I always fine this issue interesting. Assuming we can identify what median household annual income is; what % above and below that point do you consider the floor/ceiling of the middle class?
**My question is directed at Pat, but I would interested in all opinions.
Any answer would be so subjective it’d be meaningless, imo. Even median household annual income would be subjective because you’d have to account for outliers on the right side of the bell curve. Then there’s the issue of the median income in NYC might be 300% more than that of Birmingham Alabama.
I don’t like giving arbitrary answers without all of the variables, but I’d start at least above double. I donno, maybe 250+% of the local median annual income or something like that. So if $50K is the median then $125K (or $75K over the median) would be considered “rich” to me.
I agree, making $100K in New York City is a whole lot different than $100K in Birmingham, Alabama. Still, that doesn’t mean we can’t spitball a little bit, right?
Let’s look at it from another angle that kinda-sorta avoids the issue of indexing it to a fixed number that might mean different things in different places - what do you think most people consider rich? Probably something around 2-3 times what they personally make, right?
*EDIT: usmc basically gave the same answer that I was thinking, the concept of the “local median”
My wife and I (together) make something like 2.5 times the median household income. I consider us to be something of “middle class” but it’s an odd territory. We don’t have nearly enough money to be considered “rich” and I can’t imagine anyone thinking of us as “rich” - but I do realize that if we made exactly the median household income, we’d have to make a lot of changes - move to a cheaper apartment, start shopping for groceries on the cheap, drink wine with dinner once a month instead of once a week, maybe even sell our car. I don’t think we live an extremely privileged lifestyle but we are comfortable.
To a dining-services worker making $30K annually, my wife and I are probably “rich.”
To my colleagues in cardiology (where the average attending physician takes home something like $300K), my wife and I are not rich.
Ya, it’s just a mess. Plus, you’ve brought up a good point, which is dual vs single income households. Is there a different percentage over median depending on marital status? There probably should be.
This is also another good point. Perception is a big deal here. You may appear “rich” with your McMansion, but what’s the mortgage? Do personal choices count? Are you rich if you make $250K, but you’re also $1.5M in debt?
I have never been under the impression that the middle class [even at the upper end] would be considered rich. Comfortable yes…rich no. Certainly marital status or two person vs one person earning households are a consideration. Region as well of course. IMO people always generally under estimate where they fall relative to others. For example…I wouldn’t consider 2.5x the median rich; however It would place in the top 15% of households.
^Exactly, this is how I feel. Despite my perpetual concern that I’ll never have enough money to send my (as yet unborn) children to college or to buy a beach home in retirement, I think 2.5x the median probably ought to qualify as “comfortable” or “upper-middle class.” And yet, I cannot fathom being considered “rich.”
To me, at this point in time, in 2016 dollars, being “rich” at the most simplistic level would mean million(s) in the bank and/or other relatively-liquid assets. Being a thousandaire doesn’t make me feel anywhere near rich, lol.
Surely, to a billionaire, someone with mere millions is not rich.
And to a dining-hall worker, I am rich because I shop at Whole Foods.
Most of us judge our wealth according to how our friends and neighbors are doing, the peers in our immediate experience. In other words, I’m more aware of the size of my home as compared to others on my street, rather than thinking about what property and incomes are like in rural Kentucky.
We’re also more likely to look on material posessions and conspicuous consumption. We assume the guy driving the new Tesla is doing better than the guy in the old minivan. We can’t see his retirement accounts or know how much debt he has. We tend to make judgements based on what’s visible.
I read that people who live near a lottery winner tend to engage in more purchases of new cars and luxury items. We feel good when we’re doing about the same, or slightly better than the people around us. When that changes, we’re less happy.
Kind of a funny story. A friend of ours is a partner at a law firm. He has five kids and a stay-at-home wife. During a business lunch, everybody was going around the table talking about which region of Italy they most like to visit. Haha. He might be making the same money, but he’s not “feeling rich.”
So much of this is about perception. How people around us are doing.
You could live in a million dollar home, and by million dollar home I mean a 1500 square foot, 1975 tract house with the original Brady Bunch kitchen. You’re living in this “million dollar home”, but you might feel pretty unhappy when you drive by the 5 million dollar homes down the road.
This was the reaction I expected and reiterates my point. “Rich” is entirely subjective. 2.5x the median is not considered rich by you (or me fwiw), but to someone making $7.5/hour that’s rich.
I recognize the impact perception has on the issue, and I’m not dismissing it. However; if one’s perception is delusional it may lead to counter productive decisions.
ex-If a couple has an annual household income of $150,000 and lives paycheck to paycheck attempting to keep up with those around them, the problem is their decisions not their income.