Is A Million Bucks Enough to Make You Feel Rich?

It's funny how the old numbers get carried forward, regardless of inflation.

Even the New York Times did an article about 2 years ago how $200k/yr is now the same perceived quality of life as $100k/yr used to be awhile ago.

I ain't stopping until the interest from my money earns me 1 million a year after taxes.

That should be somewhere around 50,000,000.

Oh, at first I thought it included real estate and I was like, well if you count that I'm almost a millionaire and I certainly don't feel wealthy.

However, if I had $1 million in investable assets, I think I'd feel pretty good where I am in life.

At my current rate of income I will have earned a million dollars in 32 years. To earn the magic amount 7.5M, it would take me 235 years. But I'm quite comfortable anyway, I have a roof over my head, food in the cupboards, a vehicle for transportation. I even have computers, video games, Rogers On-Demand television and Netflix. Can't complain.

If you have "middle class" American Dream aspirations and expectations -- your own house, kids go to college, a new car now and then, health insurance, retirement that doesn't require you to get a job -- then a million dollars isn't wealth, it's security. A guarantee that you won't lose all those bourgiousie goodies despite job losses, illnesses, etc.

Another couple of mill would be my "hey, I'm wealthy!" price point.

No, I wouldn't feel rich. I would feel secure. My financial planner suggests that if I have $800,000 in the bank by the time I'm 55 then I could retire at 59, and help my child get through college (probably a state school) without taking on more than $25,000 or so in SallieMae debt. At 4% income, $800k will give me $32,000 a year. The house won't be paid off, but I'll have two or maybe three hundred thousand in equity by then. I'll have to sell it and find something much smaller. Since the badness, my annual contributions need to be about $8k more than I last budgeted, to make this happen on schedule. It's probably the college fund that will get short shrift, because, as the financial planner also remarked, you can get a student loan, but you can't get a retirement loan. I really hope that doesn't make my son decide to skip college. I hear a lot of that lately.

So, no. If I had a million dollars, I would not feel rich. But I would stop weighing my son's preparation for the future against my own security in old age. I would stop putting 20% of the household income into savings, and call the retirement fund done. With that bump, I might get my son out of public school and into private. I would certainly keep working, and clipping coupons, and not going out to eat much. I might get the occasional vacation. I would stop worrying that I don't know any software developers over age 50 or so, and wondering what happens to them. Do they all retire early? Voluntarily?

I talk to people and wonder what their retirement planning is like. The one topic related to finances that people talk about is their insane credit card debt. Does that mean they have no savings? Are they making IRA and Sep contributions with great discipline, and running up retail debt at the same time? Do they get that a time will come when they can no longer earn a living? And a time even sooner when they won't want to? Why isn't everyone else as freaked out as I am? Or are they?

Heck, I feel rich when I find a dollar bill in a coat pocket! It's a pity wealth is wasted on the wealthy.

In a survey, respondents said they'd rather make $150K/yr and live in a neighborhood in which the neighbors make $100K/yr than make $250K/yr and live in a neighborhood in which the neighbors make $350K/yr. OK, my numbers are not exactly from the survey, but I heard it on NPR, in an address by the American Enterprise CEO at the California Commonwealth Club. Make "good" money, live frugally, feel rich. I mean, make more than your neighbors.

Most of us will never have $1 million all at once in our lives so it would certainly make us comfortable. Rich? No. Heck in a lot of areas in California $1 million buys a tract home. Not that I'd turn it down if someone is offering.

A million earning the dismal minimum of 1.5% is a mere $15,000 a year. No one is retiring on that type of interest income. Sure there's better returns (but not by much) but the risk goes up along with the rate.

"It's a pity wealth is wasted on the wealthy."

Isn't that circular? I will always be wasted then.

Maybe you meant to say that it's wasted on those rich pricks who are born into wealth and/or don't know how to appreciate what they have or do some good with all their money? ;)

hmmm, I was just making a silly circular joke.

Von Skippy, I could easily retire on $15,000 a year. When I worked in radio, I supported a family on that. However, if a person had a million for retirement, they would spend the principle instead of the interest. After all, you can't take it with you!

fretter, most of the people I know don't have a penny saved for retirement, but why freak out? You do the best you can, but worrying doesn't make you any more money.

@ Miss Cellania: I could easily retire on $15,000 a year.
That blows my mind. Just my health insurance and living expenses (sans mortgage) costs me more than that.

fretter. if you think at all about your future you are worried about retirement. Because I have a physical, labor intensive job I was planning on retirement at 60 until the economic downturn. Between cuts in salary, increases in expenditure and my retirement account going south, if I'm lucky my forecast is now 67.

@D Bozko - A lot of it depends on where you live. A million bucks goes a lot further in some places than others.

@PaulVI - I remember that study! Definitely an insight into the human psychology.

@Erik Anderson: If you can earn 10% per year and you're a single-filer, about ~$20MM invested normally would get you $1MM after taxes per year.

There are private management firms that should [had damn well better] be able to beat the S&P 500's avg. return of 11%/yr for a fee-based compensation of 1% value of assets managed. (ie: if they manage $20MM, you'd pay them $200k/yr.

You'd need a lower rate if you had any invested in a Roth, as that's tax-free.

Also remember that historically, most bull-runs last 6-7 years and most bad market-crash-recessions last 4 years.

So the other legs of the chair you'd build out would be 4 years worth of Living Expenses (ie: 4x $100k if that's what you give yourself every year to live off) in an Emergency Account that's not invested and is hard for you to get to.

1 year of living expenses in a "slush-fund" money-market for periodic emergencies/oversights is also a good idea.

Hey, Miss C! I worked in radio for 15 years and was lucky to pay rent and keep two cats in food and homemade toys (no expensive jungle gyms or what have you).

I have a small Schwab account, an IRA, a 401K, savings and so forth, and I get my medical care from the VA.

I do not worry about "keeping up with the Joneses", and have saved a ton of money not "needing" to buy a leather couch, big flat screen tv and new car.

I make 28,000 a year (I support a wife and child on that), if I had a million in a bank account I could give myself how much I make right now for 35 years. Heck, I could pay off my house and still live 30 years job free. Then I'd be 800 dollars a month richer.