We tend to have only one label for all levels of wealth — “rich” but evidently “rich” could mean vastly different things to different people. Today, we’ll look at how much money you actually need to be considered rich.
An average American thinks you need $2 million to be considered rich. Millennials believe that number to be $1.4 million while baby boomers believe you need $2.5 million to be rich. Different countries also have different networth and annual income requirements to be in the top 1%.
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An average American’s perception of ‘rich’
According to this article by CNBC published in May of 2021, most Americans think that you need $2 million to be considered rich.
Of course, that number would vary from country to country but America is one of the richest countries in the world so that is a good standard to reach for if you want to comfortably label yourself as rich.
What do different generations think?
In the same article by CNBC, here are what each generation thinks you need to be considered rich:
- Millennials, those aged between 25 to 40 think that you need $1.4 million to be “rich”
- Gen X, those aged between 40 to 55 think that you need $1.9 million to be “rich”
- Baby boomers, those aged between 56 to 74 think that you need $2.5 million to be “rich”
Clearly, different generations have different ideas of what is rich.
The reason why the amount of money one needs to be considered rich is rapidly dropping from one previous generation to the next can be speculated.
For instance, I speculate that the younger generations have a harder time estimating the true amount of money one may need to live comfortably for a long duration of time.
This is the same reason why 10-year-olds may think they are rich if they have $100 in their pockets.
$100 at 10 years old clearly doesn’t feel the same as $100 at 20 or 30. This phenomenon is beyond inflation alone.
There is also evidence to suggest that millennials are likely to underestimate the amount of money they need for retirement. This isn’t too surprising since we rarely think as far as we should into the future when planning our retirement.
So yes, different generations perceive “rich” differently although there isn’t a right answer.
To some, a rich person can still be considered rich even if they aren’t exactly ready for retirement yet. While to others, a rich person is only rich if they have enough to cover themselves financially for the rest of their lives.
Comment down below what generation you are and how much you think you need to be rich.
Are you rich for your age?
A lot of us unfairly compare ourselves to “rich” people who are much older than ourselves.
I told a story of a former supervisor in one of my previous blog posts who loved to brag about how “rich” she was but she was near retirement age and had worked decades in the field.
If compared to someone else her age, she really isn’t as “rich” as she claimed to be.
Not to mention how most rich folks don’t talk about how “rich” they are (Although some still do).
Someone who has worked decades of their lives away has a better chance of accumulating greater wealth compared to someone who just started their career.
Do yourself a favor and don’t compare to someone years ahead of you and feel discouraged.
You have the advantage of time in an era where making lots of money online is very possible and you don’t have to trade decades of your life for it.
Hard work and consistent practice for 1–3+ years are in many cases enough for you to go full time. Many bloggers are making a full-time income online. Some make 6, 7 figures per year.
Click here to read my article on how much bloggers make, you’d be surprised!
Check out my “make money” section for more ideas.
In fact, I can argue that you shouldn’t compare your networth to anyone at all. Compare with yourself. Your journey isn’t the same as anyone else’s. It’s apples and oranges. You are meant for different accomplishments and endings so there is no need to compare at all.
However, for the sake of completing this section, let’s take a look at what the top 1% of each age group earns and see where you fall.
This screenshot is taken from an article by FinancialSamurai if you wanna check it out.
The table starts at age 25 and ends at 80+.
- If you’re 25, you need $235k in networth to be in the top 1%
- If you’re 40, you need $4.7 million in networth to be in the top 1%
- If you’re 50, you need $7 million in networth to be in the top 1%
You can see why having $250k in networth as a 25-year-old is equally as impressive as having $10 million in networth as a retired 70-year-old.
Anyone can be ‘rich’
Anyone can be ‘rich’.
This can be interpreted in various ways. So let’s explain.
If rich means you need millions of dollars you can literally be ‘rich’ in Monopoly dollars but that would convert to next to nothing if you translate that into American dollars.
You can also be rich in Dogecoin as in you have millions of tokens but translate that into real money you can see volatility and it may indeed be worthless in American dollars.
You see, the currency is important when defining “rich”.
There’s also the saying that true ‘rich’ doesn’t lie in money but lies in character and experience.
A lawyer working 50 hours a week and pulling in $300k per year with a networth of 10 million may be considered rich in money by most people but poor in time and anything else.
If such a lawyer lack character and is often abusive to his staff, he would be considered “rich” monetarily but poor in character.
Anyone can be ‘rich’ but you have to think about what currency and other aspects of oneself as a person as well as the amount of time left to enjoy after using to exchange for monetary gain.
Another perspective to consider when thinking about the phrase, “anyone can be rich” is the fact that we live in the information age where if you have access to the internet you can make money and become ‘rich’.
Most people who have become rich online did so within a few years. Don’t underestimate the power of time and consistent effort.
You may just be 1–2 years of hard work away from a full-time job and 3 years away from being “rich”.
Top 1% of income in various countries
Here’s how much you need to earn to make the top 1% of income in various countries.
According to CEOWorld, in this article, this is how much you need to make per year to be in the top 1% of the following countries.
United Arab Emirates has the highest income requirement to be in the top 1% of income earners at $922,000.
In the United States, you need to make $488,000 per year to be in the top 1% of income earners.
In Canada, you need to make $201,000 per year to be the op1% of income earners.
Top 1% of networth in various countries
In the US, you need to have a networth of $4.4 million to join the top 1%.
Monaco has the highest requirement of networth to join the top 1% at 7.9 million.
Japan and Taiwan both require a networth of $1.5 million to join the top 1%.
Singapore has the highest networth requirement among Asian countries to join the top 1% at $2.9 million which is the 4th highest number following Monaco, Switzerland, and the US.
Not all billionaires and millionaires with the same networth are equally rich
The reason not all billionaires and millionaires with the same networth are equally rich is due to what makes up one’s wealth.
If the person’s networth is made up mostly of stocks it means their asset may not be as liquidated as someone else whose networth is tied up more in their properties.
For one to liquidate their networth, it means they’d have to convert whatever asset in its form to cash or cash equivalents.
Just think of a house that is worth $1 million. If you were to liquidate the house, it means you’ll convert its value of $1 million to $1 million in cash.
Moving on.
You see, if Elon Musk and Jeff Bezos were to cash in on most of their supposed networth, they’d have to sell a lot of their company’s stocks which of course wouldn’t the good for the price of the stocks. At some point, the price would fall so much that they won’t be able to sell all their stocks at the same high point.
Many billionaires are only worth so much on paper but aren’t actually as much.
You can set up an LLC and sell 10 shares of the company. Keep 9 shares to yourself and list the 1 share left for $100 million. On paper, you’d be worth a billion but no one would buy your share for $100 million.
But you get my point. This is why “networth” can be tricky. Many of these billionaires don’t actually have billions in their bank accounts.
Their networth can’t be liquidated without significant disruption to the company they built and without sending a big dip in the stock price itself.
If you want to assess how “rich” someone actually is, you have to look at their asset to determine what makes up the bulk of their networth.
A person whose’s networth is tied up in houses may be more likely to liquidate their supposed networth and get their cash equivalent than a person whose net worth is mostly tied up in stocks.
Final thought
We clearly all have different answers to the question of how much a person needs to be “rich”.
Nevertheless, it’s important to not let anyone define “rich” for you. If you think that being rich in character is truly rich, then, by all means, practice what you preach.
No one is wrong when considering what makes a person “rich”.
If you have your own number in mind, don’t let anyone define whether you are indeed rich for you. After all, this is your life. You don’t live for others but yourself.
You shouldn’t live in need of anyone’s approval of how “rich” you are. As long as you think so, that’s enough.
What is your personal number for “rich”? Comment down below!
