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Dreadnought
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What Is "Rich"?

Wed Sep 28, 2011 7:38 pm

With all the discussions and debate about "tax the rich", what is considered "rich" these days?

I think that a "rich" person would be defined as someone who could retire today, if he wanted to, and spend his days watching TV, mowing the lawn, and taking the occasional trip to Europe or Hawaii, while owning a nice house, nice car(s), etc.

A nest egg of $1 million is not enough for that. Let's say by doing a little bit of stock trading and most of your money paying some interest in the form of bonds, you can expect to make an annual ROI of 5% or so. A million bucks only gets you $50K per year, pre-tax. To live comfortably in a nice neighborhood, you probably need to have at least $2-3 million in the bank.

What do you think?
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GrahamHill
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RE: What Is "Rich"?

Wed Sep 28, 2011 7:54 pm

Quoting Dreadnought (Thread starter):
I think that a "rich" person would be defined as someone who could retire today, if he wanted to, and spend his days watching TV, mowing the lawn, and taking the occasional trip to Europe or Hawaii, while owning a nice house, nice car(s), etc.

It depends at what age you retire and when you die    
Quoting Dreadnought (Thread starter):
What do you think?

I think that if I retire at my age, 1 million would not be enough if I want to live the same way I live now. I would indeed need at least a couple of millions.

There's a French guy who won more than 100 million Euros few weeks ago at the Euromillion lottery. I guess he's pretty fine for the rest of his life...
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casinterest
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RE: What Is "Rich"?

Wed Sep 28, 2011 7:58 pm

Rich is arbitrary. Many different definitions of it based on location, lifestyle, and cost of living.
You are trying to define comfortable retirement, and that is a different ball of wax for a lot of people.


My definition of Rich is someone that doesn't blink an eye at paying for a Boat, 3000+ square foot house, an expensive SUV, and European vacatiosn, while also paying cash for everything.
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MrChips
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RE: What Is "Rich"?

Wed Sep 28, 2011 8:05 pm

How about we say "tax the wealthy" from here on in?

I know a few wealthy people who definitely don't lead rich lives.
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Flighty
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RE: What Is "Rich"?

Wed Sep 28, 2011 8:21 pm

Rich is basically with about 200%+ as much money as you (or the speaker). Rich, wealthy, same thing.

The whole country is pretty rich. The rich already pay all the taxes pretty much. People who struggle in the USA do not have a federal tax liability. They usually receive a payment from the government at tax time, not a tax bill. This is for the bottom 40% of wage earners in the nation, or so. The jobless or homeless pay basically no taxes.
 
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falstaff
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RE: What Is "Rich"?

Wed Sep 28, 2011 8:47 pm

Quoting Dreadnought (Thread starter):
A million bucks only gets you $50K per year, pre-tax. To live comfortably in a nice neighborhood, you probably need to have at least $2-3 million in the bank.


I could live just fine on $50,000 a year. That would be a small raise. I only make $46,000 a year now. I am one of those teachers who's giant salary people seem to think in bankrupting our country. I have been teaching 11 years too.

Quoting casinterest (Reply 2):
cost of living


Big.... The cost of living around metro Detroit isn't exactly high. If I was in a place like San Francisco I wouldn't be able to live as well as I do here on that kind of money.

Quoting MrChips (Reply 3):
I know a few wealthy people who definitely don't lead rich lives


I know several people who are loaded and drive sad cars and dress like bums. They are fun to hang out with though, because they have some sweet planes and helicopters. They are small/medium sized business owners and they work their butts off most of the time.


I would say rich is when you could retire at anytime and do pretty much whatever you wanted for the rest of your life, regardless of the cost.
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Tugger
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RE: What Is "Rich"?

Wed Sep 28, 2011 9:43 pm

Quoting Dreadnought (Thread starter):
With all the discussions and debate about "tax the rich", what is considered "rich" these days?

I think that a "rich" person would be defined as someone who could retire today, if he wanted to, and spend his days watching TV, mowing the lawn, and taking the occasional trip to Europe or Hawaii, while owning a nice house, nice car(s), etc.

A nest egg of $1 million is not enough for that. Let's say by doing a little bit of stock trading and most of your money paying some interest in the form of bonds, you can expect to make an annual ROI of 5% or so. A million bucks only gets you $50K per year, pre-tax. To live comfortably in a nice neighborhood, you probably need to have at least $2-3 million in the bank.

What do you think?

To me, "the rich" (as a general statement) are those that have assets in excess of $5 million dollars and/of an annual income of more than $500,000.00. I qualify that because "rich" is different in different areas, some one how is rich is Podunk, Kansas is very likely not "rich" in New York City.

If I had to make is an absolute statement, I would say that rich probably is someone with over $5 million in assets and $1 million a year AGI.

For me I am not comfortable with less than $5 million in retirement assets. I don't think you (or I) would be rich with JUST $5 million in assets but you could be very comfortable and reasonably guaranteed that you would not end up broke before you died if things went wrong.

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MrChips
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RE: What Is "Rich"?

Wed Sep 28, 2011 9:53 pm

Quoting falstaff (Reply 5):
I know several people who are loaded and drive sad cars and dress like bums. They are fun to hang out with though, because they have some sweet planes and helicopters. They are small/medium sized business owners and they work their butts off most of the time.

You've missed the point.

To me, someone who has led a rich life is someone who has had a lot of different experiences doing all kinds of things; financial success may or may not be a part of it (although it can certainly help).

With my original statement, I was thinking more of people who have a lot of material wealth, but that is all they have to show for their life - which makes them singularly uninteresting people.
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fr8mech
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RE: What Is "Rich"?

Wed Sep 28, 2011 10:20 pm

This passed weekend I went to one of the local malls and was stopped and asked to take a poll. The poll was run by our local 'progressive' newspaper (which, btw, was founded by our Congress-critter). I had some time to kill so I consented.

First a couple of classification questions (age, marital status, etc.)

-Do you think the rich should pay more in taxes? I countered with: define rich. She said, "you know, people with a lot of money". I asked again give me a number $50,000/yr, $100,000/yr, a million, 10 million. We settled on a million.

I then asked "pay more than whom in taxes"? "well, the rest of us, duh". I said, "they already do".

She then said (and I'll paraphrase) oh, so you're one of those stupid Republican Tea Baggers who think only the poor should pay taxes. I smiled, told her to rework her poll so that it actually meant something and thanked her for her time.

I look forward to reading the results.

What is rich is an arbitrary and subjective benchmark that means whatever the person using the word means. In many respects, we live more richly now than the royalty of the Middle Ages.

Someone making $100,000 in Louisville is a lot richer than someone making $100,000 in NYC.

So, there really is no answer to your question except...it depends.
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photopilot
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RE: What Is "Rich"?

Wed Sep 28, 2011 10:23 pm

Define rich is impossible. Hell, give me that theoretical million dollars yielding $50 k per year and I can retire and live the life of luxury with not a want in the world. It just depends WHERE.
If I wanted to live in a luxury Bel-Air estate, obviously it wouldn't be enough.
If I wanted a lovely oceanfront home in Costa Rica or any other number of nice Caribbean destinations, it would last forever.
It's all a relative term and what you consider the "needs" of your lifestyle.
For me, a warm ocean breeze, palm trees, sand beach, comfortable but modest home, good food, and a few pair of cut-off jeans to swim in, beach wear, and what more do I really need to be content in life.
Start adding all those 21st Century toys that people seem to think they MUST have, and well, you see the problem.
 
sccutler
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RE: What Is "Rich"?

Wed Sep 28, 2011 11:55 pm

Photopilot has a sound and healthy attitude.

But, for the purpose of our current political debate, "rich" is pretty much anyone who's making a decent living. They just don't tell you that.
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NWADC9
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RE: What Is "Rich"?

Thu Sep 29, 2011 12:08 am

When you think about it, even those who we would consider "poor" are actually "rich." Got a phone? Got a car? Got a house? Got food? Got drinkable water? Got access to healthcare not from a voodoo doctor? Logging on to the internet? Got clothes? Someone who only makes $1,000 a year gross is still richer than the tribal family in the savanna.
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zrs70
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RE: What Is "Rich"?

Thu Sep 29, 2011 12:17 am

I'll answer from a Rabbinic point of view (which is shared by many other cultures as well):

Rabbi Ben Zoma asked in the Talmud, "Who is rich?" And he answered his own question: "Those who are happy with what they have."
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YokoTsuno
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RE: What Is "Rich"?

Thu Sep 29, 2011 12:22 am

Quoting Dreadnought (Thread starter):
you can expect to make an annual ROI of 5% or so

Just curious. Which "riskless" investment gives you that return these days?
 
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RE: What Is "Rich"?

Thu Sep 29, 2011 12:42 am

Quoting YokoTsuno (Reply 13):
Quoting Dreadnought (Thread starter):you can expect to make an annual ROI of 5% or so
Just curious. Which "riskless" investment gives you that return these days?

I would like to know that as well. I might not have much, but even 5% of 1000 bucks is considerably more than 3% of 1000
bucks.

Quoting NWADC9 (Reply 11):
Got a phone? Got a car? Got a house?

Well, unless that is on plan/on mortgage... not quite "got" then, you see... Still, the reason I don't agree with your point, as much as I understand it, is elsewhere - the debate is on the US rich.
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RE: What Is "Rich"?

Thu Sep 29, 2011 1:54 am

I thought "rich" was anyone making more than $250,000 a year. Since that is who someone amongst the Democrats decided that was the number. Funny thing, though: The right wing followers (read: FOX news watchers, Rush Limbaugh listeners) who are screaming and gnashing their teeth that $250,000 is not rich and they should not pay more taxes but less are not even close to making $250,000.
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RE: What Is "Rich"?

Thu Sep 29, 2011 2:17 am

Quoting seb146 (Reply 15):
Funny thing, though: The right wing followers (read: FOX news watchers, Rush Limbaugh listeners) who are screaming and gnashing their teeth that $250,000 is not rich and they should not pay more taxes but less are not even close to making $250,000.

So you think it's odd that someone would be against higher taxes for everyone and not just everyone higher than their income? The former is based on a fair principle (whether one agrees or disagrees is a different story) but the latter is greedy, IMO, because they are willing to throw $250Kers under the bus just because they don't make $250K
 
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RE: What Is "Rich"?

Thu Sep 29, 2011 3:00 am

Quoting zrs70 (Reply 12):
Rabbi Ben Zoma asked in the Talmud, "Who is rich?" And he answered his own question: "Those who are happy with what they have."

Quite obviously, many on here, and many in the real world, are not happy according to your definition from the Talmud. We have the modern day Robber Baron's, stripping wealth from anyone they can. We have a congress which enbles them to do this. We have a corrupt greedy congress bought and paid for, sucking up every dime thay can from special Interests.They are never happy with what they have. One could of course say that, the words "what they have", has no time line.
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StarAC17
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RE: What Is "Rich"?

Thu Sep 29, 2011 3:03 am

Quoting seb146 (Reply 15):

I thought "rich" was anyone making more than $250,000 a year. Since that is who someone amongst the Democrats decided that was the number. Funny thing, though: The right wing followers (read: FOX news watchers, Rush Limbaugh listeners) who are screaming and gnashing their teeth that $250,000 is not rich and they should not pay more taxes but less are not even close to making $250,000.

I don't really recall democrats using the word rich when saying $250,000 and above should be taxed more. They called that the top 2% of earners and unless there are stats out disproving that, I'm going to assume that is still pretty accurate.

The media said tax the rich and the not Obama admin, until recently where he makes the point of wanting to tax millionaires more.
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jcs17
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RE: What Is "Rich"?

Thu Sep 29, 2011 5:03 am

It has different definitions depending on where you live and who you talk to.

In Dallas, for example, it's if you make more than around $125k-$150k.

In the New York Metro, if you make over $200k a year, and less than $400k, you still have to "think about" finances. You're rolling in dough anywhere else in the States except Chicago, San Francisco, and LA.

If you asked me, it would be affording a $3000 a month one bedroom in a good building, having a $599 a month luxury car lease (and paying for the appropriate lot space per month), and still being able to put money away and travel. (Note: I have zero of these, Obama needs to get on this.)

If you asked someone in a Memphis suburb, it's paying $1000 a month on a mortgage, paying $299 a month on a car payment, and being able to save.

If you're in Bangui, it's having 5 Euros in your pocket at any given time.
---
I believe in a flat income tax system, with the exception of the very poor -- like less than $20k a year. I disagree with people who think we should switch to national consumption tax/"The Flat Tax." In my previous job, I worked in business development for a company that provided wealth information to non-profits, education, banking/finance, and luxury goods companies. Basically, we compiled their wealth over 25 different metrics (mostly public records, some [aside from credit scores] from credit reporting agencies) to tell them how much a certain person/family was worth. There are millions of millionaires who don't live in a mansion.

The problem you run into in a consumption tax is that you run into a situation like my ex-girlfriend's in rural North Dakota. Her father made over $100k per year as an agronomist and they lived in a ranch valued at $120k and land valued at $150k (public records). They didn't spend their money aside from a nice hot tub in the back, they saved it. How will that guy be taxed as much as someone who lives in NYC and drops $2000 a month on an apartment and has to buy a parking space for $400 a month?

[Edited 2011-09-28 22:15:14]
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kiwiinoz
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RE: What Is "Rich"?

Thu Sep 29, 2011 5:21 am

I would define it as nett assets worth US$10 million
 
TW
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RE: What Is "Rich"?

Thu Sep 29, 2011 7:24 am

Quoting Dreadnought (Thread starter):
A million bucks only gets you $50K per year, pre-tax

It gets you $50,000 in interest, and if you live of that you would die with $1,000,000 on the bank account. You should see it as a loan repayment schedule.

If you assume that you have 20 years left to live, you assume a loan repayment schedule of $1,000,000 over 20 years at 5% interest p.a., you get $82,745 per year over 20 years (according to my calculations). The only problem is that you wouldn't leave anything for your kids (or wife) and if you live longer than planned then you're out of luck.
 
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LAXintl
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RE: What Is "Rich"?

Thu Sep 29, 2011 8:12 am

This evening on the news they actually had a story about defining this and help figuring out what one news for retirement.

Ultimately one huge factor that cannot be avoided is where you live.

I know plenty of $100,000+ earners here in Los Angeles that only manage single bedroom apartments, and seemingly live pay check to pay check almost. Even couples earning $250,000 don't always have the ability to purchase a home in a decent area, or close to work.

The two retirement planners they spoke to in the story seemed to settle on a figure of $3million of total assets at retirement as being a good target figure for a major metro area such as Los Angeles. This would include 401k's, IRA's, cash savings and value of your primary home.

One of the retirement planners alternatively suggest a simple rule of having 33 times of what you desire to earn your first year of retirement in liquid assets. If you need an income of $50,000/yr, then you would need $1.65mil saved. If you earn a pension then you can back out that number from the 33 total.

With people living into the early/mid-80s almost as a rule, and having almost a 50% chance of making it into their 90s, the probability of drawing on retirement savings for some 30-years is a something that many need to be ready for.


Now back to the broader debate in the national news of "what it rich" and the $250,000 number Obama loves to throw around.
To me in no way do I define a $250,000 income as "rich". I might call it "comfortable", but hardly rich especially when you live in a metro area and monthly rent or mortgages can be north of $5,000/mo. (I just saw a house nearby renting for $9,900/mo).
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HAWK21M
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RE: What Is "Rich"?

Thu Sep 29, 2011 8:23 am

Rich is having the financial power to purchase things available at a cost  
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StarAC17
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RE: What Is "Rich"?

Thu Sep 29, 2011 10:09 am

Quoting jcs17 (Reply 19):
If you asked me, it would be affording a $3000 a month one bedroom in a good building, having a $599 a month luxury car lease (and paying for the appropriate lot space per month), and still being able to put money away and travel. (Note: I have zero of these, Obama needs to get on this.)

Why if you were making that kind of dough would you be leasing a car, that is a horrible waste of money.

Quoting kiwiinoz (Reply 20):
I would define it as nett assets worth US$10 million

You can't possibly be serious.
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rabenschlag
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RE: What Is "Rich"?

Thu Sep 29, 2011 11:49 am

Well, as with poverty, being rich is not easy to define, and in my humble opinion, it needs to be defined in relation to your social context, mostly in relation to what others have in your society.

Defining it in terms of needs is not very smart, because needs are flexible and can grow (and that is a difference to poverty, because there is an absolute baseline for some needs).

Saying that you can retire immediately does not help either, because it again depends on your needs.

I think the smartest thing to do is look at the distribution of wealth and income in a society. Instead of using an arbitrary label such as "rich", you now can see where you stand.

If you want to be more precise, look at the distribution of wealth and income in your immediate social context, e.g. your city, county, or state.

So, this is an informative source for all US members, I think:

http://factfinder.census.gov/servlet...lang=en&-format=US-30&-CONTEXT=grt


And just an add on:

I would never talk about tax the rich, but talk about "tax the top X% incomes". That would help.

[Edited 2011-09-29 04:51:47]
 
iakobos
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RE: What Is "Rich"?

Thu Sep 29, 2011 12:55 pm

Rich is not having to ask yourself if you will have something to eat tomorrow
Rich is being able to live on your own resources instead of having to beg or steal
Rich is having the possibility to get decent treatment if you are sick
Rich is having the means to raise your kids decently and afford them good schooling
Rich is when all is done you still have some time or a penny to help others
Rich is when you have electricity and sanitation
Rich is when your environment is not life threatening on a daily basis
Rich is when you have an occupation that pays for all of the above + a penny to save

There are billions who are dreaming of what many if not most on this forum would not even consider as basics.
 
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falstaff
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RE: What Is "Rich"?

Thu Sep 29, 2011 2:06 pm

Quoting LAXintl (Reply 22):
I know plenty of $100,000+ earners here in Los Angeles that only manage single bedroom apartments, and seemingly live pay check to pay check almost.


You can live high on the hog in metro Detroit for that kind of bread, especially if you are single or have no kids.

Quoting LAXintl (Reply 22):
(I just saw a house nearby renting for $9,900/mo).


You can buy a house in my neighborhood for that. It will be a fixer upper, but my neighborhood is safe.
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rabenschlag
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RE: What Is "Rich"?

Thu Sep 29, 2011 2:19 pm

Quoting iakobos (Reply 26):
Rich is not having to ask yourself if you will have something to eat tomorrow
Rich is being able to live on your own resources instead of having to beg or steal
Rich is having the possibility to get decent treatment if you are sick
Rich is having the means to raise your kids decently and afford them good schooling
Rich is when all is done you still have some time or a penny to help others
Rich is when you have electricity and sanitation
Rich is when your environment is not life threatening on a daily basis
Rich is when you have an occupation that pays for all of the above + a penny to save

There are billions who are dreaming of what many if not most on this forum would not even consider as basics.

I see where you are coming from. Putting things in a global perspective, most of those who live in NA or the EU are rich.

Do not forget, it is only about labels. I'd say, rich means that you are exceptionally well off regarding a specific standard.

You suggest to use basic needs as well as the global average as a standard. And yes, compared to that, most A-Netters are very rich.

When we use more local standards, most A-Netters will score average, some very much below, some very much above average. That is meaningful too. And, coming back to the TO's question, I'd say scoring much above an income standard (say top 5%) means you are rich, and scoring very much above a local standard (say top 1%) means that you are very rich.
 
Flighty
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RE: What Is "Rich"?

Thu Sep 29, 2011 2:27 pm

Quoting Dreadnought (Thread starter):
To live comfortably in a nice neighborhood, you probably need to have at least $2-3 million in the bank.

This is totally arbitrary though. You can live in a nice neighborhood in Tulsa Oklahoma on $50k easily. Maybe a large city with high real estate values + taxes, $150k/yr is "needed" for that, but that falls into the realm of personal choices.

Quoting iakobos (Reply 26):
There are billions who are dreaming of what many if not most on this forum would not even consider as basics.

   What's unique about say, USA/Canada is not that rich people here live well. Rich people everywhere are doing ok. But our middle class / lower middle class here has exceptionally large houses, many cars, etc. At least compared to other people out there.
 
nkops
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RE: What Is "Rich"?

Thu Sep 29, 2011 2:33 pm

Quoting Dreadnought (Thread starter):
what is considered "rich" these days?

Whatever it is, I am pretty sure it is not me!!!  

Seriously, to me, being rich is in the eye of the beholder... I am not loaded, but I have a house, nice car and make enough to pay my bills and occasionally go on vacation, so I do consider myself rich!!! I am pretty sure the government doesn't though
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Quokka
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RE: What Is "Rich"?

Thu Sep 29, 2011 2:47 pm

Quoting iakobos (Reply 26):
There are billions who are dreaming of what many if not most on this forum would not even consider as basics.

This is so true. I count myself fortunate and rich because I have been able to travel widely and see how other people live, both at home and overseas. It makes me appreciate what I have and reminds me that things can always be worse. While I live in a country where taxation is supposed to provide a "safety net", there are those who fall through and local tax does nothing to address real suffering in other countries. While I am "rich enough" to be able to donate to crises as they occur, I prefer to support those organisations that seek to enable people to become self-supporting. Sadly, sometimes agencies actually appear to have a vested interest in creating dependence rather than helping to overcome it. Who was it that said that food aid is a weapon?

Quoting Rabenschlag (Reply 28):
I'd say, rich means that you are exceptionally well off regarding a specific standard.

Yes, it is all relative, just like poverty. It is easy to recognise absolute poverty in countries where people literally have no food, where there is no access to clean water and medicines are beyond reach. But even in countries like Australia, the US and within the EU there are pockets of poverty measured by what is generally regarded as an adequate standard of living. In a country where 95% have access to the Internet the few who can't afford it are at a definite disadvantage in terms of access to resources, online education, etc.

I would not accept the definition of being rich as simply having enough to retire on, wherever one lives or what the norms are. After a long working life being able to retire without fearing the electricity being cut off is not too much to expect. Should one really be expected to work until one literally drops dead? People forget that earlier generations created the conditions that we enjoy today and to expect them to quietly drop off the perch and not become a burden is extremely callous and selfish. Whateever happened to the notion "honour your father and your mother?" (Of course, being able to retire at thirty would be a different story altogether.)
 
PanHAM
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RE: What Is "Rich"?

Thu Sep 29, 2011 3:43 pm

Quoting tw (Reply 21):
and if you live longer than planned then you're out of luck.

worse than that, you're out of money....   and you forgot the taxes on the interest as well.

In our social welfare states meanwhile you are roich when you make, as a single, about € 60K a year. Or, if married, around e 120K . That's when the highest tax rate / percentage starts to take almost half of every next Euro you make.

That is an income some high skilled labor makes, absolutely middle class with a good vocational or college education.

OTH, a couple, not working, with 2 kids, gets support of living, including contribution to the pension fund and full medical totally worth close to € 2K, they'd have to earn more than 2500 € gross per month for the same net.

One should tell Fidel Castro that this is the capitalist approach to socialism.
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bhill
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RE: What Is "Rich"?

Thu Sep 29, 2011 6:54 pm

$379,151/yr and above.......keep in mind, real riches is not based on take home pay but wealth..usually derived form capital gains.
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MadameConcorde
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RE: What Is "Rich"?

Thu Sep 29, 2011 7:41 pm

For me rich is being able to spend the money I want on things I like --without excess-- and without needing to count or think whether it's reasonable or not... like making a reservation go to a a starred restaurant for lunch without asking myself how much it will cost me, or staying at a Fairmont or Four Seasons hotel when I travel and flying international First Class on every one of my trips. I would buy Paddock Club hospitality at F1 races instead of buying the cheapest packages. I don't need the $$$ Billions a la Bill Gates. I don't want to own top scale property. I would just like to have enough to live well and without hassle.
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RobertNL070
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RE: What Is "Rich"?

Thu Sep 29, 2011 8:03 pm

Quoting zrs70 (Reply 12):
Rabbi Ben Zoma asked in the Talmud, "Who is rich?" And he answered his own question: "Those who are happy with what they have."

Excellent !!

I am happy with what I have. Permit me to throw the word "thankful" in too.
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LGWflyer
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RE: What Is "Rich"?

Thu Sep 29, 2011 8:08 pm

I'd say being rich is someone who has loads of money now during this economic crisis.
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Tugger
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RE: What Is "Rich"?

Thu Sep 29, 2011 8:14 pm

Quoting StarAC17 (Reply 24):
Why if you were making that kind of dough would you be leasing a car, that is a horrible waste of money.

Because you can write off the lease expense and reduce your taxes. It's a normal thing that many "rich" people do.

Quoting MadameConcorde (Reply 34):
For me rich is being able to spend the money I want on things I like --without excess-- and without needing to count or think whether it's reasonable or not... like making a reservation go to a a starred restaurant for lunch without asking myself how much it will cost me, or staying at a Fairmont or Four Seasons hotel when I travel and flying international First Class on every one of my trips. I would buy Paddock Club hospitality at F1 races instead of buying the cheapest packages. I don't need the $$$ Billions a la Bill Gates. I don't want to own top scale property. I would just like to have enough to live well and without hassle.

You know this brings an excellent point, someone who is "truly rich" does not live in just one place. Many here are noting how being rich depends on where you live and what your lifestyle is. However the truth is that if you really are "rich" you are not locked to just one place (though there are real differences between countries that are on different tiers, i.e. "first world, third world"). If you really are rich, you travel and do things and live in a few places at least. If you don't because you cannot afford to then you are not truly "rich".

The entire reason why I picked the dollar value I did for my retirement is because it allows me to travel and do a lot of things I want to do. I am not stuck in just one place doing essentially the same thing everyday for the rest of my life.

Tugg
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kiwiinoz
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RE: What Is "Rich"?

Fri Sep 30, 2011 12:45 am

Quoting StarAC17 (Reply 24):
You can't possibly be serious.

Yes. Why? Too high or too low?
 
StarAC17
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RE: What Is "Rich"?

Fri Sep 30, 2011 2:48 am

Quoting tugger (Reply 37):
Because you can write off the lease expense and reduce your taxes. It's a normal thing that many "rich" people do.

Maybe so but I personally think not having the debt to begin with is a better use of money you might pay at little more in taxes but you once you own something outright no one can take it away. If you can pay cash for a car.

This is also why I don't like the idea that you can write off interest on a home mortgage, if you have an incentive to pay off a house faster you end up paying far less money in the long run and its a secured asset.

Quoting kiwiinoz (Reply 38):
Yes. Why? Too high or too low?

Reading back you did say assets not income but even then I think that is too high, if you are talking assets I would put it at US$ 2-3 million.
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Mir
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RE: What Is "Rich"?

Fri Sep 30, 2011 3:07 am

I'd say if you're pulling in $500,000 a year for yourself or your family, you're rich.

Quoting LAXintl (Reply 22):
One of the retirement planners alternatively suggest a simple rule of having 33 times of what you desire to earn your first year of retirement in liquid assets. If you need an income of $50,000/yr, then you would need $1.65mil saved. If you earn a pension then you can back out that number from the 33 total.

That is, if that pension manages to hang around until you retire. Which hasn't been happening a whole lot.

-Mir
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kiwiinoz
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RE: What Is "Rich"?

Fri Sep 30, 2011 3:32 am

Quoting StarAC17 (Reply 39):
Reading back you did say assets not income but even then I think that is too high, if you are talking assets I would put it at US$ 2-3 million.

I think someone "rich" would live in a house worth at least $2 million, (clear, no debt, seeing as we are talking about nett assetts)

So with the $2 million gone on the house, this leaves only another $1 million of your $3 million to generate their income for the rest of their life.

As we have said already, the income thrown off $1 million is about $80K per year. I don't think that's a rich persons income, (even if you consider that there would be no accommodation payment to come out of that)

Consider a $10 million dollar person. They could own:

House: 2 million
Holiday house: $750K
Boat: $750K
Car/s: $350K

This is just short of $4 million in assets, leaving $6 million

This would generate about $300K per year, (interest only). On which they would be taxed

Probably $8 million would suffice
 
Flighty
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RE: What Is "Rich"?

Fri Sep 30, 2011 2:15 pm

Quoting tugger (Reply 37):
If you really are rich, you travel and do things and live in a few places at least. If you don't because you cannot afford to then you are not truly "rich".

That's right, in really nice neighborhoods many of the houses are vacant. The owner has 4 houses, so they only have a 1/4 chance of being home.

Quoting kiwiinoz (Reply 41):
This would generate about $300K per year, (interest only). On which they would be taxed

That is way too much footprint for $300k a year. 300k gets you maybe a $1 million house and some normal cars, plus the ability to save some, pay for expensive kid upbringing (if you are into that). The basics of running a household like that (with vacations), will take just about all of that income. You're thinking of $1m+ incomes IMO

Just keeping the lights, taxes, and maintenance up on that much real estate will cost over 100k/yr, maybe 200k. In my city the property taxes on a 2 million house are $50,000.

[Edited 2011-09-30 07:17:00]
 
AviRaider
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RE: What Is "Rich"?

Fri Sep 30, 2011 6:12 pm

The Cosby Show had a definition for rich. "Rich is where your money works for you and you not working for your money."
 
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aerorobnz
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RE: What Is "Rich"?

Sat Oct 01, 2011 1:24 am

If you don't have a corporate jet you're not rich...:-P
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WarRI1
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RE: What Is "Rich"?

Sat Oct 01, 2011 2:02 am

I think to get a broad, fair view of this, one would have to ask many people with many different levels of income. I am sure to someone supporting him/herself, or a family on 30K a year will certainly have a different view of who is rich, such as the 50k, 100k, 1 million, 10 million people. I am sure that a person making 1 million feels poor when thinking of the 10 million person. Keeping up with the Jones, covers it.
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jcs17
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RE: What Is "Rich"?

Sat Oct 01, 2011 2:39 am

Quoting StarAC17 (Reply 24):
Why if you were making that kind of dough would you be leasing a car, that is a horrible waste of money.

I don't know about leasing in Australia, the car markets might be different, but here it makes sense if you like a new car every few years. A lot of car manufacturers, especially in the luxury category offer free scheduled maintenance for the duration of your lease. The thinking there being that they want their car returned in pristine condition so they can sell it at their dealership and not bring it auction.

I think our recession has brought a different sort of thinking in the US in terms of renting/leasing vs. buying. I have a few friends, my age, who decided they'd buy a house the first chance they got. A couple of them are now upside down in their mortgages. Personally, I don't plan on buying a place of residence unless I'm 90% sure it can hold its value. Dumping a rented apartment or house or a leased car is a lot less lethal than having to declare bankruptcy.

It used to be equity, equity, equity... now I'm thinking safe, safe, safe. I'm more interesting in acquiring a good future line of credit than spending for today.
America's chickens are coming home to rooooost!
 
BMI727
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RE: What Is "Rich"?

Sat Oct 01, 2011 3:48 am

Quoting jcs17 (Reply 46):
I think our recession has brought a different sort of thinking in the US in terms of renting/leasing vs. buying. I have a few friends, my age, who decided they'd buy a house the first chance they got.

A house is fundamentally different. Almost nobody can expect their cars to appreciate, and those that do don't need it anyway. I car is not bought as an investment, unlike houses circa 2007.
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Flighty
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RE: What Is "Rich"?

Sat Oct 01, 2011 2:54 pm

Quoting jcs17 (Reply 46):
Personally, I don't plan on buying a place of residence unless I'm 90% sure it can hold its value.

Incidentally, both your friends and you are very human, but both might be wrong. When prices are going up, people get happy about an investment. But it is the worst time to buy! When prices crash, it is the absolute best time to buy. But people are depressed about it.

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