Millionaires Need $7.5 Million to Feel Wealthy.

[jeffrey]

The definition of "wealthy" is a moving target, depending on the economy and prevailing politics. To some in the White House, a salary of $250,000 a year is wealthy, to others, it's barely a living wage.

But millionaires have their own benchmarks. According to a Fidelity Investments survey of more than 1,000 millionaires (households with at least $1 million in investible assets, excluding retirement accounts and real estate), 42% of respondents say they don't feel wealthy. Keep in mind that while $1 million is the threshold, this group has an average net worth of $3.5 million...

Millionaires Need $7.5 Million to Feel Wealthy - The Wealth Report - WSJ

[disneysteve]

Wealth is all relative to your peers and your surroundings. In the neighborhood surrounding my office, someone earning $30,000 would feel quite well off because the median income is probably half that. In the neighborhood around my home, someone would likely need to earn $200,000 or more to feel the least bit wealthy. In some nearby neighborhoods, I'm sure if you aren't earning close to $1,000,000 or more, you wouldn't even be living there.

[jpg7n16]

I feel that this survey got responses essentially saying the following:

"How much do you need to feel wealthy?"

"Just a little more..."


Those who aren't happy with $3 million, wouldn't be happy with $7.5m. Those who are happy would be happy with much less.

I don't think this has anything to do with the actual dollar figures involved, but the mindsets of the people involved. Change the threshhold to $10million, and you'll still have people who feel like they need more.

Those who don’t feel wealthy were asked how much money they would need to feel wealthy. Their answer: $7.5 million. (That’s the median asset level).

But here’s the interesting twist. The 58% of millionaires who did feel wealthy were also asked how much money they had when the began to feel “wealthy.” Their answer: $1.75 million.

So millionaires who don’t feel wealthy say they would need $7.5 million to feel wealthy, while those who do feel wealthy need only $1.75 million.

[tripods68]

Whining Spoiled Brats!

[disneysteve]

I also think this reflects a problem experienced at all income levels. As people earn more, they tend to elevate their standard of living to match their new income. They buy nicer cars, move to bigger homes, eat at better restaurants and shop at higher end stores. Why? Partly because they think that's what people with their income are "supposed" to do. Partly because they think they "deserve" it. Partly because they think it will make them happier.

In reality, what would really make them happy would be satisfaction with what they have and not always wanting more and more and more.

As our income rose, we did bump up the lifestyle little by little, but we also boosted the savings rate. When we first got married, it was 6% of take home. Now it is up to 25% of gross. We're happy with where we are in life and, just as important, we are confident that we are building a secure future rather than blowing everything today on big screen TVs, luxury cars and designer clothes with nothing to show for it when we're older.

[jpg7n16]

Originally Posted by jeffrey

Keep in mind that while $1 million is the threshold, this group has an average net worth of $3.5 million...

Millionaires Need $7.5 Million to Feel Wealthy - The Wealth Report - WSJ

So millionaires who don’t feel wealthy say they would need $7.5 million to feel wealthy, while those who do feel wealthy need only $1.75 million.

Hmmm just noticed this. If the average was about $3.5M, then the people who do feel wealthy would feel wealthy with 1/2 of what the have. And those who don't, feel they need twice what they currently have.

The happy have twice what they need.
The unhappy need twice what they have.

Interesting...

[jpg7n16]

Originally Posted by disneysteve

In reality, what would really make them happy would be satisfaction with what they have and not always wanting more and more and more.

yup. Money doesn't create happiness.

I find the studies that cannot find a link between wealth and happiness to be very interesting.

[disneysteve]

JPG - Keep in mind that $3.5 million is an average, not a median. That could be 9 people who have $1 million each and 1 person who has $26,000,000. That would be an average of $3.5 million.

Also, they are talking about net worth, not liquid assets.

Someone with a $1 million home and a big 401k balance might not have a whole lot in disposable income and, thus, may not feel all that wealthy. Someone who sees more of their income in their pocket, even though they have a lower net worth, might feel richer. It also depends on how much debt they have. If they are making monster mortgage payments, BMW payments, college tuition payments, etc., they may not feel very rich even though their bank statement has a lot of zeros.

[jpg7n16]

Originally Posted by disneysteve

JPG - Keep in mind that $3.5 million is an average, not a median. That could be 9 people who have $1 million each and 1 person who has $26,000,000. That would be an average of $3.5 million.

Agreed. I just thought it was odd that the numbers worked out that way.

And for the other factors, I figure that those would be averaged into the final numbers. Where a $2 million guy with no debt, but lots of income producing properties may only feel as though he 'needs' 2.5 million, and a 2 million guy with debt whose assets are all tied up 'needs' 5 million -- I figured those factors would all average out across the 1000 people they surveyed.

Clearly it wouldn't be a 2:1 or 1:2 ratio for each person surveyed. I just thought that on the whole, it was odd that the math on the requirements to feel wealthy worked out that way.

[elessar78]

This exact same article came up in my "NFL team" message board too. Again, the disparity in opinion between this forum and that one is stunning. Most there seem unable to understand that $7M in investable assets can be both rich and not rich, first depending on lifestyle. Most also can't understand that one can't "see" $7M in investable assets if the person/family lives simply and keeps a low profile.

Some even make the argument that if I have $7M and spend $6.9M that I'm still rich because I have spent richly. The perception is that wealth IS visible, disposable income.

[couchrobt]

I don't think it is a matter of how much they have to be able to feel really happy. Happiness is a state of mind, if your mind is programmed to like and enjoy as highly as $7M, even if you can afford things/luxury while having only $3M, you will still feel unsatisfied and unhappy.

[Jenniferw]

7.5M in some place like NYC may barely called wealthy

[shanecurran]

Have to keep up with the Jones'!