How much money does it take to be considered “rich” in the US?

Are you rich? The smart money says you answered “no” to that question, regardless of how much money you have. According to a 2013 report by investment bank UBS, only 28% of people with $1 million to $5 million in assets considered themselves wealthy. Even when you ask people with more than $5 million in assets, only 3 in 5 consider themselves wealthy.

So how much does it take to make it big in America? How much cash do you need to be considered rich?

It depends on where you live, on your lifestyle, and who you hang out with. That is an accurate but lame answer. So here are some specific guidelines that provide a more useful benchmark.

A Million Dollars?

One million dollars

Although a million dollars isn’t worth what it used to, it’s still a popular asset threshold to determine whether you’re rich. Leonard Beeghley, author of “Society in Focus” (2005), defines the rich as the top 5% of households or those with a net worth – including home equity – of at least $1 million. Although a million bucks is still a lot of dough, it no longer is enough to put you into the top 5%. As of 2012, it requires a net worth of $1.9 million to make it into the top 5%. According to the Tax Policy Center, in 2012, a household income of $208,810 would put you within the top 5% richest households in the country. Getting into the truly exclusive 1% group wasn’t so easy: you needed an income of $521,411.

The 2013 Spectrem Group’s survey asked investors what net worth you need to be considered rich. Results varied widely by age: 45% of investors under 40 felt $1 million was the threshold, but only 22% of investors older than 60 felt $1 million was enough to call yourself rich.

It’s hard to swallow that having a net worth of a million dollars isn’t enough to make you rich; but if that’s all it takes, there’s an awful lot of rich people in the United States. According to Spectrem Group’s survey, there were 8.6 million millionaires in the United States, in 2012.

A Million Bucks and a House?


A million dollars, excluding the value of your primary residence, is the minimum amount required to meet the U.S. Securities and Exchange Commission definition of an “accredited investor.” This is a useful measure because it excludes what for most people is their most valuable asset and focuses on more liquid assets, such as stocks, bonds, and investment properties.

Double Your Current Salary?

My favorite definition of what makes someone rich is “double what I make,” whatever that may be. This definition was proposed by Robert Frank in his Wall Street Journal blog: The Wealth Report. I like it because it sheds light on how we use “being rich” as a target, a driving force, that is always pursued but never quite attained. The more we have, the more we want, so our definition increases in proportion to our current net worth.

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This “double whatever I make” definition is supported by several studies, including Spectrem Group’s 2008 and 2013 surveys. When people are asked how much it would take to be rich, they tend to give a number twice as much as their current income. If you make $50,000 a year, someone who makes $100,000 qualifies as rich. If your annual income is $100,000, $200,000 is enough. If you’re worth $5 million, then $10 million is all it would take, and so on.

$250k and a Better Tax Bracket?


Annual income is another popular measure of wealth. If you have an annual income of $250,000, it’s safe to say you’re rich, although depending on where you live you may not feel that wealthy. The IRS determines people’s tax rate based on income thresholds that divide middle class from the “rich” and the “rich” from the “ultra-rich.” After the 2013 “fiscal cliff” negotiations two of the big dividers are $250,000 ($300,000 for married couples) and $400,000 ($450,000 for married couples).

If you earn more than $250,000, you are limited in how much you can claim in itemized deduction and personal exemptions; and you will be hit with the new 3.8% net investment income tax that started on January 1, 2014. Moreover, if you make more than $400,000, your tax rate rises to the ultra-rich tax bracket of 39.6%.

Not “Just” Upper-Middle Class


“No financial constraints on activities.” That was what half of the investors interviewed by the USB 2013 Investor Watch survey responded when asked what it would take to be wealthy. According to this threshold, if you don’t do something, such as buy a yacht or visit the International Space Station, because you’re worried about the price tag, then you’re not rich. This is an important point. It shows that our measure of what it takes to be rich is directly linked to contentment. You may have a $1 million in the bank, but if you dig your neighbor’s private jet and you can’t afford one, you probably won’t consider yourself rich.

If you have an expensive taste for vacations, jewelry, or cars, it’s going to take ultra-wealthy levels of income to satisfy your hunger for luxury, which is probably why 8% of investors interviewed by the Spectrem Group 2013 interview said $100 million is what sets apart the rich from “just” upper-middle class.

The Lonely 1%

Rich guy

In the United States, it takes a household net worth of $6.8 million to join the much-maligned and admired 1% club. It’s hard to argue you’re not rich once you’re part of the 99 percentile. In fact, anything above $5 million puts you in the ultra-high-net-worth category. If you’re looking at income, you’ll need $383,000 a year to get your 1% membership card.

However, if you go global, it really isn’t that hard to make it to the top 1% richest people on the planet. An annual income of just $32,000 is all you need. The average laborer in Ghana would have to work 200 years to earn $32,000. This highlights the huge income (and cost of living) gap between countries. Click here to see how your income compares to global standards.

So, who’s rich?

Good question. A million dollars in liquid assets or an income of $250k are a good start. But wealth is dependent on lifestyle choices, the cost of living, and which country or city you live in. The New York Times has a nifty app that shows you how your household income ranks when compared to over 300 zones across the United States. Plug your numbers in, you might be surprised at how rich you already are.

How To Become A Millionaire

Building a $1 million nest egg is not as difficult as it may sound. If a 25-year-old saves $405 a month he will have a $1 million by the time he hits 65 (assuming an average annual return of 7 percent). Even savers who start later in life can hit the $1 million target with relatively small but regular monthly contributions. It just takes discipline and planning.

Online management companies and brokerages make it easy to start investing, set up automatic contributions, and diversify your portfolio, regardless of how much money you think you need to be truly rich.

Now read > SuperMoney’s list of best credit cards for bad credit.

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