How Rich is Rich

[SEC=UGA]

NEW YORK (CNNMoney.com) -- How much money do you need to feel rich?

 

Wealth is a subjective concept, but one thing is universal in most definitions: being able to live a comfortable life without having to work.

 

"I'd like to have enough money so my family and I wouldn't have to work anymore or worry about the necessities, and maybe travel a bit," said Deborah Veale, a Southern California resident visiting New York City.

 

Veale said she'd need about $10 million to consider herself set.

 

One woman from Seattle put it at a "couple thousand dollars a month." Another from New York City wanted a billion (although she'd still fly coach.)

 

Experts peg the figure to be somewhere around $2 to $12 million in savings.

 

On the high end of that range, a single person living in an expensive part of the country (say, New York City), wanting to retire at 35 would need at least $300,000 a year to feel rich, according to Steven Kaye, president of Watchung, N.J.-based wealth management firm American Economic Planning Group. He based that number on real-life figures his clients tell him they need.

 

A yearly income of $300,000 would allow for taxes, a $3,800-a-month apartment (the average price in Manhattan), and a monthly spending allowance of around twelve grand, he said. Not too bad, especially since you could do this all without a pesky job.

 

To generate $300,000 a year beginning at age 35, you'd need a nest egg of just under $12 million. That assumes a conservative investment portfolio generating a return of 5% a year, an inflation rate of 2.5% a year and Social Security benefits of $25,000 a year starting at age 62.

 

Over time, the shape of your nest egg would resemble a bell curve, growing in the early years, and then declining as inflation required you to withdraw more money to maintain a lifestyle equivalent to $300,000 in 2010. The $12 million would finally dwindle to $934 when you turned 100.

 

If you live in a low cost part of the country, $100,000 a year should be enough, said Kaye. In that case, you would need savings of about $4 million to retire at 35.

 

But if you're willing to stay in the workforce until age 65, a mere $2 million would be enough.

 

Jon Duncan, a financial planner at Tacoma, Wash.-based Seneschal Advisors, gave numbers similar to Kaye's, and agreed that for most people, the figure would be somewhere in the multi-millions.

 

"I'm from an era when we'd talk about millionaires and say 'Whoa, he's got it made for life,'" said Duncan. "But that's not the case anymore."

 

Indeed, few experts think a million is enough to quit your day job.

 

"Don't retire at 35," he advised this reporter, "you'll need a ton of money."

 

Keeping up with the Joneses

 

Of course, there are other ways of determining wealth besides just what you'll need to live well in retirement.

Does $250,000 make you rich?

 

Although decidedly not recommended by financial planners, one is relativity. Basically, you're rich if you're making more than your brother-in-law.

 

That appears to be how the government measures affluence. The Obama administration wants to extend tax cuts for all but the wealthiest Americans, which it defines to be those families making more than $250,000.

 

But that only includes about 2% of the population, according to the Census Bureau.

 

Kaye cautions not to confuse wealth with income. Some people can make a million a year, but be spending a million and a half. They are not rich, said Kaye.

 

"Income relates to lifestyle," he said. "Wealth relates to balance sheets."

[Scooby's Hubby]

more than 5 million and I can coast, but I would have to use 80% of that nest egg to make more money with. you need a million to invest aggresively with, 3 million to buy income earning properties with and a million to put away for living expenses, travel, etc.

[driveby]

My rule of thumb has always been if you want to buy something, and you're rich, you never have to ask "How much is it?"

[Ursa Majoris]

My rule of thumb has always been if you want to buy something, and you're rich, you never have to ask "How much is it?"

And you go into shops where they don't use price tags. My wife was looking in the window of a jewelers like that once.

[Azazello1313]

these days, I would define "rich" as being someone whose share of the national debt burden is going to end up over $10 million.

[dmarc117]

being rich isnt cool anymore. working your arse off for a better life for you and your family is bad. the cool thing now is too take whats not yours. accept handouts. do less. its the amerikan way.

[wiegie]

My rule of thumb has always been if you want to buy something, and you're rich, you never have to ask "How much is it?"

If you don't know how much it costs, how in the world can you be expected to equate your marginal utilities per dollar spent?

 

reference:

http://www.amosweb.com/cgi-bin/awb_nav.pl?...ity-price+ratio

[driveby]

If you don't know how much it costs, how in the world can you be expected to equate your marginal utilities per dollar spent?

 

reference:

http://www.amosweb.com/cgi-bin/awb_nav.pl?...ity-price+ratio

 

The only thing I remember from econ in college was when the professor, who was from the Middle East, stood up in front of the class, turned to show us his rather beefy profile, ran his hand down and around his big belly and said "In my country this is what we call the affluency curve"

[dmarc117]

 

The only thing I remember from econ in college was when the professor, who was from the Middle East, stood up in front of the class, turned to show us his rather beefy profile, ran his hand down and around his big belly and said "In my country this is what we call the affluency curve"

 

 

you could understand yours?

[Big John]

 

The only thing I remember from econ in college was when the professor, who was from the Middle East, stood up in front of the class, turned to show us his rather beefy profile, ran his hand down and around his big belly and said "In my country this is what we call the affluency curve"

He was not there when I attended.

[Savage Beatings]

[Nancy Pelosi] You have to BUY something to find out how much it costs. [/Nancy Pelosi]

[TimC]

Leftists, including Obama (and probably wiegie), love Keynesian economics...another proven failed economic policy again and again and again.

[driveby]

He was not there when I attended.

Prob 77-78?