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We do not recognize social classes in America. Class is gauged in economic terms. If you can support yourself 100% from income generated by your investments then you are considered "upper class".
If you can support yourself 100% from income generated by your investments then you are considered "upper class".
That's the definition of "Financial Independence," but it does not mean "Upper Class." Someone may be able to live on $23K/year and they may have enough investments to cover that amount, but I don't think they are considered "Upper Class," since the amount of investment to accomplish that would be less than $600K in total investments at a withdrawal rate of 4% per year.
Upper Class is not just meeting basic expenses, but able to fund any and all possible expenses for more than just 1 person, with enough to fund another generation, if desired. $30M+ is Upper Class. Under $1M is definitely not.
We do not recognize social classes in America. Class is gauged in economic terms. If you can support yourself 100% from income generated by your investments then you are considered "upper class".
I don't think so.
There still need to be financial parameters.
I'm sorry, but you will never convince me that that guy living in a basement apartment on $1000 month, while reusing paper towels, and eating cat food is "upper class" - even if he has amassed $300K to make that possible.
What about someone on disability that receives $3K a month with $0 in the bank - Is he or she "upper class"? They don't have to work.
I do agree that you can't just look at income, as overall wealth/net worth do need to be taken into consideration.
Upper Class is not just meeting basic expenses, but able to fund any and all possible expenses for more than just 1 person, with enough to fund another generation, if desired. $30M+ is Upper Class. Under $1M is definitely not.
I'd quibble a bit about that.
If you accept "lives an upper middle class lifestyle without needing to work" as the definition of "upper class", a married couple who are retired blue state union public school teachers meet that criteria. Started teaching at age 22 which is when I hit the work force. 2% per year vesting. 35 years. Masters + 25 years is $80K in my town. 70% of that is $56K. That's a combined $112K pension income at age 57. Even better, that pension has some COLA protection. Your nice suburban house is paid for. You live out your days with upper middle class discretionary income without having to work and your net worth might be your $500K in home equity and emergency fund.
To do that without the pensions, you'd need about $2.5 million in investable assets so that's roughly the value of those pensions.
70th percentile household net worth for age 65 is about $350K. The top-20% or so of 65-year-olds have either the net worth or the mix of net worth and pension to live an upper middle class life forever. Far fewer have the net worth to do that at age 40 or even age 50.
If you accept "lives an upper middle class lifestyle without needing to work" as the definition of "upper class",
But I don't. That's your definition and I don't agree. I've said before my definition of "upper class" is the top 5 to 8% of wealth holders (more than the 1%, but not like 20%) and part of that criteria is being able to not only fund your own family, but able to fully fund the next generation if desired. That's wealth, that's not just Financial Independence.
I'm sorry, but you will never convince me that that guy living in a basement apartment on $1000 month, while reusing paper towels, and eating cat food is "upper class" - even if he has amassed $300K to make that possible.
Cat food is pretty expensive
My cat eats grain-free canned cat food. A 24 can case is $43.00 on Amazon Prime. The can of tuna I ate for lunch was half that price.
If you're sitting in Nigeria, $1000/month is about double what the middle class there lives on. Somebody with $300K in investable assets is certainly upper class there. It's all relative. In Manhattan, you're perceived as poverty level if you only have a $10 million net worth. They certainly wouldn't vote to let you in at one of the better co-op buildings.
I think the serious flaw in the original question is that it only looked at income--presumably earned from working--and not wealth.
I completely agree with this. I just tried to answer the question in the context the OP asked. However, as you mentioned before accumulated wealth plays a significant role in determining who is part of the upper class.
Quote:
Originally Posted by volk2k
I don't think so.
There still need to be financial parameters.
I'm sorry, but you will never convince me that that guy living in a basement apartment on $1000 month, while reusing paper towels, and eating cat food is "upper class" - even if he has amassed $300K to make that possible.
What about someone on disability that receives $3K a month with $0 in the bank - Is he or she "upper class"? They don't have to work.
I do agree that you can't just look at income, as overall wealth/net worth do need to be taken into consideration.
Yes there does. There needs to be a minimum requirements for income, net worth and liquidity ability in order to financially qualify as upper class.
For example, in my opinion the following are not members of the upper class:
-Couple who has amassed enough in passive investments to make $50K for like and retired at 35. Their net worth is $1.2 million ($1 million investment, $175K home, $25K cash) They have good liquidity ability but do not meet the income or net worth requirement. But they are what I consider to be financially independent upper middle class (but just at the threshold of upper middle class).
-Retired pensioners (per Geoff's example) who make $120K from their pensions. Networth is $500K ($475K home equity and $25K cash). Although they have a high income and pretty high net worth their liquidity is lacking because their net worth is solely from home equity. Also, since their income is from pensions they have no ability to pass on significant wealth to the next generation for their family. I consider them at the upper echelon of the upper middle class, just a bit shy of upper class.
-Couple who have a net worth of $2.5 million ($2 million in investment, $475K home, $25K cash) who have most of their funds invested in very safe funds to where it generates only $75K adjusted for inflation every year. Although they have a high net worth and liquidity ability they lack enough income to be considered part of the upper class. They are in the same class as the couple above.
This is what I would consider upper class:
-A couple with $2.5 million in net worth ($2 million in investment, $475K home, $25K cash) with an income of $140K (in a normal COL area). What they are investing in is generating a significant income that will let them lead a very comfortable upper middle class lifestyle without working. Considering their home is paid off; if they have no kids they can take multiple luxury vacations, afford to eat out regularly at good restaurants, always drive new luxury cars (leases) and even splurge on the occasional upper class indulgences by saving up (rent luxury yacht for a week vacation to Caribbean, rent a private jet, rent a private island etc.). All this without ever working. They will also have good liquidity ability for emergencies and have the ability to pass on significant wealth to their children.
Last edited by griffon652; 04-26-2017 at 08:16 AM..
Upper Class is a measurement of wealth, not income. The way I'd define it, Upper Class means you have accrued enough wealth to live an upper middle class lifestyle without needing to work.
Bingo -- upper class means you have an upper middle class _passive_ income.
I guess we should first define what is upper middle class. If I were upper middle class, I would except to be able to buy a nice condo in Brooklyn Heights or Prospect Park. I would say around $200,000.
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