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How Much Money Do You Need to be Considered Rich?
By JLP | March 10, 2008
Although I’m back home, you’ll have to bear with me while I get back into the swing of things. I haven’t had a lot of motivation to blog lately.
According to this week’s Barron’s (UPDATE: here’s a free version of the article), it now takes a net worth of at least $25 million to be considered “Beer & Pretzels rich,” which is what Barron’s considers entry-level rich.
Think about that for a minute. A net worth of $25,000,000 should easily be able to kick off an income of $750,000 per year at 3%.
I think “rich” is a frame of mind. Personally, I would be happy with a net worth of $5 million (not including home equity). Sure, I could make it on a lot less, but $5,000,000 would give my wife and me enough income to be able to enjoy the things we like.
What about you? How much would you need for you to consider yourself “rich?”
Oh, and in case you’re interested, here’s how Barron’s breaks down the rich:
Topics: Net Worth | 26 Comments »
March 10th, 2008 at 11:13 am
Being rich is a state of mind. And good grief, $1 million @ 4% is $40,000… after tax, what, $30k? If I had $30k and didn’t have to work for it, I would consider myself rich.
Talk about keeping up with the Joneses!
March 10th, 2008 at 11:22 am
I hope to have over $5mm when I retire, and would considder that fairly rich. I’d say that is more the type of beer and pretzels rich. $10 mm would definately be righ to me. $25mm to me would be considerred LOADED.
Living in a moderate size city in the midwest, a $750k house is pretty much the top of the line.
Now, I’f I lived in new york city where you have to spend millions for a nice place, then maybe $25mm IS the right number.
March 10th, 2008 at 11:46 am
Does anyone know how to read the barron’s article with out a subscription. When I click on the link it’s asking for a subscription.
March 10th, 2008 at 12:43 pm
I agree, rich is purely a state of mind. Having enough money to do whatever you want to do. You can either want a lot and earn a lot, or want a little and earn less. If your idea of doing what you want is living in a cabin in the sticks and fishing all day, you can do it for a lot less that if your trying to live the high life in Manhattan.
March 10th, 2008 at 1:23 pm
I love the notion that “get serious about philanthropy” only happens at the plus-50 million range! We’re doomed!
I think JRich is on the right track– it’s all about context. I live in Tennessee, and it would take me far less than $10 mm to retire for good (but I live pretty cheaply anyway). I can’t imagine living in Manhattan, where I’d feel like a poor boy with that in my pocket!
March 10th, 2008 at 1:32 pm
I am shooting for 2.5 million to retire with. I was surprised to find out that for it to actually last thgroughout 35 years of expected retirement, it will grow to about 4 million, and then deplete as the years go by. So even 4 million wouldn’t really be “rich”, just would let us live comfortable without worries in retirement. Wow. So now I guess I’d have to say anything over 5 million would increase our lifestyle of generosity, so that would be rich in my book.
March 10th, 2008 at 2:22 pm
A decade ago, I would have said $3 million, but now I would say $9 million is my target figure. $25 million seems a bit much to me, but then, I don’t have expensive habits of choice. As long as legitimate medical care is hard to find at any price, and not provided to every citizen by default, one needs quite a bit of money.
March 10th, 2008 at 4:03 pm
$5M sounds right to me – certainly enough for two homes, one in an expensive area, and one in a resort area, and enough that my wealth would continue to grow without effort. Of course if you have to live in Beverly Hills and Malibu, that wouldn’t begin to do it, but that isn’t really about living but about impressing others, though to many, that is what rich is all about.
March 10th, 2008 at 7:49 pm
Homer Simpson:
Gee Mr Burns, you’re the richest man in the world! You own everything!
Mr Burns:
Yes, that’s true, but I’d give it all away to have just a little bit more.
How much? Just a little bit more!
March 10th, 2008 at 11:19 pm
Right now I’d feel rich simply to have my student loan paid off and 2 years living expenses in the bank. Why? So I’d feel free to take a chance going entrepreneurial.
Otherwise, I’d feel rich having enough in stable investments that allowed me to meet expenses off the interest.
March 11th, 2008 at 3:46 am
Good grief, people!
On the world scale: if you have a roof over your head, access to clean water and medical care, and know where your next meal is coming from – You *are* rich. $25 million is far, far more than anyone needs.
March 11th, 2008 at 10:16 am
As a 20-something young entrepreneur, I was personally disgusted by Barron’s comments on philanthropy. “Serious philanthropy” is an approach to life and is not so dependent on the amount. It should be a foundation for any business or individual, whether just starting out or considerably further along.
As for being rich, I heard economist Robert Reich once say that being rich was being able to buy whatever you really wanted, whenever you really wanted it. This seems like a workable and flexible definition. (Incidentally, he was talking about the absurdity of the current economic stimulus package giving $600 to people who are already rich, saying it won’t exactly encourage them to spend…)
March 11th, 2008 at 11:00 am
Moneymonk posted a quote recently that sums it up “There are two ways to be rich: one is to have great wealth, the other is to have few wants.”
I could live easy breezy with all my needs and wants satisfied on $2.5M, or $100,000 before taxes, ESPECIALLY if I had my mortgage paid off. And that’s in Dallas – if I wanted to live happily in Mexico or rural AL (where I’m from) I’d certianly need less than $1MM.
My personal goal (mainly because I’m so young) is $250,000 of passive income a year in today’s dollars (this assumes I have a family to support). I plan to reach it by the time I’m 50 or so. $10MM net worth (including home equity) is my goal mainly because by the time I reach it $10MM will be worth a lot less than it is today.
March 11th, 2008 at 12:03 pm
Since I’m so young I haven’t really thought about an amount of money I want to save. I’m mostly trying to pay down debt and save a little for a house. I never thought $25 million would be considered poor rich. I guess I need to get moving if I want my giant yacht.
March 13th, 2008 at 6:12 am
Since I’m already in the 7-figures (in my 40’s), I recognize that my view is going to be quite skewed. Believe it or not, I don’t feel “rich”. Most of my assets are not very liquid, so I cannot live off of them yet. I still need to work to maintain an upper-middle-class lifestyle. I also live in a high-cost city (though offset by the availability of well-paying employment).
Rich to me equates to not ever needing a job again in order to maintain a relatively luxurious lifestyle. By luxurious, I mean owning at least a couple of nice homes, being able to afford a car w/driver, and flying private. Also means having a crew of domestic help and a house manager/personal assistant to handle them. And means sitting on some swanky charitable boards – the kind that have a $50K annual give or get policy.
At my level, I can have and do some of those things, some of the time, but not all of those things all of the time, and certainly not without the benefit of a well-paying job.
I know people up and down the spectrum, on up to about $1Bn and I think the kind of wealth that gets you there, starts at around $15mm – $25mm, depending on where you live.
Don’t get me wrong, personally, I don’t need all that to be happy. I’m already pretty happy. My goal is to reach at least $10mm, more for the financial security, and the ability to use the money to make a difference, than for the lifestyle. Other than having to get up and go to work everyday, I like my present lifestyle just fine (only 1 home, no car, no chauffers, no domestic help, no private jet). And I even like my work – a lot – I just would prefer if I could set my own schedule and run my own show. And someday I probably will.
March 14th, 2008 at 10:38 pm
It’s all relative, and it will also probably change over time as Yana observed. As others have also commented, lifestyle and geography will obviously be factors. Many of my colleagues, at least those willing to talk, have not really focused on a number, to qualify them as being rich, or really to be able to retire comfortably. It’s certainly one thing to be able to maintain a certain lifestyle while a large income exists – being able to maintain a similar lifestyle without that earned income (not from your investments) is what requires life planning to improve your net worth over time. Actually, if you are living just a comfortable lifestyle on $250,000 to $300,000 per year, then you will probably need at least $5m to throw that off in earnings, and you’ll need a great market to keep your investments on track, and that is not rich in my estimation.
March 16th, 2008 at 7:05 am
Being Rich is the ability to live the lifestyle that is comfortable to you without ever having to work again if you dont wish to.
The list shown above in the post… 25 million is “poor” rich? I think this Barron’s dude believes that you have to be able to buy expensive junk that you dont need, and most likely will impulse on and lose interest in after a while, just to impress people you don’t really like. If that is what it takes to be rich, i’ll pass.
March 27th, 2008 at 9:19 am
I feel that $25 mm is far more than beer and pretzels rich. I would say that in the 2-5 mm would be beer and pretzels rich. I believe that to be considered rich you have to be able to retire at an age less than 60 and not half to worry a day past that. With this in mind I feel that if you have a steady income of around 200-300 thousand a year with out working I would put you in the Beer and Pretzels rich catagory…..
April 29th, 2008 at 12:07 am
Rich to me is being able to quit working if I really wanted to. Also I’d like to able to eat out a few times a week. My pastimes are few and mostly amount to video games, movies, and internet. I’m trying to save up $1mil and then quit working.
May 1st, 2008 at 4:14 pm
my opinion 1million dollars is not alot of money. I say Barron is right. He knows what he is talking about. My objective is to be a multi billionare but im about a quarter way. I guess i need to cut my spending. Invest wisely and you will be a millionare. I started with a 163 dollars and now i am making around 1,200,000 a year. My opinion to all of starting out is to invest wisely. these are tough times now. so watch your spending.
May 17th, 2008 at 6:54 pm
I really love post 9. I am still lol. That 25 million remindes me of F. Scott when in 1924 he wrote a book entitled “How to get by on 36,000. a year”. That is like almost half a million now. Yeah better start clipping coupons. I think we are being made fun of. Rich to me is not having to worry about money. But once your investemnts get up high enough then you have the added worry of losing alot or not gaining enough off them to keep up with inflaion. $25 million seems like alot of money the way 500,000 a year seems like alot. The rich know this. Never spend principal darling.
September 18th, 2008 at 4:30 pm
Rich, not on the $27,000 a year this poor ole redneck earns, and to think, my neighbors think I’m doing well! Rich is a joke for most of the world anyway.
October 27th, 2008 at 7:10 pm
So why do Buffet, Soros, Gates and that crowd seem to always be for increased income taxes? Because they’ve got theirs and it would be virtually impossible to spend or lose it – they will be rich forever. So, why not a tax on assets? I think a conservative estimate of the amount of revenue this would generate might be enough to pay off the national debt and give the poor people a little spending money. ( I can hear Buffet, et. al. squealing now – that’s communism, we want socialism.)
March 24th, 2009 at 7:44 pm
Most people are too materialistic. No amount is enough. Even they are blessed, they still complain. That is human nature … unfortunately.
For me, I am rich if I have a roof over my head, warm meals, clothes to wear, healthy and have peace of mind. The most important thing is to be giving …. not always wanting more and more. How much are you giving to help those in need is what is more important than being greedy. When we die, we can’t take the millions along with us. Who knows, we might be fighting against death because we have too much material things and money left behind?
Ask those people who have won lotteries? Read about their testimonies. Most of them said they were happier before winning the lottery. Money is the roots of all evils. So having lots of money will attract alot of evils. The cost is to forgo peace of mind.
June 7th, 2009 at 2:23 am
to be hollywood rich you need at least $30 million. That's the three homes, top private schools, parties, fashion sprees at gucci and prada, and cars.
to be rich by the elite standards you need over $200 million. And that doesn't get to much attention.
How is this possible?
I lived in manhattan, nyc (one of the richest places in the world) so I saw wealth. But where is all this money coming from?
In NYC, and even in wall street, most people including the ivyies could never dream of making over $900,000 a year. Investment bankers at wall street makes $250,000-$600,000. A corporate lawyers makes $160,000-$700,000. Top neurosurgens makes on average $500,000 (the highest paid doctors).
These individuals all went to the best colleges and they are the best of the best. They are at the top of the income pyramid.
Still they can't afford most of the condos and co-ops in the Upper East Side or SoHo (in manhattan). Prices there start at $1.5-$20 million. Someone with those incomes can't afford that. Take into account taxes and maintainese. In co-ops you have to pay an extra fees.
So where do all those millionaires and billionaires come from. They can't all be CEOs or Chief Executives. There isn't enough them to fill all those new upper class high-rises in manhattan.
It is not only in Manhattan. Go to areas in Long Island they are filled with mansions like the hamptons. Including New Jersey and Upstate New York.
The same is true in London, Hong Kong, Monaco, Milan, Aspen, Tokyo, Los Angles. They own vacation homes in the Hamptons, Caribbean islands, Brazil, and Europe. They are all located in villas with prices starting at $1 million. Unbelievably, there is not enough supply even at those prices for those second homes.
There is just about 200,000 super rich individuals in the world. They can't all possibly be buying and renting all those ultra-expensive mansions and penthouse (over $10 million) all over the world. Even if most of them own more than one house.
They can't all be CEOs, Executives, or the children of the ultra-rich. Most of the money is self made. So where is all this money coming from?
January 14th, 2010 at 3:06 pm
Before I even read the article my number was around 30 million! I figure at that point I can pursue any hobbies that I want and travel the world all while maintaning a few beatutiful homes and some nice cars. I have about 1.5 right now in investments and real estate, but I still work an entry level 9 to 5 (basically because the health care package is amazing… sad isnt it?!) I am only 22 so I have a while to reach my goal, but I am fully aware that working for someone else is NEVER EVER going to get me to that number. So I will have to branch out on my own at some point in the very near future! Wish me luck!