The term “millionaire” entered the common parlance in the 1920’s. That sum was equal to about 20 million in today’s dollars. It signified one who was truly rich, did not have to work and could live in luxury. Today it means someone who will be able to afford to retire at 65 and won’t have to eat dog food.
@@fendermon I was a paramedic for 10 years and you would be surprised at the number of elderly folks I encountered that ate canned dog food because it was all they could afford because the copays for their prescriptions were so high. It’s so commonplace that new paramedics are literally taught to look for dog food in peoples fridges and ask especially if they don’t have a dog.
I'm a millionaire and I'm loading an 18 wheeler with a safety vest on as I type this. 1 million is definitely not enough to be lavish and not work. There's also the notion of KEEPING your million once you've got it, and you might find yourself pretty attached once you get there. Not the grandiose lifestyle most people think, but it definitely takes a lot of pressure off if you know how to handle your funds.
Excellent post. While millionaires are the minority, they're still common, and the majority of them, as per The Millionaire Next Door, are pretty much like everyone else, middle class, working, saving, and spending moderately. We were so busy working, we never noticed when we passed $1M. But we were damn happy when we paid off the mortgage! Still don't feel wealthy, but at least we're starting to feel secure.
When we hit $1 million this year it felt good but was kind of anti climatic. As Erin said, you still keep working and saving and making good choices in an unstable economic environment. We also just keep living our simple lifestyle - none of our neighbors or friends would even guess our financial situation.
Many years ago, while on a job. I got to talking to the home owner. Him and his sister owned a motorcycle repair shop and four homes on their street. It wasn’t an upscale neighborhood either. He’s the guy who told me about the book “The Millionaire Next Door”. It gave me a new outlook on my life.
When I hit 1M, I was really proud given my humble beginnings. I wanted to tell my family/friends, but realized I couldn't/shouldn't so it was rather anti climatic for me too.
Agree, if you're one of the top 10% or so that get $1M, you're likely a "saver" and crossing that level is fun but not really going to go out and spend like a pro ball player. More likely to go to a nice dinner. We went out for pizza and dined inside!!! 😂
Success depends on the actions or steps you take to achieve it. Building wealth involves developing good habits like regularly putting money away in intervals for solid investments. Financial management is a crucial topic that most tend to shy away from, and ends up haunting them in the near future.., I pray that anyone who reads this will be successful in life!!
Starting early is simply the best way of getting ahead to build wealth , investing remains a priority . I learnt from my last year's experience , I am able to build a suitable life beause I invested early ahead this time .
In fact, I had no prior experience or understanding when I began investing in 2020, but by the end of 2023, I had made a profit of almost $850k. All I had been doing was going by what my financial advisor had told me. This demonstrates that all you truly need is a professional to assist you; you don't even need to be a great investor or put in a lot of work.
I’m a wealth manager and I think there is a huge discrepancy between a true millionaire and the perception of millionaire that permitted media. When you’re seeing social media wealth, you’re seeing people with tens or hundreds of millons of dollars. In a major city like San Francisco, a million dollars can get you to the threshold of middle class stability. A couple of millions can plant you firmly in to middle class. But unlimited freedom and buying what you want starts at about $10M and up
Or much less if one lives in a low cost of living state. A few million in the Midwest allows unlimited freedom and buying what you want. Location is critical.
$10M? I would debate that $5M in states that have a low economic impact on you will get you the same freedom. TX, TN, AL are a few of the states where $2 to $5 will go far as long you have your health.
I tend to agree, except I'd like to point out that they're are very few people with "hundreds of millions". The assumptions people make, regarding the net worth of apparently wealthy individuals, is often grossly overdone.
We hit millionaire last year and it’s not what I thought it would be. I am 52 and still have 3 kids in the house. Tomorrow I’ll be installing brake pads and rotors on my 2.5k beater. We still owe some on our home. Once that is paid off I’ll feel better, but I’ll still need to work.
I am 49 and hit $1M net worth earlier this year. I have six years left on my mortgage and two kids to get through college without debt. When that is done - I will feel much better. Right now - I still need to work! But I feel fortunate as I know I am fare better off than most people.
I feel investors should be focusing on under-the-radar stocks, and considering the current rollercoaster nature of the stock market, Because 35% of my $270k portfolio comprises of plummeting stocks which were once revered and i don't know where to go here out of devastation.
Safest approach i feel to tackle it is to diversify investments. By spreading investments across different asset classes, like bonds, real estate, and international stocks, they can reduce the impact of a market meltdown. its important to seek the guidance of an expert
A lot of folks downplay the role of advlsors until being burnt by their own emotions. I remember couple summers back, after my lengthy divorce, I needed a good boost to help my business stay afloat, hence I researched for licensed advisors and came across someone of utmost qualifications. She's helped grow my reserve notwithstanding inflation, from $275k to $850k.
How can I participate in this? I sincerely aspire to establish a secure financlal future and am eager to participate. Who is the driving force behind your success?
’Carol Vivian Constable’’ is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..
Ask someone without enough food to eat what it means to be rich. Ask someone without shelter. Ask someone without a secure retirement. Ask someone who has those things but still lacks meaningful relationships and purpose in life. It’s all a matter of perspective. Thanks for the insights. You rock!
While working as a cable guy. I was at a house while the moving guys were bringing in the furniture. One of the guys said to me, “I wish I had your job”. It seems there will always be people worse off than you. It made me appreciate my position in life a little more. Some homes I went in were real shit holes. Other homes I’ve been in, my house would fit in their living rooms. It’s a matter of knowing who you are and improving yourself. Hopefully unburdened by addictions or toxic people.
Hmmm, I had assembled this amount of money in my early 40's. I read the book, worked very hard, and was fortunate. Very few of my friends or family had done so. To me their preconceived ideas about money held them back.This disparity caused a tremendous amount of psychological friction with people I wanted to be close to, and I didn't want to change friends, and could not change family. There is more to what you are describing than math and mechanics. But I agree with the concept of wealth building. There is a difference between ambition and a desire for security, although both are usually present if you are to succeed in financial goals. It is important to share strategies and help when and where you can.
My net worth is at $3.5m. 100% debt free and retired young. $5 mill net worth is the number that will work for me. I should be able to get there over the next 7 years or so. The key is to live below your means and don’t stop planning for the future. Make sure you always have a plan.
@@johnmay9699im 100% debt free. Although, I did retire from my career job…I still manage my finances, and have a pretty large cashflow from several paid off houses. I still live a pretty modest life, outside of vacationing. Once I hit the $5mill target, I’ll allow myself to live on a pretty extravagant budget and my money will still continue to grow on an on.
worked for me. I have reduced investment risks and still avg over $400K/yr in appreciation of portfolio. Dont forget to give to good charities (those dont pay VPs over $100K) and dont duplicate gov handouts
As someone who has hit this milestone, I can assure you I don't feel wealthy. I have a better than average income, but I keep my yearly expenses less than the median income, and invest the rest. I think once I hit the $2-3M range, I'll start to feel more wealthy; when I can finally justify spending more than the median income on lifestyle.
Agree too, I’m at 1.75 semi retired , but run small painting contractor business, basically two clients that own a lot of rental properties. I’m not old enough to do nothing so I do something and you may as well make money out while you’re doing it
I did this for a bit. But then I watched my father die a long terrible death, broke after spending his whole life delaying his life and saving for retirement. Only to burn it all with healthcare expenses and end up on Medicaid relying on family for financial and physical support. Now I spend my and enjoy life a bit more. Not lavish, but definitely not frugal.
The term “millionaire” has a practical meaning very different from its cultural meaning which is antiquated because of inflation. My wife and I are 49 with a net worth just over $4M. We still live in the same house we bought in 2006 when we were making 25% of what we make now and hardly have expanded spending habits. I don’t feel rich in anyway…just secure.
Same. Not moving/selling (unless strategically living in a 'flip' every 2 years) saves SO much $. The quietly wealthy folks I know have all owned and stayed in place a long time.
A net worth millionaire simply means you own your home, have a few hundred K in your IRA, and have no debt. You're probably in your mid late '50s and taking your foot off of gas, but still paycheck dependent. Sounds very middle class to me...
@@Markrtsoon How much do you think medical insurance costs?! If you got just a 5% return on your 4 million per year that would be $200K. I you have a paid off house you should easily be able to live off that amount and still buy health insurance unless your annual expenditures exceed that you should be able to retire already.
@@krissimons1339 the problem is that there is no guarantee that we could always get a 5% return. And that there will be times that inflation will be much higher than 5%.
Another excellent and insightful video Erin. Watching your videos is an enjoyable part of my week. As I have indicated many times in my previous comments, I have been retired for 2.5 years after a 40+ year career as an attorney with a Fortune 500 insurance company. I have a high 7 figure net worth. Personally, I still feel I am in the middle class. I in no way feel that I am in the wealthy upper class. To me “Middle Class” is not a monolithic concept. I think there are degrees of middle class: lower, middle and upper. I feel I am in the upper middle class. I became a millionaire in my early 40’s but never felt any differently. I think this is because of my life experiences. My parents were both born in the 1920’s and grew up in the depression. All my life I was constantly told that money can be lost at the drop of a hat and that I needed to be extremely careful with it. Even though I was a millionaire, I saved as much as possible until my retirement. Even in retirement, I save $2000 a month from my income sources. In my opinion, I think it would take a net worth of at least $5,000,000 (excluding your home) to cross into the wealthy status from the middle class status. That said, even though I have that much in a net worth, I still don’t feel that I have crossed over. Thanks again for your excellent channel.
@@cbell5017 Too low? Too High? When Erin first mentioned it I came up with $10,000,000 after thinking about it some. According to google, 17,000,000 people in the USA have $5 million net worth. 30 million people have over a million dollar net worth. That means 1/20 people have 5 million dollars. That doesn't seem that special/upper class to only be in the 95 percentile! The 1% is $13.7 million.. So I actually like my first thought of $10 million being "rich". 1 million is well off, but not near enough to spend lavishly.
I recently instructed my brokerage to divert our dividends to our checking account. It's a small thing, but it's a start. Still working, and saving, but wanted to start reversing the cash flow a bit after roughly 40yrs of work.
One million isn't a ton of money (using the 4% Rule/Guideline 4% x 1,000,000 = $40,000) to live off the rest of your life, but two million (4% x 2,000,000 = $80,000) and SS should put you well above average. Especially if your house is paid for. As always, good job Erin.
2M is pretty much my goal…53 with about 1.2M net worth today…though the market is up right now. Still have to pay off the home (2.8% rate) and would either like to have a low stress job that helps pay the bills after 60, or move to a lower cost country where we can purchase health insurance for $300/$400 a month. Perhaps come back state side at 65 when we qualify for Medicare.
Hi Erin, I’m sorry to hear about your dad. Send prayers to you and your family 🙏My dad had dementia and passed away 2 years ago, 2 and a half weeks after my only sister passed away, so I can understand how difficult this is for you. In Regards to being a millionaire, you are so correct about a lot of them still being middle class. Someone owning a $500K house and $500K portfolio and someone with no house and a $1 million portfolio, you have to take in account that the person with the house, has no mortgage, which saves them a lot of money every year but the person with no house will have to rent or pay a mortgage either until the day they die, or until that mortgage is paid off
Most net worth millionaires have most of their money tied up in homes or retirement accounts and still need to work and pay a lot of W2 income taxes. They are comfortable but can't stop working or spend like crazy.
Exactly, and then you have to account for the portion of your spendable millionaire net worth which should also be tied up in your emergency fund, money which is important to have, but shouldn't affect your daily spending habits because it's only to be used in an emergency. You can also add in saving for children's education and future large purchases (such as the next car) which pushes your pool of remaining spendable cash into a very middle class lifestyle.
Having equity tied up in the house can be a big problem. Are you going to sell your house to pay for the kid to go to college or caregivers for your aged parents. I don’t even consider it when thinking about assets that you can liquidate to live on.
Yes, the cost of living is higher in SF and trying to keep up with the Jones is harder, but they could both move to an even cheaper city or country. One can't just say woe is me, I live in a high cost of living city, so I feel broke even though I'm doing well. They have money, take some ownership of the situation.
Not if you rent. It's actually pretty inexpensive to live in SF (I do) with a studio apartment. Food, including excellent organic produce, is cheap, not many utilities are needed (neither hot nor cold), can get by just fine without a car.
@@stevenspencer306 Not everyone can just up and move and take their job with them. Sometimes staying in that high cost of living area, at least until retirement, is the best financial decision you can make. Not to mention, people may not want to leave their family, friends and the only home they've ever known. That might be a good financial decision, but a very bad decision in every other way.
@@jenniferdeshon389 I absolutely agree that sometimes the high cost of living area might be the better financial decision. If you're making 2x the income you could in a lower CoL city and you only *have to* spend 1.5x as much, you're better off. But if you choose to live somewhere where you're better off, hopefully you're not saying "woe is me, I'm better off here." Moving away from friends and family is definitely rough, I've done it. But if you can have a better quality of life, maybe you can convince some of your friends and family that they could, too. My main point is that someone with a $1M net worth has means, regardless of where they live. They aren't at risk of starving anytime soon (outside extreme circumstance). Now, they might not be living their dream lifestyle, but they absolutely should not feel like a victim of their location.
when someone is straight forward and good at what she does best. People will always speak for them. For me I can would say give Mrs Sonia Duke of finance education a try and you be happy you did
Check out an inflation calculator online. Being a millionaire in 1985 now takes 2.9 million to be of equal wealth. 7 figures is a catchy thing to say, but it’s still middle class.
A $10,000 a month care facility is one of the insane expenditures in our society. My wife's last 6 weeks of life in Hospice was $5,000 a week. Imagine getting that bill on top of funeral and debt (medical + cancer) payoffs as a retiree. We were well prepared, but it could have easily obliterated 55 years of careful saving. Being a millionaire is not enough anymore.
Yes, there are various ways to prepare. A good estate lawyer is an invaluable asset. The first step, putting a home in a living trust. The second, here I can only speak for New York State, my mother needed to be moved to a managed care facility at 79. My parents transferred all of her assets to my father, making her insolvent and covered by Medicaid. My father had no idea this could be done. It was the managed care facility that told him and suggested speaking with a lawyer. I don't know if the fact that it was a Christian facility that motivated this suggestion, but it allowed my father to live out his time in financial security and know his wife was being cared for when he could no longer do so.
My deceased mom worked for the federal government and was privy to income situations. She told me most people with expenses houses and cars were a short step away from bankruptcy. The ones in very good financial shape were self employed people like plumbers or electricians who lived in modest houses. As for me, my newest car is over 20 years old. I'll just leave it at that.
With our house, our net worth is over $2M, but I don't count the house usually. You definitely would not be able to tell by looking at us. Our cars are 10+ years old, house is older, smaller and decor not updated. We save for security and our own goals -- not to impress.
A millionaire was rich when the phrase was coined in the 1920s. Since then the FED has devalued the dollar by more than 95%. So a millionaire back then is more like $50 million today.
Good morning Erin. I am so very sorry to hear about your father. I was the primary care giver for both of my parents as they aged and know first hand, how very difficult that can be. You will be in my thoguhts and prayers in coming weeks. I enjoyed your content today and share your view 100%. For me it was a brief oh wow moment, and then settled right back to normal day to day. Since, I have always felt to be part of the middle class, the typical example discussed in the book. Your final comment was spot on IMO. Have a great weekend and week ahead and keep up the good work Erin! Larry, Central Valley, Ca.
Erin, I'm so sorry to hear of your father's condition. He's got a great kid on his side. I hope you and your family can help him be happy in his new surroundings. Sending lots of love.
My net worth is just short of $2M and I still watch what I spend. I intend to pay for my son's college education and that is keeping me from freely spending on vacations, eating out, and joining a country club.
Your number depends on your lifestyle... If you need $6000 a month which equates to $72000 a year which means you probably need 1.440,000 million generating 5% ... Social security portion will be your taxes you pay and probably a few extra medications needed.
I usually don’t consider my house because it doesn’t directly generate wealth. But a $500k home with a 20% down payment and a 4% interest rate (I know that is not possible today but many people are still lower) would lead to a 2k per month house payment with 30 years to go. This will look a lot more like 3k at today’s rates. In other words, 24-36k per year. Having a paid for house as half your net worth on the first million, at worst breaks even, at todays interest rates you will be much better off. And you will be less impacted by market declines.
The discussion around millionaire status and its relation to the middle class is thought-provoking! 💭 It underscores the complexity of wealth and the diverse financial landscapes individuals navigate, shedding light on the nuanced nature of socioeconomic classifications in today's society.
I diversified 100% into the S&P500 in 1990 and never looked back. With a salary of about $28K, I could only afford to put about $1K into my 401K, but I did get 5% matching. . Still 100% in the S&P and have about $3.3 million. No management necessary.
If you're managing a health condition as detailed in the video, costing about $10,000 monthly, and you have $1 million, consider relocating to a full-service medical facility outside the U.S. Accompanied by an English translator, you'll find that both the cost and quality of healthcare and lifestyle significantly exceed U.S. standards, potentially offering two to three times the value. Earning in the U.S. and spending abroad may be the optimal strategy for handling steep medical bills. Moreover, this approach allows you to avoid higher-risk investments, making it feasible to keep your funds in safer, more conventional investments.
Hey Erin, sorry about your Dad. My mother in law is also in memory care for dementia. Regarding the $1,000,000 running out at $10k/ month, keep in mind that it will still last 8+ years which will more than likely out last how long he'll need care.
What a concise, refreshing video The million Erin is using is to make the Math simple Just times by 4 if you want realistic numbers Leverage and compounding are the most mis understood terms that few truely understand
I appreciate that you don't have corporate sponsors, and don't flog merchandise or services in your videos. Please keep it that way, it is so much classier! This other personal finance blogger with initials RS interrupts their program to sell completely useless garbage products that are a total waste of money, while telling people to be conscious spenders ... It completely ruins their credibility. Thank you for not doing that!
We consider ourselves to be middle-class, having a net worth of $3-4MM, albeit it’s all tied up in our retirement and estate plan… we gross about $750k/yr TGI, including cash and equity awards, we are in our late 50’s and intend to retire at age 67… we’ve down sized our living footprint from 6k sq ft home in TX to. 3.5k sq ft home in NW AR… we only buy preowned CPO vehicles, typically 2-3 yrs old,
I am 73 and passed the $millionaire mark a few years ago. We are comfortably retired and manage our finances (we live below our means). I buy clean low-mileage cars with cash (pay no (interest), we carry no balance on credit cards (pay no interest), and we own a few modest paid-for rentals which provide income and some protection against inflation. We live far better on $75,000 a year than most people with twice our income. We have about $800 a week in disposable income (entertainment). We make a Country Club home by the Gulf Coast, my Used Benz and Town and Country are paid for, we travel as much as we like and spend too much time in restaurants. IMHO: We live better than 90% of Americans, we have twice what we need.
My dad was not a millionaire but in retirement he lived like one because he had a pension. I have more money than he ever had but I worry about my retirement.
If you have a defined benefit pension and you have your debts paid off including your house then really you don't need to save money. Unless of course your pension fund is not fully funded.
This is absolutely true. Also, it’s important to consider the very valid point that having a million invested likely will not provide you with the same level of income, even with SS, that you had while working full time. I think most people would need at least 2 million to even come close to drawing a middle class income in retirement.
Became a millionaire at 22, now worth 1.6m at 28 years old. No debts, no mortgage, no rich parents. Living fully of income right now through different investments and scaled down my business the past year. Now focussing on letting money work for me instead of me working for money, now that I have the wealth. Came to the conclusion that freedom of time is the most valuable asset. At the end of the day, health and freedom is all that matters to me
Like Erin said, don't confuse $1M Net Worth Millionaire with a $1M Income Millionaire. There's a huge difference. One will provide $40,000 - $50,000 in yearly income and the other, well $1,000,000. :)
It seems that to comfortably afford "things" that have been historically attributed to the middle socio-economic class standard of living, now requires a lower-upper class income (which is approx. between the 75th percentile and the 95th percentile in terms of income). The "things" that I am referring to include but are not necessarily limited to (1) taking family vacations, (2) paying for kids' college, (3) saving for retirement, (4) eventually owning your home without a mortgage, (5) eating out a couple of times per week, (6) paying your bills and having money left, (7) buying gifts for holidays and special occasions without taking debt, and (8) having a 3-6 month emergency fund.
As a private wealth advisor for a trust company, I would push back and say that most millionaires look middle class, but by virtue of the fact that they have a million dollars in investable assets, they are upper class. Class is NOT determined by income alone. Wealth is a factor and having substantial wealth, even if it doesn’t generate a lot of income, is in itself, a luxury making one upper class. I would agree that most of these “upper class millionaires” look middle class by life style.
I think lower class, middle class, and upper class are just outdated terms now. We should categorize it in terms of how many options people have financially, and being a millionaire tends to give you a lot of options when most people worldwide do not. Sure, it's not fuck you money like it was compared to 30-40+ years ago but it's definitely a lot of money that gives you a lot of options.
Exactly. $1M gives you is the ability to walk away from jobs you don't love. And you no longer have to live in fear of the next round of layoffs. That's not nothing!
Hi Erin, I love this. I’ve followed you for a long time. I hit the million dollar net worth in 2020 and only a very small portion was the equity in my home. 🏠 I feel that expenses (if kept low) can make it feel like the engine you’ve created is much larger, but I also see your point about not knowing what can happen in the future with healthcare. Thank you for your videos! 🎉😊❤😊
Long term healthcare insurance is something I signed up for in my early 50s. Expensive, but my mother also had dementia and it also was costing over a $100K a rear
Erin, I’m so sorry to hear about your father. vascular dementia is so hard - my family just went through it with my uncle over the past year. Enjoy the time that you have with him, the decline can be so fast 😢❤
I had to go through the same memory care situation. Historically, and we went on the typical timeline, you spend 3 years there so you know how kong you’ll live, and thus need. With Social Security, and passive income withdrawals, you have enough.
Unless you're creating a beneficiary legacy, you need to change your mindset from one of scarcity to abundance. Otherwise, you run the risk of working your entire life and then dying with having only spent a fractional percent of what you accumulated. I have seen this countless times where people work and work and work to save. Plan on retiring at 68+ and then end up dying at 65 with $2M unspent. Get busy spending!
I think we need to take when the term millionaire started being used to indicate a rich person (60+ years ago?) and maybe inflation adjust that number. It's probably closer to 10 million today, which yeah - that person is rich and not just middle class by any stretch today. But in 60 years, 10 million will be what you need just to retire out of poverty.
The big thign to consider is this is by stats one million by "household" if you have two adults to support and are saving thats different than a single person with 1 million. Also could have a household larger than two. People often conflate household income with individual income as well.
As a person at age 45, I feel like social security will basically pay for my health care when I retire. So, my investments will pay the other expenses I have. I own my house outright, so that's great, but it isn't quite the same as having that 500k in an investment (it does allow me to invest a large percentage into my retirement as a result). My general analysis says a couple would need about 100k a year of today's dollars with a house paid for to live a reasonable lifestyle that they probably currently live. So, I'd probably think 2.5 million would be a good number. With my current investment rate, I should hit that by 65.
I don't think many people consider the tax write off long term care will provide. Depending on your time horizon and a modest nest egg, claiming social security late may be the best strategy in providing the cash flow needed later for LTC.
I think “working class” is a much more meaningful term than “middle class”. There are a lot of millionaires and people with very high-paying jobs that still depend on getting up in the morning and going to a job, and many of them are unfortunately also living paycheck-to-paycheck. Class seems to be more about where your money comes from than how much of it you have.
Another consideration today is that most of us don't have defined benefit pensions anymore. If you were a millionaire in say 1990, that's like $2.4M today. You also would have been likely to have a pension that would lessen your need for retirement income significantly, so more of that $2.4M could go to lifestyle instead of survival.
For most people I know, by the time they get to 40, they've adjusted financially and emotionally to living within their means - which includes emergency and retirement savings and managing debt responsibly. Once you do that, the milestones - whether they are 100,000, 500,000, a million or more are numbers that come and go that do not affect your lifestyle.
Millionaire: a person (or couple) with net wealth, liquid and/or illiquid, of $1 million. I got there by getting into a profession, always spending less than I earned, and conservatively investing the leftovers in the stock-market. My biggest mistake along the way? Being under-invested in US stocks. Good video, Erin.
"Pew defines “middle class” as those earning between two-thirds and twice the median American household income, which in 2021 was $70,784" Twice the median is 140k (2 years ago.) To get above that, and out of the middle class, it would require 3.5 million at a "safe" rate of 4%. Yes, many millionaires are strongly in the middle class, while there are plenty of people in the upper class who are broke. (Not poor, but broke.)
Great video! I like how you talk about withdraw rates and living modestly and protecting wealth. Rich people have a lot of money and spend it. Wealthy people have a lot of money but protect assets to promote generational wealth. It all depends on your habits.
My mom had vascular dementia and lived in memory care 9 months before she passed. Yes, what we paid was about $9K on average, but she also got a pension, so a net loss of about $500 to $1500 a month. Never impacted her house, savings account, other than a blip in her checking.
All of these can be explained by a very common misunderstanding about cause and effect on personal finance success. It’s not that “millionaires fret over security of their riches, save for retirement and don’t spend lavishly”. It’s “people who fret over the security of their riches, save for retirement and don’t spen lavishly are more likely to become millionaires”. It’s like survivorship bias; they’re just finding out the root causes of surviving the “millionaire” cutoff.
I would never include all my estate in my gross domestic worth. In fact much of the Estate is a hindrance rather than an asset. New money coming in is a good way to determine wealth, whether it be your personal annual income or, your estate's annual income.
I'm on the cusp of hitting a million in my portfolio. I just turned 62 and I'm making my own trades in the market. I'm debt free and intend to retire soon. However I still want my portfolio to continue to grow. So I'm not going to start living lavishly just yet.
An old basic house in our area that needs renovation is listed at $600k. The cost to buy property isn't high. I could buy property and build a new house of equal square ft and better finishings for $150k. Market is broken... none of this makes any sense. So that's what I'm doing. Looking at property to buy right now. When just a shack of a house costs that much... being a millionaire doesn't mean much. If you look at the cost of a 30 year mortgage, our money is worth less than half of what it was in 2019. Median home price in 2019 was $258k, mortgage rate - 3.94%, 12% down, Payment with initial PMI $1,595.68, total cost of 30 year mortgage = $545,688.17, Median home price in 2024 was $495k, mortgage rate - 6.81%, 13.6% down, Payment with initial PMI $3,449.80, total cost of 30 year mortgage = $1,191,642.08,
We hit it at 39 and 37, about a couple years ago. We will continue driving our POS cars (Adam Sandler has a great song about it) and we will continue investing every paycheck as we have been for the past 15+ years. Health will make me retire early, but we've been planning for it. We still feel a long way to go numbers-wise, but thats ok. Slow and steady wins the race. We've managed to do this while putting our three kids in daycare (now ages 11,9,3, 3 year old is in daycare currently) and we've also pre-paid a few years of college tuition for our oldest kids already. It can be done, just need to be intentional.
What happened to cause the people of our nation to believe “we don’t have enough”? Considering all the suffering and misery in the world, we (especially deprivation obsessed millionaires) HAVE IT MADE. Too bad we all can’t spend time in places like Nigeria or Senegal to understand how fortunate we really are.
How many millions do you have is the question in these times as inflation has deluded our money. The literal term of millionaire does not hold the same meaning in status as it did ,say 30 or 40 years ago. For that status one would have to have 5 or 10 million in today's dollars.
I liked your comment about there is a difference between a million dollars of income vs. a million dollars of wealth. I think to be upper-class, you need a million dollars of income, or about 10 million dollars of wealth. I think these days the true elite are billionaires.
After retiring (with many millions), my saving habits have not changed. I still live the same middle-class life I've always lived. To be comfortable and feel secure, I think you need to have enough so that income provides enough that you don't have to budget, can go on vacations whenever you want, and don't fret over money. That's the original feeling of "millionaire".
When I was in primary school I remember one of my teachers mentioning that it's not just arriving at a goal, but also staying there, and staying is often the harder part. In the US, many people dealing with unexpected stuff like health emergency, could have their financial security stripped away. Just look at Walter White from the "Breaking Bad" tv show. I think one of the problems of society in the US is that its easy to lose your wealth to unexpected situations, medical emergencies, getting sued, etc. So it creates a feeling of insecurity, of always having to look over your shoulder.
Statistically, most people are broke. Being better off than broke doesnt mean you are out of the middle class classification. A reasonably safe 4% withdrawl rate is a a low income. If you know how to focus on cashflow you can live a better middle class life on 1m of assets, but very middle class none the less.
The real issue is the term middle class has warped from small business owners and self employed professionals ie the 'middle' between the working class the landed aristocracy, to being anyone with a fulltime job.
If you do not know what your “enough” amount is and know your “why” for life and retirement, then no amount is going to satisfy. $2-3M becomes hustle as anti-climactic as $1M. Your private jet suddenly is not good enough because you cannot fly non-stop to Europe like your friend’s jet and on and on. Know your why and know your enough!
I agree with your comments, Erin. You have a realistic and grounded POV. Great video, as always. Keep up the great work on this channel and the quality of your videos. I appreciate you!
This is one of those things that I'm still trying to wrap my head around. The first issue is that "middle class" means a lot of things to a lot of different people and institutions. I think that in general it means having enough to provide for a family, own a home, 2 cars, retirement and still afford a few extras like hobbies or vacations every year. ....but... Is that home a 1920s fixer-upper? Or a McMansion? 2 beater cars? Or new? Does it count if you are still making payments? Family size of 3 or 12? Trips every year to a national campground? Or overseas? The scale of what can be included is wildly different. So we look at more institution based metrics of middle class having an income "between 2/3rds and 2x average" which is roughly $65-200k. And that also isn't helpful, because $65k of income isn't going to make it in Cali, while $200k is quite lavish in the Midwest. There is also that time component. I mean, the first year that I jumped from a household income of $55k to $80k helped me progress quickly... But it has taken a few years of making $80k+ to feel the difference in financial stress and having a little more freedom with what decisions I can make. If you make a windfall one time, it doesnt put you in a different lifestyle bracket. Similarly, if you have had a long time of a high income and own everything outright, and have assets built up, then you can absolutely fall beneath the middle class metric, but still easily afford a middle class lifestyle. But using net worth as a metric also has traps. If you own a $1M house, then it isn't the same as owning $1M in dividend stocks that generate income, or $1M in index funds that need to be sold to generate income, or a small business with a value of $1M that may be negative cash flow or earning thousands of dollars a month. Simply put... Middle class is a rough metric to define in any useful way 😅. It depends on your time of life, location, and a mix of income and asset allocation that can vary wildly!
I break wealth down into the top 10% and top 1%. To reach the first benchmark in the US, a household needs something like 2 million. To reach the later, it’s something like 10 million, though both of those numbers may have shifted up with stock appreciation.
Remember when we used ‚Millionaire‘ and thought of person that is and looks rich? Is ‚Deca Millionaire‘ the new ‚Millionaire‘? Millionaire: - have a house 600k - have a car 50k - make regular holiday - have some investements 350k -> just 14k per year in investment profits (at 4% after taxes). Median US-income is 55k per year. -> you don’t feel abundant, you cannot stop working, you don’t look like a rich person (just invisibly you have paid off the home) -> it’s all about age. Millionaire at 35 is basically comparable to Deca-Millionaire (10million) at 65 Deca-Millionaire: - have a house 3mill - have a car 0.5mill - make regular holidays - have investments 6.5mill -> 260k per year in investment profits (4% after taxes), around 5x the median income -> i guess you feel abundant, can stop working, look like a rich person In my western europe country having 1mio networth is top 4% of people, having 10mio is in top less than 1%.
Hey Erick, great video so interesting when you talk about middle class and the different classes how many you use the videos get in the comment. Congrats on wonderful content.
Class and money have no connection, at least here in the UK. "Money can't buy you class" is a well know expression. In fact, there are a lot of middle class people here that are in net debt
People just have a very skewed perception of what wealth actually looks like because of TV/social media, etc. Two things can be true at once: having $1m in assets doesn't mean you're rich like Jeff Bezos with a net worth that rivals the GDP of some countries, but you're still better off than the vast majority of people on the planet. If nothing else it's just an illustration of how obscene the distribution of wealth has become.
The term “millionaire” entered the common parlance in the 1920’s. That sum was equal to about 20 million in today’s dollars. It signified one who was truly rich, did not have to work and could live in luxury. Today it means someone who will be able to afford to retire at 65 and won’t have to eat dog food.
Good comment. The dog food part is debatable.
@@fendermon I was a paramedic for 10 years and you would be surprised at the number of elderly folks I encountered that ate canned dog food because it was all they could afford because the copays for their prescriptions were so high. It’s so commonplace that new paramedics are literally taught to look for dog food in peoples fridges and ask especially if they don’t have a dog.
@@areyalunera7126 Yowza., did not know that. Thanks
@@areyalunera7126 Are dog food really cheaper? Why don't they just eat plain bread, rice, or beans?
@@leanliferdementia and desperation
I'm a millionaire and I'm loading an 18 wheeler with a safety vest on as I type this. 1 million is definitely not enough to be lavish and not work. There's also the notion of KEEPING your million once you've got it, and you might find yourself pretty attached once you get there. Not the grandiose lifestyle most people think, but it definitely takes a lot of pressure off if you know how to handle your funds.
@@doingit66 what do you doubt?
Someone with a net worth of a million dollars is definitely in the upper class. It doesn’t mean they can quit working.
You should be concentrating on your job, not watching videos...gold bricker
@@MrRar66 lol. Caught me.
Excellent post. While millionaires are the minority, they're still common, and the majority of them, as per The Millionaire Next Door, are pretty much like everyone else, middle class, working, saving, and spending moderately. We were so busy working, we never noticed when we passed $1M. But we were damn happy when we paid off the mortgage! Still don't feel wealthy, but at least we're starting to feel secure.
When we hit $1 million this year it felt good but was kind of anti climatic. As Erin said, you still keep working and saving and making good choices in an unstable economic environment. We also just keep living our simple lifestyle - none of our neighbors or friends would even guess our financial situation.
Many years ago, while on a job. I got to talking to the home owner. Him and his sister owned a motorcycle repair shop and four homes on their street. It wasn’t an upscale neighborhood either. He’s the guy who told me about the book “The Millionaire Next Door”. It gave me a new outlook on my life.
I´m in the same boat ;-)
When I hit 1M, I was really proud given my humble beginnings. I wanted to tell my family/friends, but realized I couldn't/shouldn't so it was rather anti climatic for me too.
Agree, if you're one of the top 10% or so that get $1M, you're likely a "saver" and crossing that level is fun but not really going to go out and spend like a pro ball player. More likely to go to a nice dinner. We went out for pizza and dined inside!!! 😂
Once I hit that goal, all that really happened was I moved the goalposts.
Success depends on the actions or steps you take to achieve it. Building wealth involves developing good habits like regularly putting money away in intervals for solid investments. Financial management is a crucial topic that most tend to shy away from, and ends up haunting them in the near future.., I pray that anyone who reads this will be successful in life!!
Starting early is simply the best way of getting ahead to build wealth , investing remains a priority . I learnt from my last year's experience , I am able to build a suitable life beause I invested early ahead this time .
In fact, I had no prior experience or understanding when I began investing in 2020, but by the end of 2023, I had made a profit of almost $850k. All I had been doing was going by what my financial advisor had told me. This demonstrates that all you truly need is a professional to assist you; you don't even need to be a great investor or put in a lot of work.
who is your advisor please, if you don't mind me asking?
I looked up her full name online and found her page. I emailed and made an appointment to talk with her; hopefully, she gets back to me.
*** SCAM ALERT ***. Only a fool would use a financial advisor based based on a fake RUclips tip.🤦♂️🤦♂️🤦♂️
I’m a wealth manager and I think there is a huge discrepancy between a true millionaire and the perception of millionaire that permitted media. When you’re seeing social media wealth, you’re seeing people with tens or hundreds of millons of dollars. In a major city like San Francisco, a million dollars can get you to the threshold of middle class stability. A couple of millions can plant you firmly in to middle class. But unlimited freedom and buying what you want starts at about $10M and up
pre or post tax and per pax or couple?
Or much less if one lives in a low cost of living state. A few million in the Midwest allows unlimited freedom and buying what you want. Location is critical.
$10M? I would debate that $5M in states that have a low economic impact on you will get you the same freedom. TX, TN, AL are a few of the states where $2 to $5 will go far as long you have your health.
I tend to agree, except I'd like to point out that they're are very few people with "hundreds of millions". The assumptions people make, regarding the net worth of apparently wealthy individuals, is often grossly overdone.
We hit millionaire last year and it’s not what I thought it would be. I am 52 and still have 3 kids in the house. Tomorrow I’ll be installing brake pads and rotors on my 2.5k beater. We still owe some on our home. Once that is paid off I’ll feel better, but I’ll still need to work.
I feel like that’s how most people feel!
I am 49 and hit $1M net worth earlier this year. I have six years left on my mortgage and two kids to get through college without debt. When that is done - I will feel much better. Right now - I still need to work! But I feel fortunate as I know I am fare better off than most people.
Get an EV. No more worn out brake pads.
@@205rider8 Just pay for 3x the amount of tires, double the insurance, higher repair rate and higher depreciation, good luck!
@@205rider8nah, I’d continue maintaining that $2.5k beater.
I feel investors should be focusing on under-the-radar stocks, and considering the current rollercoaster nature of the stock market, Because 35% of my $270k portfolio comprises of plummeting stocks which were once revered and i don't know where to go here out of devastation.
Safest approach i feel to tackle it is to diversify investments. By spreading investments across different asset classes, like bonds, real estate, and international stocks, they can reduce the impact of a market meltdown. its important to seek the guidance of an expert
A lot of folks downplay the role of advlsors until being burnt by their own emotions. I remember couple summers back, after my lengthy divorce, I needed a good boost to help my business stay afloat, hence I researched for licensed advisors and came across someone of utmost qualifications. She's helped grow my reserve notwithstanding inflation, from $275k to $850k.
How can I participate in this? I sincerely aspire to establish a secure financlal future and am eager to participate. Who is the driving force behind your success?
’Carol Vivian Constable’’ is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..
She appears to be well-educated and well-read. I ran an online search on her name and came across her website; thank you for sharing.
Ask someone without enough food to eat what it means to be rich. Ask someone without shelter. Ask someone without a secure retirement. Ask someone who has those things but still lacks meaningful relationships and purpose in life. It’s all a matter of perspective. Thanks for the insights. You rock!
While working as a cable guy. I was at a house while the moving guys were bringing in the furniture. One of the guys said to me, “I wish I had your job”. It seems there will always be people worse off than you. It made me appreciate my position in life a little more. Some homes I went in were real shit holes. Other homes I’ve been in, my house would fit in their living rooms. It’s a matter of knowing who you are and improving yourself. Hopefully unburdened by addictions or toxic people.
There’s an old saying; “to the man who is barefoot, the man with shoes is rich.”
Hmmm, I had assembled this amount of money in my early 40's. I read the book, worked very hard, and was fortunate. Very few of my friends or family had done so. To me their preconceived ideas about money held them back.This disparity caused a tremendous amount of psychological friction with people I wanted to be close to, and I didn't want to change friends, and could not change family. There is more to what you are describing than math and mechanics. But I agree with the concept of wealth building. There is a difference between ambition and a desire for security, although both are usually present if you are to succeed in financial goals. It is important to share strategies and help when and where you can.
My net worth is at $3.5m. 100% debt free and retired young. $5 mill net worth is the number that will work for me. I should be able to get there over the next 7 years or so.
The key is to live below your means and don’t stop planning for the future.
Make sure you always have a plan.
You are a jagoff
How do you make money while retired?
@@johnmay9699im 100% debt free.
Although, I did retire from my career job…I still manage my finances, and have a pretty large cashflow from several paid off houses. I still live a pretty modest life, outside of vacationing. Once I hit the $5mill target, I’ll allow myself to live on a pretty extravagant budget and my money will still continue to grow on an on.
worked for me. I have reduced investment risks and still avg over $400K/yr in appreciation of portfolio. Dont forget to give to good charities (those dont pay VPs over $100K) and dont duplicate gov handouts
If you’re retired your plan is risky investments?
As someone who has hit this milestone, I can assure you I don't feel wealthy. I have a better than average income, but I keep my yearly expenses less than the median income, and invest the rest. I think once I hit the $2-3M range, I'll start to feel more wealthy; when I can finally justify spending more than the median income on lifestyle.
Thoroughly agree with this sentiment. I think with inflation, multi million dollar stats (2 or 3 million) is the new 'millionaire' status
Agree too, I’m at 1.75 semi retired , but run small painting contractor business, basically two clients that own a lot of rental properties. I’m not old enough to do nothing so I do something and you may as well make money out while you’re doing it
I did this for a bit. But then I watched my father die a long terrible death, broke after spending his whole life delaying his life and saving for retirement. Only to burn it all with healthcare expenses and end up on Medicaid relying on family for financial and physical support. Now I spend my and enjoy life a bit more. Not lavish, but definitely not frugal.
I think we just needa all learn to be content. I’m sure once u hit 2 million, u will want 3. Once u hit 3, u wish u had 4, etc
Likewise. I this class as well. But I don't feel wealthy!
$5 mil is the new $1 mil
Deca-millionaire is the minimum for what people think a "millionaire" life is.
@@bigal3928 I agree. I think it's about 10 million now.
Is that all?
The term “millionaire” has a practical meaning very different from its cultural meaning which is antiquated because of inflation. My wife and I are 49 with a net worth just over $4M. We still live in the same house we bought in 2006 when we were making 25% of what we make now and hardly have expanded spending habits. I don’t feel rich in anyway…just secure.
Same. Not moving/selling (unless strategically living in a 'flip' every 2 years) saves SO much $. The quietly wealthy folks I know have all owned and stayed in place a long time.
A net worth millionaire simply means you own your home, have a few hundred K in your IRA, and have no debt. You're probably in your mid late '50s and taking your foot off of gas, but still paycheck dependent. Sounds very middle class to me...
We have about 4 million investable plus a paid off home. Still paycheck dependent mostly for medical insurance. Not consider ourselves rich at all.
@@Markrtsoonnah you rich lol
@@Markrtsoonstop gaslighting. You’re rich. Middle income/class ppl don’t have million dollar net worth. 🤡
@@Markrtsoon How much do you think medical insurance costs?! If you got just a 5% return on your 4 million per year that would be $200K. I you have a paid off house you should easily be able to live off that amount and still buy health insurance unless your annual expenditures exceed that you should be able to retire already.
@@krissimons1339 the problem is that there is no guarantee that we could always get a 5% return. And that there will be times that inflation will be much higher than 5%.
Another excellent and insightful video Erin. Watching your videos is an enjoyable part of my week. As I have indicated many times in my previous comments, I have been retired for 2.5 years after a 40+ year career as an attorney with a Fortune 500 insurance company. I have a high 7 figure net worth. Personally, I still feel I am in the middle class. I in no way feel that I am in the wealthy upper class. To me “Middle Class” is not a monolithic concept. I think there are degrees of middle class: lower, middle and upper. I feel I am in the upper middle class. I became a millionaire in my early 40’s but never felt any differently. I think this is because of my life experiences. My parents were both born in the 1920’s and grew up in the depression. All my life I was constantly told that money can be lost at the drop of a hat and that I needed to be extremely careful with it. Even though I was a millionaire, I saved as much as possible until my retirement. Even in retirement, I save $2000 a month from my income sources. In my opinion, I think it would take a net worth of at least $5,000,000 (excluding your home) to cross into the wealthy status from the middle class status. That said, even though I have that much in a net worth, I still don’t feel that I have crossed over. Thanks again for your excellent channel.
So 5mil in investments to be out of middle class? Dumbest comment I’ve ever read.
@@cbell5017 Too low? Too High? When Erin first mentioned it I came up with $10,000,000 after thinking about it some. According to google, 17,000,000 people in the USA have $5 million net worth. 30 million people have over a million dollar net worth. That means 1/20 people have 5 million dollars. That doesn't seem that special/upper class to only be in the 95 percentile! The 1% is $13.7 million.. So I actually like my first thought of $10 million being "rich". 1 million is well off, but not near enough to spend lavishly.
@@Mareshos even dumber comment. You might want to do some research on income statistics.
We hit the $M point several years ago. We still live a fairly simple lifestyle, but now smile a lot.
You’re right. I’m a millionaire teacher . I still feel I have to work . It’s not easy to withdraw money when you’re so used to saving.
I recently instructed my brokerage to divert our dividends to our checking account. It's a small thing, but it's a start. Still working, and saving, but wanted to start reversing the cash flow a bit after roughly 40yrs of work.
But, teacher don't make any money! Ha, ha,
@@floydestelle6242 I'm in NYC I make close to 140k with another 60k in rentals. I guess that could be no money to some.
You will get used to it. 👍🏻
One million isn't a ton of money (using the 4% Rule/Guideline 4% x 1,000,000 = $40,000) to live off the rest of your life, but two million (4% x 2,000,000 = $80,000) and SS should put you well above average. Especially if your house is paid for. As always, good job Erin.
2M is pretty much my goal…53 with about 1.2M net worth today…though the market is up right now. Still have to pay off the home (2.8% rate) and would either like to have a low stress job that helps pay the bills after 60, or move to a lower cost country where we can purchase health insurance for $300/$400 a month. Perhaps come back state side at 65 when we qualify for Medicare.
Hi Erin, I’m sorry to hear about your dad. Send prayers to you and your family 🙏My dad had dementia and passed away 2 years ago, 2 and a half weeks after my only sister passed away, so I can understand how difficult this is for you. In Regards to being a millionaire, you are so correct about a lot of them still being middle class. Someone owning a $500K house and $500K portfolio and someone with no house and a $1 million portfolio, you have to take in account that the person with the house, has no mortgage, which saves them a lot of money every year but the person with no house will have to rent or pay a mortgage either until the day they die, or until that mortgage is paid off
Most net worth millionaires have most of their money tied up in homes or retirement accounts and still need to work and pay a lot of W2 income taxes. They are comfortable but can't stop working or spend like crazy.
Exactly, and then you have to account for the portion of your spendable millionaire net worth which should also be tied up in your emergency fund, money which is important to have, but shouldn't affect your daily spending habits because it's only to be used in an emergency. You can also add in saving for children's education and future large purchases (such as the next car) which pushes your pool of remaining spendable cash into a very middle class lifestyle.
Having equity tied up in the house can be a big problem. Are you going to sell your house to pay for the kid to go to college or caregivers for your aged parents. I don’t even consider it when thinking about assets that you can liquidate to live on.
Location matters. A million in San Francisco is vastly different from a million in Boise.
Yes, the cost of living is higher in SF and trying to keep up with the Jones is harder, but they could both move to an even cheaper city or country. One can't just say woe is me, I live in a high cost of living city, so I feel broke even though I'm doing well. They have money, take some ownership of the situation.
Not if you rent. It's actually pretty inexpensive to live in SF (I do) with a studio apartment. Food, including excellent organic produce, is cheap, not many utilities are needed (neither hot nor cold), can get by just fine without a car.
Move if you want to live a high lifestyle
@@stevenspencer306 Not everyone can just up and move and take their job with them. Sometimes staying in that high cost of living area, at least until retirement, is the best financial decision you can make. Not to mention, people may not want to leave their family, friends and the only home they've ever known. That might be a good financial decision, but a very bad decision in every other way.
@@jenniferdeshon389 I absolutely agree that sometimes the high cost of living area might be the better financial decision. If you're making 2x the income you could in a lower CoL city and you only *have to* spend 1.5x as much, you're better off. But if you choose to live somewhere where you're better off, hopefully you're not saying "woe is me, I'm better off here."
Moving away from friends and family is definitely rough, I've done it. But if you can have a better quality of life, maybe you can convince some of your friends and family that they could, too.
My main point is that someone with a $1M net worth has means, regardless of where they live. They aren't at risk of starving anytime soon (outside extreme circumstance). Now, they might not be living their dream lifestyle, but they absolutely should not feel like a victim of their location.
I'm favoured, $130K every week! I can now give back to the locals in my community and also support God's work and the church. God bless America.
when someone is straight forward and good at what she does best. People will always speak for them. For me I can would say give Mrs Sonia Duke of finance education a try and you be happy you did
Please who is this Mrs Sonia
This sounds so good andI would like to
be a party to this, is there any wayl can
speak with her?
Yeah get connected to Miss Sonia, here's her line👎🏻
英꧁ᨖᨖᨖᨖᨖ࿅🇺🇸╋🇺🇸𝟭𝟴𝟲𝟬𝟯𝟬𝟬𝟴𝟰𝟵𝟯👍🏿👍🏿👍🏿👍🏿👍🏿👍🏿👍🏿👍🏿👍🏿👍🏿👍🏿👍🏿👍🏿👍🏿❤️❤️
大家都這樣“複製”，“RUclips”令人沮喪
Check out an inflation calculator online. Being a millionaire in 1985 now takes 2.9 million to be of equal wealth. 7 figures is a catchy thing to say, but it’s still middle class.
A $10,000 a month care facility is one of the insane expenditures in our society. My wife's last 6 weeks of life in Hospice was $5,000 a week. Imagine getting that bill on top of funeral and debt (medical + cancer) payoffs as a retiree. We were well prepared, but it could have easily obliterated 55 years of careful saving. Being a millionaire is not enough anymore.
Yes, there are various ways to prepare. A good estate lawyer is an invaluable asset. The first step, putting a home in a living trust. The second, here I can only speak for New York State, my mother needed to be moved to a managed care facility at 79. My parents transferred all of her assets to my father, making her insolvent and covered by Medicaid. My father had no idea this could be done. It was the managed care facility that told him and suggested speaking with a lawyer. I don't know if the fact that it was a Christian facility that motivated this suggestion, but it allowed my father to live out his time in financial security and know his wife was being cared for when he could no longer do so.
My deceased mom worked for the federal government and was privy to income situations. She told me most people with expenses houses and cars were a short step away from bankruptcy. The ones in very good financial shape were self employed people like plumbers or electricians who lived in modest houses. As for me, my newest car is over 20 years old. I'll just leave it at that.
With our house, our net worth is over $2M, but I don't count the house usually. You definitely would not be able to tell by looking at us. Our cars are 10+ years old, house is older, smaller and decor not updated. We save for security and our own goals -- not to impress.
A millionaire was rich when the phrase was coined in the 1920s. Since then the FED has devalued the dollar by more than 95%. So a millionaire back then is more like $50 million today.
Bingo millionaire is nothing
The only saving grace is that productivity has, fortunately, increased greatly since then; meaning our dollars stretch much further in comparison.
$20M but your point stands. $10M generates $700k pretty reliably. One can live a very comfortable life with half or even a quarter of that.
Good morning Erin. I am so very sorry to hear about your father. I was the primary care giver for both of my parents as they aged and know first hand, how very difficult that can be. You will be in my thoguhts and prayers in coming weeks. I enjoyed your content today and share your view 100%. For me it was a brief oh wow moment, and then settled right back to normal day to day. Since, I have always felt to be part of the middle class, the typical example discussed in the book. Your final comment was spot on IMO. Have a great weekend and week ahead and keep up the good work Erin! Larry, Central Valley, Ca.
Erin, I'm so sorry to hear of your father's condition. He's got a great kid on his side. I hope you and your family can help him be happy in his new surroundings. Sending lots of love.
I am sorry for your father. Will be praying for you and your family.
I’m a member of the 2 coma club but feel very middle class living in San Francisco. Just happy I own a home here too.
You don't own it unless it's paid off and even then you are renting from Uncle Sam with taxes + insurance, repairs etc.........
@@alohastateofmind3565I don’t pay any property taxes to Uncle Sam. Insurance and repairs are optional.
@@alohastateofmind3565I don’t pay property taxes to Uncle Sam. Insurance and Repairs are optional.
congrats -- love San Fran -- amazed at the $$ of just getting a home --- enjoy!!!
My net worth is just short of $2M and I still watch what I spend. I intend to pay for my son's college education and that is keeping me from freely spending on vacations, eating out, and joining a country club.
Send him to Europe for college and save hundreds of k.
Your number depends on your lifestyle... If you need $6000 a month which equates to $72000 a year which means you probably need 1.440,000 million generating 5% ... Social security portion will be your taxes you pay and probably a few extra medications needed.
I usually don’t consider my house because it doesn’t directly generate wealth. But a $500k home with a 20% down payment and a 4% interest rate (I know that is not possible today but many people are still lower) would lead to a 2k per month house payment with 30 years to go. This will look a lot more like 3k at today’s rates. In other words, 24-36k per year. Having a paid for house as half your net worth on the first million, at worst breaks even, at todays interest rates you will be much better off. And you will be less impacted by market declines.
Very true...if I may, make sure your insurance accurately and safely covers your home value
Retiring with $1 million means that you can spend around $40k/year in normal retirement. Is that rich?
1 million dollars for one person in US is always enough to retire if your priorities in life are healthy
Exatamente!🇧🇷🇺🇸
The discussion around millionaire status and its relation to the middle class is thought-provoking! 💭 It underscores the complexity of wealth and the diverse financial landscapes individuals navigate, shedding light on the nuanced nature of socioeconomic classifications in today's society.
Adding nuance to a conversation on the internet. Keep up the great work Erin!
Erin, so sorry to hear about your father. Memory loss is a tough one to deal with for the person and their whole family 🥰
Where ever you are in your life, portfolio diversification and management are key.
And minimizing recurring expenses!
I diversified 100% into the S&P500 in 1990 and never looked back. With a salary of about $28K, I could only afford to put about $1K into my 401K, but I did get 5% matching. . Still 100% in the S&P and have about $3.3 million. No management necessary.
If you're managing a health condition as detailed in the video, costing about $10,000 monthly, and you have $1 million, consider relocating to a full-service medical facility outside the U.S. Accompanied by an English translator, you'll find that both the cost and quality of healthcare and lifestyle significantly exceed U.S. standards, potentially offering two to three times the value. Earning in the U.S. and spending abroad may be the optimal strategy for handling steep medical bills. Moreover, this approach allows you to avoid higher-risk investments, making it feasible to keep your funds in safer, more conventional investments.
Hey Erin, sorry about your Dad. My mother in law is also in memory care for dementia. Regarding the $1,000,000 running out at $10k/ month, keep in mind that it will still last 8+ years which will more than likely out last how long he'll need care.
What a concise, refreshing video
The million Erin is using is to make the Math simple
Just times by 4 if you want realistic numbers
Leverage and compounding are the most mis understood terms that few truely understand
I appreciate that you don't have corporate sponsors, and don't flog merchandise or services in your videos. Please keep it that way, it is so much classier! This other personal finance blogger with initials RS interrupts their program to sell completely useless garbage products that are a total waste of money, while telling people to be conscious spenders ... It completely ruins their credibility. Thank you for not doing that!
We consider ourselves to be middle-class, having a net worth of $3-4MM, albeit it’s all tied up in our retirement and estate plan… we gross about $750k/yr TGI, including cash and equity awards, we are in our late 50’s and intend to retire at age 67… we’ve down sized our living footprint from 6k sq ft home in TX to. 3.5k sq ft home in NW AR… we only buy preowned CPO vehicles, typically 2-3 yrs old,
I am 73 and passed the $millionaire mark a few years ago. We are comfortably retired and manage our finances (we live below our means). I buy clean low-mileage cars with cash (pay no (interest), we carry no balance on credit cards (pay no interest), and we own a few modest paid-for rentals which provide income and some protection against inflation. We live far better on $75,000 a year than most people with twice our income. We have about $800 a week in disposable income (entertainment). We make a Country Club home by the Gulf Coast, my Used Benz and Town and Country are paid for, we travel as much as we like and spend too much time in restaurants. IMHO: We live better than 90% of Americans, we have twice what we need.
My dad was not a millionaire but in retirement he lived like one because he had a pension. I have more money than he ever had but I worry about my retirement.
If you have a defined benefit pension and you have your debts paid off including your house then really you don't need to save money. Unless of course your pension fund is not fully funded.
This is absolutely true. Also, it’s important to consider the very valid point that having a million invested likely will not provide you with the same level of income, even with SS, that you had while working full time. I think most people would need at least 2 million to even come close to drawing a middle class income in retirement.
Became a millionaire at 22, now worth 1.6m at 28 years old. No debts, no mortgage, no rich parents. Living fully of income right now through different investments and scaled down my business the past year. Now focussing on letting money work for me instead of me working for money, now that I have the wealth. Came to the conclusion that freedom of time is the most valuable asset. At the end of the day, health and freedom is all that matters to me
Thanks for your videos. I'm terribly sorry about your dad.
Most people will never have a 1 Million dollar portfolio so of you do your beyond blessed and not average in any respect
Like Erin said, don't confuse $1M Net Worth Millionaire with a $1M Income Millionaire. There's a huge difference. One will provide $40,000 - $50,000 in yearly income and the other, well $1,000,000. :)
A lot of my coworkers love to throw the ol’
“A million dollars ain’t much anymore”
They are trying to justify no saving anything
It seems that to comfortably afford "things" that have been historically attributed to the middle socio-economic class standard of living, now requires a lower-upper class income (which is approx. between the 75th percentile and the 95th percentile in terms of income). The "things" that I am referring to include but are not necessarily limited to (1) taking family vacations, (2) paying for kids' college, (3) saving for retirement, (4) eventually owning your home without a mortgage, (5) eating out a couple of times per week, (6) paying your bills and having money left, (7) buying gifts for holidays and special occasions without taking debt, and (8) having a 3-6 month emergency fund.
One million dollars is middle class. I hate the phrase “millionaires and billionaires”, almost makes them sound synonymous.
So sorry to hear about your Dad. I'm sure he is proud the way you are able to inform and educate your audience! You do a great job!
As a private wealth advisor for a trust company, I would push back and say that most millionaires look middle class, but by virtue of the fact that they have a million dollars in investable assets, they are upper class. Class is NOT determined by income alone. Wealth is a factor and having substantial wealth, even if it doesn’t generate a lot of income, is in itself, a luxury making one upper class. I would agree that most of these “upper class millionaires” look middle class by life style.
So brilliant and articulate. As an advisor myself, I’d ask you out if I was younger just to talk investing over dinner. 😂
I think lower class, middle class, and upper class are just outdated terms now. We should categorize it in terms of how many options people have financially, and being a millionaire tends to give you a lot of options when most people worldwide do not. Sure, it's not fuck you money like it was compared to 30-40+ years ago but it's definitely a lot of money that gives you a lot of options.
Exactly. $1M gives you is the ability to walk away from jobs you don't love. And you no longer have to live in fear of the next round of layoffs. That's not nothing!
Hi Erin, I love this. I’ve followed you for a long time. I hit the million dollar net worth in 2020 and only a very small portion was the equity in my home. 🏠 I feel that expenses (if kept low) can make it feel like the engine you’ve created is much larger, but I also see your point about not knowing what can happen in the future with healthcare. Thank you for your videos! 🎉😊❤😊
Long term healthcare insurance is something I signed up for in my early 50s. Expensive, but my mother also had dementia and it also was costing over a $100K a rear
Erin, I’m so sorry to hear about your father. vascular dementia is so hard - my family just went through it with my uncle over the past year. Enjoy the time that you have with him, the decline can be so fast 😢❤
I’ll feel more confortable with $ 5-10 million
$ 20-50 million would be better
A very rational explanation, that those who haven’t saved would struggle to understand
I had to go through the same memory care situation. Historically, and we went on the typical timeline, you spend 3 years there so you know how kong you’ll live, and thus need. With Social Security, and passive income withdrawals, you have enough.
Unless you're creating a beneficiary legacy, you need to change your mindset from one of scarcity to abundance. Otherwise, you run the risk of working your entire life and then dying with having only spent a fractional percent of what you accumulated. I have seen this countless times where people work and work and work to save. Plan on retiring at 68+ and then end up dying at 65 with $2M unspent. Get busy spending!
I think we need to take when the term millionaire started being used to indicate a rich person (60+ years ago?) and maybe inflation adjust that number. It's probably closer to 10 million today, which yeah - that person is rich and not just middle class by any stretch today. But in 60 years, 10 million will be what you need just to retire out of poverty.
The big thign to consider is this is by stats one million by "household" if you have two adults to support and are saving thats different than a single person with 1 million. Also could have a household larger than two. People often conflate household income with individual income as well.
Internet safety note. Posting your net worth on this thread and others like it can make you a target of scammers.
really? Most people lie on the internet and most people aren't using other identifiable information for it to matter.
@@hanwagu9967while that’s true, everyone isn’t broke so the point still stands.
As a person at age 45, I feel like social security will basically pay for my health care when I retire. So, my investments will pay the other expenses I have. I own my house outright, so that's great, but it isn't quite the same as having that 500k in an investment (it does allow me to invest a large percentage into my retirement as a result). My general analysis says a couple would need about 100k a year of today's dollars with a house paid for to live a reasonable lifestyle that they probably currently live. So, I'd probably think 2.5 million would be a good number. With my current investment rate, I should hit that by 65.
I don't think many people consider the tax write off long term care will provide. Depending on your time horizon and a modest nest egg, claiming social security late may be the best strategy in providing the cash flow needed later for LTC.
Consider long term care insurance.
Our goal is around $6-7M not including the house which is $2.2M. Currently at $2.7M and house is paid off.
That's terrific. You must be very pleased with your progress!
That’s beautiful
I think “working class” is a much more meaningful term than “middle class”. There are a lot of millionaires and people with very high-paying jobs that still depend on getting up in the morning and going to a job, and many of them are unfortunately also living paycheck-to-paycheck. Class seems to be more about where your money comes from than how much of it you have.
A millionaire is no longer what it was.
TRUTH!!!
Another consideration today is that most of us don't have defined benefit pensions anymore. If you were a millionaire in say 1990, that's like $2.4M today. You also would have been likely to have a pension that would lessen your need for retirement income significantly, so more of that $2.4M could go to lifestyle instead of survival.
For most people I know, by the time they get to 40, they've adjusted financially and emotionally to living within their means - which includes emergency and retirement savings and managing debt responsibly. Once you do that, the milestones - whether they are 100,000, 500,000, a million or more are numbers that come and go that do not affect your lifestyle.
the statistics prove otherwise.
Millionaire: a person (or couple) with net wealth, liquid and/or illiquid, of $1 million.
I got there by getting into a profession, always spending less than I earned, and conservatively investing the leftovers in the stock-market. My biggest mistake along the way? Being under-invested in US stocks.
Good video, Erin.
Millionaires aren't "middle class" by any definition.
But some still have a middle class mindset, with the same insecurities.
"Pew defines “middle class” as those earning between two-thirds and twice the median American household income, which in 2021 was $70,784"
Twice the median is 140k (2 years ago.) To get above that, and out of the middle class, it would require 3.5 million at a "safe" rate of 4%.
Yes, many millionaires are strongly in the middle class, while there are plenty of people in the upper class who are broke. (Not poor, but broke.)
@@IamR3D88if you have 1 million in assets not including home but only make 100k I’d say you’re out of middle class
Great video! I like how you talk about withdraw rates and living modestly and protecting wealth.
Rich people have a lot of money and spend it.
Wealthy people have a lot of money but protect assets to promote generational wealth.
It all depends on your habits.
My mom had vascular dementia and lived in memory care 9 months before she passed. Yes, what we paid was about $9K on average, but she also got a pension, so a net loss of about $500 to $1500 a month. Never impacted her house, savings account, other than a blip in her checking.
All of these can be explained by a very common misunderstanding about cause and effect on personal finance success. It’s not that “millionaires fret over security of their riches, save for retirement and don’t spend lavishly”. It’s “people who fret over the security of their riches, save for retirement and don’t spen lavishly are more likely to become millionaires”. It’s like survivorship bias; they’re just finding out the root causes of surviving the “millionaire” cutoff.
Everyone with the ability to comment is rich.
I would never include all my estate in my gross domestic worth. In fact much of the Estate is a hindrance rather than an asset. New money coming in is a good way to determine wealth, whether it be your personal annual income or, your estate's annual income.
I'm on the cusp of hitting a million in my portfolio. I just turned 62 and I'm making my own trades in the market. I'm debt free and intend to retire soon. However I still want my portfolio to continue to grow. So I'm not going to start living lavishly just yet.
Hi Erin, in the future can you please be specific regarding individual millionaire and household millionaire. Thanks
I sure can, thank you for the feedback 😊
An old basic house in our area that needs renovation is listed at $600k.
The cost to buy property isn't high. I could buy property and build a new house of equal square ft and better finishings for $150k.
Market is broken... none of this makes any sense.
So that's what I'm doing. Looking at property to buy right now.
When just a shack of a house costs that much... being a millionaire doesn't mean much.
If you look at the cost of a 30 year mortgage, our money is worth less than half of what it was in 2019.
Median home price in 2019 was $258k, mortgage rate - 3.94%, 12% down, Payment with initial PMI $1,595.68, total cost of 30 year mortgage = $545,688.17,
Median home price in 2024 was $495k, mortgage rate - 6.81%, 13.6% down, Payment with initial PMI $3,449.80, total cost of 30 year mortgage = $1,191,642.08,
We hit it at 39 and 37, about a couple years ago. We will continue driving our POS cars (Adam Sandler has a great song about it) and we will continue investing every paycheck as we have been for the past 15+ years. Health will make me retire early, but we've been planning for it. We still feel a long way to go numbers-wise, but thats ok. Slow and steady wins the race. We've managed to do this while putting our three kids in daycare (now ages 11,9,3, 3 year old is in daycare currently) and we've also pre-paid a few years of college tuition for our oldest kids already. It can be done, just need to be intentional.
What happened to cause the people of our nation to believe “we don’t have enough”? Considering all the suffering and misery in the world, we (especially deprivation obsessed millionaires) HAVE IT MADE. Too bad we all can’t spend time in places like Nigeria or Senegal to understand how fortunate we really are.
How many millions do you have is the question in these times as inflation has deluded our money. The literal term of millionaire does not hold the same meaning in status as it did ,say 30 or 40 years ago. For that status one would have to have 5 or 10 million in today's dollars.
I liked your comment about there is a difference between a million dollars of income vs. a million dollars of wealth. I think to be upper-class, you need a million dollars of income, or about 10 million dollars of wealth. I think these days the true elite are billionaires.
After retiring (with many millions), my saving habits have not changed. I still live the same middle-class life I've always lived.
To be comfortable and feel secure, I think you need to have enough so that income provides enough that you don't have to budget, can go on vacations whenever you want, and don't fret over money. That's the original feeling of "millionaire".
When I was in primary school I remember one of my teachers mentioning that it's not just arriving at a goal, but also staying there, and staying is often the harder part.
In the US, many people dealing with unexpected stuff like health emergency, could have their financial security stripped away. Just look at Walter White from the "Breaking Bad" tv show.
I think one of the problems of society in the US is that its easy to lose your wealth to unexpected situations, medical emergencies, getting sued, etc. So it creates a feeling of insecurity, of always having to look over your shoulder.
Statistically, most people are broke. Being better off than broke doesnt mean you are out of the middle class classification. A reasonably safe 4% withdrawl rate is a a low income. If you know how to focus on cashflow you can live a better middle class life on 1m of assets, but very middle class none the less.
The real issue is the term middle class has warped from small business owners and self employed professionals ie the 'middle' between the working class the landed aristocracy, to being anyone with a fulltime job.
If you do not know what your “enough” amount is and know your “why” for life and retirement, then no amount is going to satisfy. $2-3M becomes hustle as anti-climactic as $1M. Your private jet suddenly is not good enough because you cannot fly non-stop to Europe like your friend’s jet and on and on. Know your why and know your enough!
I agree with your comments, Erin. You have a realistic and grounded POV. Great video, as always. Keep up the great work on this channel and the quality of your videos. I appreciate you!
This is one of those things that I'm still trying to wrap my head around.
The first issue is that "middle class" means a lot of things to a lot of different people and institutions. I think that in general it means having enough to provide for a family, own a home, 2 cars, retirement and still afford a few extras like hobbies or vacations every year.
....but...
Is that home a 1920s fixer-upper? Or a McMansion? 2 beater cars? Or new? Does it count if you are still making payments? Family size of 3 or 12? Trips every year to a national campground? Or overseas? The scale of what can be included is wildly different.
So we look at more institution based metrics of middle class having an income "between 2/3rds and 2x average" which is roughly $65-200k. And that also isn't helpful, because $65k of income isn't going to make it in Cali, while $200k is quite lavish in the Midwest.
There is also that time component. I mean, the first year that I jumped from a household income of $55k to $80k helped me progress quickly... But it has taken a few years of making $80k+ to feel the difference in financial stress and having a little more freedom with what decisions I can make. If you make a windfall one time, it doesnt put you in a different lifestyle bracket. Similarly, if you have had a long time of a high income and own everything outright, and have assets built up, then you can absolutely fall beneath the middle class metric, but still easily afford a middle class lifestyle.
But using net worth as a metric also has traps. If you own a $1M house, then it isn't the same as owning $1M in dividend stocks that generate income, or $1M in index funds that need to be sold to generate income, or a small business with a value of $1M that may be negative cash flow or earning thousands of dollars a month.
Simply put... Middle class is a rough metric to define in any useful way 😅. It depends on your time of life, location, and a mix of income and asset allocation that can vary wildly!
I break wealth down into the top 10% and top 1%. To reach the first benchmark in the US, a household needs something like 2 million. To reach the later, it’s something like 10 million, though both of those numbers may have shifted up with stock appreciation.
Remember when we used ‚Millionaire‘ and thought of person that is and looks rich?
Is ‚Deca Millionaire‘ the new ‚Millionaire‘?
Millionaire:
- have a house 600k
- have a car 50k
- make regular holiday
- have some investements 350k -> just 14k per year in investment profits (at 4% after taxes). Median US-income is 55k per year.
-> you don’t feel abundant, you cannot stop working, you don’t look like a rich person (just invisibly you have paid off the home)
-> it’s all about age. Millionaire at 35 is basically comparable to Deca-Millionaire (10million) at 65
Deca-Millionaire:
- have a house 3mill
- have a car 0.5mill
- make regular holidays
- have investments 6.5mill -> 260k per year in investment profits (4% after taxes), around 5x the median income
-> i guess you feel abundant, can stop working, look like a rich person
In my western europe country having 1mio networth is top 4% of people, having 10mio is in top less than 1%.
So true on what she is saying, you need income outside of a portfolio worth a million dollars.
Hey Erick, great video so interesting when you talk about middle class and the different classes how many you use the videos get in the comment. Congrats on wonderful content.
Class and money have no connection, at least here in the UK. "Money can't buy you class" is a well know expression. In fact, there are a lot of middle class people here that are in net debt
People just have a very skewed perception of what wealth actually looks like because of TV/social media, etc. Two things can be true at once: having $1m in assets doesn't mean you're rich like Jeff Bezos with a net worth that rivals the GDP of some countries, but you're still better off than the vast majority of people on the planet. If nothing else it's just an illustration of how obscene the distribution of wealth has become.