care.
Dan,
That is a GREAT answer.
I agree with your “Income vs. Expenses” approach. That’s how I’ve looked at it in retirement for a long time. Particularly the guaranteed income to expenses ratio as I look at that as the foundation of my financial plan since it’s what I can (worst case) reasonably count on. I pay almost no attention to net worth in retirement, although I did pay more attention to net worth during my working years.
Interesting perspective. Using your income versus expenses method, what would you include in income? Everything taxable or not regardless of the source?
Good question. I’m talking about wages, pensions, RMDs if there are any, and total Social Security. These are people who would not have much, if any, dividends and capital gains. They will have interest from the excess income, but would never think of spending it. They will leave a legacy when they check out.
They are not usually the kind of folk you would engage in a conversation about the nerdish things we HDers agonize over. Still, they follow one of our golden rules; living below ones means.
It just dawned on me that I have described my parents. I also had many clients who fit this description.
Apparently in the controversial waters once again and a 🔻
Are you better off financially than your parents, siblings, other relatives, close friends? How do they feel about what you have?
I have a couple of friends who a few years after we met and socialized seem to treat me differently and another who is European who has no problem letting me pay for everything when we are together.
I am happy to do it, but being made to feel different hurts.
Are you better off financially than your parents, siblings, other relatives, close friends? How do they feel about what you have?
1) Yes, my parents re no longer alive
2) Don’t really know, sister-don’t think so, as of when last in contact with her six years ago she warned me about IRMAA, when I researched what it was and saw the income level required to pay it I was shocked at how high it was; brother-don’t know. For both really doesn’t matter as never talked about it as it’s none of our business to ask, nor reveal.
3) Don’t, don’t care, again none of my business
4) We are above average for net worth, but below 90th percentile. Neither matters, what matter is we are comfortable in retirement, and have “enough”, and are grateful.
We’re definitely better off than my parents ever were – different times, different country. I don’t think I’d ever have gotten where I am now had I not emigrated to the US. They have always been glad that we did well, and we’ve taken them on many vacations when they came to visit.
My sister and brother-in-law are probably better off than us, but I couldn’t say by how much.
My two brothers are definitely not as well off, but again, being separated by an ocean means no-one is in a position to compare all that often. My youngest brother’s wife is definitely a spendthrift, and I know that causes friction.
One funny incident – we took my nephew out for the day in Dublin a few years back. We were in a food court with lots of local chocolate that I hadn’t seen before, and I ended up buying quite a stack of it. He happened to walk up to the register right as they told me the total, and he said, in a shocked voice, “You spent more than 100 Euro on chocolate?!”.
Com’on somebody must feel guilty.
Why should we feel guilty? We both received a good college education, worked hard, lived a middle class life, were responsible with our money, invested regularly n retirement accounts for many years in index funds. As a result we are comfortable in retirement, and we earned it