Millionaire - RICH or Middle Class?

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Millionaire - RICH or Middle Class?

Shiloh LundahlPro Member
Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes

I have had a interesting discovery recently. At the end of last year, I was finishing updating my financials and I realized that my networth had reached over 1 million dollars. That had been one of my financial goals over the last couple of years but last week I had a sad, disappointing realization. 

I posted a question on the forums asking if there was a shortcut to wealth. Many people on the forums said yes and a few suggested I read the book The Millionaire Fastlane by MJ DeMarco. I started listening to that book on Audible and it basically stated that 1 million dollars today is not worth what it used to be and that you would really need 5 million today to live a millionaire lifestyle that I saw when I was a kid.

Unfortunately, I think there is a lot of truth to this perspective. 

As my networth has gone up, I have relaxed a lot on my spending habits. I signed my kids up for music lessons, sports, and other activities without considering the cost because in my mind, I am a millionaire and millionaires are wealthy and that is what wealthy people do. When I would eat out I would think more along the lines of what do I feel like eating rather than comparing the prices of each meal and then asking myself, “how much do I want to spend on lunch.” Each month when my wife and I would do the budget, we were over spending by $500 - $1000 and I would need to pay myself more by transferring more money into our personal account from my business accounts. I was getting confused and frustrated at this. If I was a millionaire then why was I still feeling strapped financially?

DeMarco explaines in his book that the millionaires are not really wealthy but are considered the middle class or the upper middle class. And that if you spend like you are wealthy, you will ultimately become poor. So now I am back to budgeting more strictly and living more frugally - darn it! I thought that I had arrived just to find out I am only one-fifth the way there.

Have any of you come to the realization that what you thought was wealthy today isn’t really as wealthy as you thought? 

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Erik W.
Real Estate Investor · Springfield, MO · Member since 2017 · 1k+ posts · 2k+ votes
7y

For decades, I've heard people saying, "$1 million isn't a lot these days."  I wonder how many of those are broke people living paycheck to paycheck, spouting off statements like this make them feel better about their (lack of) drive and accomplishment?

Let's state the obvious: Inflation is a booger!  It's a "silent thief" that drives down our purchasing power every year.   "A loaf of bread was 10 cents and gasoline was 15 cents a gallon when I was a kid..."  Yes, yes...I get it.

But...a personal computer in the 1980s used to cost $2000 and couldn't do more than run DOS games. Today, the $50 Trak Phone from Wal-Mart can run circles around that ancient PC!

Most people's quality of life has also vastly improved.  Think about basic things such as central HVAC and indoor plumbing.  The wealthiest emperor 200 years ago couldn't make it 70 degrees inside on a 100 degree day.  You and I can with the touch of a switch or the turn of a dial (or just tell Alexa to set the NEST t-stat for us!)  You and I can travel coast to coast in 2-3 days in a car, or fly in 5 hours.  Could Dale Carnegie?   Nope.  How many multi-millionaires died on the Titanic?  Today, you and I would just hop over the Atlantic via Delta coach class and get there with far less risk (though admittedly with less comfort)...easy peasy!

Value and wealth are always relative to the time and place in which one lives.  Does that make sense?  We can't just say, "$1 million aint what it used to be".  That's a given.  But a wise person asks, "What IS $1 million today?"  I live in a medium size Midwest town.  $1 million will purchase 2-3x the assets you can buy for the same million in some high cost of living locations.  So is $1 million "a lot" in my town but barely "middle class" in San Francisco bay?

Over 98% of the world has less than $100,000 net worth.  I made that stat up, so don't bother Googling it, but I'd says it's fair since we know over half of American's can't handle a $400 emergency.  That is a real stat you can Google.  So if a person who has $1 million USD net worth today isn't wealthy, I don't know who is.  Is that person hyper-consumptive rich?  No, probably not....but is hyper-consumptive rich a true picture of what it means to be "wealthy?"  I don't think so.

In conclusion: Daddy Warbucks (movie Annie, set in the year 1933) stated, "I made my first million by the time I was 23 (around 1910)....that was a lot of money back then!"

Just for some perspective on how people view their personal wealth, always have, and probably always will.  ;-)

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  • Shiloh LundahlPro Member
    OP
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    7y
    Originally posted by @Jay Hinrichs:

     There is something to be said about being in those circles of people with high net worths. They think differently and speak differently. I recently went to the BiggerPockets meetup in Colorado last month and met a man in his late 50’s/early 60’s who has several apartment complexes. Talking to him for 20 minutes was a completely different experience than talking with anyone else there. He was also really encouraging which felt really good (although it wasn’t as special as talking with @Jay Hinrichs over the phone a few month back. That was the best.)

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  • Jian G.
    Rental Property Investor · San Diego, CA · Member since 2019 · 102 posts · 43 votes
    7y

    @Shiloh Lundahl

    $1 million is not merely enough to be wealthy or allow you to retire and live comfortably. HUD is giving low income housing to millionaires. If you assets is value at over 1 million you can still qualify for low income housing. I think the qualification have more to do with the monthly cash flow/income. Wealthy family kid go to private college and room and board can cost around $200k a year(how many kids do you have?) can you send them to private college? Can you afford have couple 80-100k cars in the driveway and a big house? I think wealthy is to have at least $5 million put to work with the minimum 10% COC return. When you have enough money working for you and being able to afford a nice house and nicer cars without being a big part of your liability, then I think I would consider wealthy. Nevertheless, welcome to the club, you are one of the 36 millionaire in the world out of 7.5 billion people. It's a great milestone!

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  • Brian Ploszay
    Investor · Chicago, IL · Member since 2009 · 1k+ posts · 1k+ votes
    7y

    One million is upper middle class.  It could be borderline rich in many parts of the country.  It is not impressive if you live in the Bay Area.

    My fastest accumulation of wealth came from the recovery of the real estate crash.  Bought a lot of properties that were distressed.  Some of them returned to higher values between 5 to 8 years later.

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  • Account Closed
    Lender · Pensacola, FL · Member since 2017 · 658 posts · 626 votes
    7y
    Originally posted by @Rob Malda:
    Originally posted by @Account Closed:

    When the inflation rate is 3%, the Rule of 72 says it takes a quarter of a century (24 years) to have your purchasing power cut in half.

    Inflation is nowhere near 3%. If you look at the growth of the M3 money supply, college tuition, government tax receipts, healthcare spending, etc. inflation comes out to 6%. It takes just a little over a decade for your purchasing power to get cut in half.

    I've seen the ShadowStats site, which claims the actual inflation rate is twice the official inflation rate. I don't know enough economics to be able to assess the validity of this claim.

    I do know the inflation rate for health care is much higher than whatever inflation rate you want to use as your baseline. Back in the 2000s, for example, my health care premiums were increasing at 25% a year (I worked for a small temporary help agency that didn't offer a health care plan, so I had to buy my own). The great news of the 2010s (before I was covered by Medicare) was the inflation rate for these health care premiums dropped to the high single digits.

    The takeaway is to stress test your finances to make sure you can withstand whatever the market or government might throw your way.

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  • Shiloh LundahlPro Member
    OP
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    7y
    Originally posted by @Loc Nguyen:

    Congratulations to reaching an arbitrary, albeit a huge psychological one, number.  I consider 1M as upper middle-class.  For me, Rich is having the luxury to retire and never worry about money again.  I'm not talking poor retirement that some extreme FI people pursue.  I want to never have to worry about anything, including unforeseen health or catastrophic events, ever affecting my lifestyle from a financial standpoint.  Based on the popular 4% rule, 1M only affords a person 25k a year.  That cuts it too close.  If health insurance goes up, that rule will not stand up.  If the gov raises taxes to cover entitlements in the coming decade, that rule will not stand up.

    5M is a good number to be considered rich, but I don't think people need to reach that number to live a rich lifestyle.  It's also matters what you consider a rich lifestyle.  To me, freedom and never having to worry about finances again is true wealth.  3M seems to be the lower limit to what I consider retire-ready.  I would never be able to retire stress-free with 1M.  Inflation, rising taxes, health events, accidents will all adversely impact how well I can retire if I'm trying to scrimp on $25k/yr.  The rule of thumb is going to be different for everyone, and as people have said, it depends on where you live.

     I agree with you. I don’t want to retire a poor retirement and reduce my lifestyle to fit a passive income stream of 5k or less a month. There will likely be enexpected expenses in the future (medical, extra taxes, high inflation, ext) that can easily whittle away at the 5k until you are below the poverty line.

    I would like to world school my kids. I don’t want them to read about places in history or geography, I want them to visit the places and get the feel of the culture and stand on historical grounds. 

    I would like a home that is big enough to have friends come stay comfortably for a week or two with their families. I would like to have a house in the beautiful rain forests of Costa Rica that has a main house with 3-4 smaller houses around it where my friends and I could stay and explore that beautiful country (by the way, the food alone is worth the trip). I would like to visit other exotic location and see the world such as Bora Bora, Italy, and New Zealand. I want to go on humanitarian missions with my wife and children and help my children learn to give and serve others. 

    Here are a few of my dreams and goals. But to do all of that, you need money. My goal is about 20k a month and I plan to reach that in the next 5-7 years.

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  • Terry Madden
    Investor · Jersey City, NJ · Member since 2016 · 39 posts · 10 votes
    7y

    You make a very valid point on this topic. I really feel, depending on how much you are bringing in with the cash flow from your assets and what you are bringing home with your business/job/etc., (worth a million +) dictates if you can live the "millionaire" lifestyle, obviously. 

    But it also has to do with where you are living in the country. A million dollars in the middle of the country (not putting these areas down by any means, but the cost of living is significantly cheaper) verse living in areas like NY, NJ, & CA are almost night and day. 

    I always love going on Realtor or Zillow and comparing what I pay for a 1 bedroom condo in North Jersey and then see a gorgeous 3 bedroom home in GA for example with property going for the same price.

    It's all relevant I guess, but if you are able to live in an area that is significantly less than what you are bringing in, then that's a home run!


    I just crossed the same threshold you crossed with regard to asset ownership value and feel the same way, so it's not just you, lol!

    My advice, acquire more assets!

    Good luck!

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  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    7y

    One other thing I forgot to add: in an ideal situation, whenever you have reached the "don't need to work anymore" stage, ideally your income would exceed your expenses by a good amount such that your overall net worth continues to grow without a job. 

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  • Shiloh LundahlPro Member
    OP
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    7y
    Originally posted by @Joe Splitrock:

    @Shiloh Lundahl congratulations, but I agree hitting that milestone wasn't so exciting once you realize how little money $1M truly is.

    Whenever I hear the term "middle class" or "upper middle class", it is always income related, so it is interesting this author links it to net worth. It is probably fair to say if you are middle aged or above and upper middle class, that you should have a net worth over $1M. Simply because net worth includes home value and retirement savings. Given the ten year market increase of home and stock values, anyone reasonably responsible in that age group should have a net worth over $1M.

    Of course many factors play into the situation to paint a full financial picture:

    - Net worth, but more importantly is the money working as income producing. I could have a house worth $2M, paid for, but really it does nothing for me accept cost me money in taxes. That same $2M leveraged in real estate could produce $200K of income per year or more. In both cases my net worth may be the same, but the income it produced is vastly different. 

    - Age, because arguably a 20 year old millionaire is in a better position than a 70 year old millionaire. Of course you could argue a 100 year old millionaire is doing just fine too! The point is it matters how long do you have to invest the money, before you need to spend the money.

    - Spend rate and life style is probably most important. Lots of people are talking about 4% safe withdrawal rate, which is really a frugal existence. I would argue to be truly wealthy, you are not asking how much something costs. That requires much more than 4% of $1M to live on. 

    When the term millionaire was first coined, it was really reserved for the ultra wealthy. Put in perspective today, they would be billionaires - the most elite wealthy people. When you have that much money, it really doesn't matter how much it multiplies or how fast you spend it. There is just so much, that you never run out. 

     Joe, you understand what I am talking about. I could stop expanding my real estate portfolio and just start living off of the cash flow from my properties instead of earning an income by meeting with clients. But I would need to move my family, curtail my spending, and hope nothing goes wrong ever, and I could live a frugal middle class lifestyle and survive. But I don’t want that. I know I am capable of more. 

    I believe in the parable of the talents. If I have been given certain talents and abilities along with financial support from my parents early on in my schooling and at the beginning of my married life, if I were not to multiply those financial blessings and pay that forward to others through generosity then I would truely be ungrateful. So for me, accumulating wealth isn’t just something cool to do, but it is a responsibility, and I look at it as a spiritual stewardship. Because I have been given much, I too must give.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Account Closed:

    @Randy E. I was being hypothetical. Of course I don’t spend 100% of my income. It’s just that having a solid income allows me to spend more freely than having a high net worth. And there are reasons to hold on to Bay Area property long term. Just ask @Jay Hinrichs!

    I can think of about 4 to 5 million reason to hold on to a bay area property.. that's about the equity I would have in the 3 I sold LOL  Geesh Anish you know how to hurt a guy 

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  • Kelly Iannone
    Rental Property Investor · Orlando, FL · Member since 2018 · 301 posts · 354 votes
    7y

    @Shiloh Lundahl congrats on the achievement! I’d definitely agree that $1M when we were kids is not like $1M today; thanks inflation and consumerism. I’d concur with others that $1M is middle class. If this were simply in a index fund with the 4% withdrawal rate you’d have to live on $40k a year...that’s a far cry from being rich. Perhaps it makes you rich in the sole knowing one can live on $40k a year if they had too. If my homestead would payed off, I could comfortable (I think).

    However you should get discouraged. Even at $5M net worth one may need to budget to at least be aware of how they choose to spend money in order to maintain that level of net worth.

    Congrats again on a big milestone!

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  • Joe Miller
    Member since 2019 · 17 posts · 7 votes
    7y

    Its a great achievement 100%. I'm going to get there in the future and I'm sure its particularly easy to lose track of finances. Keep the same grind and diligent level you had when you were broke. Easier said than done though.

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  • Slawek Jakubowski
    Bensalem, PA · Member since 2016 · 43 posts · 20 votes
    7y

    @Tony Kim Read "Millionaire Next Door"

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  • Slawek Jakubowski
    Bensalem, PA · Member since 2016 · 43 posts · 20 votes
    7y

    @Loc Nguyen 4% of 1,000,000 is 40,000.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Shiloh Lundahl:
    Originally posted by @Loc Nguyen:

    Congratulations to reaching an arbitrary, albeit a huge psychological one, number.  I consider 1M as upper middle-class.  For me, Rich is having the luxury to retire and never worry about money again.  I'm not talking poor retirement that some extreme FI people pursue.  I want to never have to worry about anything, including unforeseen health or catastrophic events, ever affecting my lifestyle from a financial standpoint.  Based on the popular 4% rule, 1M only affords a person 25k a year.  That cuts it too close.  If health insurance goes up, that rule will not stand up.  If the gov raises taxes to cover entitlements in the coming decade, that rule will not stand up.

    5M is a good number to be considered rich, but I don't think people need to reach that number to live a rich lifestyle.  It's also matters what you consider a rich lifestyle.  To me, freedom and never having to worry about finances again is true wealth.  3M seems to be the lower limit to what I consider retire-ready.  I would never be able to retire stress-free with 1M.  Inflation, rising taxes, health events, accidents will all adversely impact how well I can retire if I'm trying to scrimp on $25k/yr.  The rule of thumb is going to be different for everyone, and as people have said, it depends on where you live.

     I agree with you. I don’t want to retire a poor retirement and reduce my lifestyle to fit a passive income stream of 5k or less a month. There will likely be enexpected expenses in the future (medical, extra taxes, high inflation, ext) that can easily whittle away at the 5k until you are below the poverty line.

    I would like to world school my kids. I don’t want them to read about places in history or geography, I want them to visit the places and get the feel of the culture and stand on historical grounds. 

    I would like a home that is big enough to have friends come stay comfortably for a week or two with their families. I would like to have a house in the beautiful rain forests of Costa Rica that has a main house with 3-4 smaller houses around it where my friends and I could stay and explore that beautiful country (by the way, the food alone is worth the trip). I would like to visit other exotic location and see the world such as Bora Bora, Italy, and New Zealand. I want to go on humanitarian missions with my wife and children and help my children learn to give and serve others. 

    Here are a few of my dreams and goals. But to do all of that, you need money. My goal is about 20k a month and I plan to reach that in the next 5-7 years.

    You make a good point.. a lot of folks make the point that they drive a beater and dont take fancy vacations but have a nice stable of income producing properties .. thats great of course cant fault that.

    But I am more with you and life experiences before we die. And providing those for our children .. We live in the Jet age not the horse and wagon age or the age of taking a steamer around the horn. 

    And Look at someone like J Martin he has been on a perpetual vacation travelling the world for darn near 2 years now.. Of course he is single and I dont think he has children but he chooses to use his cash flow to live the life of a world traveler. 

    Others may just hunker down and never really have a desire to travel or spend any money on any type of lux item or eating out or fine wine or any of that stuff..  Neither is wrong.. its a personal desire..  I found travel and other cultures was a very important part of raising my kids.. so much so that my Daughter went to school in Spain.. and is now taking her brood on a one month trip to Europe on her Intel Sabbatical.. She could buy a rental house with what she will spend .. but its something she did and now wants her girls to enjoy.  My other daughter and husband 30s same thing they travel all over the place.. and of course they take Nana along to help with the babies so my wife gets to go along.. this spring its London and Cruise through Norway..  Me I get to stay home and feed the dog and cat.. LOL. 

    Bottom line balance is important and we have this conversation about quarterly on BP..

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  • Peter TverdovBusiness Member
    Developer · New Brunswick, NJ · Member since 2015 · 1k+ posts · 2k+ votes
    7y

    I guess I am in the minority ITT but I think several of you are severely out of touch with reality saying someone with $1m net worth is middle class wealth. You're insane or just don't know the numbers. 

    There are about 50-60% of people in this country who do not have $1,000 to their name. The AVERAGE net worth in the US is maybe 50-100k. Again, it might not feel like you made it. But if you're a millionaire that means every 10 people you see today, you're doing better than 9 of them. That's not middle last time I checked. 

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  • Shiloh LundahlPro Member
    OP
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    7y

    @Peter Tverdov I’m not the one who came up with that idea. I’m just sharing the idea that comes from MJ DeMarco in his book The Millionaire Fastlane. But it did change my perspective that even though I have gotten to a level of net worth that in the past I thought was wealthy, I can’t afford to live the lifestyle that I used to associate with that level of wealth. But I can live a middle class lifestyle; or upper middle class lifestyle.

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  • Kelly Iannone
    Rental Property Investor · Orlando, FL · Member since 2018 · 301 posts · 354 votes
    7y

    @Jay Hinrichs sorry to squash your career goals Jay, Wal-Mary is doing away with the greeter positions 😂

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Peter Tverdov:

    I guess I am in the minority ITT but I think several of you are severely out of touch with reality saying someone with $1m net worth is middle class wealth. You're insane or just don't know the numbers. 

    There are about 50-60% of people in this country who do not have $1,000 to their name. The AVERAGE net worth in the US is maybe 50-100k. Again, it might not feel like you made it. But if you're a millionaire that means every 10 people you see today, you're doing better than 9 of them. That's not middle last time I checked. 

     I think there is a big difference between net worth in cash and securites and net worth in leverage to the hilt real estate.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Kelly Iannone:

    @Jay Hinrichs sorry to squash your career goals Jay, Wal-Mary is doing away with the greeter positions 😂

    well there is always volunteer work !!! 

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  • Vladimir K.
    Real Estate Agent · Wheaton, IL · Member since 2008 · 66 posts · 32 votes
    7y
    Originally posted by @Joel Owens:

    <snip>

    Money isn't this magical thing that is going to solve all of life's problems. With having more money becomes more responsibility. Stress does not go away when you have money it's form just changes to something else.     

     I agree with you.  I know of one millionaire who says that when he was poor, he worried about making money, now that he's wealthy, he is worrying about keepit it.

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  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    7y
    Originally posted by @Anthony Wick:

    @Steve Vaughan

    Sorry bro, you’re simply wrong. $1 mil is way way above middle class. If you make $100k a year you are top 10% earned in this country. Not to confuse $1 mil with being “rich” and certainly not ultra rich. But to say $1 mil is middle class is simply incorrect.

     Your post to Shiloh just prior to this said "..the middle class family could have $1M in assets and retirement funds and still be middle class."  So which is it?  Our choice was middle class or rich with a $1M net worth. 

    The answer appears to be very subjective based on people's location and upbringing and what the million is made up of.  I grew up poor but have since learned the difference between being 'rich' (having  a high income) and being wealthy (maintaining a nice lifestyle without having to work).  

    Robert Reich, prior labor secretary and professor at Berkely, defines the middle class as anyone earning the median income  +/- 25%.  So if your stat of family of 4 earning $55-60k, the 'middle class' is a 4fam earning $41,250-$75,000.  

    The problem is, middle class net worth isn't in his statistic (or anyone's?), making this $1m NW rich or middle class question kind of a trick question or dichotomy.  Perhaps we could say if the million in assets is providing more than $75k in passive income, you are affluent or upper middle class? If it also continues to grow, you are 'wealthy'. Both!

    Anyway, I've enjoyed this entire discussion.  Where else can you get together with a ton of (98%) like-minded strangers and go deep into a 'taboo' topic like money and wealth. The humility and desire to give back expressed here are admiral.  

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  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    7y
    Originally posted by @Anthony Wick:

    @Steve Vaughan

    Sorry bro, you’re simply wrong. $1 mil is way way above middle class. If you make $100k a year you are top 10% earned in this country. Not to confuse $1 mil with being “rich” and certainly not ultra rich. But to say $1 mil is middle class is simply incorrect.

    There is a difference between income and net worth, but arguably higher income individuals will have higher net worth. Simply because net worth includes home equity, cars, retirement savings, etc. 

    You referred to $60K as middle class, which is actually the US median household income. Median income means half the households make more and half make less. 

    Middle class is a range in the middle and is generally taken as between 66% and 200% of median income. Roughly 50% of households fall into the middle class. So based on $60K, it would be a range of $45K up to $120K are middle class.

    In other words middle class is a range that includes what half the households make, whereas median income is the point at which half make more and half make less.

    The top 10% of household incomes in the US are closer to $170K and top 5% is around $210K. 

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  • Bill F.
    Investor · Boston, MA · Member since 2015 · 1k+ posts · 3k+ votes
    7y
    Originally posted by @Peter Tverdov:

    I guess I am in the minority ITT but I think several of you are severely out of touch with reality saying someone with $1m net worth is middle class wealth. You're insane or just don't know the numbers. 

    There are about 50-60% of people in this country who do not have $1,000 to their name. The AVERAGE net worth in the US is maybe 50-100k. Again, it might not feel like you made it. But if you're a millionaire that means every 10 people you see today, you're doing better than 9 of them. That's not middle last time I checked. 

     Wouldn't it be nice if we had a way to independently verify these claims about what is wealthy relative to the rest of the US and your peers...? 

    Net worth by state. Slide 19 is where the data starts. 

    By age. "A household led by a 40-44 year old with a net worth of $1,000,000.00 was in net worth centile 93% in 2016. This centile ranged from $993,990.14 to $1,200,043.70. Around 773,630 of the 11,051,864 households in this age range had $993,990.14 or more in net worth."

    I'm sure there is data out there that combines state/MSA and age, but that would take more than three minutes on Google. No matter how you slice it, having $1m+ net worth puts you in the top 75% of Americans in any age cohort.

    What net worth level allows you to live a middle, upper middle, or upper class life style? 

    That is where we are all talking past each other, because what exactly is a "middle class life style"? Definitions matter. Does it shift with location and age? I would think so. 

    That means you need a different net worth to be a "middle class" 40 yo in NYC than be a "middle class" 40 yo in Fort Wayne.

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  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    7y
    Originally posted by @Steve Vaughan:
    Originally posted by @Anthony Wick:

    @Steve Vaughan

    Sorry bro, you’re simply wrong. $1 mil is way way above middle class. If you make $100k a year you are top 10% earned in this country. Not to confuse $1 mil with being “rich” and certainly not ultra rich. But to say $1 mil is middle class is simply incorrect.

     Your post to Shiloh just prior to this said "..the middle class family could have $1M in assets and retirement funds and still be middle class."  So which is it?  Our choice was middle class or rich with a $1M net worth. 

    The answer appears to be very subjective based on people's location and upbringing and what the million is made up of.  I grew up poor but have since learned the difference between being 'rich' (having  a high income) and being wealthy (maintaining a nice lifestyle without having to work).  

    Robert Reich, prior labor secretary and professor at Berkely, defines the middle class as anyone earning the median income  +/- 25%.  So if your stat of family of 4 earning $55-60k, the 'middle class' is a 4fam earning $41,250-$75,000.  

    The problem is, middle class net worth isn't in his statistic (or anyone's?), making this $1m NW rich or middle class question kind of a trick question or dichotomy.  Perhaps we could say if the million in assets is providing more than $75k in passive income, you are affluent or upper middle class? If it also continues to grow, you are 'wealthy'. Both!

    Anyway, I've enjoyed this entire discussion.  Where else can you get together with a ton of (98%) like-minded strangers and go deep into a 'taboo' topic like money and wealth. The humility and desire to give back expressed here are admiral.  

     Exactly. Also, I know some broke farmers who own a million dollars in land and can barely pay the property taxes on the land. Which is one of the reasons most of these farms get stripped down for parts by the kids when the farmers die. You can't eat net worth. 

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  • Dave FosterBusiness Member
    Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
    7y

    And while the pessimist and the optimist were arguing whether the glass was half full or half empty - the opportunist snuck in and drank the lemonade.  Defining wealth is easier (and more fun I gotta admit)  than obtaining it (whatever your definition may be).  

    @?shiloh Lundall - I love your "world school" philosophy for your children.  That's awesome.

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