Re: Is $250K Rich?
posted at 11/12/2012 2:53 PM EST
In response to skeeter20's comment:
In response to yogafriend's comment:
Wealth is not a relative term insofar as the government is concerned, and I don't subscribe to it being relative, either. Value systems are relative, not the money itself.
The data is crunched by the Census Bureau, and unfortunately, and while not entirely fair, they top off the earning rate at 250K; there is a very low percentage of people who earn more than 250K in the USA, and that may be the rub in determining what constitutes "who's really rich" and who's "upper" middle class.
The challenge for the east coast and the west coast is that a high concentration of people in that salary range live in those regions. $250K is not the definition of "rich" but moreso "upper" middle class, for a family.
Call many of those salary earners the "silent minority", maybe? Take the college tuition issue as an example. You don't qualify for financial aid, low-interest government loans, and other types of scholarships when you make 250K a year -- so you essentially pay *more* out of pocket and FULL tuition than people who make a fraction of what you make (NOTE: the kid has to be smart, too ...) because those lower-earners qualify for aid, scholarships and (again, the kids have to be smart ...) even a free ride. I've seen this many times. Some of my brightest friends went to colleges where they got HUGE boosts from either low-interest govt. loans, scholarships, or even FULL RIDES because they were smart coupled with having lower-middle class (or below) earning parents. I have a friend who got into Wellesley (not ONE DIME) vs. Boston University (FULL RIDE). Guess where she went? I can cite many examples of this happening. Education: Paid in Full, and it was almost free (there are really no completely free lunches :) )
SO higher earners essentially get $crewed in that type of equation. That's just one example, but I am sure you can think of more. Still, there aren't many people who are feeling sorry for any family that hauls in $250K / year.
This may be why higher earners, who are "upper middle class" but not what you would define as "rich" feel like they are no better off than people who make a lot less money. They are not "entitled" to the same "discounts" and therefore, feel they are paying a disproportionate amount of money into the system, be it education, taxes, etc., and in a way, I can understand it.
You have to be making well beyond 250K to be considered rich, unless you are a single, young, twenty-something miser who saves every dime and lives in his mama's basement.
One last thing --- it's also the ability to save out of your income that creates wealth. It appears that the ability to save is almost non-existent for most Americans, and that is the reality. Retirement is a scary, if not impossible prospect for far too many Americans.
Your last point is the key point. Our government does not want us to save at this point. That's part of the policy. The money that we could save, if it was government policy, is now being sent to Washington. [/QUOTE]
Well, maybe this is the key point: how much can you or do you save? It's not the amount of money you make, where you live, or if you have no kids, or 5 kids, if they are in college, working on the farm, or whatever. The key question is, "what are you able to save?" That is what will make or break you.
And most Americans in the low - mid - upper middle class do not have the ability to save.
I don't believe that the government "does not want us to save", as you seem to think, but the ability to save is not part of the conversation often enough.
I also agreed with you that 250K is "upper middle class" at this point in time, and not "rich" but again, your overall wealth is determined by your savings and assets, not by the amount of money you make. When did "money management" change to being called "wealth management" -- must have been when the economy was prospering. :)
Interesting -- there was an article in the Globe not long about about college graduates and their ability to make a living ... you know the drill. These new graduates think they should be making what is considered the median "middle class" salary, all alone, right out of college. They need a sanity check. One kid complained that she can't afford a manicure ... oh, you should have seen the comments following that; such sacrifices some kids have to make when their parents stop paying for the necessities of life, such as manicures. =)