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.
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.