If you want another reason why having a high net worth is better than having a high income, all you’ve got to do is look at who gets stimulus checks from the new CARES Act.
If your latest tax return shows an adjusted gross income of under $75,000 for single filers or $150,000 for joint filers, you get a $1,200 or $2,400 stimulus check. With each child, you get an additional $500. Once you make over $98,000 as an individual without children, and $198,000 as a couple without children, you no longer get any benefits.
To make between $75,000 – $150,000 a year in investment income at a 4% rate of return requires having a portfolio of $1,875,000 – $3,750,000. At a 3% rate of return or withdrawal rate requires having a portfolio of $2,500,000 – $5,000,000. Therefore, plenty of millionaires who are retired or semi-retired will be eligible for stimulus checks.
Yes, many of these people are the same millionaires who are also getting healthcare subsidies under the Affordable Care Act. Even though the ACA is supposed to help make healthcare affordable to the middle class and poorest of Americans, I guess you can’t blame these millionaires for legitimately taking advantage of the system.
Based on all these benefits offered by the government, if you want to be a millionaire who lives the best lifestyle while also getting continuous maximum government benefits, then strive to have a net worth between $2,000,000 – $5,000,000.
Out of curiosity, I asked several millionaire stimulus check receivers about what they plan to do once the free money arrives. Here are their profiles and what they had to say.
What Millionaires Plan To Do With Their Stimulus Checks
Family of 4 with a $2.8 million net worth
We plan on using our $3,400 to help pay for our rental property mortgages. We have seven rental properties with two tenants saying they have temporarily been furloughed and would like to delay their payments. Hopefully, they will get their jobs back once the economy reopens so they can pay the full rent, but who knows for sure.
Family of 3 with a $2.1 million net worth
We’re going to spend most of our $2,900 stimulus check on local restaurant delivery for the duration of the lockdown. Like you, we love to eat sushi and steak on occasion. With these stimulus checks, it feels like free money. Might as well treat ourselves to some good food during these difficult times! We’ll put aside $1,000 for rental expenses and a new couch.
Fortunately, both my wife and I are still getting paid our salaries during the lockdown. However, if the lockdown lasts for more than two months, at least one of our salaries will be at risk. But we’re confident that if one or both of us are furloughed, we’ll get our old jobs back.
We’re going to invest $500 in an eREIT and see how it goes for the year. We want to diversify our investments away from mostly stocks and bonds.
Family of 3 with a $1.8 million net worth
Although we are U.S. citizens, we live abroad and hardly pay any U.S. taxes. Yet, we’re still eligible for $2,900 in stimulus checks. We’re just going to use the money to invest in our Roth IRAs.
Maybe it’s not right that we are getting a stimulus check, but our net worth was over $2 million before the coronavirus pandemic began.
74-year-old grandfather and 72-year-old grandmother with a $1.5 million net worth and pensions
We will spend our $2,400 on groceries and takeout. Our son has helped us figure out Instacart, so we will be ordering all our groceries through them at least until the pandemic subsides.
We’re relatively frugal with no debt. As soon as the shelter-in-place order is over we will use the money to hire a gardener and a handyman to fix some various things around the house.
64-year-old single tennis buddy with a $1.9 million net worth
My buddy is the most frugal guy I know. Before the lockdown, we use to hit on the public tennis courts a couple times a week. He still drives a 30-year-old Nissan 240Z despite owning multiple properties mortgage-free. He also is single and has no dependents. I think corona time is finally making a difference! Here’s me asking him over text what he plans to do with his stimulus check. We’ve been talking about the Porsche Panamera for two years.
Related: Are You A Real Millionaire? $3 Million Is The New $1 Million
How I’d Spend A Stimulus Check If I Got One
Unfortunately or fortunately, my family of four will not be receiving a stimulus check from the CARES Act. If we were, my wife and I would have received $3,400 since we have two kids. That would be so sweet! We’d donate most of the money to my father-in-law who lives alone in West Virginia. Whenever I get an unexpected windfall, I like to spread it around to as many people as possible.
Despite not getting any financial assistance during this difficult time, it’s still nice to dream about what we’d do with the money if we did. I’m imagining a scenario where we’re getting paid $150,000 to work from home for two months while also getting stimulus checks. What an amazing dream!
Further, hopefully, many of you readers will receive benefits from the coronavirus aid package. I’m excited that many grandparents who are on Social Security also get stimulus checks. Therefore, I thought it would be a good idea to provide some suggestions.
What To Do With Your Stimulus Check
1) Calculate expected income. The first thing is to calculate the expected loss of your various income streams. It’s a sad process, but it must be done. Your future income will dictate how you should adjust your spending. I recently calculated my budget and kind of winced at how much we spent in one quarter.
2) Create two budgets. First create your Essentials Budget, which includes all the necessary things you and your family need to survive. Now create your Normal Budget, which includes all the things you were spending money on before the pandemic hit. Find the difference in the two budgets so you’ll know what to cut.
3) Calculate the shortfall. If you cannot cover every item in the Essentials Budget from your expected income, then you must use your stimulus check to cover such essentials. The government’s goal is for nobody to starve and lose shelter during this time of crisis. Further, we must ensure all medicine and support is provided for those with medical needs. Everything else is superfluous and should be cut.
4) Calculate your emergency fund. If you have less than three months of living expenses in cash saved up, but can cover your Essentials Budget, then I would save at least 50% of the stimulus check. Although saving your stimulus check is not helpful for the economy in the short-term, in the medium-term, preventing financial ruin for millions of people will tremendously help you and the economy.
5) Spend on local businesses. If you’ve got more than six months of living expenses in cash saved up, then I suggest spending the stimulus check on local businesses that are hurting the most. Spend immediately on food pickup or delivery. Set aside the money you would have spent money on a haircut, dry cleaning, flowers, a fitness class, etc and spend it on these small business providers once shelter-in-place is lifted. We must support our local economy to the maximum so that people who worked for these local businesses can return to work. Thank goodness for the Paychecks Protection Program!
6) Restock supplies that were hard to get during the pandemic. When the supply chain of masks, hand sanitizers, and other products come back, it’s worth stocking up on a month’s supply so that you don’t find yourself in a shortage again. Restocking your household when there is plenty of supply will help minimize shortages in the future.
7) Pay your liabilities. The people who could not fully recover from the 2008 – 2009 financial crisis were those who got trapped under too much debt. It is important to try as hard as possible not to have any debt anchors tied around your ankles when the economy eventually starts to recover. The government is doing its best by having moratoriums for rent, mortgages, and student loan repayments. However, if there is no debt forgiveness, you will eventually have to pay back your creditors.
8) Donate it all. If you find yourself in great financial shape, yet still received a stimulus check, please donate the money to whatever cause, business, or medical facility that needs the most help. Donating to a family member in need is also great. The money was not meant for you. The money was meant for people who are seriously struggling.
Receive Relief, Provide Relief
I’m very happy that millions of Americans will be receiving up to $1,200 in stimulus checks during the coronavirus pandemic. I’m also pleased that millions of Americans will be getting an additional $600/week in unemployment benefits until July 31, 2020. $4,200/month in unemployment benefits per person is a lot of money in California.
On the flip side, the worst thing that can happen is if a stimulus check goes to a non-tax-paying, healthcare subsidy-receiving multi-millionaire who decides to save it all. At least spend the money in your local economy if you’re not willing to give the money away to people who need it most.
Let those who need relief, get relief to survive another day. Let those who don’t need relief at least spend every dollar of the stimulus check so it is injected back into the economy.
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Readers, what are you planning on doing with your stimulus checks? Do you expect more stimulus checks in the future? Do you agree or disagree with the income requirements for getting a stimulus check? If you are a millionaire receiving a stimulus check, please share how you are spending the free money.
I sent mine back to the government thieves that plundered future generations to get it.
I make 56,000 a year. In 2019, my mother passed away and I received 66,000 from her accounts of which I had to report as income. So I did not receive a stimulus check because it cause my AGI to be over 100,000. I have no savings or assets. I don’t own a home because I went through a divorce and never had enough money for a down payment. Basically lived check to check. I find it very unfair that people with assets in the millions get a stimulus check and because I received money from my mothers account after she passed, I get nothing. My base income is 56,000 a year. I am 63 years old and will probably not be able to retire for several years because I can’t afford to. How is this fair
Interest post. I only have a small amount of debt with a $1,500 Paypal Working Capital Loan. I’m thinking about paying the loan off to go debt free again. But I should probably build up my emergency fund in case I experience another dip in income. I love the idea of being debt free but working capital can really help a sticky situation.
I think diversifying into REITs is a good idea now that everyone is focused on stocks and bonds. I like the passive nature of real estate but abhor dealing with day to day tasks like leaks, damage, chasing down rental payments, etc. I want as much passive income that requires the least amount of maintenance work on my part!
Sam, didn’t you say 3 million was the new millionaire a while back? An elderly couple with 1-2 million in NW are not rich, per say, but in good financial shape since they will likely need that money in case of health issues and when they cannot work. The majority of the average American NW comes from a combination of their primary home and retirement funds (IRA, 401ks, pensions). Those people are relying on money from 401ks that may have taken huge hits and thus their “fixed” income decreases. Also, 75k a year doesn’t cut it for many coastal cities if you don’t have your mortgagae paid down. I wonder what the numbers are and what percent of the checks are going to high NW individuals and couples.
Ours has not yet arrived since we paid taxes before this happened. We owed and wrote a check because we rolled part of a TIRA. We had to do the “sign in and give the information” thing.
We are solidly middle income with a million of assets, no debt. We get pensions and Social Security (but I worry about both with few paying taxes). Very frugal.
We found a “back pack buddy” group that gives food to kids to take home. They are in full swing. Stopped our Church donation, they seemed to be doing little for the community.
Found another Church that was working with the undocumented. Our “sanctuary undocumented” are working full time in packing plants still making next to nothing. Yesterday my state recognized that a large plant was not even testing. Today our state is back to full lock down. Half of our check will go to them.
We hung a sign on our door with washed money in baggies for the delivery people.
Gave my 25 person grocery one of their own gift cards for a “lunch on us”. They bought some store pizza!
Holding back $200 for each of our small hair salons. I wish we could figure out how to get them the money now!
BTW- most of my extended family is out of work (nurses/dental/hotel/ real estate/gaming). They have seen very few cases of the virus in their states. They have not seen a penny of unemployment yet. My mom (89 in full lock down) is floating a lot of people until the money comes in….
Hi Sam,
Thanks for sharing this. I am an avid reader of your blog. I couldn’t help but find that we fit the profile of having a NW within that range and an income below the range listed in your article. We’re 35 and we work for ourselves and decided to take this winter off to explore moving to Los Angeles (were from Canada), of course that’s on hold now. We also had our first baby in 2018 and I took 18 months off, so our income is different than what it would be if I was working. Right now, as Canadians, in the same situation we can obtain stimulus checks of 2k per month for 4 months per individual, as long as we have lost income due to COVID-19. There are other support measures if you own a business. I just wanted to point out what a big difference between Canada and the US. As far as spending, I do want to spend more on eating out and supporting existing businesses. Also one of my tenants has chosen to take off in May (breaking their lease) so that will be painful since it will be hard to rerent in this environment. I definitely have noticed pretty much 1/3 of tenants are having a hard time in general, I’m happy to help by discounting rent or deferring based on their situation. We have a live in nanny who has been isolating with us every weekend (if we weren’t isolating she would be seeing friends and family on weekends), so I’ll also give her extra hours ( and buy her some necessities and snacks) of work each weekend so she can save more to bring her daughter to Canada soon.
I’ve invested it into a diversified portfolio of stocks and bonds. Have around 2 million and seems like a made the most returns after prior downturns. Sounds nuts but I love sell offs and recessions for the opportunity to buy less expensive assets. Five to ten years to an infinite time down the road this will be big money. However, hate to see people suffer because of it. Investing helps the economy as well.
My wife and I received our $2400 stimulus money and sent the majority of it to our emergency fund. I normally wouldn’t invest my EF into the stock market, but after the crash, I simply had to withdraw some EF money to invest into stocks and index funds to lower my cost basis.
It worked well for us. The $2400 from the stimulus went straight back to partially replenish our EF. No complaints there.
As far as having an opinion on whether or not millionaires should get a stimulus check. I’m not entirely sure because I’m not a millionaire :) I personally would not need a check if I was a millionaire because I trust my money management skills and likely would have quite a bit cash on reserve and multiple sources of income to cover if one source crashed hard. But that’s just me.
I’m not getting a stimulus check because CONgress apparently feels if you make more than $99,000/year as a single person, you are rich. I think since the US owns the world’s reserve currency, this debasing of the currency vis a vis creation of money can go on far longer than you dream possible.
And as long as it props up the (insanely overvalued) stock market, both parties are happy. Democrats get to shower “bottom feeders” with endless money and promises, and Republicans get their corporate welfare and stock bubble. And if the stock market dares plunge again, there will once again be the ubiquitous 3pm pressers by Trump, Treasury, Congress to announce their newest bailout creation.
STONKS?! Is that what you call stocks when the market is tanking?! Really made me smile…and I think I will keep using this vernacular :-)
“Mostly invest it (stonks, real estate, bonds, etc)”
Yep! Stonks is what the cool kids describe stocks nowadays. Glad the bull market is back!
That’s the curious thing about stock bulls–they get 10+ years of gains and are too wimpy to handle a several week pullback, so they need to be bailed out.
It really is egregious that with tens of millions of newly unemployed, the stock market has nearly reversed the entire drawdown. Obviously there has always been a disconnect between Wall Street and Main Street, but the unbridled arrogance of the Federal Reserve, in concert with the US Treasury, to skirt the Federal Reserve Act to buy risky assets, just to keep stocks propped up is outrageous. Stocks, I may add, that were already trading at nosebleed valuations before the crisis hit and are now by all measures, even more overpriced (at least, if P/E ratios mean anything anymore). Worse, this is an affront to prudent investors who once again have had interest rates further suppressed in order to support speculation in financial markets.
I fear our economy has basically become Californicated: that is, the flipping of houses and stocks to greater fools at ever higher prices backed by more debt substitutes for real, productive labor. Why? Because of the lure of easy money. Why work and do something productive when you can day trade? An activity I argue adds no value whatsoever to the world or to people.
So while you smugly celebrate the end of the bear market and the return of the bull market, remember that bear markets don’t end in a couple of weeks. The bull was already incredibly long in the tooth, at historically rich valuations. Very few investors have lived through a true, secular bear market (that is, one akin to 1968-82). Given that is about the least that people expect, that may be a more probable outcome going forward than what is acknowledged. And remember, despite your stocks performing so well, there are tens of millions of newly unemployed. Someday in the midst of our crushing national debt, your fate may take a turn for the worse like theirs have, when a newly elected Congress decides not to bail out your precious stock market.
It is always good to be humble.
I just realized my AGI is negative 400k+, and thats why I got a stimulus payment from the IRS yesterday. It feels wrong, wtf. I read your article and now thinking about what to do with it. I have a problem spending money so I have to find something else worthy to do with it.
Thank you for your caring nature. Many people who are suffering aren’t getting a stimulus.
God Bless
My wife and I make too much to qualify for the stimulus checks. I still support them, since a lot of people are out of work, and really could use the money. I’m in the top tax bracket already, so I know ultimately my taxes will paying for all the stimulus checks (that I don’t get). This is where the progressive US tax systems has the the top few percent of income earnings supporting everyone else while everyone else complains the rich don’t pay enough.
That’s good. And also the Net Investment Income tax of another 3.8%.
Good to pay to support others.
And the medicare surplus tax of .9%. I’m finding at higher incomes, there are many more penalties, and reduced deductions/credits than loopholes that will benefit me.
I did not qualify either. I also applied for the PPE grant, they ran out of money before they dispursed mine. And to add insult to injury, I am one of their so called ESSENTIALS, I am a nurse and getting paid what I have always been paid, Corona or not…. not even hazard pay here. But as my grandmother says, at least I am still working. And I see that my tax dollars will be too…
Feels great to help the needy Right?
No disrespect, but simply being in the top tax bracket (income of $622k or more for married couples) isn’t who I think of when I think about rich people that don’t pay enough in taxes. I think about people for whom most of their income is related to capital gains, or private equity managers benefitting from the carried interest loophole.
No disrespect taken, I completely agree with you. I don’t consider myself rich, but I pay a lot of taxes. “Rich” is hard to define, its different for everyone. When I see government wanting to tax the rich more, they typically use an income of $250,000 per year as the cutoff.
We are retired, so our income hasn’t been affected yet. Our net income has decreased almost $200K, however. I’m gradually donating our $2400. A few things we are doing: 1) We increased our automated donation to our church by $100 per month. Some people might not write a check unless they physically attend church. 2) We had a once in a life trip that was cancelled for next month. I’m planning to pay our pet sitter anyway for the 16 days we were planning to be away. 3) I’ve donated $200 thus far to my favorite zoo, as they won’t be able to open in May or maybe even June and will lose a tremendous amount of revenue. The precious animals still need to be fed and the keepers paid (Animal Adventure Park in Harpursville, NY, home of the famous April the Giraffe). 4) I plan to pay my hairdresser even though I can’t get my hair done this month. 5) We give very generous tips when we order takeout from restaurants. 6) I procrastinated on filing taxes, so I’m sure any excess will be paid to the IRS!
Correction…our net worth, not net income, has decreased almost $200K. Sorry.
It’s great what you’re doing during this time of crisis for many people. Thank you for supporting the folks and animals in your community by continuing payment.
Feels great to help the needy…right
If you’re using it to invest, you shouldn’t be getting one.
Yes, I’d like to receive a Stimulus Check, but I don’t qualify and shouldn’t With the high number so those that do need a check for basic living (food, shelter, medical), I think they should come first.
100% agree. Unfortunately, I desperately needed it. If not, I would have donated to a homeless shelter or a brave hard working Nurse.
Having freshly done Venn diagrams last night helping my youngest daughter with her e-learning math homework, I would have to think the percentage of net worth millionaires that would receive stimulus checks would be extremely small. (Imagine a circle with “millionaires” in it, a circle with “receiving stimulus check” in it…..now picture where they intersect……not a large area)
Yep. This is a very niche problem.
Not sure. Many traditional retirees over 60 who own their properties outright are millionaires b/c property has appreciated tremendously over the past 40 years.
I am on Social security. And it’s not much either. Don’t intend to be mean but I still helped family with finances.
Prayers for all.
PS. Nurses are also a great person to help.
So many people are suffering. Pray to God that this is over soon!!
God Bless and stay healthy!
My biggest question is how the 3 families in the first 3 examples accumulated net worth so high (between $1.8M – $2.8M), while making less than $150k last year AND having kids. Perhaps they inherited money, made smart investments, or live super frugally.
Even for a couple w/o kids making $150k, after taxes and normal cost of living expenses they may only be able to save $30-$60k per year, meaning it would take a long time to get a net worth anywhere close to $2M.
Good question.
Family #1: Investments and heavy in tech investments. NASDAQ is UP in 2020 as of today.
Family #2: Stock investments, real estate investments, and aggressive savings (60%) for 15 years. Multiple streams of income.
Family #3: Stock investments, geoarbitrage and living really frugally.
Thanks, that’s good to know. Glad to see that families without super lucrative salaries can still chart a path towards a high net worth.
Shouldn’t even be a question. Rich people who don’t need it, should not receive any stimulus.
If so, donations of many types are needed and very much needed.
Homeless Shelters
Free meals groups
Animal Shelters
Nurses
Many charities
Etc etc etc
It sickens me to hear the millionaires speaking of how they will spend the money.
If I were rich, which I’m from it. I live on a small Social security check. Giving makes you feel great!! God Bless
Pay income tax. Paid April but June is coming up fast.