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to OP it is NEVER INCOME you look at as 1% of 0.01% always hide their income.
you have to look at total WEALTH
fools have to stop thinking income determines your status.
the rich look at their wealth NOT Income.
they all know that they hide their true income after all
Basically I agree with you.
There's a big difference between wages of $350K as income and $350K of passive income from invested wealth.
The wage earner could be wealthy, or not. But probably on his or her way to becoming wealthy. But if you have $350K of passive income from investments, you're most likely wealthy.
In another City-Data forum some kind person posted this Bankrate.com link which defines the income threshold needed to be part of the top 1% as $343K per year. Now that was based on the 2009 tax year, so the figure is admittedly a bit dated. Top 1 Percent: How Much Do They Earn? | Bankrate.com
However, I was amazed that the amount was that low. I would have guessed it to be several times higher than that. Apparently the 1% includes some folks at the lower end of that lofty range who are not really very rich at all. I don't know what to think about that datum.
Perhaps someone will come up with a more recent figure and/or other explanatory comments.
(And no, just to clarify, I am not anywhere close to being part of that lofty group).
data is as of 2009, which i'm sure it's higher than that now. But as a household in NJ, I can state unequivocally that if my household made $343,000/yr, I would consider myself extremely comfortable. We're fairly comfortable right now, and a household income that's substantially less than that. And it's not because we're extremely frugal. our home cost above $400,000, we have 3 kids all in daycare, and we entertain ourselves with nights out (billy joel concert 2 weeks ago), take nice vacations annually, and have reasonably nice vehicles.
if you just added $50,000 to my income, I could almost impule buy whatever i wanted, and would definitely spring for that Tesla I've been oogling since it came out.
if that couldn't be called rich, then i dunno what the standard is.
As of 2012, it was $394,000 (Saez/Piketty updated stats) but I don't believe there is aggregated data to indicate what it would be as of 2013.
As to lowexpectations' comment, part of what people miss is that income means little. It's the ability for people at a certain income level to save and grow their capital assets faster than inflation. If you are making $50k as a household (usually a two earner household), you are probably taking home 40k and spending 30k or more depending on where you live. So, barring any medical issues or other unexpected expenses, you can maybe save 10k. And that's if you live modestly.
A person making 394k, even if they are only taking home 250k after all taxes, can save 200k if they live a considerably more generous lifestyle than the person making 50k. So, for 8x the pay, you can save 20x as much and still have an easier and more comfortable life on top of it.
Not only THAT, but people with more assets can risk more because of the lower marginal utility of lost income from risk. Someone saving 10k per year will likely save in more "stable" instruments with lower returns because they can't afford a single larger loss if they ever needed to dip into their savings (job loss, move, medical expenses, car problems, etc...). So the inequality diverges yet more!
so very well said. i couldn't rep you. but spot on. even more, the person taking home $250k (which is conservative given that income bracket's typical access to tax-shelter methods), they could spend $100,000 and still put $150,000 into a well diversified portfolio. next year, that $150,000 could easily be worth $160,000 (6% return). now they've added $10,000/yr in income just from this year's savings, invested rather conservatively.
Exactly --- the 1% we hear about in recent discussions are those people who have enough wealth that they get offended if you ask "how much do you earn per year?". These people don't really work for a living because their net worth already pays all their bills and anything they do in their daily lives is strictly for some other endeavor (running for political office, managing a foundation, etc).
People who earn $343,000 per year aren't rich --- they are lower upper class that still needs to worry about paying the bills of life. Many brain surgeons earn $500,000 a year but still lose sleep over the mortgage, kids college funds, etc.
The true 1% don't need to ever worry about paying the bills.
I find it difficult to believe that someone earning $500,000/yr loses sleep over bills. Not if they have any personal finance skills at all. If you make that much and are stressed over paying your bills, you're horrible at managing money.
When people generally refer to the top 1% it is probably in terms of net worth not income.
Yeah, I am thinking the real 1% is making well over $500K a year. They have ways of sheltering it from taxes and all kinds of little things going on to not show it, but IMHO, $500K a year isn't all that huge if you are talking about the 1%. It wouldn't surprise me if it was $1 million a year in reality.
so very well said. i couldn't rep you. but spot on. even more, the person taking home $250k (which is conservative given that income bracket's typical access to tax-shelter methods), they could spend $100,000 and still put $150,000 into a well diversified portfolio. next year, that $150,000 could easily be worth $160,000 (6% return). now they've added $10,000/yr in income just from this year's savings, invested rather conservatively.
Of course much easier said than done on a long term basis. But doable with enough motivation, a lot of good information, timing and luck. But that 6% return in most cases will be reinvested and for most people will not be as income, but as future capital gains.
Is 343k per year really "that low" too you? Sheesh. To me, that number is gigantic. I don't think I know anyone that makes that number. This includes directors and producers, executives, senior managers, doctors, and successful entrepreneurs. Most of these types of folks who are successful usually end up in the 150-300k range, which for any person is more than you need in today's world to live very comfortably on. 343k seems like the 1% to me.
And consider this. Roughly 15-18% of Americans are unemployed, discouraged unemployed, or part-time/underemployed. (That's true unemployment numbers) The next biggest majority of workers are making minimum wage which on average across the country is probably around $8 an hour. That's anywhere from $15k-20k per year. This is all a lot of people make. Then you have the next biggest majority, which is around 30-50k. Going above 50k, the numbers making above this start to drop drastically as the income gets higher. I would probably even say that only around 5% of people even make above 100k a year.
Just can't believe 343k is thought of as low... O_O
I agree with your point about $343K, but how many people are you estimating making minimum wage? I think you're actually overstating the number by an incredible amount. far fewer people than people think actually are paid only minimum wage. I personally believe it should be raised above the current level, but at the same time, I think people are getting way too enthralled with the issue not realizing it's not a large number of people working those jobs.
I find it difficult to believe that someone earning $500,000/yr loses sleep over bills. Not if they have any personal finance skills at all. If you make that much and are stressed over paying your bills, you're horrible at managing money.
Certainly with all sorts of bad luck one could end up poorly here. But 'bills' meaning typical middle class bills would not be of much consequence.
Of course much easier said than done on a long term basis. But doable with enough motivation, a lot of good information, timing and luck. But that 6% return in most cases will be reinvested and for most people will not be as income, but as future capital gains.
my point is, when you're able to set $150,000 aside in investments annually, it's actually just as easy done as said. i know times won't always be like this, but in my diversified 401k plan, I've gotten >15% returns every year since 2010. if i was able to invest in individual stocks and not stress over short term risks, I could easily make a fortune off the peaks and valleys off of the market over the years. heck - just buying a ton of Verizon or AT&T stock will get you close to a 6% dividend payment.
I guess sports figures would make up a lot of the 1% earnings wise?
Heck... There are some City and State employees brushing up against the 350k
They often point to forced overtime... still, it's amazing.
It's typical for Public Safety in parts of California to push six figure in retirement.
One guy retired from the city of Oakland at 52 with a 180k pension and lifetime medical... got bored and went to work for another department and earns 130k plus adding to his pension...
Could just be the Bay Area has a lot of high paying jobs.
some california towns were quite generous in their future promises when times looked good, at the expense of current salaries more often than not. these are extreme examples though and are often floated around to appear far more common than they really are. My uncle worked his entire career for the state of Pennsylvania. He's retired now, and when he's old enough he'll be on Medicare, no longer the State health plan (usually those lifetime medical benies are a supplement to Medicare, not a replacement for) and a pension around $70,000/yr, roughly his salary near the end of his career.
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