31% of millionaires say they're part of the middle class | Hacker News Reader

31% of millionaires say they're part of the middle class

cnbc.com

35 pointselsewhen29 comments

Many millionaires don't feel rich because they don't have enough passive income to cover their expenses. They're stuck on the hamster wheel. If you have $1m in liquid assets but your family's burn rate is $120k/year, then you can't stop grinding because you don't have enough runway to cover even 10 years (not even counting for unforeseen expenses such as medical, emergencies, extended family needing help). $120k/year burn rate is not uncommon in cities and is probably on the lower end of spend if you have kids in a city.

It's worth noting that the article defines millionaires as "investors with $1 million or more of investable assets" (as opposed to those who simply have a net worth > $1M, which would include illiquid assets)

Is a home considered an illiquid asset? Every homeowner in CA could count as a "millionaire"

Real estate is illiquid. At best it takes months to convert it to cash.

Sometimes it can be done faster but that requires a deep discount to attract professional flippers.

Only if they've paid off that home ("net worth")

Does this include 401ks?

Generally yes. But it sounds like the survey just asked them, and typically people overestimate what counts as an investable asset. Many times people will include their house even though technically this is not an investable asset.

> illiquid assets

Such as a house that has popped up above $1 million in recent years, which includes many tens of thousands in the Bay Area alone.

Correct, though many with those homes aren't yet millionaires by the net worth definition.

If you're (upper) middle class, saved your money, bought a house, and invested it in the stock market, and are, say, 60 to 70, then by now you could easily be a millionaire. The wind was at your back, so to speak, for much of what you did.

But a bunch of your money is in your house. And most of the rest of it is in an IRA or a 401k, unless you went for a Roth conversion. (You needed a conversion, because if you're 60 or 70, there wasn't a Roth when you started putting money in an IRA.) So you're a millionaire, on paper. You don't have a million in liquid assets, though.

I’m 50 and have been in tech for 25 years. Theoretically I earn $1M/yr but my RSUs haven’t really vested yet (new comp structure) so I’m not actually grossing that yet. It will take 3 years to really kick in. I have probably $7.5M in total assets ($1.4M retirement, $1M in non-retirement stocks, $5M in real estate equity, which is one family home and 3 rental properties).

I honestly don’t feel rich in the slightest. I still have to go to work every day like anyone else. You’re either independently wealthy or you have a job. That’s it. There’s two types of people.

I worry about what my wife spends at Costco. I worry about what I order at restaurants. I worry about mortgage payments. No different than anyone else.

Of course we are.

To be the equivalent of a 'traditional millionaire' these days, we'd need to be a lot 'richer' and have at least 50 million dollars.

Inflation has evaporated the buying power of the present-day dollar to about a miserable 2 cents of a 1960 dollar.

Did you know that back around the mid-1960s a blue-collar working man on the Ford assembly line reached a wage of $100 a week? In today's money, he'd need to be earning five grand a week to be on the same wage level as his grandfather.

$100 in 1960 is close to $1000, not $5,000 today

That's inflation, GP is referencing purchasing power.

But inflation is measured by normalizing purchasing power across multiple categories.

If you look at wages compared to cost of living in 1960, you'll find the average ford line worker would have a similar quality of life to someone who makes $4000/week in today's dollars. Look at what food, rent, gas, and real estate used to cost

You keep believing that. I suppose you also believe the 'official' CPI increases too.

Forget the numbers that are disclosed. Just look at what the prices are for equivalent things. And work out the 'true' inflation rates.

For instance, look at the price of a barrel of oil then and now. or the price of an ounce of gold then and now.

Or even equivalent manufactured items. Like , for example, the price of a Rolex watch in 1960 versus the price of a Rolex watch in today's dollars.

Prices of equivalent items, then and now, maintain a fairly good relativity. Especially when you price those items in terms of gold. Look at the price of oil, say, in terms of ounces of gold and you will find it's more constant than you would think.

Just like probability depends on prior personal knowledge, inflation depends on personal earning power and demand. The same reality can be inflationary and deflationary to different people depending on who they are , what they can do, and what they want to buy.

Bayesian inflation anyone ?

Even a working class family can easily accumulate enough wealth to pass as millionares these days without really being part of the middle class. The actually weird part is that some median wage proles who work from 9-5 for their boss think they're middle class instead of working class.

Where I live, if you own a house, you are a technically millionaire, no matter how broke you are otherwise. A lot of home owners I know are definitely middle class.

What a millionaire was when I was a teen in the 80's, versus what it means now, is totally different.

You'd need roughly $3 million today to be a mid-80's millionaire. I don't count my house as part of my net worth (it's paid off, FYI.)

That asserts your house is paid off....

$1,000,000 in 1980 is about $4 million today. Know any $4-millionaires?

House price is meaningless. It’s home equity that matters. Someone with a million dollar house likely owns a good chunk on it.

I wonder if the % of taxes they pay is the same as the actual middle class.

It’s because they are.

Centamillionaire today is what millionaire used to mean. Ie, can live opulently without ever having to work, along with their children and grandchildren, too.

Inflation compounds and you are living through the hockey stick part of that exponential chart now.

would be nice if the billionaires felt squeezed instead. Classic failed economic policies just hurt the upper middle class and keep them down rather than the actual cream of the crop skimming off the top

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