How To Tell If You’re Rich Even If You Think You Aren’t

Congratulations everyone! With the stock market, real estate market, and many other assets doing so well, many of us are rich! In fact, there are are record number of millionaires in the world. However, some people still don't think they are rich. Let's see how to tell if you're rich even if you think you aren't. There are a lot of delusional people out there!

Anybody who bought stocks and real estate between late 2009 and 2020 is sitting mighty pretty. When you're sitting mighty pretty, you tend to spend more frivolously and take on debt to buy things you don't really need. But at some point, a percentage of the population gets carried away, commits financial suicide, and brings the rest of us down with them.

I'm really hoping the good times will last for several more years. After all, it's more fun making money hand over fist than losing money.

Alas, I'm worried that with cash-out refinances reaching pre-crisis levels and stock market valuations at all-time highs, we're bound to repeat our mistakes from the previous financial crises.

How To Tell If You're Rich

There is a qualitative side and a quantitative side to being rich. If you're two standard deviations higher than the median household income of $69,000 and the median household net worth of $120,000, you're considered rich. At a two standard deviation, you're richer than 97.8% of all Americans.

For more detail on how to tell if you're rich, you can check out my top 1% net worth amounts by age post or top 1% income amounts by age post as well.

Median net worth in America - How To Tell If You're Rich

When Do You Feel Rich?

I think the qualitative side of being rich is much more interesting because being rich is more of a feeling after all your needs are met. Feeling rich also comes from a temporary state of mind.

It's just like experiencing spikes of happiness due to a promotion, a raise, getting into your school of choice, hitting a home run, or getting married, followed by what is hopefully a sustainable level of contentment.

All The Times I Felt Rich

The first time I felt a little bit rich was a couple years after I bought my own place in 2003. The initial years were a little nerve-wracking due to the assumption of $425,000 in debt. But after two years, I felt like everything would be OK since I continued to get promoted. I felt rich because I finally owned a piece of America. No longer was I a price taker in an ever rising rental environment.

The second time I felt rich was when my company agreed to let me go with a severance payment and all my deferred cash and stock. I felt like I had won the lottery because I would have gladly left if they just gave me my deferred cash and stock that paid out over the next five years.

But they decided to give me a six-figure lump sum check when I left as well, which has almost doubled since 2012 because I invested all of it in the stock market.

The third time I felt rich was about three years after I left Corporate America. Again, the initial years were a little worrisome despite the severance because I wasn't sure whether I had made the right move. But by 2015, I knew we were home free as Financial Samurai grew so my wife joined me in early retirement. Having the freedom to choose how we spend 100% of our time was priceless.

The fourth time I felt rich was when our passive income finally reached a level that could sustainably provide for the lifestyle we wanted. Before then, we were only generating about $80,000 a year, which doesn’t go far if you want to raise a family in San Francisco. It was after hitting $200,000 that I felt I could finally slack off a little bit without worrying about falling too much behind.

The most recent time we felt rich was when our son was born. He is a miracle baby because we had tried for several years with no luck. His birth helped crystalize all the effort we had put into studying, saving, investing, working, and taking risks. Since my wife and I are both pretty frugal, using our wealth to provide for someone feels wonderful.

Survey of what makes daily life rich

How Rich You Should Feel Based On Net Worth And Income

Given I can't tell you how to feel, let me introduce to you a simple chart that tells you how you should feel based on a simple net worth-to-income multiple. You can use the average gross income you've earned over the past three years. 

Or you can separately plug in your personal ideal gross income where making more brings you no additional happiness. That ideal income figure for us is $300,000 a year for a family of up to four.

When will you finally feel rich based on net worth and income

Eventually, you will reach a point where you will no longer want to work for anybody or hustle as hard because your wealth is making more money than you need.

For example, during a bull market you might see a 10%+ appreciation of your investments for the year. If your net worth is $1 million and it was 100% invested, you might begin to start second-guessing the necessity of working at a $100,000 a year day job.

Hence, it follows that starting at around 10X your average income, you'll begin to start imagining what being rich really feels like. You'll start to daydream about what it would be like to actually work at a job you enjoy. Perhaps you might even get enough courage try becoming an entrepreneur.

20X Income Should Make You Feel Rich

When you hit 20X your average income in net worth, you finally begin to actually feel rich. A lot of folks believe that you're financially independent once you reach 20X your average annual expenses.

But I never felt this way because expenses can dramatically increase if you have health issues, experience some type of accident or natural disaster, start a family, or your parents need senior care assistance.

Once you're over 50X your average income, you are unquestionably really rich, even if you don't believe it. At 50X, you're no longer second guessing your spending habits because you likely won't be able to spend all your money before you die.

You only need to earn two percent a year to sustain your lifestyle without touching principal, while the risk free rate of return is currently at 3%.

Having more money no longer brings any sort of happiness. You also begin to feel guilty for having so much. As a result, you give more of your time and money away to institutions and people that need your help the most.

Are these multiples subjective? Yes. But they are also grounded on the principle that the ideal withdrawal rate does not touch principal. Once you have a net worth that will always provide the lifestyle you want that will never decrease in value, you are quantitatively truly rich.

Hoarding Can Be A Disease

Jeff Bezos from Amazon is worth over $100 billion. When asked what he plans to do with his money recently, he said he wants to use his wealth to go to space. Jeff has the incredible ability to ignore the poverty plight within his own Seattle community.

Instead, he'd rather hoard as much of his wealth as possible while he is still alive. Yes, he's revolutionized the way we shop and made consumption cheaper and easier, but come on now. He is truly rich and can't spend all his money, even if he tried.

Given we can only pass down $12.06 million per person death tax-free in 2022, hoarding so much more than $12.06 million, let alone billions, makes little sense as the government will first tax you ~40% and then proceed to squander much of your money.

Therefore, the best strategy for feeling rich is to determine your ideal income for maximum happiness and accumulate at least 20X that income figure. Once you get there, spend your time figuring out as many ways to help other people as possible. The more you give, the richer you feel.

Getting Rich And Staying Rich With Real Estate

As mentioned, one way to feel rich is to earn income passively without having to work. You feel like you're getting something for free. Therefore, I suggest investing in real estate.

Real estate is my favorite way to achieving financial freedom because it is a tangible asset that is less volatile, provides utility, and generates income. Stocks are fine, but stock yields are low and stocks are much more volatile.

Given interest rates have come way down, the value of rental income has gone way up. The reason why is because it now takes a lot more capital to generate the same amount of risk-adjusted income.

Take a look at my two favorite real estate crowdfunding platforms.

Fundrise: A way for accredited and non-accredited investors to diversify into real estate through private eFunds. Fundrise has been around since 2012 and has consistently generated steady returns, no matter what the stock market is doing.

CrowdStreet: A way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations, higher rental yields, and potentially higher growth due to job growth and demographic trends.

I've personally invested $810,000 in real estate crowdfunding across 18 projects. My goal is to take advantage of lower valuations in the heartland of America and earn income 100% passively.

My real estate investments account for roughly 50% of my current passive income of ~$300,000. Both are free to sign up and explore.

Stay On Top Of Your Money

You can tell if you're rich by sign up for Personal Capital, the web’s #1 free wealth management tool to track your net worth.

In addition to better money oversight, run your investments through their award-winning Investment Checkup tool to see exactly how much you are paying in fees. I was paying $1,700 a year in fees I had no idea I was paying.

After you link all your accounts, use their Retirement Planning calculator that pulls your real data to give you as pure an estimation of your financial future as possible using Monte Carlo simulation algorithms.

Personal Capital Dashboard Widgets

How To Tell If You Are Rich Even If You Think You're Aren't is a Financial Samurai original post.

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53 thoughts on “How To Tell If You’re Rich Even If You Think You Aren’t”

  1. I only agree with one thing. Rich is making X over your lifestyle of living. It’s a personal definition. I do also feel you are bragging in this article then do a sales pitch in your business, or you’re filled with anxiety. I make 35k a year and so does my significant. We’re a very happy family and we feel richer than people who obsess and focus on money. Set yourself free guys!

  2. Well, I know for a fact that we’re not financially rich or wealthy but mine was pretty simple. Every time my wife and I was at a nice fancy restaurant, I feel like I belong to the rich club. I remember a few years ago when we’re out vacationing in Vegas and we’ve made a reservation to this $120/person popular steakhouse. Boy, did I feel rich! Unfortunately, after the dinner, I thought the food was mediocre and was not worth the money. We never did go back there.

  3. Hello! Recently caught up with the posts and can finally contribute my 2$ … yeah inflation and there is no “cent” on my keyboard ;-)

    There is the “feeling side” of “being rich” and, as many pointed out, it is much more than just monetarily defined. There is the saying, “one is so poor that all one has left is money.” Theshhold of feeling of financially secured is also different or people and it is often based on perceived peer-group comparison.

    Quantitatively speaking, 20x+ income-NW ratio definitely is a lot, but it maybe too high or not enough depending on income level (high income families may actully not need this high multiple, reverse for lower income families). Also NW generating cash flow ability may be vastly different depending on investment capability/style.

    I agree with your statement: “… being rich is more of a feeling after all your needs are met.” To me, this translates to enough passive, stable cash flow to meet all your needs. So I would say if you can generate enough passive, stable CF to fund your “basic” lifestyle, you can declare retirement. If that CF can fund a reasonably “luxury” lifestyle, you are allow to feel rich!

    BTW, one minor issue to point out: income and NW are both extremely right skewed distributions. So mean (or median) + 2 Std. dev will not cover 97.8% (only true for normal-like distribution).

  4. At a net worth of 50x annual expenses you only need a 2% return AFTER INFLATION — and the risk free rate of return does not provide that. The current true yield on a 10y treasury note is about 0.7% annually, net of inflation. If you spend more than that then your spending is not sustainable into perpetuity.

      1. I did. I don’t remember what the multiple was, but I bailed out when a more conservative 3% rule could support my new reduced expenses. Since then the multiple has grown a lot due to rising asset and security prices and the very conservative rule I was relying on in the first place.

        I occasionally work a few hours in medical research, but I don’t like producing much, otherwise I’m going to fall off the Obamacare subsidy cliff… I left the millennials to work (actually work for me to a large extent) in hip cities like San Francisco and moved to a cheaper area where at $80-$90k in yearly expenses I get to enjoy being in the top 0.2% of wealth worldwide –and it sure feels that way here, unlike 300k middle class residents of SF.

        I sometimes feel sorry for the hipsters I left behind working for me, but hey, that’s the bed they made… their lives and ascensions are going to become increasingly difficult. I’ve seen this cognitively dissonant behavior of progressives play many times over as I was growing up in Europe, so I basically arbitraged on American naïveté bent on replicating … the European dream…
        So go on SF hipsters, grab your pitchforks, someone somewhere is trying to build some new housing in the Bay Area… shoot it down quick…and Uncle HB is waiting you and your children on the rent side of the equation… …bless them… there’s a name for that, something about being useful, but I forgot.

  5. Your table “Here’s how rich you should feel based on net worth / average income” is the definition of “golden handcuffs”. Employers know how to prevent their critical personnel from taking the ER plunge, once it shows up on their radar just bump their income up to a level that demotes them to “almost there”. Repeat annually and watch the OMYs accumulate.

    A bank teller who earns 30K/yr comes into a 1.5M inheritance that makes her feel rich. Until her manager doubles her income to keep her on. If her income doubles every year her NW/Inc ratio is falling fast and in a few years she’s condemned to a life “unsettled, running on a treadmill, often miserable”. Details may vary but this is a fairly common story.

  6. At 23, I have a lot more money than I know what to do with. I’m just apathetically watching the zeroes go up for now.

    Honestly, I have no idea. I guess I’m a little lost, at least for now. All I know is that I can carry on laying some good foundations for the future.

    PS. Your speaking skills have definitely improved Sam! (Especially if you still aren’t using any scripts and doing it off the cuff)

  7. If I compare myself to the 1% of Americans, probably I will never be rich enough. If I compare to 80% of American households, probably I am rich. If I compare people from the rest of the world, probably I am very rich. Now all I want is to downsize. What do you really need when you get older? I stopped buying jewelry, clothes, property etc. The only few things I like to buy are leather from Italy or Spain, travel packages, and local goodies when I travel.

    I admire parents in my city who spend money in taking their kids to private lessons such as piano and drawing. There is a culture where I live that people love to draw. I myself learned Chinese painting and have proudly given friends some of my works. One day I chatted with a Dutch guy and he said one of my paintings is worth 1,500 euro. At that moment, I felt life is rich.

  8. I prefer to think of my net worth and by extension feeling rich in terms of a multiple of expenses as opposed to income. I felt rich as a first year Managment consultant living at home and earning $35000 per year. I felt great about buying a $40,000 sports car. 20 years later with two kids, a working spouse, and a mortgage and making $300,000+ Combined, we thought twice about spending more than $40,000 on a family car (we didn’t). We felt middle class even though our income indicated otherwise.

    I believe a multiple of expenses is more relevant than income because
    1. Income can fluctuate wildly year to year (mine does but it’s by choice)
    2. Saving rates differ (I am an aggressive saver; my income multiple would be lower than someone who spends every penny using your table)
    3. Impact of taxes vary and therefore net income varies (I live in a high tax state but I decreased my tax liability after self-employment)

  9. I think that it is all relative and that your feelings of rich or not continue to change. I recall feeling “rich” when I was a recent college graduate. I had a positive income compared to college and was living in DC. I took a ski trip to Aspen for for a week, flew direct from there to NY where I bought a new car and then drove back to DC. Life was good. Looking back all of that was on a modest income. Now I net nearly 7 times that income and feel well off but not “rich” in monetary sense. Kids, school, house, dog walker, etc. the money can go quickly living in DC. Some days I think down sizing and moving out to the mid west would be the way to go. Certainly the money would go further. At the end of the day I look at the experiences that I have and shared with my family and friends to gauge my life. I feel rich when I spend days with my wife and kids but poor when I don’t. You can always make more money but you can’t buy more time.

  10. Honestly I struggle with using income as any basis. As someone with extremely variable income and a low expenditure rate it’s hard to fathom using income to measure anything. Even with averages if you had an extremely high income the sky would be the limit on networth requirements. That doesn’t seem to match with reality.

  11. Hi, Sam: We live in bay area, i’m 51, own a home, no mortgage, and our liquid assets is ~50 x our living expense (using personal capital, thanks!), or 30x pre-tax income. However, almost 50% of our expenses are highly discretionary (charity, travel, restaurants, in that order…). We’re planning to retire in 4 more years when I’m 55 and our kid goes to college (his 529 already funded not included in liquid assets), and hopefully we can get up to 50x pre-tax income in 4 years, but not a big deal if we don’t.

    Yes, we’re definitely blessed and do not deserve our good luck (simply joined a pre-IPO company and watch stock goes ~30x in 14 yrs). The only reasons i’m still working is 1) our kid is still in school and we can’t travel anyway 2) we can donate more to charity while i’m working. At this point in life, we’re not asking much and the only concern is the healthcare after we retire.

    1. Good stuff Eric. Got a love it when the company stock goes up so much during your time period. My company stock went nowhere because banks went nowhere since Banks went nowhere for a long time since 2009.

      Regarding your comment on kids not being able to travel, are they not allowed to travel for three months during the summer and four weeks during the winter breaks? I’m thinking about doing that once my son turns three years old, So he can remember better.

      1. Oh I mean we’d like to travel more (and without kid :) . Currently we can only travel during normal school summer & winter holidays and 1-2 weeks at a time. That’s also why our travel expenses are so high: everything is 2x during those school holidays.

        As for what they’ll remember as a teenager? NOTHING. The best things we got out of those vacations were photos, when they were still cute and don’t talk back :)

        1. Lol and so true Erik,

          My daughters and mine best memories are throwing the football in the front yard, riding 4 wheelers in the field, and fishing the creek behind our house. Swimming with the turtles in Maui and walking the streets in Italy aren’t even in the top 10.

          Save the big vacations for the wife. Kids just need quality time.

      2. Better take more leisure travel before he starts K, Sam. After that you’ll only get rushed trips. But “leisure” and “travel with kid” is kind of an oxymoron anyway…

  12. Why is it I am at the point where I can withdraw 2-3% of my portfolio without touching principle, meet all my expenses including a yearly vacation somewhere in the world, yet I still don’t fell rich. what makes me feel rich is the success of my daughter whom we adopted from the foster care system, because I was relentless in pushing her forward. She is of the 3% of foster children who graduated college. Or my son, married and the way he works to provide for his family. Now that makes me feel wealthy.

  13. Sam, maybe I missed it, but did you share where you are in that table of networth/ avg or ideal income ratios?
    Average income over last 3 or x years, is not a great formula for people who can have unsteady income with some very large outliers. Also people are not necessarily living off their average income then, as they save a lot assuming the outliers are not going to happen again or often. In finance, for instance, you can easily make 300k one year, 1.5 million another, and then back to 300k for the next 2 years. Ideal income is a great measure for all! After all in FI you want to live off your ideal income. Does your ideal income assume after tax income or pre tax income?

  14. So Bezos has a speficic goal, which could easily consume 4 billion or more dollars a year (i.e. what the 4% rule would allow him to spend for the rest of his life) for a decade or more.
    If he is (admittedly, probably not purposefully) ensuring, that he will be able to reach his goal, regardless of whether he retains control over Amazon’s money or not, why would we characterize that as hoarding, rather than as super-safe super-responsible fi-certified fiancial planning on his part?

    1. I have no problem with the accumulation of money in the advancement of science and discovery. As a person who worked with the homeless, the idea that my grandchildren will someday do research in space as a private citizen thrills me.
      Bezos did not “grow up rich”- unlike Gates. Son of a teen mom. He attended public school, cooked at McDonalds and his brains got him the rest of the way. More power to him. Our government cannot fund space- maybe he (and Musk) can get us there. The dream is alive! If you, personally, feel compelled to help them–there is always a need for help at the food bank I work at. Taxing more does not solve the problem- one on one help does.

  15. Oh my god hahaha. We’re 1-5 and I was just scolding me previous dumb self!!! That’s amazing, how did you know. Had we invested any money we could have easily doubled our net worth and be at 10x.

    I think Bezo has other plans than just space with that money, that or he has much bigger plans to do in space so he needs even more money. I rather see what he does with his wealth in the area of discovery for all of man :) Giving his money away to the downtrodden people doesn’t help man as a whole compare to developments in space.

  16. My ratio is at 80+ my final salary before early-retiring 10+ years ago. Most people I’ve worked with or associated with are at this level or much higher. I’m thinking many at this level either experience hedonic adaptation, pay no attention to net worth, or still think it’s not enough!

  17. You have so many creative ways of looking at personal finance and wealth Sam! Love it! There definitely are both quantitative and qualitative ways to feel rich. The way I’ve looked at and analyzed my wealth has changed a lot as I’ve aged. I feel so fortunate every day now especially because I get to be at home raising my baby instead of being overly stressed at my previous office job. My health has improved a lot since and that is priceless to me! I want to live as long as possible for my family!

  18. Mr. Rational Buck

    “Once you get there, spend your time figuring out as many ways to help other people as possible. The more you give, the richer you feel.”

    A great thought. It’s so easy to get focused on looking upwards in our careers and obtaining “next level wealth.” While not necessarily bad, it can consume you and others that stand in your path.

    The people that are typically remembered fondly are those that choose to look around and beneath them. They are the ones that pull others to their feet.

  19. I guess “work until your bank account is two standard deviations larger than the average” didn’t make for a very catchy tagline.

    I appreciate your point about spending your time figuring out as many ways to help other people as possible, but you can do this on a smaller scale before you get rich.

    It’s just nice to help people out, and incredibly humbling.

    1. Ms. Conviviality

      I think that it’s likely easier to help other people when one does feel rich. I knew someone that always felt that he didn’t have enough so why should he give his time or money when he needed them more. Just being appreciative and grateful for all the good things in my life has made me feel rich on multiple occasions. I felt rich going on my very first vacation that involved a flight at age 23 to Hawaii :) because I was grateful that I could choose to spend money on something that was not a necessity, unlike how it was like while growing up. I felt rich after I purchased my first home and so grateful for homeownership that I started volunteering for Habitat for Humanity to help other people who made less income than me own their own homes. I felt rich when I got my very first car, a brand new customized Prius, at age 28 after riding public transportation for so many years, that on a few occasions when I saw local college students toting heavy bags of groceries (been there, done that!) to the bus stop I offered to give them rides. Having a career that pays well but to be successful involves constant learning from peers at other entities and professional organizations it has had me volunteering on various committees to gather knowledge into whitepapers, guides, databases, or bringing in speakers for training has been rewarding. Even having the opportunity to go to college which landed me into a successful career made me so grateful that I started mentoring for a school program focused on students at risk of not graduating high school and attending college.

  20. I think a better measure would be Liquid Net Worth/ Desired spending including Taxes. If using Income, then what about the person who saves 50% of it now? In our own case(we are retired), if I divide total Net Worth by pensions/ss the number is 26. But we spend more than our pensions/SS. If I divide that same number by our pensions/ss/passive investment income the number is 16.88, but we don’t spend anywhere near that sum of money. Also our home is worth approximately 13.5% of our total net worth. If I remove the house value from the numerator and change the denominator to the amount of spending per year, I feel we get the most accurate reflection I think which comes out to 19.75, and with a SWR of less than 1%, over the long term it should grow. I think we’re there….

  21. To me, rich has always meant that you could spend money on whatever you want (within some reason) without thinking twice. I don’t really worry about money right now, but I do feel guilty about splurging because I know it just tacks on time that I need to work down the line – so for that reason I don’t really feel “rich” – but it’s also a relative term, and I know I have it better than most.

    Definitely a subjective chart, but I don’t think calculating the ratio based on you income is very helpful. Compare a young professional with $500k income and $2,500,000 net worth to a school teacher who makes $40k / year and inherits $200k. Both have a ratio of 5, but I bet they feel very differently about their own wealth. “Ideal income” is better, but only if you mean the amount of income you need to cover your expenses and live comfortably. Seems like you should just use expenses :)

      1. A fair question once I thought some more about it, but I still my original thought was that any way you slice it, $2,500,000 feels richer than $40,000. I think in many situations the teacher would be more grateful and maybe more happy, but not rich. It does shed some interesting light on relative wealth though. Those examples were very loosely based on two friends of mine who know each other and have many of the same friends. If you put them in different groups my view may change – I can imagine many scenarios where the young professional lives in NYC and is surrounded those with more, while the teacher feels super rich because $200k is a fortune in some small town.

        What you’re really doing when you start to separate for relative wealth is adjust for expenses: The teacher in West Virginia feels richer because that might be 10x their expenses. Some young professionals who are trying to keep up with the Joneses and spending >$250k per year would feel poorer, but not other who have expenses in line. In any event, I think using expenses as the denominator is the most telling. An interesting thought exercise nonetheless.

        1. I remember making $40,000 a year in Manhattan and feeling poor because I had to split a studio. But when I made $160,000 from my stock pig, I felt like the richest person in the world.

          When I walked away with $1.8 million after selling my SF rental for $2.74M, I felt rich because I escaped a bullet by not selling in 2012 for $1M less. But I don’t think I felt richer than when I was 23 years old with that stock gain. I felt richer when I was younger.

          1. In John Grisham’s The Firm there was a part that has stayed with me. The main character, despite having gotten his law degree and being well on the way to being a rich man reflected on how unhappy he was, especially when compared to some friends of his that had married each other and were both making very little as school teachers yet loving their life.

  22. I first felt rich when I left my career to pursue my personal interest. I can tell you for sure its a mind game, that chart tells the story for sure. I think its important to mention having a spouse that is like minded helps a lot. Great article Sam

  23. This is so subjective.. much like the controversy on your 300k middle class post. Some folk can never be wealthy or rich because they need things or expensive experiences to make them feel good.

    Having an attitude of thankfulness and greatfulness makes a huge difference.

    Personally, even being raised, without much, we had plenty.

    If you increase spending with income, need the maid, nanny, food brought to your door, lawn service, dog walker and ya don’t believe you are rich/wealthy, money is not the problem.

    1. It’s subjective, but not very controversial. Ever since publishing my $300K/year middle class article, news outlets have picked it up. The National Association of Realtors came out with a report about needing $333,000 a year to afford a median middle class home in SF too.

      We can discuss the qualitative feelings of being rich all day. It will never end b/c we are all unique. But we can use a quantitative measure, and I think 20X ideal income = net worth is the level where being rich truly is a reality. What multiple do you think is best?

      1. Sam,
        News today loves to post contoversial… The desires of the middle class have changed from years past, ever increasing. Eating out multiple times a week, private school, 2 new nice cars, dog walkers, maids all upper classes.

        As far as multiples, it’s qualitative, it’s a feeling. I had a great career, great wife, great kid, great vacations with family. I don’t believe there was ever a time when I didn’t feel rich. My family always had my back if needed and never was. I felt rich when I had a 1x because of all of the non material things I had. Now, our ratio would be over 100x our required expenses and over 60x living expenses. I felt I could majorily disagree with the boss at 10x. So let’s call it 10x.

        My needs are small, and I’m happy with what i have, which IMHO is they key to being wealthy.

        1. Good stuff. Although, I think a lot of people who live in coastal cities just want to be able to afford a medium priced home. Surely that’s not too much to ask compared to the previous middle class definition.
          Good stuff. Although, I think a lot of people who live in coastal cities just want to be able to afford a medium priced home. Surely that’s not too much to ask compared to the previous middle class definition.

          What is your age now and why do you have a handle done by 53? Why not age 50, or 55, or 60, or 45?

          1. We lived where we could afford to live. Want has been conflated to need in many areas of modern life. If more people lived where they could more easily afford rather than needing to live where they want, would real estate prices be so high?

            I “work” with builders and other real estate pros and have asked who’s bying these small houses down town? Young doctors, folk moving from NY, NJ and the most 20 something’s that can’t afford them and gifted 100 to 200k from momie and daddy. Great life lesson ehh?

            DoneAt53 because I retired at 53, 55 now, 56 very soon.
            I waited a little longer to retire but should not have. Shortly after my oldest son took his life, I could no longer meet the demands for high quality engineering, that was the push, so to speak.

  24. Our ratio is a little over 20. I don’t feel rich and still hustle a little bit. Income can fluctuate too. Last year our income was really good. Once my wife retires, our income will drop quite a bit and our ratio will go into the mid 40s range.
    Getting over 50 will be tough. You’re right about that part.

    Too bad about Bezos. But is money really going to solve the problem? Bill Gates lives in Seattle too and he’s doing good thing with his money. Doesn’t seem to stem the tide of homelessness. I think it’s more of a housing affordability issue.

  25. Awsome post Sam, especially after our recent discussion in the comments section. I believe you are the average of the 5 people you surround yourself the most, which also drives your qualitative personalistion of being rich. I love the simple ratios and personal examples, can you at some stage do a piece on “sustainable level of contentment”?

  26. Paying off the last of my student loan last year. It wasn’t much to begin with, but it was the only debt I had remaining after I paid off the car a couple years ago. But then hitting 100k net last month for my 27th was even more of a rush. Still riding that high!! I’m no longer wondering when all my scrimping and saving will start to pay off. I feel like I am finally starting to trust the process. That in of itself is a victory for the rich mindset :)

  27. I like the analysis. Although I prefer to try to frame “being rich” in non-quantitative terms in my own life. But as you stated, those non-quantitative things like spending time with friends or doing what I want only come about because of monetary success.

    As for Bezos, I agree. If you look at what the Gates Foundation is doing, to me that’s the example. Folks like Bezos and Musk and Zuckerberg should unite and start something similar.

    1. Even though Zuckerberg is the king of fake news and sued local Hawaiians out of accessing their ancestral lands, he did start the Chan Zuckerberg foundation And has been donating money to education and local hospitals. Hoarding his wealth until he passes away would be such a shame Since he’s so young.

      1. In fairness, ancestral Hawaiian land ownership is a pretty complicated thing. Zuck seemed to reverse course fairly quickly when he was brought to realize just what a morass it is. Personally, I don’t see how it can ever be sorted out at this point.

        Let’s cut Bezos some slack, too. The man is funding his own space program. A lunar colony won’t come about from a few multi-millionaires pooling their savings and human civilization probably will not endure if we don’t move most of our mining and at least some of our manufacturing off of this planet.

        I used to dream about doing exactly what he is now talking about doing when I grew up (after being inspired by some of Gerard K. O’Neil’s stuff in National Geographic and, possibly, Robert Heinlein’s The Man Who Sold the Moon) after creating something like what Paul Allen is making. Unfortunately, the first step was making a 100 billion dollars (seriously, that was the figure I arrived at circa late 1970’s) of my own money and I allowed myself to get distracted.

  28. Hey Sam. Do you have any guidelines for careers that have a income profile that is way different from the norm?

    As a physician we have a very different expected income course that sort of makes using general rules harder to apply (like your what your net worth should be for a given age article)

    For example. After college a physician doesn’t enter the job force at age 22. Rather he or she accumulates substantial debt for another 4 years in med school.

    Now, at age 26 despite all those years of education instead of entering a high 6 figure job like most would at this stage of their lives if they were this specialized, the physician enters an incredibly low paying job in the form of residency.

    This can last 3-5 yrs (mine was 6 actually for reasons explained in my financial mistakes blog) which when I was in residency (97-03) made mid 30s in beginning to mid 40s in end of it. Then I did another year for fellowship (believed I made low 50s).

    Finally, 11 yrs after college and at the age of 33 did I start making 6 figure salary. Granted it is now a very high 6 almost 7 figure salary now, but it has been such an exponential curve of my income that it is hard to tell where I fall if based on current salary (just based on last yr I am about 3.5 times that salary for my net worth). Given my net worth is over 3 million I don’t think that last chart really applies because if truth be told the way I feel is more like the 2nd to last (20-49x) rather than the 2nd (1-5x).

    1. The great thing is, nobody can tell you how to feel. The chart is just a guideline that I noticed after going through the numbers and speaking to others who have gone through the progression as well.

      What we do in life will often determine how good we feel about ourselves. I have to imagine that being a doctor is quite rewarding compared to many other professions.

      And the good thing about being at 3X – 4X, but feeling like you are above 20X Is that I really do think you will have more upside in terms of how you feel.

      At some point, there’s a high chance he will likely wear down and not want to work as many hours or do the same thing every day. When that time comes, knowing that you are a 20 times or somewhere around there will give you Quite a feeling of relief.

      What is your personal ideal income for maximum happiness? Ours is $300,000 for a family of up to four, so therefore, the target net worth would be $6 million.

      1. To be honest, when I first started out I always thought $5 million would be the ideal net worth to have because using the 4% rule it would provide $200k/yr. As I slowly developed into my current lifestyle I have toned it quite a bit and think I could live a great live at $125k/yr (I know studies say $90k/yr brings maximum happiness, but I though this padding could allow me to never have to skimp on vacations and always get something off the menu without looking at price when I’m retired).

        I am very lucky that I have fully taken advantage of geoarbitrage. I live in a state with no income tax and fairly low property tax assessments. The only downside is the sales tax is higher (over 9%) however I would have to spend over $3 million/yr in goods if not more to even come close to the savings I got from no income tax on my salary, so that’s a huge win for me.

        The home prices where I live are shockingly low (I moved from Cleveland Ohio to my current place and what would have gotten me a tract home on 1/4 acre allowed me to get a magnificent property here).

        I’m like you in that I think real estate is the key to wealth. This past year I have solely been concentrating on building up passive income streams with real estate. I am not as active as you in wanting to become a direct landlord, but I mainly have invested through private syndications and have been extremely happy with the results.

        Right now (age 47) I have almost $60k/yr in passive income from all pre-retirement sources which include dividends from my brokerage and the rest in real estate income (when I hit retirement age as of now I would bring that up to $73k/yr without social security and a pension I have (if I include that it brings it up to $114k/yr). So I am almost at my target (although I think I want to get to 125k/yr with pre-retirement funds only (you never really know if either will be there when I’m in my 60’s).

        Thanks again for your great blog. It’s definitely on my daily reading list (and I listed you under my Continued Financial Education list on my blog as a must read).

      2. Dr. Remoulak

        Hi Sam, I recall a previous post you did where you felt $200k was the ideal income for maximum happiness, assuming I do recall that correctly, just wondering what factors have resulted in you changing your perspective on that. Maybe a future post? Thanks.

        1. I still think about $200K a year is the ideal income for an individual. It’s probably gone up about 20% since I first felt this way so will yours ago thanks inflation.

          $300,000 a year is to be able to raise a family of up to four.

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