Thursday 17 March 2011

Is $7 million enough wealth?

A article in the SMH titled 'A million dollars ain't what it used to be.' stated that in a recent survey more than four out of 10 American millionaires said that they do not feel rich. Out of more than 1000 millionaires (having at least $US1 million in investable assets, excluding any real estate or retirement accounts - the average age of respondents was 56-years-old with a mean of $US3.5 million of investable assets), 42% said they did not feel wealthy. This was a slight increase since 2009 when 46 per cent did not feel wealthy.

Personally, I felt quite 'wealthy' when the stock market was doing well in 2007 and my net worth was around $1.2m. Even though most of that was tied up in real estate and my retirement account, (so I wasn't a millionaire according to the measure used in this US survey), it was still sufficient for me to be confident about my financial future and to be considering early retirement. Of course, all that changed with the GFC (I'm now planning on working until 67 if my health holds up and I don't get laid off before then), and I'm now 'comfortable but cautious' rather than optimistic.

However, I'll concede that $1.2m wasn't enough to make me feel 'rich' - our family vacation to Europe involved staying in a campervan, not 5-star hotels, and after briefly considering building a new house we decided there was no way we could afford to do so (so we'll be staying in our 50+ year old house until at last retirement age). However, if I'd had $1m of investable assets in addition to our real estate and retirement savings I probably would have started thinking of myself as rich. I suspect the reason such a large percentage of US millionaires don't consider themselves rich is that their viewpoint is formed by comparing themselves to the 'super-rich'. After all, with 55% of US wealth being controlled by only 5% of the population, there more than enough billionaires available for comparison if you want to make yourself uphappy trying to keep up with the Joneses.

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health insurance australia said...

There can never be enough if you're spending too much.

Financial Independence said...

Well if you are 55 - 1,2 million is not enough.

According to some studies by 2050 there will be over 5 million people in Western Europe 100 years old : -)

But the USA is always different kind of fish. There is no medical for free. Even now they calculated with Medicare couples should put aside at least 250 K to offset medical cost during retirement.