OT: Net worth of top 1%

[HomeShopping]

Lots of discussion about high incomes. I think high net worth is more interesting. It’s a better measure of wealth.

If you believe the IRS, there are 1.8 million Americans with a net worth of at least $2 million, which would be just under 1% of the population. Seems like too low an estimate. Perhaps the IRS data is not complete. Or their assumption that estate tax returns represents the living population is not right.

http://money.cnn.com/2012/03/02/news/economy/wealth_in_America/index.htm

What’s your best guess at the threshold to make the top 1% of net worth?

[Anonymous]

I think $2 million sounds about right for the top 1% in net worth.

The curve is very steep.

I don’t recall the exact number, but Bill Gates has more wealth than about 100 million Americans on the bottom of the list combined. Makes sense, because that many people have essentially nothing.

For the political issues, income is more relevant than net worth because taxes are based on income.

[Coronita]

[quote=pri_dk]I think $2 million sounds about right for the top 1% in net worth.

The curve is very steep.

I don’t recall the exact number, but Bill Gates has more money than about 100 million Americans on the bottom of the list. Makes sense, because that many people have essentially nothing.

For the political issues, income is more relevant than net worth because taxes are based on income.[/quote]

My net worth is worthless

[dumbrenter]

Is that it? I find it hard to believe. Maybe the estate tax returns whose basis IRS used are very different from living people’s return.
Maybe people do take some of their wealth with them when they die.

[bearishgurl]

[quote=dumbrenter]Is that it? I find it hard to believe. Maybe the estate tax returns whose basis IRS used are very different from living people’s return.
Maybe people do take some of their wealth with them when they die.[/quote]

“Net worth” (and their progeny) are the only (tangible) things one leaves when they die. Their “salary” doesn’t mean anything, unless a last paycheck is owed to their heir(s).

Perhaps some salaried individuals feel more comfortable leveraging their salaries into more debt in order to “own” more things. This mindset doesn’t necessarily add to their net worth.

IMHO, in most circumstances having net worth is preferable to having more income, but that’s just me … I’m not one who needs a lot to live on.

[all]

$2MM is a lot of money. You have to generate $4K/month for 40 years (you ‘generate’ by either producing or having others produce and then redistribute some of their production to you).

[UCGal]

Interesting article. Here are some thoughts – in no particular order:

– They extrapolated the data from estate tax returns and applied it to the living. But I would imagine estate tax returns are skewed to the older age bracket… people who have already accumulated their wealth… vs younger people who have smaller retirement accounts and bigger mortgages.

– Real Estate lead the list of assets. This can include a primary residence. If you bought before the bubble, in CA, and dilligently paid off the mortgage, that’s a BIG chunk of your networth… But you can’t spend it while you live there. Many folks work to pay off their home before retirement. (Even though Piggs might mock them. LOL)

– The other asset that stood out was retirement accounts. Hopefully people have LARGE retirement accounts by the time they retire… that may not make them wealthy – it takes a pretty big retirement account to support enough retirement income if you use a withdrawal rate of 4%.

I wonder how many of these 1% are just frugal people who did the responsible thing of saving for retirement, paying down their debt… living in the same house for years…. Not rich, just responsible.

I’m not in the 1% by these calcs… but hope to be someday soon (in a few years) by maxing my 401k, paying off my house. I hope to retire, and coincidentally that magic $2M is close to what I have calculated. I don’t want to be in the 1% – just financially secure and unworried by debt or lack of income streams.

[HomeShopping]

When you consider what the savings rate would need to be over 30 or 40 years to accumulate $2MM, it is virtually impossible for most Americans. Between job loss, unexpected medical expenses, saving for future college costs, one or two poor investment decisions, people can be derailed easily.

I bet a significant number of people in the top 1% inherited large sums.

[sdrealtor]

I know its very possible by living a reasonably frugal life, being disciplined and waiting for the right opportunities. I saw my parents get there with modest incomes. BTW, alot less than 20% is attributable to real estate, they rarely owned any stocks or stock mutual funds and none was inherited.

[bobby]

[quote=harvey]I think $2 million sounds about right for the top 1% in net worth.

The curve is very steep.

I don’t recall the exact number, but Bill Gates has more wealth than about 100 million Americans on the bottom of the list combined. Makes sense, because that many people have essentially nothing.

For the political issues, income is more relevant than net worth because taxes are based on income.[/quote]

I think the number is 30million
source http://walmart1percent.org/2012/04/04/the-walmart-1-percent-one-family-richer-than-35-million-us-families/
However, it’s a misleading figure. To slightly change this: if you have 5 bucks in your pocket, you have more money than the poorest 29million Americans combined. The reason for this is so many people have negative net worth (CC debt, student loans, etc) that to be richer than 29millions Americans combined means literally nothing (i.e. zero dollars).

[flyer]

Net worth discussions like this are very interesting–especially when the stats reveal that about 95% of US households are relatively clueless concerning the realities of how much they will need to comfortably retire.

As UCGal mentioned, and as the OP noted, I agree that having around $2M saved, or a comparable pension, etc., from around age 60 on should work out for most people. $2M for someone who wants to retire at 40 would most likely fall short, but, we’re hoping maintaining $2M (not inherited, and not including real estate) till we’re 60 (we’re now 54) will do it for us. After that, the only concern for all of us will be having the health and longevity to continue to enjoy our lives!

[scaredyclassic]

Squat n shower at la fitness, live in a van, read at the library, gas insurance, sundries. I think I could have fun on 30k a year.

[CA renter]

[quote=squat250]Squat n shower at la fitness, live in a van, read at the library, gas insurance, sundries. I think I could have fun on 30k a year.[/quote]

Add in the wife and kids, and you’re back to broke! 🙂

[scaredyclassic]

true. that was my solo plan.

it’s difficult for me to believe that these children will successfully be independent.

of course my parents had severe doubts about me too.

[bearishgurl]

[quote=squat250]Squat n shower at la fitness, live in a van, read at the library, gas insurance, sundries. I think I could have fun on 30k a year.[/quote]

scaredy, as for your “solo” plan to “live in a van”, I think it would be a bit of a hassle if you chose to do this in an urban or suburban area. You can only park for 72 hours in any one spot and there should be no evidence visible from the outside of your van that someone is actually “living” in there.

If you move from spot to spot on the same residential street every 72 hrs and do not live on that street, the neighbors will ask the cops to “investigate” your vehicle.

If you cover the windshield at night so no one can see you have set up “house” in your van, the neighbors will likely believe someone IS living in it and call police.

The places you may end up having to move to for the night may or may not be convenient to libraries and LA Fitness (or even conducive to your safety).

Once the cops get wind of you favoring to spend the night in your preferred locale (close to your library and LA Fitness), they will broadcast your license plate number to all their units in the division to be on the lookout for illegal lodging.

I would be best to have a late model, clean, dent and sticker-free van which is moved frequently so as not to arouse any negative suspicion to pull this off most successfully. And do NOT exit your van in the morning all rumpled in your pajamas and slippers.

And under no circumstances should you string an orange extension cord from your van, even if you park in front of a vacant house with outside receptacles and utilities turned on. It’s a dead giveaway :=}

PS: A better idea would be an RV/5th wheel or travel trailer parked long-term (up to 3 mos at a time) in a county park and have a moped or small car to travel around in.

http://www.co.san-diego.ca.us/parks/Camping/info.html

The “Sweetwater Summit” Park isn’t too far from a library with free computers and LA Fitness, even possibly a bike ride. Your low rent could include utilities (opt), access to bathrooms with showers on the premises and even sewage dump if you need it. There, you will only have to address moving every 3 mos and could have another park in “system” already reserved when the time comes to move. Surprisingly, lots of seniors who sold their homes live in these parks and move quarterly. Pets are welcome … even horses :=]

[Author]

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