How Much Money Would You Need to Call Yourself Rich?

Katie Simon

how-much-to-be-richAbout a quarter of Americans believe they could be wealthy one day. Are their dreams realistic?

It comes down to a matter of perception: the definition of rich depends on many factors, including your current income. The more money you earn, the more money you believe it takes to be “rich.”

According to a recent survey, people think it would take anywhere from $10,000 to $4 million a year to feel rich. Nearly 75% of the 1,000 survey participants responded that it was unlikely they would ever be rich, while 20% believed it was at least somewhat likely.

Researchers also looked at how demographic factors affected people’s willingness to believe they could be wealthy. Political independents, women and those without college degrees were less optimistic than partisans, men and college-educated respondents. 28% of those who lived in urban areas believed there was some possibility of becoming rich, compared to 18% of suburbanites and just 5% of people in rural places.

Relationship status also came into play: single individuals were more hopeful than people in relationships (though that difference depended more on participants’ age) and divorced respondents were consistently less confident, regardless of age, gender, or current income.

Among households in the lowest income quartile (making under $25,000 annually), people believed $293,000 per year would make them rich. Households earning between $30,000 and $60,000 a year set the bar at $394,000, and those making between $60,001 and $120,000 put the number at $426,000. For the top 15%, or those earning over $120,000 annually, the number was $501,000.

Most people placed the “rich” number at or above what the top 0.5% of Americans bring in. The Census Bureau’s 2012 Current Population Survey found that about 4% of households earn over $200,000—nearly $100,000 short of what even the lowest income bracket counts as rich.

The good news is most of us aren’t waiting for that $300,000 paycheck to feel happy—recent research suggests the majority of Americans would be content with under $100,000.

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  • Haggy

    What’s missing from the discussion here is net worth. A person with ten million dollars in investments who doesn’t spend much might fail to meet the definition. Long term securities that don’t pay dividends aren’t taxable until they are sold. So it’s possible for a person with a high net worth to have no more or less income than is needed for spending. It could come down to not churning investment accounts. Likewise, a person who sees his portfolio rise a million dollars in a given year might have some securities that can be sold at a loss and that loss could offset capital gains, if any. Thus there might be ample funds to pay expenses as needed, lots of securities that appreciate in value but aren’t sold, and taxable income based on interest, dividends a capital gains that can be offset by losses and can be avoided with a buy and hold strategy. Thus a person could conceivably have little income, more spending power than somebody who qualifies as rich, more of an annual increase in net worth that doesn’t count as realized gain, and not be considered rich. If a couple has one working spouse who makes enough money to cover expenses, then the annual salary might be under $150K but the family might not be considered rich.

    I can’t say for certain what Warren Buffett has as investments, but I do know that his salary is $100K/year. I also know that Berkshire Hathaway has never paid a dividend and he has no reason to sell any of his shares. Thus one of the richest men in the world by net worth might not qualify as rich.

    Shouldn’t there be some level of net worth above which most people would consider a person rich?

    • Will

      you are right. net worth is the only measure of wealth. income means nothing if you own nothing