I’m seeing quite a few posts, editorials, and news article (perhaps I should say “news” articles) characterizing people who make wages of $500,000 per year as “very rich”. That must be the framing du jour.
My own view is that the top 1% of income earners are well-to-do; the top .1% of income earners are rich; and the top .01% of income earners are very rich. Interestingly, the tax bill being floated by the House Ways and Means committee is focused on the rich but leaves the very rich alone.
Disclaimer: I am not well-to-do let alone rich or very rich. I know quite a few people who are well-to-do, a few who are rich, and I have met a handful of people who are very rich. I also think that quite a few people see those on the next rung of the income ladder above them as “very rich”.
500G is 10x ours.
Nuff said.
I’ve known and worked for all three of those segments. I suppose I’m in the second one. I will tell you definitively that unless you are part of the multiple palatial home/private jet set you may be very well to do, but your life is not of a different kind than probably the top 10%.
Income is only one side of the ledger. $500k is a lot but it doesn’t go nearly as far in Manhattan, NY as it does in Manhattan, KS.
Think I made the top 1% a few times in the past but not recently. Now that I usually only work 60-65 hours a week just dont get there. Was well below the top 50% for first 20 years of working (starting at age 17 when joined Navy, unless you count part time work in early teens). Finally made the top 2%-3% by age 40.
” but your life is not of a different kind than probably the top 10%.”
It really is different. You can easily pay for your kid’s college costs out of current income and dont really need to save. You dont worry about what kind of car you can afford but what kind you want. You’re not going to think twice about ordering anything you really want on the menu when you go out and dont worry about going out too often since it will hurt your budget. If you want a vacation home you buy one. At the 10% level, about $160,000 level right now you dont do all of those things since you have to make choices about what you can afford. You can have the BMW, but you have to give up something else so you can have it. And at the 10% level you worry about vacation costs, especially when you have kids. Need to pay for your elderly parents care? Going to be hard at that 10% level.
Steve
which is why nationalizing some things isn’t as good an idea as it sounds to people who live in Marin County or Scarborough.
All that you say in your last paragraph is true, Steve, but is that really of a different kind? Porsche vs BMW vs Jeep SUV. All different price points, but all fine vehicles. Different in kind? Yes, I don’t worry about purchasing anything, but the top 10% don’t worry about much either. And remember, after taxes things tend to even out. As a self employed I pay double payroll taxes, the highest rates etc.
IMHO its somewhere around $100MM in the bank where things really change. I’ve seen it with my own eyes. On the spur of the moment want to head off to Europe? Fire up the private plane, make a reservation at the Peninsula (if you don’t own a place there) buy some boating clothes there……………..and get driven to your step onto your rented and captained yacht – complete with servants and food spreads – for a little cruising on the Mediterranean. Or perhaps you prefer the Caribbean. Movie stars, rock stars, sports stars (notice the prominence of entertainers?) some business owners………….. That’s living of a different kind. Personally I’m not interested, but that’s a different world.
Reminds me of this from reddit, look for “a1988eli”.
https://www.reddit.com/r/AskReddit/comments/2s9u0s/what_do_insanely_wealthy_people_buy_that_ordinary/
From his description; my cutoff point from well-to-do to rich is at $30 million (7 yrs ago) where the wealth is attracting power (regular socialization with Legislators).