Reality of the Middle Class Millionaire
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- เผยแพร่เมื่อ 5 มิ.ย. 2024
- 00:00 Intro
01:43 Millionaire
03:47 Protection
05:14 Market Volatility
06:21 Saving
07:20 Age
08:24 Spending
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Disclaimer: Please note that this video is made for entertainment purposes only and not to be taken as financial advice. Always make sure to do your own research.
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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 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.
$5 mil is the new $1 mil
Deca-millionaire is the minimum for what people think a "millionaire" life is.
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.
7 figure debt free club here. Comfortable, yes. Rich, no. Common sense, gratitude and a well balanced life style is a winning prescription here. Money’s a tool to help enable your best life. It’s not the end game. Love your intelligent and thoughtful content.
Well said!
What does it mean to be member of a 7 figure club?
Does that include the equity in a primary residence?
Retirement assets you cannot touch until actual retirement?
Or, simply net all assets minus net all liabilities?
@@ArmageddonIsHere Means different things to different people. For me, it's the net assets minus net liabilities, although we also qualify if you subtract the house, or even if you subtract the locked in pension. Yes, we're all comparing apples to oranges, but the general tone of the conversation is everyone wants to get to FI, and everyone's definition of that is different, dependent on their lifestyle level, location costs, etc..
@@dstevens518
Thank you!
Retiring at the end of this week May 3rd age 55. Net worth just north of $6 million, paid off house is $1.5 million of that. I still consider myself middle class because that's what I've been my most of my life (started with nothing, making $5/hour in 1988). I know I am in the top 5% and most here would consider me wealthy, but I will always be frugal and maybe my kids will be wealthy after I'm gone.
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 TH-cam tip.🤦♂️🤦♂️🤦♂️
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.
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 knew a guy who was basically an acquaintance. When we did some business together, I found out that he was quite wealthy. He had a house that was very nice, but not ostentatious. He told me he always bought his cars one or two years old, because they were still as good as new but way cheaper. He always bought Toyota's because they had the best quality and lasted the longest. You see the pattern.
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.
@@MKF1205nah you rich lol
@@MKF1205stop gaslighting. You’re rich. Middle income/class ppl don’t have million dollar net worth. 🤡
@@MKF1205 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%.
Erin, I'm so sorry to hear about your dad. My mom passed away last summer from covid but she did have advanced dementia. It was extremely difficult but we did our best to take care of her at home. I feel for anyone in this situation, it's not easy......♥
Prayers to your family.
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?
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.
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!
Erin, as others have said, I am sorry to hear about your dad too. I know that's a tough season of life. My mom had early Alzheimer's too and spent four years in a nursing home and she passed away last year. It was a very tough season of life for our family. Make sure to take care of yourself and focus on the things you can control during this season (your health, diet, exercise, etc) and give yourself grace. I had plenty of days where I felt guilty, sad, angry, and depressed about my mom's situation as if I was responsible for carrying her burden. But I wasn't. My mom's situation was completely out of my control and I did the best I could as her son and caretaker. Prayers for your dad, you, and your family. ❤
Thank you! 🙏
I agree Erin, I’m debt free with 7 figures in the retirement account at 57 yrs old. Feels great to hit that goal but doesn’t feel like nearly enough. Probably need 2- 3 before I retire. The best feeling is being Debt Free.
Agreed 5 million is the new million
@@rickyayy $1 in 1977 had the same buying power as about $5 today, so that's on the right track.
The problem you have is that ‘most’ financial advisors world recommend that you move a large portion of your 401K investments into bonds. This will hamper your chances of hitting 2 or 3 million. I have a modest pension and a small income from a side gig and so I could take more risk. Because of this, I kept 100% in the S&P500 and over nine years of retirement I went from about $1.2 M to $3.3 M with no contributions and pulling $54K a year for the last four years. Biggest factor in my opinion is your level of risk aversion and the ability to weather a significant downturn by having extra cash to limit your withdrawals.
@@glasshalffull2930 , I wont even consider bonds until I get much closer to actually retiring.. Until then I have no problem with risk. I plan on working another 5-10, I am also 100% in the S&P 500 and continue to Max out the 401K each year. 60% of my annual investments in Roth 401K and 40% traditional. Will also have 300 - 500K in post tax money market savings account / Brokerage accounts. Feeling pretty good about the situation. Especially after surviving 2 ex wives. Lol
Erin's tips are worth a million.
I initially read that incorrectly 😂
I see the twinkle from headlights, they are brilliant 😊
She would not bother giving them out online if she could get 1 million for them don't you think? No they are not worth much but she tries.
We hit the $M point several years ago. We still live a fairly simple lifestyle, but now smile a lot.
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.
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. 👍🏻
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.
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.
@@user-pg6gi4tt4b even dumber comment. You might want to do some research on income statistics.
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.
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
Spot on. I must admit on the edge of retirement and above seven figures my greatest concern is maintaining the wealth and growing it over time to offset inflation, maintain buying power, and leave a legacy as well. I still max out account seven in this my last year of working. Old habits die hard, I guess. The worry never goes away. Even with paid assistance I don't think I can ever just ignore it and only check monthly or quarterly statements.
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.
Adding nuance to a conversation on the internet. Keep up the great work Erin!
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.
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.
I am sorry for your father. Will be praying for you and your family.
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 think the idea of a millionare being rich was instituted decades or more ago when a million dollars was worth alot more. Now, someone's home equity alone (on a fairly modest home) could put you over or near the threshold. When the Millionare Next Door studies were conducted in the 80's, a million was worth about 3 milllion in today's dollars. And a modest home could be purchased for a lot less.
Wow. I'm really sorry to hear about your Dad's dementia, Erin. My Dad passed a few years back from Alzheimer's, after living in a memory care facility for 8+ years. I'm sorry you guys are all going through that. It is a tough road to travel, above and beyond the staggering cost of care.
You will all be in my prayers, Ma'am.
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.
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.
Hi Erin, I have very fluid ideas of middle class these days. If you can pay your bills and still have money to put away for retirement or an emergency, you're middle class. If you can fill your gas tank and not worry if you have the cash to get through until your next paycheck, you're middle class. If you can pay cash for most car repairs or other breakdown, you're middle class. If you don't worry about paying for your groceries, you're middle class. Why such a fluid idea on my part? Because I know too many people who can't do what I listed above, anymore. Your video points out the other end of middle class (aka upper middle class) that I rarely think about. You make a good argument. Thank you. I'm sorry to hear about your dad. In 2018 my older brother was diagnosed with Alzheimer's. He denied the diagnosis of 3 doctors and refused to take his meds that would have slowed the onset. He quickly became a danger to himself and others. Putting him in a memory care unit was one of the hardest things I've ever done. My heart goes out to you and your family
$2.5 million is the new million! At one million you are likely never to starve but it’s far from being wealthy. Great video!
It really is. The problem is measuring against an inconsistent base: USD. 1990 $1 =/= 2024 $1
I think it's higher, I think the minimum is deca-millionaire to be "rich".
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!
Also, great video Erin! Keep up the good work!
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
Thank you for sharing this.
Have been listening to your information. Very helpful Thanks. Sorry for your loss 😢
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.
Super healthy advice from Erin in this video. Keep them coming!
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 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!
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!
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.
Your video always encourages me to save more, thanks!
Completely subjective to lifestyle, location and budget …. When you factor in life’s curveballs …. I think you’re spot on … TY
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 😢❤
awesome video thanks!
Very good perspective. Good insights.
Thanks Erin. I’m glad we had this little talk.😁
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.
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.
Im a 50+ deca millionaire. I still work on my online business 7 days per week. I was going to retire last year but decided against it. I cant speak for everyone but I need a purpose in my life beyond eating, sleeping and watching television. I dont plan on ever stopping working. And yes, I still worry about money- not from the place of lack or need but more about wealth preservation and keeping it out of the hands of our greedy and totalitarian government.
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. :)
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.
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.
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!!!
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.
Retiring with $1 million means that you can spend around $40k/year in normal retirement. Is that rich?
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
If you have 1 million you are upper class… BUT, once there you have to dance with the one that brought you, like living below your means, continuing to work hard, etc…
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.
A million dollars at age 60+ is like having a $40k per year pension. That's definitely middle class. You won't be handing out Grey Poupon from the back seat of the limo.
Very interesting and smart video, thank you!
A very rational explanation, that those who haven’t saved would struggle to understand
People keep wanting more, not knowing that time is the one thing you can’t get more of. How much is enough? $3M $5M? You can die tomorrow. Let that dictate how you feel, think and what you do.
Very informative and accurate information based on my experience. Also, the millionaire next door is an excellent book.
I'm at $2mm net worth including the house and age 59. I should be about $3.5 when I retire in 8 years. I'd say I'm comfortably middle class. I take some nice vacations, but rarely shop or eat out, make my own meals and just watch streaming services at home. My vehicles are starting to get older, but they are paid off as well.
Bottom line is I'd have to be at $4 million today and maybe $8 million at retirement before I could be the "AND" person that goes shopping AND eats out frequently AND takes nice vacations AND drives a new car.
Bruh. cut the “just a humble hard worker” gaslighting bs ur not middle class anymore with that net worth. U do understand what the middle is, don’t u?🙄
@@newagain9964 Dang, you're injecting a lot of your feelings into that reply. Maybe take a rewind and actually read what I wrote objectively. And yeah, I'm "comfortably middle class". At best, I'm dragging along the bottom of the upper class.
@@andrewdiamond2697 even when u say it mostly right, ur still trying to elicit sympathy while gaslighting…bottom of upper class. U should start a go fund me. Must be rough.
@@newagain9964 Not nearly as rough as being in the comments section of a financial advice video with a chip on my shoulder. I'm fine...and realistic about things. Maybe you can join me in being in a good place while being realistic?
@@newagain9964actually the term middle class originated as people that were affuent but not royalty. The rest were the working class, the term has changed over time. Most millionaires get there by being frugal, driving the older car and staying at the Holiday Inn instead of the 4 Seasons. Based on my first sentence I would say you need at least a million to be considered middle class.
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%.
To retire comfortably you need at least 2M and your house paid off.
Agreed
I agree with needing your house paid off but not the $2M. Much is going to depend on where you live and what standard of living you are accustom to. I think it is a must to have no credit card or consumer debt before you retire. The amount of retirement funds you need is going to also depend on how much SSI you will be drawing. So it really just depends on your own circumstance on how much in retirement funds you will need.
I refinanced and took cash out when the rates were 2.7% to take care of my mother who had dementia. My mortgage is about the same as it was back in the 1990s. So, instead of pulling extra from my portfolio that made about 30% in the last three years, I’m borrowing at 2.7%. Paying off the house early is nice, but it may not be the end all that people espouse. It’s really more about monthly cash flow.
@@glasshalffull2930 Yes, it is certain that a ~10% return on portolio vs 2.7% expense is much better. Even more so I agree that you really have to have a reduced principal in relation to the portfolio value to even think of funding paying off the mortgage, and at that level, probably only when the % ROI of the "bond" - like portfolio is down to 2.7% at which time the decreased expense might help with cash flow. BUT people have some comfort in being "debt-free" or "being able to sleep at nite" vs trusting in their cash flow plan ..... different psychologies.
@@brucesprung6431 So true. A 4% draw on $2M is 30% more than our entire household spend for our family of four before SS.
Based on recent CNBC articles about what it takes to live comfortably it looks like retiring at ~$3M in today’s dollars is what Middle Class would require. Probably need 8 figures before you consider acting rich.
All the numbers I give don’t include house value btw. Liquid investments or bust.
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.
I loved the video, just became a subscriber : )))
thanks! Welcome to the channel! :-)
People see this milestone differently. Im 8 days older than one of my best friends. We are completely opposite. She takes a lavish vacation once a month. I go on a modest vacation once every few years. Our daughters are 12 weeks apart in age. She got her daughter a car for her sweet 16. I got my daughter a car after graduation 🎓 She splurges on jewelry. I have nice pieces that were gifts but I mainly wear jewelry my daughter made for me. She orders food at work. I take my lunch to work. The only way people figured out my financial status was my kids telling people I gave them homes.
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.
I retired at 57 three years ago. Just living a pretty low key life style. With a few exceptions. I just booked a trip to Europe for my family this summer for an extended stay. In my mind it is literally the last time my children will be able to do this. My daughter enters the work world this summer. My son will start internships next summer. Using some of that earned wealth to create good memories. After this trip it will just be my wife and I. We will take much more modest trips and closer to home.
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!
This was a great perspective. Millionaire seems like an antiquated term these days when we have close to 1,000 billionaires in the US alone. It just is not a relevant benchmark anymore for most folks, and as you say it depends on how you define the term too.
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
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.
There is a very, very small percentage of Americans who actually have $1M in assets or cash (including a home). Homes are typically very heavily financed (and likely any equity is cashed out with home equity loans). Autos are typically leased or heavily financed with no / negative equity. 401k's are often tapped into from time to time for purchases/emergency expenses. Credit card debt for daily purchases and other larger purchases are prevalent.
Truly wealthy people pay cash for their homes, cars, investments, and have liquid cash. Buy high quality and keep it and maintain it a long time. Don't talk about money. Very subtle, yet confident, and refined.
Thanks for your videos. I'm terribly sorry about your dad.
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.
Millionaire is a loaded term because it tilts hard toward people in the later years. Most young people feel that being a millionaire is an alien concept. We should teach people to value their lifetime expected earning potential as an asset on the balance sheet. It's kind of weird at first but you can really see your future better if you count this asset amongst the others. It also helps with how should I value a college education.... These days you start your adult life being worth $3M and the trick is to keep a good fraction of it as you age.... It's a different way of looking at it but I think it's helpful.
1 million dollars for one person in US is always enough to retire if your priorities in life are healthy
Exatamente!🇧🇷🇺🇸
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.
You do an excellent job on your videos. I have no dought you will hit a million subs in short order. 🎉
I love the opening comparison of millionaire by investable assets vs including primary residence. I've had the good fortune to live in a mid-range home price area, and have had much more money to invest than my friends living in high housing cost areas like Boston and California. While their homes may have appreciated a lot in value, the fact is they have been using their cash flow to pay down the mortgage balance rather than putting it into an investment account.
I hope your father is adjusting well to his new living space. That's hard adjustment to make for him and for your whole family. I'm sure your background and experience will be of great support as you all make this shift.
$1m could sustainably generate $40,000-$50,000 a year. If your mortgage is paid off and your expenses are low you could live very well. Otherwise you’d basically just replace a decent but modest salary
Absolutely. Adding $50,000.00 annually to a comfortably higher end salary - $100k/annually) put one in a very comfortable position. The key is having your home and autos paid for. And no loans. Keep investing your income after your expenses.
We are grateful to be well beyond that milestone but still manage to a monthly/annual budget. Our ritual is to meet for 30 minutes twice a month to review budget to actual spending, in total and by category (so easy to track these days with all of the online tools) and make sure that reconciles to our account balances. It is super healthy for our marriage to make money a non-issue. Being open, respectful, and non-judgmental during those discussions makes them easy and non-confrontational. As the saying goes - every dollar has a job. This sounds tough but once you set it up the first time (dead simple monthly/annual cash spending/savings budgets, online spending tracking, etc.), it is really cut and paste for each subsequent year.
One million dollars is middle class. I hate the phrase “millionaires and billionaires”, almost makes them sound synonymous.
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!
So sorry to hear about your dad's situation. :-( And as I am in my "nearing retirement" years, I think your perspective on millionaire status is well-calibrated. In fact I think that most folks today are not comfortable with the idea of retiring with "just $1M" in assets, especially if a large chunk of that is tied up in a primary residence. The term millionaire meant something very different when it was first widely used 70 or 80 years ago or more, certainly--but I think the nearest parallel to that today would be to be debt-free with perhaps $5-10M in assets. Something few people (or couples) achieve today before retirement age.
The millionaire next door book highlights the everyday millionaire you are speaking of and glad you shared this in the video. I think 3 million plus in the southeast or middle America one might be wealthy, but in the northeast or west coast that number is at least 5 million due to cost of living.