For the Rich, $5 Million is the new $1 Million

[bjl584]

http://blogs.marketwatch.com/encore/2013/07/23/for-the-rich-5-million-is-the-new-1-million/?

"Call it a harbinger of a cultural Gilded Age, or an indicator of inflation, or just another sign that in America, even affluent people prefer to think of themselves as middle class. Whatever the reasons, the conclusion is the same: Most high-net-worth Americans no longer think that having $1 million makes you rich. In a survey of affluent investors released this week by UBS Wealth Management Americas, only 28% of investors who had between $1 million and $5 million in investable assets (not including the value of their primary residence) said they considered themselves “wealthy.” And even among those with $5 million in assets, there were clearly some undercurrents of financial self-doubt – only 60% of that group identified themselves as wealthy."

[disneysteve]

Most high-net-worth Americans no longer think that having $1 million makes you rich.

I agree. I've said this many times. Becoming a "millionaire" retains this coveted status even though it really isn't that rare today and it really isn't that much money anymore. If I became a millionaire tomorrow, my life wouldn't change a bit. I wouldn't be able to stop working. I couldn't afford anything that I can't afford now. It sounds like a lot and is a number that people reference frequently but it just isn't that significant anymore.

[bUU]

I think this survey is being misunderstood a bit by some people in some situations. I don't mean just that it is a survey of personal perception rather the being some objective measure of what it means to be "rich"; and not just that it is just a survey and not really a normalized behavioral study of people's reactions to living with various levels of wealth; but rather with regard to the fact that the survey is about being "rich", while I think a lot of folks are reading and responding to it from the standpoint of being "comfortable" or "financially secure" which are states that I would suggest are actually substantially lower than "rich".

For me, $1M is still enough. $1M is actually enough to generate a reliable income stream of $75k per year, for life, for two spouses (75% survivor benefit), adjusted for inflation up to 5%. It won't keep us at our current lifestyle - that would take $1.5M - but I think that it'll be enough to keep us happy, even if that's all we had.

[disneysteve]

$1M is actually enough to generate a reliable income stream of $75k per year, for life

Please tell us what investment is giving you a reliable 7.5% annual return.

[bUU]

It wasn't an investment. I entered the data into a quotation tool for an annuity. That income stream is possible since there is no return of principal.