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"Americans have also revised their perspectives on what it takes to be wealthy. Schwab’s survey reveals Americans believe it takes an average $1.9 million in personal net worth to be considered “wealthy” in 2021, [...] $700,000 below the bar set for wealth in Schwab’s 2020 survey, which was fielded before the pandemic outbreak."

In 2020 it took $2.6M, but now $1.9M.

https://pressroom.aboutschwab.com/press-releases/press-relea...
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No. of Recommendations: 4
"Wealthy" is a rather vague term. The definition is "having a great deal of money, resources, or assets; rich."

$2M and a paid off home will get you $80K a year and with social security easily give you $100K+ per year in retirement. Obviously everyone, barring serious medical issues, should be able to live off that w/o an issue.

I'd probably consider $5M wealthy since that would bring in $200K a year (before taxes) and that will cover a lot of expenses.
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No. of Recommendations: 13
Schwab’s survey reveals Americans believe it takes an average $1.9 million in personal net worth to be considered “wealthy” in 2021

It looks like that was from a survey done by an outside firm, and not by Schwab. ("The online survey was conducted by Logica Research from February 1 to February 16, 2021, among a national sample of 1,000 Americans aged 21 to 75. Quotas were set to balance the national sample on key demographic variables.")

So, those are the opinions of a vast swath of people, many of whom are completely ignorant about investing and don't have a budget so they don't know how much it takes to sustain a lifestyle and what expenses continue into "not working for pay," and which go up or down. It also is across geographic locations. So, "barely can afford a house payment" in LA or San Fran might be "buys a new car every three years with cash" in rural Indiana.

I remember a FIRE discussion with someone in her 40s just discovering the possibility of not working for pay until old enough for social security. She figured you'd need over $250K or even $300K to be able to do so. With no pension for her or husband, it didn't seem realistic, so I told her how to estimate future SS benefits and just left it at that. I bring that up because if she or someone else with the same opinion was surveyed by Logica, their definition of wealthy would be in the survey results.

If someone were to ask me what amount of money connotes "wealthy" in the US, it'd be some number around 5 million (assuming no pension). If you're so wealthy you don't have to work for many many years, you won't have built up Social Security credits (140 quarters), so there isn't that to fall back on. In my own case, seeing my employer's method of dealing with economic hardship via massive layoffs, a million bucks would not be enough if you got separated at age, say, 58. Two million at that stage is "can probably make it," but not wealthy. Wealthy means that many decisions aren't based around price but your calendar and if it's worth the trade-off with something else, but not so much "how much is the price tag." Of course, you can be wealthy and not own a yacht, but by "many decisions" I mean things like, should we eat out and should we pay to have XYZ done on our house rather than doing the work ourselves?
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I’d also go with $5M invested, not net worth. Probably the people here pick a higher number because we understand the 4% rule more than the average guy on the street.

Proud that my 24 year old kids know the 4% rule, dollar cost averaging, index funds and LBYM. Smarter than most of the adults I meet. I’ve been giving them little lessons and pop quizzes for years now. “Time for dinner! What’s a safe post retirement withdrawal rate...what’s an amortization schedule...how long would it take to double an investment making 7.2%?”

Poor abused kids.
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"If someone were to ask me what amount of money connotes "wealthy" in the US, it'd be some number around 5 million (assuming no pension)."

That all really depends upon your lifestyle, current home ownership, etc, and HOW much you've been earning and SPENDING!

- - ----


"If you're so wealthy you don't have to work for many many years, you won't have built up Social Security credits (140 quarters), so there isn't that to fall back on."

Yeah, it makes some difference, but not all that critical. If you can make it to age 70 without touching SS, you get a nice kicker at that point - again, depending upon HOW MUCH you've been earning. If you maxed out SS, it's well over $30K/yr.

I only had 31 years of SS when I retired at age 52.5. I didn't cry in my beer.

- - ---

"In my own case, seeing my employer's method of dealing with economic hardship via massive layoffs, a million bucks would not be enough if you got separated at age, say, 58."

Well, IT ALL DEPENDS. If you make $60K or $80K a year, and spend most of it, probably not. Or if you make $120K or more and spend MOST OF IT.

On the other hand, if your house is PAID FOR, or very low cost per month - and you've been saving 30-40% of your paycheck each month.....

Then maybe. You'd be living on $40K a year from a million dollar port, before taxes. If your port spins off cap gains, enough to live on - then taxes are zero. Can you live on 40K? Depends on what you've been spending!

- ----

"Two million at that stage is "can probably make it," but not wealthy. Wealthy means that many decisions aren't based around price but your calendar and if it's worth the trade-off with something else, but not so much "how much is the price tag." "

Again, it all depends! How much have you been spending before you retire? Really? If you've been saving 30-40% of your salary, paying 15 or 20% or more in taxes (SS, Medicare, fed taxes, state taxes).....it comes down to WHAT HAVE YOU BEEN SPENDING.

You never addressed that. And for me, no I don't have $50 steak tastes when I eat out, and a $50 alcohol bill for 'cocktails'. Never had. Never will.


- - ---
"Of course, you can be wealthy and not own a yacht, but by "many decisions" I mean things like, should we eat out and should we pay to have XYZ done on our house rather than doing the work ourselves?"

Duh....from a 2 million port, you're taking home 80K a year. A couple is likely paying zero in fed taxes. Your biggest expenses are real estate taxes and health insurance. With only 80K, you probably can get $200/month ObamaKare. You might want to move to TX or other low real estate place rather than pay $15,000 a year in MA, NJ,NY, DC area, MD, etc. A single person can live high on the hog for 80K/yr. Inflation Adjusted, too! At 66, you can kick in another 30K a year from SS.

- - ----

Heck, one of my biggest 'problems' is that due to the great stock market rise, my spending is only 2% of my port and my lifestyle is not conducive to significantly increasing spending. I've got two decent cars - I'll buy another in 2-3 years when the 2016 wears out. My house is paid for. I drive all over the country when times are good.

My house is paid for. My taxes are $4000/yr for real estate taxes. Zero state income taxes. Reasonable fed taxes. $180/yr HOA fee. I'm on Medicare and Supplement.

I've traveled overseas and am 'touristed out'. Don't need 'another bloody church, another bloody castle, another bloody city center'. No more ABC tours. Been to enough places to be satisfied overseas. Don't do 'cruises' but my parents enjoyed them through their 70s. Again, no need to 'shop duty free' and see the 'ports' where ticky tacky tourist strips are there just for the tourists. Spent time doing the 'by train' visit to tourist sites around England, Germany, Italy, Austria, and been all over other countries as well.

I don't worry about $25 dinners out. Or $80 motel bills. Or $40 gas fillups. or which bills to pay. Or $2000 vacations.

What's 'wealthy'? Usually it's probably 50-100% more than YOU GOT. Simple.

What do you need to 'retire on'? Enough to maintain your desired lifestyle. And that depends upon WHAT you've been making and WHAT you've been spending.


t.
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What is "wealthy" is like what is "inflation", very dependent on one's expectations and lifestyle.

My older hippie brother might have a net worth around $500k, almost all of it his paid off house that he bought 40 years ago before the local housing boom market. He still "works" puttering around at his church and mowing lawns. I think most of it is to keep social contact. Maybe earns $30k/yr. Does what he wants when he wants. So he could be considered wealthy in many respects.

I'm almost 180 degree different. Net worth approaching 8 figures. Have "mailbox money"* that covers needs and wants. I do what I want when I want. The more traditional picture of wealth.

Different stories same result.

JLC

* dividends and rental property income. Money I get without generating a W2.
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If you're so wealthy you don't have to work for many many years, you won't have built up Social Security credits (140 quarters), so there isn't that to fall back on.

Except, you only have to have 40 quarters of SS credits to claim SS. So those with at least 10 years (40 quarters) of work, including things like summer jobs, will get at least some SS to fall back on. It won't be as much as if they worked for 35 years (140 quarters), but it won't be nothing.

AJ
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So those with at least 10 years (40 quarters) of work, including things like summer jobs, will get at least some SS to fall back on. It won't be as much as if they worked for 35 years (140 quarters), but it won't be nothing.

Very true.

On average, if you have 10 years as SS income, you'll receive about 29% of what the full 140 quarters would have provided (40/140). Probably good enough for some food and utilities, at least.

Pete
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Wealthy is someone who has a dollar more than you do, and isn't paying any tax on it.

intercst
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MataroPete writes,


On average, if you have 10 years as SS income, you'll receive about 29% of what the full 140 quarters would have provided (40/140). Probably good enough for some food and utilities, at least.

</snip>


I've found the most interesting thing about SS to be the "bend points".

https://www.ssa.gov/oact/cola/piaformula.html

For 2021, you get a 90% credit for the first $12,000/yr in wages, a 32% credit for $12,000 to $72,000/yr, and only a 15% credit for $72,000 up to the max FICA wage of $142,800.

That first $12,000/yr in FICA wages is like gold -- it collects six times the SS benefit of earnings over $72,000/yr. I had about $9,000/yr in royalty income I was getting for some engineering continuing education courses I authored years ago. Royalty income is not subject to FICA, but I decided to start a small business and collect the royalty income through that so that I would pay FICA on it -- it was that good a deal. Social Security is a "loser" on income above $12,000/yr. But subjecting that first $12,000 to FICA taxes effectively allows you to buy an inflation-adjusted life annuity at about half the cost of what a commercial insurer would change for the same monthly benefit.

I've never understood someone making $200,000/yr working a few more years to increase their SS, maybe they'll get an extra $20/month. But if you have a lot of zeros in your FICA earnings history like I do since I retired at age 38, being able to book that first $12,000/yr in income and have it subjected to FICA is very valuable.

intercst
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If you're so wealthy you don't have to work for many many years, you won't have built up Social Security credits (140 quarters), so there isn't that to fall back on.

Except, you only have to have 40 quarters of SS credits to claim SS. So those with at least 10 years (40 quarters) of work, including things like summer jobs, will get at least some SS to fall back on. It won't be as much as if they worked for 35 years (140 quarters), but it won't be nothing.


Yes, you can claim some small amount of SS, but since it's based on your highest 140 quarters or earnings, getting all but 40 of 140 quarters of zeros means it'll be pretty low. I should have been more clear.
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CuriousQ writes,

Yes, you can claim some small amount of SS, but since it's based on your highest 140 quarters or earnings, getting all but 40 of 140 quarters of zeros means it'll be pretty low. I should have been more clear.

</snip>


For high salaried workers, the benefit of working longer is limited.

I had 13 years of paying max FICA when I quit in 1994 and retired at age 38 -- lots of zeros on my FICA earnings record. Yet, at full retirement age I'll get about $2,200/month -- astonishing since I've paid very little into SS over the past 27 years.

What happens to my Social Security benefit if I retire early?
https://retireearlyhomepage.com/soc_security.html

</snip>


intercst
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So those with at least 10 years (40 quarters) of work, including things like summer jobs, will get at least some SS to fall back on. It won't be as much as if they worked for 35 years (140 quarters), but it won't be nothing.

...

On average, if you have 10 years as SS income, you'll receive about 29% of what the full 140 quarters would have provided (40/140). Probably good enough for some food and utilities, at least.


I paid OASDI for 54 years (216 quarters). I can assure you that I wouldn't want to have my Social Security benefit based on my first 10 years of OASDI. Most likely my monthly benefit would have been less than 10% of my monthly benefit based on my last 35 years of employment.
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MCCrockett writes,

I paid OASDI for 54 years (216 quarters). I can assure you that I wouldn't want to have my Social Security benefit based on my first 10 years of OASDI. Most likely my monthly benefit would have been less than 10% of my monthly benefit based on my last 35 years of employment.

</snip>


Sure. But you got much more in SS benefits from the first 27 years of FICA earnings than the last 27 years when I assume a lot of your earnings we in the final "bend point" that only gets a 15% credit.

intercst
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“Mailbox money”

I like it!

I also have two rentals and it feels more real than investment gains because you see the check....
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On average, if you have 10 years as SS income, you'll receive about 29% of what the full 140 quarters would have provided (40/140). Probably good enough for some food and utilities, at least.

Not really. Individuals with lower average indexed earnings get a higher percent of their earnings as benefits through the bend point process. From https://www.ssa.gov/OACT/COLA/piaformula.html

PIA formula
For an individual who first becomes eligible for old-age insurance benefits or disability insurance benefits in 2021, or who dies in 2021 before becoming eligible for benefits, his/her PIA will be the sum of:
(a) 90 percent of the first $996 of his/her average indexed monthly earnings, plus
(b) 32 percent of his/her average indexed monthly earnings over $996 and through $6,002, plus
(c) 15 percent of his/her average indexed monthly earnings over $6,002.


PIA is the "Primary Insurance Amount" which is the monthly SS benefit that you get if you retire at your full retirement age. If you retire at an age other than your full retirement age, that amount is adjusted up or down.

So if the individual who worked for 35 years had a $4500 Average Indexed Monthly Earnings (AIME), their benefit amount at full retirement age would be (0.9*996) + (.32*(4500-996)) = $2017

Then, if the other individual had similar earnings while working, but only worked for 10 years, their AIME would be $4500/35*10 = $1285 So their benefit amount at full retirement age would be (0.9*996) + (.32*(1285-996)) = $988

So the individual who worked only 10 years gets $988/$2017 = 48.98% of the SS benefit that the person who worked for 35 years.

AJ
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Yes, you can claim some small amount of SS, but since it's based on your highest 140 quarters or earnings, getting all but 40 of 140 quarters of zeros means it'll be pretty low. I should have been more clear.

Not as low as you would think it would be, because of bend points.

AJ
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For high salaried workers, the benefit of working longer is limited.

At least in theory for us. We ran the SS calculation to see how much we left on the table by retiring early. In theory, not much, but we don't anticipate taking SS until 70 for DH, FRA for me, so who knows how things will be in reality. Our calculations were verified by a financial planner's computer simulation of all possible SS choices for a married/widowed couple. I don't remember the difference in SS checks, but I will say it was very unimpressive, even retiring at 58 for DH vs 70. He did have many years of earning more than he was taxed on for SS, and with the spousal benefit, that boosted my SS as well, even though for the most part I became a SAHM when our kids were born. I tried taking jobs here and there, but for the very little I got after all the taxes, it was a net loss for us when you took into account all the things I was doing at home that we had to now pay someone to do, like renovations and investing.

IP
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Wealthy is someone who has a dollar more than you do,

The difference between wealthy and poor is $2. The wealthy man makes a dollar more than he spends. The poor man spends a dollar more than he makes.

—Peter
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Yep. The Micawber principle:

‘Annual income 20 pounds, annual expenditure 19 [pounds] 19 [shillings] and six [pence], result happiness. Annual income 20 pounds, annual expenditure 20 pounds ought and six, result misery.’
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Yep. The Micawber principle:

‘Annual income 20 pounds, annual expenditure 19 [pounds] 19 [shillings] and six [pence], result happiness. Annual income 20 pounds, annual expenditure 20 pounds ought and six, result misery.’

----------------------------------
I was reminded of the same quotation. But I would point out that it's not claimed to be the difference between wealth and poverty. A shilling only goes so far. But rather the difference between happiness and misery. (Either of which can exist at any income level.)

Bill
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I was reminded of the same quotation.

As well you should be. I was adapting my comment from that quotation. And translating into proper 'Murican instead of those oddball units from abroad.

But I would point out that it's not claimed to be the difference between wealth and poverty ... But rather the difference between happiness and misery.

I don't think it does a very good job of differentiating between happiness and misery. I know a lot of miserable people who have an income considerably more than their spending. And a lot of quite happy people who live right on the edge of over/under.

--Peter
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I don't think it does a very good job of differentiating between happiness and misery. I know a lot of miserable people who have an income considerably more than their spending. And a lot of quite happy people who live right on the edge of over/under.

Money may not buy happiness, but I submit that if you are worried about money your life goes to crap in a hurry.
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The definition of wealthy in the US is basically $100 more than I have.
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