What Income Level Is Considered Rich?

So you're wondering what income level is considered rich. After all, if everybody makes $1,000,000 a year, are you considered rich if you make only $500,000 a year? Probably not! In other words, rich is relative and also subjective.

When Obama was president, he considered single people making over $200,000 to be rich. He specifically called for raising taxes on singles making over $200,000 and couples making $250,000 every year he was in office.

At the end of 2012, there was a compromise in Congress for raising income taxes for individuals making $400,000 and married couples making $450,000 and above.

Why $400,000 + $400,000 doesn't equal $800,000 before a married couple has to pay more taxes, I'm not sure. The government harkened back to its old days of believing one spouse should stay at home. Thankfully, the marriage penalty tax has all but been abolished.

Today, Joe Biden also believes anybody or any household making over $400,000 is rich. He has promised to raise taxes back to 39.7% from 37% for individuals making over $400,000 and married couples making over $450,000. W2 income-earners pay the most in taxes.

Therefore, if you are constantly stressed out making a lot of money, you might want to consider taking things down a notch. Making over $400,000 while working 80 hours a week is not considered rich. That makes you a time mendicant with minimal freedom to do what you want.

If you are raising children in a big expensive city, your $400,000 income will go quicker given the cost of private school tuition, taxes, healthcare and more expensive housing. Without generational wealth, you will worry about the future of your children, despite a top 2% income. How rich you are depends on where you live and how big your family is!

New Tax Changes Increase The Definition Of Rich

The Trump administration viewed individuals making $500,000 and married couples making $600,000 as rich. Those are the rough income thresholds that now pay the top federal marginal income tax rate of 37%.

Further, the estate tax threshold increased to $12.92 million per individual and $25.84 million per married couple for 2023. That's pretty rich! If you die with more than this, you'll have to pay a 40% tax on your money if it's not properly sheltered.

Income Rich And Capital Rich

There are two aspects of monetary wealth we can focus on: Income and Capital. Some make a lot of income and are considered income rich. But they have only a little amount of capital since they are either starting off in their careers. Or they haven't saved and invested an appropriate amount.

Thankfully, that's not going to happen to you because you read Financial Samurai! You will follow my savings guide to ensure capital accumulation over the long run.

Meanwhile, there are those with a tremendous amount of Capital, with little income given. They may have inherited their wealth, won the lottery, landed a big settlement, and, therefore, have no income generating skills.

Capital-rich people may have also invested skillfully over the years, built great companies, or were incredibly disciplined in their savings. There are many different types of folks in the Capital-rich category. It's not a bad place to be at all.

Ideally, to be rich, it's best to have both high income and a large capital base. This is my goal, and therefore my goal for all of you as well. In this post, we'll focus on the income side of the equation.

What Income Level Is Considered Rich?

Instead of just saying what I think, I'm going to share my thoughts on various income levels per person for populations living in coastal cities such as San Francisco, New York City, Los Angeles, Boston, and Washington DC and work out the answer.

The idea is to focus on the more expensive parts of America. If we do, we can translate the figures into living in other expensive countries in the world such as Paris, Hong Kong, London, Tokyo. Of course, if you move to much cheaper places, you'll be considered that much wealthier.

Let's look at what income level is considered rich

Is Earning $50,000 Considered Rich?

Not at all. The median household income in 2023 is about $76,000. After contributing a healthy $16,000 to your tax-deferred 401(k), you are left with $60,000 in gross income to live. High inflation is eating away at the earnings power of all individuals.

With an effective tax rate of about 15%, you have about $51,000 left after taxes. $51,000 is enough to live a middle-class lifestyle. However, you'll probably want to find a partner who makes at least $25,000 a year to be comfortable with a family.

Median household income - What income level is considered rich

Is Earning $100,000 Considered Rich?

Earning $100,000 is not considered rich either. You are considered middle class to lower middle class in expensive coastal cities. $100,000 is considered upper middle class in lower cost areas of the country.

After contributing $19,000 to your tax-exempt 401k, you are left with $81,000 a year in gross income, and ~$60,750 net income based on a 25% total effective tax rate. The income limit where you can no longer contribute to an IRA for deductions is $83,000. It's too bad the government puts income caps on certain retirement programs given everyone should improve their finances.

In 2023, to be able to contribute to a Roth IRA, the income phase-out range for single filers is $138,000 to $153,000. For married couples filing jointly, it's $218,000 and $228,000. Hence, with a $100,000, you should try to contribute to both a 401(k) and a Roth IRA. I regret not contributing to a Roth IRA when I was younger.

Earning $100,000 a year is definitely not considered rich. Only if you are under the age of 25 and live in the MidWest would earning $100,000 be considered well-off.

How much do you make a year? (individual, not household)

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Is Earning $200,000 A Year Considered Rich?

At $200,000 a year, you are considered upper middle class in expensive coastal cities and rich in lower cost areas of the country. After $19,000 in retirement contributions to your 401(k), you are left with $181,000 in gross income, leaving you with roughly $126,700 in after tax income using a 30% effective tax rate.

By the time you are making $200,000 in your career, you're probably in your 30s or older and have a mortgage and kids to consider. Preschool may run $10,000-$25,000 a year, followed by $30,000-$40,000 in annual housing costs for a reasonable home. You're left with $20,000-$40,000 to spend on food, travel, groceries, gifts, lessons, and so forth. Not bad.

Here's a sample $200,000 household budget. It comes from my post: How To Make Six Figures And Still Not Feel Rich. The money goes quick!

$200,000 Income And Still Not Feeling Rich

Is Earning $350,000 A Year Considered Rich?

At $350,000 a year, you're living a upper middle class lifestyle in an expensive coastal city. In a heartland or southern city, earning $350,000 a year is considered rich. After $19,000 in 401(k) retirement contributions, you're left with $331,000 in gross income, or roughly $231,700 in after tax income using a 30% effective tax rate.

With a 30% after-tax savings rate, you guys have $157,000 left to spend. Your family has grown to four, and you seek a bigger home. An average 3 bedroom, 2.5 bath home in a good area in San Francisco will run you about $1,500,000 to $1,700,000. We're not talking anything super fancy at 1,800-2,800 square feet. Your mortgage at 3.5% on $1.1 million will therefore cost around $60,000 a year + $15,000 a year in property taxes.

Below is a detailed budget I've put together for a family of four earning $350,000 living in an expensive metropolitan area. Both parents work, so they get to contribute double the amount to their 401(k) while also now earning $4,000 worth of child tax credits. The family is comfortable, but not rich.

Personally, our family is shooting to consistently generate over $300,000 a year in passive investment income so we can be stay at home parents. We fell $300,000 is enough to provide my family of four a pleasant lifestyle.

$350,000 Middle Class Budget Income - what income level is considered rich

How About Earning $500,000+? Does Half A Million Dollars Feel Rich?

With a $500,000+ income, you are considered rich, wherever you live! According to the IRS, any household who makes over $500,000 a year in 2023 is considered a top 1% income earner. Of course, some parts of the country require a higher income level to be in the top 1% income, e.g. Connecticut at $580,000.

With $477,500 in gross income after contributing the current $22,500 maximum to your 401(k), you have about $300,000 in after tax income (effective at 34%, which includes 10% state). That's right, you are paying around $162,350 in taxes alone, yet the government still wants to take more from you!

For reference, here are the 2023 retirement plan contribution limits.

Undeterred, you crank up your savings to 35%, and put away another $105,000, leaving you with $195,000. Subtract $70,000 for annual mortgage/property tax leaves you with $125,00. Then subtract another $40,000 in tuition for two.

With around $7,000 a month in money available for travel, food, entertainment, goods, gifts, you are sitting pretty, especially since you are putting away away $122,000 a year in savings. That said, there are couples still struggling to get by on $500,000 a year!

Top one percent household income expenses - what income level is considered rich

Rich Income Levels By Age

Another way to know if you are considered rich is if you earn the top one percent income level for your age. After all, it's not fair to compare a 25-year-old's income to a 45-year-old's income.

Below is a great chart that shows the top income by age based on 2015 numbers. The income numbers are roughly 15% higher today.

For example, if you make at least $116,000 at age 25, you are considered rich. If you make at least $173,000 at age 30, you re considered rich. At age 35, if you make at least $291,000 you are considered rich. And if you make at least $388,000 a year at age 40, you are also considered rich.

top one percent income levels by age

The Alternative Way To Know You Are Rich

The debate about what income level is considered rich is endless. The income level really depends on your cost of living and your desires. Therefore, here's another definition for when you considered yourself rich.

If you don't have to work for a living, you are also considered rich! To be financially independent, you just need to have enough investment income to cover your desired daily living expenses. This is the definition of FIRE, a movement I helped start in 2009.

If you are super frugal, then becoming rich is much easier. You're rich if your living expenses are only $24,000 a year but your investments generate $25,000 a year after taxes. However, there is obviously a balance where you don't want to be so frugal that you're miserable.

I left full-time work in 2012 at the age of 34. Even though I went from a multiple six-figure salary to $0 active income, I felt incredibly rich because I was 100% in control of my time. I had about $80,000 a year in passive investment income that could provide a simple life for my wife and me in San Francisco.

For five years, we lived a care-free life and traveled the world. Then in 2017, we were blessed with a baby boy. The desire to earn more money took a jump higher. We needed to make enough so that both my wife and I could continue taking care of our boy full-time before he goes off to kindergarten in 2022.

Build Passive Income To Be Rich

At the end of 2019 we were also blessed with a baby girl. Therefore, we've been 100% focused on building more passive income. Our ultimate goal is to regularly earn over $300,000 in passive income consistently every year to provide for a family of four.

Below is our latest non-401(k) retirement portfolio income streams. Although $300,000 only provides for a middle-class lifestyle in expensive San Francisco, we feel very rich because we have time freedom. We disliked commuting and sitting in meetings all day. It is a blessing to be full-time parents.

Here is our latest estimated passive income breakdown. Being able to earn six-figures in passive income is considered rich in my book. Ultimately, we have a goal of earning a top 1% income, but passively.

Financial Samurai passive income investments 2023 - how much income is considered rich

Favorite Passive Income Investment

My favorite passive income source right now is real estate crowdfunding. To simplify life, we sold an expensive SF rental property for 30X annual gross rent and a 2.5% cap rate, and reinvested $550,000 of the proceeds into real estate crowdfunding across the heartland of America in 2017.

Now we don't have to deal with maintenance and tenant hassles, while earning a much higher cap rate. If you're interested in diversifying into real estate, check out Fundrise for free. It is my favorite real estate crowdfunding platform if you want a diversified, low volatility portfolio portfolio. For most investors, investing in a eREIT to earn income 100% passively makes the most sense.

I've personally invested $954,000 in real estate crowdfunding across 18 projects to take advantage of lower valuations in the heartland of America. My real estate investments account for roughly 50% of my current passive income. 

The Rich Person's Game Plan

If you want to get rich, here is the game plan I would follow.

Depend on yourself.

Earning a high level of income is a choice, no matter what the naysayers tell you. It is up to each of us to further our education to develop a skill-set that enables us to earn more.

It is up to us to work longer than our peers, so that after two more hours of work a day, we'll have made over 600 more hours of progress a year.  Don't you think you could develop something amazing with 600 hours of time? You know you can.

Get a mentor.

If you want to learn how to become wealthy, learn from someone who is already wealthy, not someone who tells you how to get wealthy without being wealthy. Those folks are charlatans, and some do it very well, which is why they are wealthy.  

Instead, seek out a mentor and do everything possible to ingratiate yourself into their circle. Successful people want to give back. It's the way they are hardwired. Your mentor can tell you what income level is considered rich and give you great guidance.

Remove disabling beliefs from your mind.

Wherever you go, there you are. You mind is either like a power plant of positivity, or a cesspool of negativity.  You must believe in yourself, otherwise nobody else will.  

I am so internet/computer illiterate that I thought there was no way I could start a website, until one day in 2009 I said ,”f*ck it” and got it done. I'm only slightly more literate than a doorknob now, but at least things are running and I can just do this full-time if so desired.

Go the traditional route. 

Earning six figures and saving millions of dollars is straightforward. It just takes time. When you are incredibly rash, you do stupid things and screw up your financial goals. Save and invest even 10% of your income over 30 years and you will likely have more money than you will ever need.

Be your own boss. 

Time and time again, you stumble across stupid things that turn out to be big hits. Twitter, for example, was one cockamamie idea that has revolutionized the way we communicate. Airbnb is another idea that has helped lower costs in the hospitality industry.

Everybody should at least own their brand online by starting a website. I started FinancialSamurai.com in 2009, and by 2012, I was making enough to live a good life in expensive San Francisco. Now, I never have to go back to work again! Not a day goes by where I'm not thankful for starting this site.

Find an amazing partner.

Let's be frank. Life is much better if you can find a loving partner to share not only your experiences, but your expenses. Your loving partner will also be your greatest champion, pushing you ahead during difficult times. If you've haven't found someone yet, it's absolutely worth spending more time finding a life partner.

I found my amazing partner in college. I knew she was the one when she woke up at 5 am to make sure I'd get up by 5:30 am to make it to my first interview at 6 am on Wall Street!

Shoot For A Net Worth Target

Now that you know what income level is considered rich, it's time to focus on building your net worth. After all, it's not so much how much you make, but how much you keep. To be truly rich, you should aim for a net worth equal to 20X your average annual gross income or more.

You can also shoot for 25X your annual expenses, but I've found many people cheat using expenses as a variable. As a shortcut, people will just severely restrict their spending to try to get to 25X.

By focusing on 20X income, you force yourself to continue saving and investing more the more you make. I know too many people with big incomes who spend everything they make. As a result, their net worth is below average.

Ideally, you want to be so rich you have F You Money, where you can tell people off who are bothering you. You likely won't, as I've discovered over the years. But it's nice to know you can!

Suggested net worth targets by age, income, work experience - what income level is considered rich
Suggested net worth targets by age, income, work experience

Net Worth Is Richer Than Income

Income is great, but it is taxed the most aggressively. Therefore, it's also a good idea to ultimately focus on building a large net worth to be considered rich. Once you have a large amount of capital, focus on capital preservation. The last thing you want to do is lose a lot of money in a bear market, which ultimately takes away your freedom!

Here are the net worth thresholds to be considered rich by city. Overall, a net worth of at least $1.2 million is required to be considered rich in America today. Although, the net worth amounts are much larger in more expensive cities.

What is the minimum net worth amount to be considered rich?

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Invest In Private Growth Companies

The way many of the richest people in America have gotten rich is by building great companies and investing in private companies. Companies are staying private for longer, as a result, more gains are accruing to private company investors. Finding the next Google or Apple before going public can be a life-changing investment. 

One of the most interesting funds I'm allocating new capital toward is the Innovation Fund. The Innovation fund invests in:

  • Artificial Intelligence & Machine Learning
  • Modern Data Infrastructure
  • Development Operations (DevOps)
  • Financial Technology (FinTech)
  • Real Estate & Property Technology (PropTech)

Roughly 35% of the Innovation Fund is invested in artificial intelligence, which I'm extremely bullish about. In 20 years, I don't want my kids wondering why I didn't invest in AI or work in AI!

The investment minimum is also only $10. Most venture capital funds have a $250,000+ minimum. In addition, you can see what the Innovation Fund is holding before deciding to invest and how much. Traditional venture capital funds require capital commitment first and then hope the general partners will find great investments.

Track Your Net Worth Like A Hawk

I hope this post has answered what income level is considered rich. Choose the income you believe to be ideal, and go for it.

In the meantime, sign up for Empower. It is the web's #1 free wealth management tool to get a better handle on your finances. You can use Empower to track your spending and manage your net worth. You can also make sure you are not paying excessive investment portfolio fees with their award-winning Investment Checkup tool.

After you link all your accounts, use their Retirement Planning calculator. It pulls your real data to give you as pure an estimation of your financial future as possible using Monte Carlo simulation algorithms. Definitely check to see how your finances are shaping up as it's free.

There is no rewind button in life. Therefore, you might as well do the best you can now to make sure your finances are in good shape.

Retirement Planning Calculator

Buy The Best Selling Personal Finance Book

If you want to dramatically improve your chances of becoming rich, purchase a hard copy of my new Wall Street Journal bestselling book, Buy This, Not That: How To Spend Your Way To Wealth And Freedom. The book is jam packed with unique strategies to help you build your fortune while living your best life.

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Buy This, Not That is also a best seller on Amazon. By the time you finish BTNT you will gain at least 100X more value than its cost. After spending 30 years working in finance, writing about finance, and studying finance, I'm certain Buy This, Not That will change your life for the better!

What Income Level Is Considered Rich was originally published back in 2012. It has been updated post pandemic. It now takes over $500,000 to be a top 1% income earner. If you disagree with what income level is considered rich, at least you can try to feel rich.

To subscribe to my free newsletter, join 55,000+ others and click here. I've been writing about achieving financial independence since 2009. In the newsletter, you learn a lot more nuanced personal finance tips as well. What Income Is Considered Rich is a Financial Samurai original post. Thanks to inflation, what is considered rich keeps on going up!

418 thoughts on “What Income Level Is Considered Rich?”

  1. Savings Easily

    Hey Financial Samurai, great breakdown on income levels and what’s considered rich! It’s so true that the definition of “rich” can vary widely depending on factors like location, family size, and lifestyle choices. I appreciate your detailed analysis for different income brackets and the cost of living in various areas.

    I particularly resonate with the idea that being rich isn’t just about income but also involves building a solid net worth. Your emphasis on saving and investing for the long term is spot on. Achieving financial independence and having the freedom to make choices beyond just working for a living is a powerful goal.

    Your personal journey and insights into passive income are inspiring. It’s fantastic that you’ve been able to achieve a balance between financial success and time freedom. Your advice on finding a mentor, being frugal without sacrificing happiness, and the importance of a loving partner adds a personal touch to the financial discussion.

    The breakdown of net worth targets by age and income is helpful for setting realistic goals. It’s a reminder that wealth is not just about making money but also about preserving and growing it wisely. Thanks for sharing your experiences and providing valuable insights for those of us navigating the journey to financial well-being!

  2. Clever Outlay

    This blog really got me thinking about what it means to be “rich.” It’s crazy how the definition can vary depending on where you live and your lifestyle. The breakdown of income levels, especially in expensive cities, is eye-opening. The advice on building wealth, having a good balance of income and capital, makes a lot of sense.
    The real-life budget examples hit close to home, especially when considering family and kids. The idea of financial independence and passive income is something I’ve been thinking about, and this post has given me some practical insights.
    Overall, a solid read that makes you reflect on your own financial goals and what being “rich” really means.

  3. Haha, you will be in a much better position if you stop wasting money on Charity, it’s just not meant for people who is not in the top 1% tier.

  4. Broken Arrow

    Ever been kicked in the balls? This is what traitor biden did to every taxpaying American with his communist policies to crush hard working Americans and give the spoils to our enemies. Transferring American wealth by stifling our energy independence closing down the oil industry, pushing stupid “unsustainable” green energy nonsense and promoting the climate change farce and spending our nation into oblivion with idiotic pot filled money laundering and unnecessary eternal spending has driven the American citizens future to fiscal suicide. Stock up on food and ammo it won’t be long now for you to Get ready for the collapse.

    1. Have you thought about taking this brilliant insight to someplace more appropriate, like OANN or Truth Social?

      1. The guy is more right than wrong about Biden, and we’re on the verge of nuclear annihilation, thanks to the people who keep voting in these moronic politicians, over, and over, and over again, while complaining about them. That’s the definition of insanity.

    2. Actually….I think Obama did an even better job with kicking the balls. That 3.8% NIIT tax is unfair. Why hasn’t the 250K threshold been increased? It’s unfair that it never goes up. That has had a permanent effect. That’s Obama’s doing.

  5. Agreed. A lot of the SE is extremely affordable, even in cities like Charlotte and Raleigh.

    Some things I also just don’t think people put that much pen to paper on value. Take $20k for pre-school and just try to teach them some things yourself for free, meanwhile put the $20k into the stock market in your kids name and it’ll be worth $320k when they are 40 or over $2m if they receive when they retire. Is the pre-school really worth that much? For an overwhelming majority of folks, the answer is no. Same is true for private school – except multiple the above stats by however many years you pay for it.

  6. I am curious about the crowdfunding passive income portion in your totals. I threw some money into Fundrise after reading one of your previous articles about them just to see what they were about. The main thing that worries me about those crowdfunding platforms is that the rental income returns are relatively miniscule while the bulk of the returns are listed as ” Valuation increases.” What I don’t know is how they determine this and it still appears to be increasing even as values across the country are decreasing.
    I am a bit hesitant to throw in more as I wonder if the valuations will be readjusted at some point or if they will just be on paper. Are the monthly income amounts you list above including the valuation or is it just the Rental income generation? Owning rental property myself I am a bit skeptical on value and am more interested in Cash flow.

  7. I’m guessing you put the 200k and 350k household budgets together at different times? It looks like the 350k household spends less on car expenses than the 200k household! And the same on vacations. Probably need to add a few hundred a month each for those categories to the 350k household’s budget (maybe more). I’d say 15k annual for vacations and about $1200/month for car expenses (payment, insurance, gas). If you’re earning that much, you’re going to be in a stressful job and will want to vacation in nice places where everything is taken care of.

  8. Gosh, what can be considered rich is so subjective and a lot depends on where you live and your lifestyle.

    I live in an expensive city (NYC) and I would say $250,000 income minimum to pass off as rich. More than that is required in the more expensive parts of the city.

    I lean towards the R. Buckminster Fuller definition of rich: Wealth is a person’s ability to survive X number of days forward (without physically working).

    Thus, passive income plays the most important role along with net worth. The freedom to use your limited time on this earth as you see fit is the mark of richness.

    This is an awesome post! Thanks for sharing. :)

  9. I love seeing this type of content right now, considering how things have shaken out over the last couple of years.

    I will say that $100,000 can be considered upper middle class in more than just the Midwest. Throughout much of the Southeast, even in some of the more expensive areas, $100,000 easily fits the bill for a household of 2-4. Of course, it can start feeling like you’re more middling if your family grows much more than that…

    I’m from one of the more expensive parts of NC, and people making $200,000 or more around here have it made. Early retirement, their children’s college paid, and so on – of course, a lot of people still mismanage it and end up in just as bad of a situation as those who make a quarter of that. In the end it’s all about learning to manage your money and not falling prey to lifestyle creep.

  10. Great write-up, thank you for updating it for current $$ amounts in 2022. Some really good advice here.

    Healthcare/dental/vision costs seem to be totally missing from this article (which is where a healthy % of my income goes to a 4 child 2 parent situation). With a little googling, it seems that in 2019-2020 healthcare costs overall are nearing 20% of GDP. That’s got to be worth mentioning here… right?

    1. What percentage of your income goes to these costs?

      When people have their jobs, they tend not to see these costs or feel these costs as much given they are highly subsidized by their employers.

      But as a fake retiree, we pay 100% unsubsidized healthcare premiums of $2300 a month. The only good thing is that we treated as a business expense, so we have a discount.

  11. So much depends on where you live of course, but when I was working in CA, getting to $100k was a huge goal. It took a long time to get there, but when I finally got my base to six-figures I really felt like I’d made it. I had a huge weight off my shoulders financially and felt solidly independent. I didn’t feel like I had money to burn, but I did feel “rich” and comfortable in meeting my living expenses with enough disposable income leftover after savings.

    1. $100,000 a year income is a great goal. And you are right, it does feel awesome once you get there. You have more breathing room to save and invest for your future.

      The thing with living in high cost of living areas is that at least there are more higher income opportunities. The upside tends to be much greater, which is why I like to stay in a high cost of living area.

  12. Is there an age/income formula as to when to switch from Roth 401K to Traditional 401K? Considering potential for future tax hikes/income growth? I looked for content on this with no luck….

  13. “With an effective tax rate of about 15% [on $72k/year], you have about $51,000 left after taxes.”

    Have you written an article on the average effective tax rates by income? I would love to see where I stand. With an assortment of deductions and credits, I’m usually around 13% with $145k/year mostly W-2 income.

      1. I’d love to take you up on that offer, though tax strategies are not my expertise. I know you have an article on how to pay as little income tax as possible, but some of those items go against my personal strategy (namely, contributing to Roth instead of traditional IRA, which is a tax now vs. tax later situation anyway). Maybe that’s what I’ll write about.

        Let me do some research and get back to you.

  14. Sam,
    Very interesting topic, and great analyses!
    You used 25% as the effective tax rate for someone with income of $100k. I beg to differ. 24% is the tax bracket for a single, only for the portion of her income between $86k – $165k. So realistically, the effective tax rate tends to be lower than 25%. I would use any value between 15% – 20%.

  15. I am rich since I was 49 years old and before that I was 1/2 rich only working part time from 24 years to 49. I served my country from 19-23 so I wasn’t rich just someone who gave back.
    Now my rent is free my healthcare is free and I get tax free money inflation protected income for life at over 60K a year and have over 100k as a back up.

  16. On the topic of net worth as a multiple of income or expenses as discussed in this article…. how do you factor in a defined benefit pensions and VA disability benefits (both with annual COLAs for inflation) and that you already receive?

    I’m 50 my $67K military pension (No FICA but taxable)+ $45K VA disability (all tax free) currently generates around $100K net income after healthcare cost, survivor benefit, and taxes are deducted.

    How do I factor in this additional $100K passive net income into to my net worth?

  17. Why is no one saving for college in your scenarios? College costs a minimum of $100k per kid for a state school. I’m mid-40s, gross just over $200k ($132k salary, $75k mil pension) in D.C., married with four kids, and this is my monthly budget:
    $3000 retail purchases only my wife can explain (mostly clothes for the kids)
    $2500 mortgage ($500k @ 2.25%)
    $2300 taxes (state, fed, FICA)
    $2000 groceries (beef, fish, chicken (rarely nuggets or hotdogs), eat at home 6 days a week)
    $1700 401k contributions (1 account)
    $1200 529 contributions (4 accounts)
    $1000 IRA contributions (2 accounts)
    $800 car payment (1 new Audi, 3 other vehicles paid off)
    $400 phone cable internet
    $300 cell phones (6)
    $300 dining out
    $200 electricity (more in summer)
    $200 gasoline (I’m mostly teleworking)
    $200 booze
    $200 FSA
    $150 car insurance
    $150 natural gas (heat and hot water, less in summer)
    $100 water & sewer
    $80 trash pickup
    $60 vision and dental
    $54 medical care for family (yes $54, thanks TRICARE)
    $50 streaming stuff
    $0 child care (stay home mom)

    Monthly leftover: enough for a ham sandwich

    Annual savings: $46k + interest/appreciation

    1. Chris,

      College tuition varies greatly across the country. State universities in FL are about only $6,500 for annual tuition. Unless, a parent plans to board their kid in their own condo, college is not $100K per kid. A smarter way is to buy a 3-bedroom condo and rent the other 2 rooms to other students to cover the mortgage.

      Then there is the argument that you don’t owe your kids a 100% paid for education.

    2. GoodProblemToHave

      I agree. I make above the definition of rich, but I am eating what I kill.

      I have a $2M home that is pathetically simple because of where I live, and the problem with my scenario is if I lose my job or die, my family can’t keep up with the $10K mortgage and $70K/year private school. My entire life is dependent upon a company that would lay me off at the first sign of trouble.

      To me, “Rich” means not having to depend on someone else for money….not how much money you earn right now.

      In fact, With the Work-From-Anywhere policy becoming commonplace, I’d be smart to sell (or rent) this simple house and move to another part of the country, where I could get me “one of ‘em circular driveways.”

      Rich is what you keep, not what you earn.

  18. Anyone who can afford to pay $24,000/year to preschool is rich!! It’s interesting reading but not anywhere close to real life. You can’t claim
    a person isn’t rich because they spend money on things only rich people can afford to. If you can put $40,000 into savings every year, you are rich. If you can spend $8,000/year on 3 weeks of vacation, you are rich. If you can afford $4000/ month mortgage on a 1.8 MILLION dollar home, you are rich. You could use this method going up to any income and claim its not rich.
    I’ll do it. If you make 5 million a year you are not rich. Cost or private plane (maintenance, fuel, pilots,) $500,000/ year. Mortgage on 22,000 square foot mansion: $500,000/ year. Taxes: 2 million a year. Cost of private yacht (maintenance, crew, fuel) $500,000/ year. Insurance on plane, yacht, house, and 2 million dollars of cars: $250,000/ year. 401k savings: $250,000/ year. Yearly cost of new armani suits, Rolex watches, shoes, gambling in vegas: $250,000/ year. Cost for full staff of 24/7/365 full security for entire family $250,000/ year. Money left: zero. So 5 million a year isn’t rich.

      1. Mike is right. Deducting rich lifestyle expenses and then saying you have no money left does not mean you aren’t rich.

        And of course if relative if you feel rich. But there is only one person that has not got someone richer than them.

        Stop complaining that you or high incomes pay taxes.
        You pay taxes becaus you can shoulder it.
        If it bothers you that much earn less and spend less.
        1000$ a month on food for 3 people? Learn to cook bloody hell.

      2. 1.5M for a home? Making 300k per year does not afford that much house. Maybe in coastal cities, but the down payment alone would be a huge deterrent to purchasing a home of that magnitude. In all non coastal cities, a 1.5M home is a literal mansion. A realistic budget for most people earning 300k would not include a 1.5M home.

  19. Rebekah Dugger

    Full Disclosure, I have not read your entire article because my husband I both are exactly who you are talking to “rich” and working 80 hours a week SUDDENLY from home while raising six kids…. The pandemic started over a year ago and this is the first time I have read anything I can relate to… Thank you!

  20. Not sure how this information is even considered facts. Where I come from in the midwest, and most other places I’ve lived, if you make 100k or more, you’re rich no matter how you slice it. If you make 100k a year you’re already making more than about 90% of the country does. And if you’re having money problems making over 100k a year, maybe you should sell that summer home that you really don’t even use for anything more than bragging rights. Maybe downsize they number of vehicles you own. Do you really need that convertible corvette that makes you looks like a creeper? I know lots of families with children in their homes that make around 40 – 50k a year and they’re considered upper middle class. The only people making half a million dollars a year and still complain it’s not enough, are greedy people who care about no one but themselves and don’t care who they have to step on to get it.

      1. Do you have a formula for what you believe is a healthy amount of debt to leverage based on risk and reward? I’m currently leveraging about 350,000 dollars of debt in real estate. I’m only 25 years old.

    1. Agreed about the creeper in the vette! When I dreamt about lots of money it was about fancy things, then when I made money it was about peace of mind. Realized the fancy things weren’t as important as I imagined. Net worth is now $4.6M and I drive the same 2010 4Runner and wife’s in a 2015 Highlander.

  21. A different perspective on being rich in the US: No debt. Well, ok you have a mortgage on a house that has appreciated considerably in the years you owned it and you maintained it well. Even if you don’t have a six figure income, if you have no credit card debt, no student debt, no car payment, you have a couple of months worth cash on hand and you have a decent 401K with your employer, you are much better off than the average American family. I consider it rich because you can go to bed every night without worries. That’s a big thing because no worries is good for your health.

  22. The middle class in this country is shrinking day by day and it’s just plain sad and WRONG. Why is it that someone who makes 50K a year has to struggle basically? This bothers me to no end, hopefully one day we’ll find a solution this has to end.

    1. Cut wasteful government spending . Get ride of the public schools and make it competitive again and accountability . Then you will have a simpler system that can thrive in the free market which creates more opportunity for everyone to make more money.

    2. smart person

      well in this case there is no such thing as inflation gas still costs that silver quater from the 80’s so as silver and gold prices go up other prices go up

    3. My wife and I make in the 50/yr mark each we aren’t rich, we aren’t hurting for money. It is all about living within your means and not taking on more debt or spending than you can feasibly pay back. Like we are saving to purchase a better family vehicle because we have a new child and need something newer and bigger and have set a goal to save 20k as a down payment on something so that we don’t have to tighten the purse strings too much for fun stuff and we are more than half way to our goal. We plan on buying in the spring if we can keep to our budget and savings. It is all about perspective you don’t need to buy a 2million dollar home or have the new phone every 6 months. I’m on year 2 with my iphone xr with a cracked screen and live in a smaller home because we can afford it on one income if needed. If you cut the fat smartly the middle class wouldn’t struggle as much as it does quit pitting yourselves against those who have the fun shit and lots of trips eat you aldi food and spend wisely. The wise man buys a the expensive leather boots once that will last him years instead of the cheap rubber ones that last maybe a year. Be smart in your purchasing and budget for what you want don’t create more debt than you can handle.

  23. I think to make things VERY SIMPLE. If you are in the top 1% in income or net worth in your region, you are considered rich. It makes no sense to compare income of $500K in SF or NY to $500K in Ohio. Purchasing power is vastly different and your level of wealth is always relative to others. So go find what is the top 1% (of individuals or households) making in your area and you will know how you are doing. I am in the 1% in my region (California) and I have more than I can spend in this lifetime. If anything, I need to set up a good trust so the future generation doesn’t waste it and can appreciate it.

    1. I prolly will never have what you have but I invested at 18 and at 35 I got a million in stock dividend payments and tons more in stock assets I am gonna start selling down to about 200,000 in stocks and start the drip accounting again. It blows my mind that I am literally 5-10 richer than any person I know and that I literally earn 30k after taxes a year just sitting around before investment returns. I only spend 15k a year and that I am richer than every person I know. I try to explain till I am blue in the face to these kids that the only ones that should be taxed are those over a certain income but they have a mindset to just blow through cash, most earn more than me short income wise but have no cash cuz they just waste it on arbitrary crap and moving around. It scares me cuz I got my wealth by slowly reinvesting less money than most people I know waste and wisely saving any gift that rolled my way (luckily my grandmother taught me about stock trading) and any time I worked it was also reinvested. I refused all of my working mans 30k trust fund and insisted that it be invested in proctor and gamble, 20 years ago. then apple, microsoft, chevron, ibm, disney, intel, boeing all about 15 years ago. Not one of my picks tanked, all were ringers….. not everyone gets to be that lucky and live like that.

      1. Good for you! Back when I used to work at a company as a Sales Manager, I tried explaining to the team (people in their 20’s just out of college like me back then) that if they could save up $50K and put it away in a 401K or IRA, it would be worth millions by the time they reached 60 and would retire wealthy. I would say out of 40-50 people who heard my explanation of interest compounding in the stock market, maybe 1 or 2 actually grasped it (and we are talking college-educated people). People are not financially equal because most do not pay attention. Most people spend and spend to the last cent. That’s why few of us are meant to be wealthy but most will not. They will work and work until old and wonder how people like you did it.. if only they would have paid attention!!

  24. Hi

    My take is that it does not matter how much income to be qualify as rich. This is entirely up to each individuals’ perception.

    WTK

  25. Sam – interesting post. I appreciate your work but feel sometimes you need to be more precise in your choice of words. This caught my eye from the beginning of the post: “The government still harkens back to its old days of believing one spouse should stay at home”…. Is that ideal (of at least one parent to tend to the children) not what you have voluntarily come to the conclusion of, at least in the short term as your son in young? Perhaps there some wisdom in government policy.

    Additionally, I encourage you to take a look at the Book Coming Apart by Charles Murray – there is no technical definition of a middle class, never has been.

      1. Maybe what they should do is giving you the option of ‘filing separately’ if you are married. Without the “married filing separate” penalty of course! Reason being: there are some tax benefits out there for low/middle income families with children that would be less available or more difficult to administer (e.g., child tax credit, earned income tax credit, double standard deduction for MFJ couples, etc.). Not a big benefit but hurting the MFJ couples in the low/middle would be a shame just for the purpose of evening things out in the upper-middle/rich brackets.

        P.S. – I really enjoyed Coming Apart. It’s worth a read.

      2. Single means separate house, furniture, bills etc.
        Married means shared house, furniture, bills etc.
        Single therefore means more expenses.
        It’s an apples to oranges comparison when we assume things are equal when married.
        Not sure why people find this concept hard to understand other than wishing that their personal situation is treated better than someone else’s.
        e.g. a single guy might say, but married couples don’t have to pay two mortgages etc, and, he’d be 100% correct.
        Assuming 1+1 = 2 here is giving all the benefits to the couple, and all the disadvantages to the single. It would be unrealistic and unfair.

        1. In saying that a couple have less expenses than a single person, you are making a lot of assumptions on how they live. If a person is working hard for the money, why do they have to pay more in tax just because they are married?

  26. MagniFIMoney

    Great points across the board. Interesting take on the different political regimes and what they consider rich in America.

    A super relative concept I think, and room for debate on actual numbers presented, but great example of how to blow through $500K a year in our consumeristic, short-sighted society overall.

  27. I think you hit the nail on the head with the 34k after tax amount for a single person. If you push that forward to a per person amount in a family you are doing well. Hell when I was poor, single, and happy I was living on 32k before taxes. Had a lousy studio apartment in the bad part of town, shopped at the cheap grocery store, cut luxuries like cable and internet. That insured I had plenty of money to invest and buy beer. I had tons of free time to read, fish, and do anything I felt like.

    Now I have a “real” job and I have to manage ignorance and laziness.

  28. Kids grown. Home owned. Cars paid off. Retirement in a few years and take home income goes up 50% the day we both retire. We are going to do some serious traveling, freed from never being able to be more than a couple weeks out of the office at a time.

    Next step after that? Get a primary residence somewhere besides this coastal northeastern state, one that has lower property taxes. Aside from dividend income and occasional changes to non-retirement fund investments, retiring pretty much makes us immune to this state’s income tax . . . but only until we have to start taking RMDs at 70.

    That’s a still a very comfortable distance away, but even so, what they call property taxes here are what we called mortgage, taxes, and insurance, for a house twice the size (and half the cost) in the state I’d rather call home.

    The the trick is living to 116 when the RMD’s end (just as they empty the last of the non-Roth retirement accounts) and we are worth a couple hundred million, even adjusted for inflation and index fund returns. May take awhile. I’ll try to be patient.

    1. Sounds like a rich life to me. Can you elaborate more on how you feel regarding the kids been grown up and I’m assuming independent? I’m imagining that I would feel a little bit of sadness, but also Full of pride. With no more responsibility taken care of children, that’s got to feel quite rich no?

      1. Well, both of us had bad first marriages and spent the best part of a decade each as single-parents. Her with two boys and me with two girls. Mine ran away from their mother, who had primary physical custody, due to her worsening mental problems (I only got her to leave them alone by agreeing to continue child support until both were out of high school and/or 18) so having them both become “of age” was a huge relief as it removed any threat of her occasional continued attempts at emotional abuse (and they will ALWAYS be my girls). I celebrated by taking a cruise (my first “grown-up” vacation in a decade or more) and met the woman I am now married to.

        This past year her older son gave us a splendid granddaughter, and my oldest daughter just announced she is expecting in 3 months. Grandkids are great. It’s just like I’ve heard many other grandparents say: “All the fun and joy of having your own kids, then you get to send them home and take a break.”

        My wife’s dog died shortly after we met and she kept talking about getting another. I finally caved and agreed and then she announced she wasn’t ready for us to tie ourselves down like that. The freedom is magnificent, the only thing left is to free ourselves from not being able to take a vacation for more than a week or two at a time (and not enough of them, at that).

        On the other hand, we refuse to wish our lives away. Even while we are still working, we try to savor every day and fill our lives with all the positive new experiences we can as well as spend as much time as is feasible and desired with both our kids and grandkid(s), and with our surviving parents.

  29. Very interesting to read the article and all these stories from the comments. Reading about those $300-500k yearly salaries and millions of dollars some of readers accumulated, only for a moment I felt not so well off, but then I remembered how privileged I actually am and that I should never compare myself to others, and that same amount of money has different value based on costs of the country and city one lives in.
    Here is a non US perspective. I’m 32 years old male leaving in one of Eastern European countries. Married with one kid.

    My net worth is at about $1.2M, consisting of cash, investments and real estate equity. Beside that, my wife and I also fully own 2 flats, total value of about $500k. However, the flats were gift from our parents, and because I like to keep track how much I made myself, I didn’t put that in my/our net worth, while ultimately it really is.

    I’m also driving a luxury sport car which I bought used a year ago, and which has value of about $45k, which I also didn’t put in my net worth as for me the car is a necessity, and I don’t consider it liquid – I will only sell it to buy another one, so it’s never gonna be a cash or cash-bringing asset I can count on (except perhaps in extreme circumstances). I really appreciate and enjoy that car, but will replace it with new fully electric one for the same or even less money then the resale value of current, in order to get cut on fuel expenses almost completely.

    Now, the average take home salary in my country is $1,000 per month.
    I never really budgeted or kept track of the costs, as I currently have a lot of one-off monthly expenses (new flat furnishing, costs associated with new investments and opportunities, etc.), but I’m quite sure my family can live fairly comfortably with total of $3k per month here.
    Worth mentioning, having lived in 3 different Western European countries, also few months in US, and traveling enough to see many others, I enjoy living in my country and lifestyle here, and don’t really want to live anywhere else again (at least for now).

    I only worked as FTE for 6 years in finance in few west European countries, and my last salary was about $100k gross. I quit my job and industry at age of 30 (didn’t like it, boring, and I couldn’t imagine myself doing that for the next 30-40 years, heck, even for a few more years. Come to think about it, I didn’t even want to wait for a few months more before I left in order to get a year bonus), and due to a split of circumstances I never got a new job. While I was working in finance, I had a business idea and founded a startup on the side, which didn’t work out and that attempt costed me $20k total. I also moved a lot for jobs, traveled, made one badly timed mutual fund investment, and it all took toll on my savings. By the time I quit my job, I didn’t have a lot of money saved – about $25-30k (and iliquid real estate equity), which was okish given circumstances and that I only worked full time for 6 years. I had no debts, except for mortgage payments on investment real estate I bought few years back – with 5% down payment being gift from my family (total of about $80k).

    After some testing, I took that $30k and invested it in crypto in mid-2017. Crypto became obsession and full-time occupation. Beside investing, I also started side business within that industry that did well and probably accounts for at least 50% of what I made.

    Come to think about it, it’s hard to believe that it was only 2.5 years ago.
    In those 2.5 years I made close to a $1M from investments, lost most of it when bubble popped in 2018, and then made most of it back once again. Extremely costly lesson and experience that I truly value and appreciate, especially for happening while I’m still relatively young. I learned the valuable lesson and hopefully that experience shall serve and guide me well through future market bubbles and economic boom and bust cycles.

    Now I’m focused on preserving the accumulated capital and creating passive income streams, partly by streaming capital to real assets like real estate/vacation homes for renting and flipping, and starting some cash-flow heavy businesses.
    Goal I would like to reach over next 10 years is net worth of $2.5M+, and $120-240k passive income per year, without taking excessive risk.

    But financial goals aside, not having to work for anyone else, having found a soulmate and a great life partner (extremely important as well), having a lot of free time to be able to be there with my family and watch my son grow every day, while working full time for myself and doing what I like (building wealth by managing my own portfolio, investments and discovering new opportunities) is invaluable in itself. Because of all that, I consider myself very rich and grateful.

    Site like this and experiences from others helps me to keep focus and objectivity. Even writing about my own experience helps- makes things more clear and puts them into perspective.

    1. I forgot to add that schools here are good and free (!), even universities are almost free.
      Healthcare is decent and also almost free. There is no annual property tax as well.
      Childcare is also much less expensive than in US, but still expensive for average $1,000 take home monthly salary. Salary tax deductions are higher though, and there is no 401k, deduction for pensions are relatively big, and the final value you get when you retire is small, not to be compared to 401k or other private company pension schemes that exist in UK for example.

    2. Can you please tell me what crypto you invested in. Everything I tried is fake platforms.

  30. I went to FinCon this year (the large annual finance conference) and had a chance to see the opening keynote speaker Ramit Sethi (of I Will Make You Rich fame).

    He had the best definition of being rich. Having a rich life is having the means to do what you want with you time or provide for your loved ones without feeling guilty of the amount spent.

    You can make a lot of money and not feel rich (JP Getty was famous for saying More to the question of what does he want after becoming the richest man in the world. He was never satisfied and obsessed with money. That is not a rich life).

    Examples Ramit provided about a rich life were simple things like if you have a difficult time choosing which appetizer to get, get both. Taking his in-laws on a luxurious trip with him on his honeymoon, etc.

    I feel like I have a rich life not because my income qualifies me as being rich, but because I can go on vacations that I feel like I don’t have to compromise on what I want and to eat at great places without looking at the cost of it.

    Another great bit of advice I learned from his presentation was that spend 10x of what you do now on things that you absolutely love and cut mercilessly on the things you do not.

        1. I assume Sally is commenting based on quality of presentation discussed. I agree with Sally. If the presentations are similar to this Ramit Sethi character, I see little value. What the hell kind of advice was this?? Sounds like book sellin gobbledygook.

    1. Makes sense. I would also feel very rich if I was able to write a book on how to get rich, despite being a recent college graduate, and then getting rich off the book and courses! He was one example back in 2008-2009 when I realized I should start Financial Samurai. If he could grow an audience as a recent college graduate, I figure I could as well after 10 years working in finance.

      Spending money on what you love is a no brainer. Hope you had fun and got inspired at the conference!

      1. Wow. Didn’t know that book was written as he came out of college. Well the best thing that came out of it then is that you were inspired to start FS.

        Definitely was a fun time, mainly hanging out with people I have developed online relationships with that I was able to solidify into actual true friendships in person. I gravitated to the other physician bloggers naturally (can you believe there were over 20 of us?!?!?) and was cool to find out the real identities of some of the anonymous onese.

  31. In my opinion, you will never feel rich until you are 100% in control of your time and have the freedom to do whatever you want to do.

    I have a ton of friends in private equity, hedge funds and in banking. They all make $500K+ and feel like they are middle class. Now people may think that they are rich based on how much they make, but they sacrifice a majority of their time and life to their jobs.

    Once you build a substantial passive income stream to live off of, then you are considered rich in my opinion.

    1. It’s also because they are surrounded by many people who are making $1M – $10M a year.

      But having 100% control of time is key as I write in the article. I feel richer than my friend who is worth $500 million b/c he goes to work every day and is not happy having to answer to thousands of people.

      1. Buyside Hustle

        Very very true. People in this industry are always comparing themselves to those making more than them.

        Never satisfied!

      2. Hi Sam,

        I’ve read your articles for quite some time. I like you- like your philosophy but I just don’t understand your budgets. They’re incomplete and leave out quite a lot of everyday expenses. IMO

        In the example above, I’m really struggling to understand how a family making 350k can afford a 1.8 million house? In your budget, you have them paying a mortgage of only $3900 a month. I’m not doing the exact math but they would have had to put down over a million dollars down payment to achieve this…so either they were gifted this generous sum or had other spectacular investments allowing them to achieve this. I know people DO have these conditions it’s hardly the norm in this HH income range. Especially considering that this level of achievement typically necessitates a considerable education investment.

        I live in the mid-west, Cincinnati to be precise. We’re a family of 4 and have 2 small children. Our HH income is 250+. We live in a home slightly over 350k that is tax abated and by the time both of us max our 401ks, my husband continues to flex and FSA and we pay for childcare there isn’t a ton of expendable income.

        We’re fortunate absolutely. I would never -ever- (for emphasis) classify us as “rich”. I can’t fathom how a family making in the 200+ range could ever get the upper middle “stamp” in a coastal cost of living region per your tiered representation above.

        It’s possible that our lack of aggressive savings in our 20s and student loan debt we’re currently wrapping up paying causes us to feel less wealth than similar income peers…but probably not much.

        Any thoughts?

        Thanks for taking the time to read! Appreciate you!

        1. I live in high cost north jersey. You are full of it. Making 330k and 700k home along with a 4 family investment property I bought back in 1999 when I was 19. I’m more than fine. I consider myself rich. Living in a 350k home clearing 250k a year, and not rich? What do you do with your money?

  32. Lucky Wolverine

    I feel I’m rich. I live on a beautiful lake in Michigan in a home that is paid for, during the summer, and a very nice home in Naples FL, on a gulf access canal, love to fish. I am 81 years old and my net worth is approximately $5,000,000.00, made up of utility and sin stock investments, and my two homes.
    I have been retired for 21 years, and have not had to draw down on any of my assets or investments, due to a passive income of ~$180,000/year.
    I truly believe the Financial Samurai proves a tremendous service to it’s readers, of which I have been one the last ten years…Thank You. Please don’t ever stop.

    1. Christine Minasian

      Can I ask you if your net worth is $5M total, what is the total value of your 2 homes? Just curious. Do your homes represent 20% of your total worth? Also how did you get $180K per year in passive income. My goal is to have a net worth of $5M and a home in Florida (tax purposes) and the Midwest so your advice would be appreciated!

      Thanks!

      1. Michigan Wolverine

        Sure, My homes make up ~15% of my net worth. My net worth would be much more if I carried them at market value, but I carry them at the value that I am taxed. This is at times less then even the appraised value.
        The other thing is that I bought the MI. home in the early 70’s, and the Naples home in the 90’s. both are at a very low tax rate.

  33. The problem is that “rich” is a function of “net worth” and not income.
    I think most reasonable people can reach a conclusion of who is rich by having an agreed upon threshold for “net worth”.
    Specifically, “net worth” here would be:
    NetWorth = TotalAssets – TotalDebts – CostOfHomeYouWouldWantToRetireInOnceYouStopWorking

  34. I am an “e-merchant” and have income that ranges from 500-600K per year. However, I am not counting capital gains and I think that should be taken into consideration for retirement purposes. On a “good” year where I can 10%, my net would shoot up to a bit over a million, a slow year would be 5% which would translate to 700-800K. So I think once you have that capital cushion it really alters the actual net income as most people perceive it. With that said, I could have retired years ago but I enjoy making money being a business owner.

      1. Selling stuff on the internet. In the early days, it was internet hosting services. Nowadays is physical merchandise.

  35. I’m curious what would level would you consider someone that was living purely on interest from their savings? For example someone who had build up a savings up to 2 million dollars and was living on 4% interest per year which would be about 80,000 dollars and not touching the principal.

  36. “You will never get rich working for someone else.”

    Sounded like total BS, he doesn’t work in tech sales I smugly thought. 10 yrs later my wife and I make $800k/yr living in San Francisco and the Samurai’s “barely making it on 500k” post was freakishly accurate. We feel very comfortable and fortunate (I know being raised on 18k/yr) but I will never feel rich until I can live a good life not at the whims of my employer.

    I think someone who makes 80k passive and needs 60k to enjoy his life is richer than I am. My number is 200k passive, saving 50% of gross working on it! BTW new to the site but loving it!

    1. My numbers are similar to Toms. I know this seems like a lot of money to most people, but it doesn’t “feel” rich. You don’t have to worry about paying the monthly bills, but I still buy used cars and shop for lower prices on things we buy. My goal is to have my house paid off and $5M invested. That will make me feel FI, even if I keep working.

  37. First of all, I don’t understand how you can live on 30k when the average health Insurance plan is about 10k for your Income level. I know you have already subtracted federal, state and property taxes, because that is more than 30k. I also think most people underestimate the cost of children. You can give them the minimum, or you can pay for lessons ($60 per violin hour) and educational goodies that most kids thrive with. When you do have kids, things change – what if he/she needs expensive therapy or wants to go on that high school trip with the band? Or refuses to make his own lunch and needs lunch money? I applaud you keeping touch with your roots and saving for a rainy day. But I do know elderly millionaires who won’t even spring for a hearing aid. And I did know one who would not fix his plumbing (no running water or toliet). Don’t become too thrifty, unless of course it gives you great pleasure. I would do the vacations now because they get very expensive with a family of 4. Obviously you are very good with money, so I wouldn’t worry about becoming poor again. I grew up that way as well. I still remember the wish list of clothes I wanted for school that I did not receive (I circled them in a catalog)!

  38. Great analysis from the old vault of Samurai ^_^. I can spend forever reading all the comments. I’ll chime in…

    Our family makes 250k so we’re right on the border of Obama’s definition of middle class. But to me, middle class stops and tops at $150k. You can have all the comforts and some leftover to cushion yourself at $150k even with a larger family.

    Our family of 3 lives on $30k a year (including home mortgage). Our expenses are pretty low. Without the mortgage we can keep under $1,300 a month. I’m not saying this to bronze my frugal badge, a race to the bottom of how lean you spend money is dumb. But we choose to live this way because it’s easy to be out of touch. I don’t want to forget who I am…the girl from the wrong side of the tracks.

    Anyways, there’s not much we want that’s appealing to part with the money. I enjoy grocery hunting for deals, it’s a fun game for me. Vacations makes me nervous because I’m not productive during. Having no kids saves buckets too. We’ll have our children attend public school when the time comes.

    So adjusted for our standard of living, I consider us rich. I wonder if we made $800k a year would our spending change much… probably not?

    1. OH, having no kids makes a huge difference. No music lessons? No sports? What if they need specialized care your insurance doesn’t cover (eye training for problems tracking sentences for example). Wait for high school and college lol.

      1. My kids are in their 30s now and cost for college was $185K including cars food book tuition – other emergencies happen and helping the people you love has its joys – not saying anything against building wealth – I am learning more about how to invest to get a higher % on the wealth acquired – without paying someone else to manage my money

    2. Lily – It’s easy to be rich if you don’t mind living around poor people! Did that in DC for 6 years. Never again.

  39. Am I all wrong or is everybody else crazy including the host. To me u cannot compare incomes in different parts of the country. You must compare disrectionary income after ones basic expences. That should be similar in likeness across the country. A European vacation or a lexus is about the same in Alabama as it is in California and so forth. That to me would be a much better way of telling if someone is rich or not. In my opinion If you can come up with 10k a month or 120k a year to spend on whatever floats your boat you have to be considered rich, not filthy rich but for the ordinary Joe, rich. That could be as little as 120k living off of mommy and daddy or 500k in SF with divorce and child support payments and a trophy wife with a couple more kids. To me it is all relative to what you have at the end of the day to spend on what you want, be it a vacation home , investments or a couple trips to the nude bar, whatever. My situation is i’m 60 been retired 4 years net worth 2.4m retirement assets 2m. I live on 105k yearly because that keeps me in the15% bracket. I spend only 2.5% of my retirement assets. I have 50 to 55k in discretionary income and have trouble spending that. I still am a value shopper but there is just so many vacations you can go on in a year. Life time habits are hard to break. Never made more than 89k. Lots of overtime. My wage was in the low 60’s when I left work. I live in a 275k home, slightly above the area norm and I always said pay off debt and spend below your means and save. Even with normal income over time you can accumulate a lot of money and still enjoy life. I always bought brand new homes and cars and paid cash for them, except the first one. I did have a mortgage for 7 years in the 80’s. Remember intrest rates were 12% back then. Be a smart shopper and and even smarter invester. I have made more money with investing that every cent i ever made on a paying job. Just my 2 cent. Thanks for listening

    1. Your savings is impressive – you must have made some great choices – giving your salary and retirement fund, you must have done more that throw it in a 401K in a target mutual fund – Kudos to you!

    2. Rchinpg – Rich is definitely a question of net worth not discretionary income. My household generates $10K in disposable income per month but it’s amazing how easily we dispose of it in our upper middle class Northeast neighborhood.

      Rich is being able to cover all of your expenses with passive income. F you money. It would take us another 15 years of $10K per month surpluses before we had a big enough stash to be rich.

  40. Your article makes me want to move to America. I live in Montreal, where Quebec’s highest income tax bracket starts at 104,000 and Canada federal highest income tax starts at 202,800. Salaries in Canada are generally lower than American and tax is much higher. So harder to save and accumulate wealth.

    1. that’s what will happen here too if we get Medicare for all, free college and whatever else they’re trying to give away.

  41. I’ve pasted the comment below from the original post I stumbled upon. All I can say is wow. Good job. Wish I was that good at write offs. Instead I pony up 35% of my revenue…….after all possible write offs. Guess I’m doing something wrong. Not so sure about deducting partially anything from income because you are a business / LLC. It still is to be a legitimate business expense.

    After the accountant is done, I only paid taxes on 117k of the overall amount of 340k income.
    It all varies per case, I have a business and a LLC so I can deduct practically anything from my income… is different when you have a set salary… you’re screwed.

    I consider myself rich, point and simple.

    – See more at: https://www.financialsamurai.com/how-much-income-do-you-consider-to-be-rich/#sthash.zE5kWP1q.dpuf

    1. So if you get audited, will they find you overlap expenses? You make much more than us and we pay taxes on double that.

  42. For all the commenters who are arguing that $250-400k isn’t that much in manhattan or sf – YES, IT IS, and here’s why. Living in those places gives you instant access to all the best culture that the world has to offer. Everyone else has to pay thousands to travel to those places to get that. You have chosen (wisely, imho) to pay big $$$ to have access to all that great stuff. To say you aren’t really rich because housing is so high would be like someone with $300k income in Alabama saying they weren’t really rich because they had to buy a boat for $150k so they’d have something fun to do.

    I live in NH, which is a high-income/high cost of living place. Not manhatten or sf high, but high. I feel very comfortable with my $140k household income with a wife and 1 kid. The fact that we have 3 pensions between us that will replace about 80% of our current income and 2 401k plans makes me feel downright wealthy.

    In my job as a high school teacher in Manchester I see what most people experience every day. 60% of the kids in my district receive free or reduced lunch. 25% live in poverty (less than $35k for a family of 4). Think of that the next time you want to complain that there just isn’t much left over after the $90k you spent on private school for your kids or the $700k you had to pay for a 3 bed 2 bath in a gated community.

      1. Sure, the example family in the article are not rich, but you really had to hunt for a very narrow demographic to try to make your point. And nobody said $200k was rich. What if that same family made $250k? They’d have heck of a lot of disposable income. Some might even say they were rich.

        The vast, vast majority of Americans, even in expensive areas, would be pretty darn comfortable with $200k plus incomes. According to the wsj, the Manchester-Nashua metro area (where I live) is the 10th wealthiest metro area in the country. I feel like I’m in the upper middle at $140k/year, and I say this as someone with many friends who earn much more.

        People in this country need to start caring about the crazy high poverty levels here (much higher than any other developed country). It isn’t all the result of laziness, some of it is caused by those in positions of power taking way too much for themselves. Your website is contributing to the idea that too much is never enough. You’re really just trying to find a moral justification for selfishness.

        1. Interesting comments coming from a TAXPAYER funded, public servant. Of course,you think society (i.e gov’t) “owes” everyone a certain Standard of Living.

          Get a grip, your Socialist mindset does not work unless you are on the public dole. This website and others are all advising others to create enough value by providing goods and services for which one can then draw wealth out to whatever degree satisfies them.

          Instead of whining about how greedy America is, get down on your knees and thank the TAXPAYING citizens of your town and state for providing YOU and YOUR FAMILY with the nice lifestyle including your pensions. All courtesy of the taxpayer.

          Man- I get tired of pompous Union public servants, especially those who are busy brainwashing children with Democrat Socialist myth.

    1. The median price of a home in Manchester is $309,000. The average price of a home in manhattan is $800,000. Expensive is in the mind of the purchaser.

    2. That’s a great point that you make. High cost of living cities are rich in amenities and opportunities. If they don’t add up for you, “get out of Dodge.” Or maybe move to Dodge City where the cost of living is probably very low.

      I have a friend who is rather anti-social. I haven’t seen him for years even though he lives 90 minutes from me and 45 minutes from our other friends and work. His house is probably 1/4 the cost of mine. He is quite happy (presumably) living in a more remote area.

      His income is slightly lower but his cost of living is a lot lower and his house is bigger. However, since he didn’t kill himself to get a large mortgage like the rest of us, he also has a smaller net worth because of less home appreciation.

    3. Fred – You are not factoring in the cost of kids into your equation. In most places in America, $250K is enough to afford a very nice home in an excellent school district or tuition at the best private schools. In Manhattan, quality childcare (if you can even find it) is going to cost about $50K per year. A 2 bedroom 2 bath 1,200 sq foot condo in a “decent” neighborhood is going to cost about $1.2M. Childcare alone is going to eat up about 40% of your after tax income, and mediocre housing is going to eat away another 40%. Other bills will eat up most if not all of your after tax income. All you’ll save is your max 401k contribution if you are smart.

      So on $250K, you are living a similar lifestyle to a lower middle class family everywhere else in the country.

      Also, the idea that you are so lucky to live in Manhattan that you never need to go on vacation is ridiculous. Our friends that live in NYC literally travel 15 weekends per year because the city is so crowded, disgusting, and stressful that they feel the need to spend $15K on travel just to retain their sanity. Tiny apartments, horrible weather, insane prices for everything. What a nightmare.

  43. I make $450~$550k/year as a software engineer in silicon valley; single w/o kids. My starting salary was ~$85k less than 10 years ago so I’ve experienced almost every income level described here with comparable living costs.

    When I was making between $85k to $150k, I had to be very careful with my spending. I had to constantly worry about how frequently I eat out, what kind of clothes I buy, and whether I own a car or not, etc… I certainly could not shell out a $200 dinner every month.

    Then I stopped worrying about price tags on groceries, clothes, etc… when I started making ~$300k/year. At that income level, I didn’t care whether I spent $10 at McDonald’s or $200 at a stake house. I could go on any fancy dinner I want, and I didn’t have to worry about it if I didn’t do it every week.

    Once I started making $400k+, I started to feel rich or entitled. I was willing to pay premiums for more luxurious services like airport lounges, and I didn’t mind spending another $1,000 at a different hotel if the hotel room I got in advance was unsatisfactory.

    However, I still think your expense estimate is a bit too high. I can assure you that spending $70,000 on rent/mortgage is a financial suicide even at $500k/year income level.

    For me, I’m still careful with my travel budget, drive an entry level luxury car (~$40k), and my rent is ~$2500/month. As a result, I “only” spend ~$85k a year and saved ~$300k (including 401k matches) last year alone.

      1. Yeah, those were interesting posts to read. I think one big different might be that those of us who work in Silicon Valley tend to have a shorter career cycle & our income tend to be a lot more volatile than those who work in other sectors.

        It’s not uncommon for someone fresh out of an undergraduate CS program to hit $300k mark in a matter of a few years. I even heard of a Ph.D. student getting offered $10m worth of company stocks. (The most shocking part of the story is that the guy didn’t accept it!). At the same time, it’s possible for someone comfortably making $350k to get laid off one day, and left unemployed for years if not indefinitely if he hadn’t updated his/her skill set. iOS / Android app development wasn’t even a thing just ten years ago.

        I can probably sustain my income level for another couple of years, but I can’t imagine doing so for the next ten years. As such, we’re a lot more conservative in how much we spend. In fact, I know many of my colleagues must have at least 5-10 million dollars in their investment / bank accounts (due to the company stock going up). But some of them still drive a Toyota and live in a rent-controlled apartment.

        Also, for many of us in Silicon Valley, the fact we make so much money is almost a side effect. We’re lot more focused on working on an interesting project / product. I honestly don’t know what to do with all the extra money I earn. So in short of throwing my money away or spending on useless things, I just save them to prepare for a layoff or an early retirement.

        1. Damn. I live in the wrong place. Software engineers in the midwest can start around $90K, but top out around $150K mid career and then are pretty stagnant.

  44. To me “rich” means money is no longer an object. You can pretty much do whatever you want when you want, including not working any longer if you so choose. If you don’t have the capital built up to quit working, you aren’t rich no matter how much income you are generating.

    For example, if you’ve racked up $200,000 in student loans going to law school or medical school, plus another $100,000 in credit card debt and buy an average house somewhere like San Francisco at $1MM+ you have a ton of overhead you have to carry such that even if you are making $500k per year or more you can’t stop working because you incurred so much debt to get you to where you are. In that example you can’t be rich until you’ve earned enough to pay off those debts and then accumulated a substantial capital base such that you could stop working if you wanted to.

    1. Excellent Point – BTW it is called “F— Y–” Money LOL. As seen in the Movie the Gambler, John Goodman — “That puts you, for the rest of your life, at a level of f— y–. Somebody wants you to do something, f— y–. Boss pisses you off, f— y–!” That number is different for everybody – but it comes down to acquired wealth and unearned income from investments.

  45. rada robertson

    Invaluable article ! I loved the details , Does someone know where my business could possibly get access to a sample TX TDLR 043AB version to work with ?

  46. Someonuser457

    If 50 grand a year is lower middle class then that means being average is no longer middle class. Middle class is suppose to be the average (therefore 50 grand a year). If solidly middle class is 100 grand you need to make double what the average person makes to be middle class. There’s something wrong with this picture.

    1. Someonuser – We pay $50K per year on childcare. Haven’t seen a solid house in a bad neighborhood for less than $350K. $100K is lower middle class maybe even poor.

  47. Hi , guys! Firstly , wanted to thank finsamurai dude )) I really like the article , learned a lot ! Secondly , want to ask you : ” What major I should choose to become rich ? I know doctors , especially neurosergeons , earn a lot , but it’s just not my field … I would love to own a business , maby even more than one , or a company . But I also need to think how I should pay my loans after I graduate .
    Basically , I need to choose a major in
    business field , so after I am done with paying those loans , it could help me in my own business and it has to be specific major , because , I think , nobody needs a person with business , or economics degree . Tell me if I am wrong , I am flexible and I trust you . Also can I start to earn a lot of money now , not like an average student . And by the way , I am in the 11th grade . And I also thought : “what if I run a landing page ?”
    As you see I think about it a lot and I also did a lot of research , but I need an advice of a wealthy man … ! Appreciate any advice !

    1. I know this sounds cliche, but it’s 100% true: Choose a major (or any form of education) that will help you start and run a successful business (of any form). Very few people become rich being wage earners (the typical lawyer, doctor, tradesman, path). And the ones that do, are the ones that have their own firm or business. As long as you are a salary / hourly wage earner, there is a cap as to what you can earn (i.e. there is only one of you and only so many hours in the day). Your time is a finite 24 hours per day, but once your money works for you, that time becomes infinite. Owning a business allows you to make your money work for you, instead of you working for your money.

      HOWEVER, If you are completely set on getting a typical degree (law, medical, etc) at least make sure your end goal is to own your own firm or practice. Or invest the money you earn from your 9-5 into creating a business. And don’t stop there. Make sure you’re not a slave to your business. Invest in people that know more than you and pay them to run the business. It sounds difficult, but it’s actually a very easy model.

      This is why you see a lot of people recommend real estate as a way to get rich (I personally am not a fan because you are limited on how good your credit is). But either way, the concept is the same in any business, whether you’re a real estate investor or otherwise: your money is making you money, YOU aren’t making you money. Once that concept sinks in, your revenue cap basically becomes pretty limitless.

      This is coming from someone that works a few hours a week, and owns a multi-7-figure per year business. And I’m not a money genius – I’m actually just a regular 35 yr old man with an average IQ that followed a simple plan – and refused to give up at the first sign of trouble.

    2. If you are not conventionally or academically smart you may have a better chance of getting rich through business and entrepreneurship.

      I banking, private equity, finance recruit top students from top universities. Getting into med school is no chip shot, and getting into neurosurgery or plastic surgery residency is another level of selection. Same with being a google engineer.

      On the other hand my friend who I know academically has no chance of getting into med school is worth about $8 million at age 40. He’s a real estate agent specializing in apartments. Each apartment he broker can bring him close to 100k. He also invest in real estate.

      Another older nurse is worth about 20-30 million. She’s been flipping houses for 3 decades. No way she could have gotten into an Ivy or med school. Maybe if she tried really hard, but only top doctors make over 1 millions. Most make $200k.

  48. You said making over 500000 a year is considerd rich. I strongly disagree with that!!
    It is all relative to life style,If your making more then 500000 a year, your expected to live a certain lifestyle. Let’s just say I make 800000 a year with 5 kids after taxes that 800000 becomes 432000. Am a religious jew so I have to give another 10% of what I make to charity after taxes, with is another 43000 with leaves me with 389000.between schools and camps that cost me another 90000 that leads me with 300000. I live in brooklyn ny between my house and house bills 60000, that leavs me with 240000.between health,dental, car insuranche ,2 cars and a cell a phone bill that’s another 50000, that leaves me with 190000. Food for 7 people another 50000,that leavs me with a 140000, there is other expenses am not thinking about as a right this message but when all is said and done am left with 60k at the end of the year and that’s if know sudden things come into play like hurricane so u tell me if that’s considerd rich!!! I am not talking reactive to other people it might be called financhel stable but not rich,

    1. Complaining about 90k in private school tuition won’t get a lot of sympathy. Neither will being left with $240k after “house and house bills”.

      432k a year after taxes = rich. Not wealthy, because of your expenses, but rich. Seems like you’re blinded by those who aren’t donating 43k to charity and raising 5 children.

  49. Can you do the $200,000 and higher salaries for single individuals? For instance for people who are studying medicine and do not see themselves getting married until they are in their late 30s, but will be making a at least $200,000 ten years prior to that.
    Thanks, love the content!

    Chicago, IL

  50. I used to be poor. I used to think like you guys until I started my sm business and when it took off and I reached this level of income. It was exciting, I’ve never seen such big numbers but for some reason I couldn’t bring myself to spend (what if the bottom drops out right)? Well it did in a way. It’s not about high income, it’s how much you get to keep. After my taxes were done and I was told how much I felt kicked in the stomach. I was SHOCKED at the taxes. If I had spent the money I would have been in serious trouble. It was a real lesson.

    After that I saw income very differently and learned that just because someone has a high income does not mean they are rich. I still feel kicked around each quarter, but I now save and invest to build my wealth. When we have enough wealth that it throws off enough income to support me and my family even if I don’t work (passive income) then I am truly rich.

    I no longer have the drive or want to take on more responsibility to grow my company or increase my income and instead my drive is to increase my wealth to create passive income.

    – It’s not how much you make, it’s how much you are allowed to keep,
    – It’s not how much income you make, it’s the type of income, the best is passive income
    – W2 income is the worst.

    People need to get a real understanding between high income and wealth.

    1. Erayp, not having to work at all is a great goal. I’m single, 31, no plans for kids, and make $90k in Charlotte, NC. While I do have a fixed-rate 30 year mortgage, I’m happy that I have my very own new 3 bedroom house…room for my Lego hobby! :) I’m able to save some and still have “fun” money left over each month.

      I’ll probably never get an indoor pool, elevator, or Lincoln SUVA…but my car is paid off, student loan gone this year, and I’m lucky to work from home for a virtual company so there’s no rush hour or dressing up and I can sleep later.

      I could never start a business. I’m too anxious/cautious, not a salesperson/extrovert type, paranoid about getting sued by customers/vendors, and dealing with the IRS once a year is enough for me!

      My point is that it takes a certain type of person to start a business. I think the key for everyone though is getting an education, caring about your job/business enough so you won’t hate it and maybe even enjoy it, saving for retirement, and living within your means regardless of income level. No one is safe from death/accidents/cancer or even making silly money mistakes sometimes. We should all strive for more, but free time with good health and a stable living situation is probably more important than tax bracket for most people.

  51. As several others have said, your numbers are way too high. “Upper middle class” and above is generally considered to be “the rich”, broadly speaking. In most places, a single person earning over $100‚000 a year would be considered “upper middle class” to some degree or another.

    1. Jay Wolfe – Most people don’t live in most places, lol. The majority of people now live within an hour of a high cost of living area. NYC has more people than most states. Also, most $100K jobs are located in very expensive areas. In the past year, I’ve heard “you can only make $200K doing that” at least a dozen times. $200K is the new $100K. $100K will get you a townhouse in a stabby neighborhood with three meals of rice and beans.

      1. Irish2four7

        Sadly you aren’t wrong – Net income about $315k, I live in Northern Va/edge of D.C. in a $600k 3 bedroom townhouse and there are subsidized and “stabby areas” all around me – as well as multi-million dollar homes. Weird area! Anyway, I agree and I’m sure FS has posted on this before; $200k is the new $100k.

  52. Louis Richards is absolutely correct. It doesn’t take a great financial background or a top flight education to know that 200k-300k is wealthy. It’s quite ironic actually. The person blessed enough to have all of this is probably going to be the same person that doesn’t realize how wealthy that is. I have the utmost respect for the people that earn their success and more times than not it IS earned. However one of the biggest issues in the world today is that we actually have people whose reality tells them that anything under 200k isn’t wealthy while there are people who would love just the opportunity to make a quarter of that. I grew up “poor” according to this article. I can safely say that I will have a fair amount of success as I continue my career and will certainly make over 100k a year. One of the most important things that I hope to remember is what a blessing it really is. I absolutely have earned everything I’ve gotten. Yet, I could never EVER claim to have done anything that someone else couldn’t do with the same opportunities that I’ve fallen on. I would have to assume that you are extremely wealthy. You’ve earned it. However, there is a whole world out there beyond the San Francisco’s.

    1. $200-$250K per year here and nope, we are not rich. We live in a moderately priced market in California (3 bed 2 ba 1900 SF home). Have two incomes, two kids in day care, and after maxing out our 401Ks and maintaining the 6 months cash reserves balance, we have very little left over. We don’t eat out much at all. We don’t drive expensive cars (I have a company car and wife’s car is paid off and has 120K miles on it). We don’t go on lavish vacations, or even spend much on gifts and other forms of entertainment. Also, we have no debt, we never consider touching our home’s equity, and save the amount needed to pay for two year old twins attending college at the same time in the future (1200 per month when you use financial calculators and the growing cost of college). So what’s left over after groceries and bills are paid? Not a heck of a lot. I consider our family “comfortable middle” class but definitely not rich. Come over for dinner and I’ll show you!

      1. You are still in the top 5%, believe it or not. That does not make you middle class, although in your area, it would put you in the middle of the demographic. So, yeah, it can be difficult to live on that when you’re expenses are high (I’m in the SAME boat), but we can’t argue that we are middle class! We just live like it – while enjoying what the 5% can – like living in that elite area.

    2. That Guy – $250K household here is that definitely not rich. We max our retirement account, send two kids to pre-k, share 1 leased mazda and live in a 1,200 sq ft apartment. We live on bananas, eggs, and rice and beans. Shop at costco and discount stores. Virtually nothing left at the end of each month. If we made any less we’d have to move to a low income neighborhood and stop saving for retirement.

      $100K per person in your household is rich ($400K), $75K is upper middle($300K), $50K per person is middle class($200K). $25K per person is lower middle($100K), <$25K per person is poor. A household of 4 earning less than $100K is definitely poor.

  53. Louis Richards

    I am sorry, but you are way off. I totally disagree. I am not sure what circles of friends you hang around with. Nor do I know what your personal income level is as well as any of your friends.

    But this much I can ASSURE you. Saying $200,000- $350,000 a year is “middle-class” at ANY level is simply an INSANE statement. Comments like that normally come from Rich people… Because that much money is nothing to them and they can only equate it to terms of middle class they are so rich.

    I am 54, and I am a working-class man. I am self-employed and do quite well in life. I have been, since I own a service business, into thousands of people’s houses and have talked to thousands of people. I have friends that range from crack addicts to CEOs.

    There’s one thing I can assure you, there is absolutely nothing about that income range that equals middle class. The vast majority of people in the United States do not have jobs that pay anywhere NEAR that income level. I don’t know where you are getting these figures at, but they are way off-base.

    Not too many people make $300,000 a year my friend. It’s pretty much limited to doctors and attorneys and those type people. The vast majority of this country’s citizens work in the service industry. They are waiters and waitresses, cooks, electricians and plumbers, carpenters and real estate agents, auto mechanics and landscape people. They simply don’t make that income level!

    Anybody making a 1/4 million a year in salary? Is Middle class? GET A GRIP. I absolutely guarantee you they are considered WEALTHY in the US of A. And once again, annual income level is a joke anyway. Someone who makes $300,000 a year and lives in a three quarter of a million dollar home, who has no disposable income, doesn’t have much. Somebody like me, that makes $150,000 a year, with $30,000 a year in bills, has much more disposable income and is much more wealthy. Not income anyway, but savings account balances and how much free money they have yearly is the ultimate clue of wealth. I know many rich people, living in million-dollar homes, can’t scrape together $1,000.

    I would gather to say, without being too sarcastic, you my friend are a millionaire. Because only rich people could possibly think that income level is middle-class. Talk to anybody who truly is middle-class, and they would kill to earn that much money.

    1. Is your reality more real than my reality?

      The median price home in Manhattan and SF is around $1 – 1.2M. That is 4-6X a $200,000 – $300,000 household income.

      Take any area in the country, and divide the median home price by 4-6, and I would say that is pretty middle class e.g. $300,000 home = $50,000 – $72,000 household income.

      Yes, you are rich, and others are poor. Are you sure you’re not out of touch with reality?

      Read my latest posts:

      Spoiled Or Clueless: Try Working Minimum Wage Jobs As An Adult

      Living In An Expensive City Can Make You Richer, Happier, and More Diplomatic

      How To Make Six Figures A Year And Still Feel Middle Class

      1. Louis Richards

        Are you actually trying to equate income levels with median price home sales??? Listing as an example no yet, two of the most expensive markets in America? That’s what your information is based upon? No wonder it is askew. You want to say for people who live in San Francisco, that is the middle class range, fine, whatever, conversation over.

        But using an income level that adheres to a vary narrow and specific market, than using it as a blanket calculation over all of citizenship in America, is not only inaccurate math, but frankly, a very bizarre math.

        Have you factored in places like Kansas, Wyoming, Tennessee, Kentucky, areas where there are many other median home prices, or just the two most expensive in the nation?

        1. Of course. Income and home sales are tied. Using ratios let’s you realize that just because someone makes $250,000, doesn’t mean they are rich if it takes 4-6X that level to buy a home. Ratios helps readers who visit from all over America with different cost of living standards. It helps factor in places like “Kansas, Wyoming, Tennessee, Kentucky, etc” as you ask.

          May I ask how old you are, and some of your financial and educational background?

          1. So, let me put it this way. I own a 14-year-old, updated home in a fantastic, suburban area. 3br, 2ba, about 1470 sqft on a 14,000 sqft lot in a cul-de-sac. $223,000 with ~$2000 annual property tax.

            We bought the house in 2011. I’m in my early 30’s make about $160,000 a year and have been at this income level for about 7 years (I was at about $70k before that), and my wife is a stay-at-home mom (she was a minimum wage earning college student when before the birth of our daughter). It took us about 3 years to pay the mortgage off entirely. We also own outright a 2012 Maxima and a 2014 Honda Fit. Our home is fully decorated, our fridge, freezer, and pantry always well-stocked, and my wife has an impressive collection of shoes and clothing. We take extended (~2 week) trips annually, either overseas or to some other part of the US, and generally splurge but already have just shy of $70k in savings (and growing) not counting my old 403b I rolled over into an IRA and my 401k from my current employer . My wife also just began studying to be a pharmacy tech, which will earn us an additional 30K annually.

            We don’t ever worry about money, especially since we don’t have a mortgage or car payments. We knew how to be frugal when we needed to, but that hasn’t been necessary for years, in any way. That said, I certainly don’t consider myself rich, but upper-middle class? Absolutely. We’ve had our eyes on potentially upgrading to a 4-5br 3-4ba, 3000+sqft home in the foothills for some time now, which run about $450,000-$500,000 in our area. Since moving into our home, the value has gone from $223k to over $300K, so it would be a simple matter to use our equity to trade-up and up with a mortgage smaller than $100k.

            The house we have now is one that I would consider to be fairly standard suburban middle class, but the houses we’ve been looking at are upper-middle class by any definition.

            I don’t care how much these houses would cost in San Francisco, Beverly Hills, or New York City. That is absolutely irrelevant. I don’t live in either of those places, or have any desire to. I love the city I live in, and I have a very comfortable life.

            I would absolutely consider myself upper-middle class. I honestly don’t know what my net worth is, really, but I have zero debt, decent savings, a healthy retirement account, and enough disposable income that I don’t even really pay attention to it anymore.

            I apologize, but I think this article is grossly out of touch for anybody who doesn’t live in the most expensive parts of the US.

            1. Sorry, I feel I should clarify – my point is that rich is relative, and ill defined, but that this article also does a pretty miserable job of adequately defining it. I am certain that by the definitions of many, I would qualify as rich. I pay about as much in income tax as my wife is expecting to earn when she starts working her job making well over minimum wage. When I was younger, I would have said that a rich person is someone who doesn’t worry about money anymore, and I’m at that point. At this point, while I don’t consider myself “rich”, I’m not even sure what that means anymore.

              Why is $500,000 the bottom range for “rich”? Why not $1,000,000? Why not $1,000,000,000? Even my own definition is arbitrary at best. I’m well into the top 10% income bracket. I make three times as much as the average American, but I don’t like to consider myself rich for stupid reasons like, “Well, I couldn’t really afford a private jet or a 30 meter yacht, so I guess I’m not rich”, while my wife occasionally shops at Agent Provocateur for $300 bras.

              Honestly, though, if I don’t consider myself rich at my current income level, I doubt I would at $500k, either.

              1. It’s because you aren’t rich, but middle class, which is something to be proud of. I wouldn’t waste time envying the rich. But to stick to the facts of the article, if you do not believe in the governments definition of rich, the IRS definition of rich, my definition of rich that is fine. But at least try to add some value and define what you think is rich instead of renting against this article. Otherwise you’re just wasting everybody’s time. Come on, step up and provide some value and academic rigor behind the definition of rich.

            2. What I define as rich is largely irrelevant. What I’m trying to get at is that when I was at an income level that was closer to the US average, I would have considered my current income and lifestyle to be “rich”, especially if I lived in one of the houses that we are considering buying (landing squarely in the “Executive Home” or mansionette category.

              I believe this perception is common among people in that income category (that is, the majority of Americans). Seriously – ask someone who makes $55k to look at someone with a three year old luxury sedan and a well-decorated, $500k, 3500sqft home, and have them tell you if they consider that person rich. They would almost certainly say yes. I make more money than any of my family or close friends, and I’ve had this debate with them before.

              The fact that I still feel that it is debatable is the entire point. Maybe it means I’m out of touch – but my friends and family would argue that I am “rich”, and I would argue from my current perspective that I am not. A decade ago, I would have agreed with them.

              I actually just asked my brother about this, in response to this conversation, and I mentioned the houses we were looking at. His feedback was that the fact that the controversial issue keeping us from simply buying one of these houses (which he straight up considers to be mansions) right now is that, if we waited a couple years, we could pay cash, means that we are rich. “Middle class people don’t pay cash for their homes. Only rich people do.” was his general conclusion.

              Again, my former definition of a rich person would have been “A person who makes enough money that, given their chosen lifestyle, makes active accounting of their finances unnecessary to accrue savings.” People who live the life they want and don’t worry about money.

              My bar for that has moved, though, like I said. Now I would say that anyone who is truly financially independent would be considered rich. If I could retire right now and continue my current lifestyle for the rest of my life, then I would consider that rich.

              Again, though, I don’t live in Manhattan or San Francisco. I have a 2500sqft home in Richland, WA. If I lived in San Francisco, I would have to live much, much more simply.

              I think that most people in America would agree that what Obama defines as rich is, in fact, rich, especially for people not living in the most experience areas in the country.

              You, on the other hand, haven’t actually explained why you consider $500k rich, as opposed to $400k, either. We can throw numbers around all we want, but nothing we can throw around is going to be true for all people.

              If we use the dictionary definition of rich as “having abundant possessions and especially material wealth” then we still don’t have a specific answer. What one person considers abundant is spare to another. That will never change.

              1. $500k is my definition of rich based off what I’ve written in the post. I have made anywhere from $15,000 a year and close to $1M a year and based on my experience, $500K is an appropriate income cut off. What has your income earning range been and number of years worked? Have you been chronicling your personal finance journey for the past 7 years?

                Another great definition of rich is not having to work for money because your passive income or multiple passive income streams cover your costs completely.

                Read this post: https://www.financialsamurai.com/how-to-build-passive-income-for-financial-independence/ and let me know if you agree.

    2. Louis Richards – Most people that earn $200K-$300K are painfully middle class. The reason is the majority of the people in that income bracket are living in incredibly expense metro areas. Middle class= modest house (3bd, 2bth) home in a decent school district, can afford 2 vacations per year and still save 10%-20% of income. That defines my $250K household exactly. The problem is childcare, housing, and inflated costs of basic services.

      Rich implies an absolute abundance of everything you need without having to budget. My household is living in a world of scarcity in every way imaginable just like the stereotypical middle class family.

  54. Stealth Wealth

    Wealth is determined by net worth, not income. Many high income earners often do not save or invest. Live below your means, no matter your income. Wealth is having choices. Learn to cook and make choices about what is worth a splurge. Pick a good spouse and invest in your marriage if you get married. Divorce is expensive. Do not be follower. Don’t worry about impressing others, most are in debt and don’t know what wealth is. Don’t spend, invest your time and money in worthwhile pursuits. Diversify. Take care of your health. Do not equate your value as a human to your wealth. Some of the richest people don’t have a lot of money. Also, never take advice from people who have not achieved what they advise about.

  55. Capitalist500

    I have trouble believing some of the figures that you mention regarding tax and all of that stuff. I make approximately 450k and I my effective tax rate is around 76% or 106k. So how is that someone making 500k pays close 200k in taxes?

      1. Capitalist550

        Sorry I was made an error my effective tax rate is 25-27 % and obviously in the 39.6% marginal income tax bracket. Sorry for the confusion

  56. Pingback: Scraping By On Five Hundred Thousand A Year | Financial Samurai

  57. From what location did you determine these numbers? I only ask because you made reference to a Californian city to equate spending power of a certain salary.

    I am from Alabama, a generally rural state with one of the lowest cost of livings. Southern living is fairly affordable. For example, a 3 br 2 ba, 1500 Sq foot home in San Diego runs about $499,000 vs in Alabama cities it might run you $123,000. Affordible on a $50-$60,000 per year salary and certaibly NOT lower middle class.

    But I certainly understand how in NY, CA, or even certain cities in TX and FL may find that salary difficult to achieve a comfortable living.

    1. In live in SF bay area and a 3 bed 2 bathroom house in a nice (but not amazing) suburban area cost at least 1 million. A 3 bedroom 2 bathroom house in sf city in a nice area would cost at least 2 million.

  58. Pingback: The Top 1% Net Worth Amounts By Age | Financial Samurai

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  61. You talked about those with capital and very little income and about how it could be quite good. You also talked about how there are many different ways of being in that position. Then you went on to define wealth by income alone. Something is missing.

    If a person has five million dollars in the bank earning virtually no interest, that’s virtually no income. Put three kids through college and find out that they are going to graduate school and you could see that plummet.

    Now suppose you invest in a mixture of securities and get an average of about 12%. Suddenly you are getting $600K/year in income and are clearly in your rich category. But what if you put all your money in stocks that don’t pay dividends, and sell almost nothing for the year? You have no capital gains, but you sell off $100,000 worth of securities to pay your living expenses. You did that by selling $89,000 worth of securities that appreciated at about 12%, ended up being worth $100,000 and that gave you a capital gain of around $11,000. So what’s your annual income? It turns out you are a pauper. At the same time, you had about $589,000 in unrealized gains. If $100,000 isn’t enough to fit your lifestyle, you can still double or even triple that and you are still not even approaching lower middle class.

    Realistically you might be able to sell your least appreciated securities and even sell those that represent a capital loss and reinvest what you don’t spend, making sure to sell enough appreciated securities to prevent a huge capital loss carry over. You might not want to sell your securities that are appreciating the most on the grounds that they represent the best companies and are best in the long run.

    This example might be extreme and might not be achievable assuming you don’t hold for the sake of holding but know when it’s in your best interest to move investments. Yet it does show that income can be whatever you want it to be, has little to do with net worth, and if you decide you want to be rich in a given year so you can buy something big, you can do it. Then you can go right back to being a pauper and spending as much as you want to live a rich person’s lifestyle.

  62. Please, for those complaining about not being rich (and yes my income level is like yours, and not I’m not saying you didn’t work hard for you money, and yes I’m sure it was ethical) – but yet says after paying my rent in NYC, of SF, or paying for private school..I only have…

    Living in expensive areas like NYC or SF is luxury. If you think cost of living is so high, why stay, cause you like the ‘vibe’, restaurants, museums, clubs, art house movie houses, wine-bars, big stores, etc…. ? So you are paying for that, and you enjoying the luxury of having money. Lets not even go into private school….

    1. You are saying it as it is. We live in a free country and are highly mobile.

      It is kind of frightening though how much real estate prices have moved beyond the normal income levels in SF and NYC though.

  63. I get it…. I made very little when I was young. I lived at home thru most of college and have always worked very hard. I was given some opportunities but created most of them. Over the years I obtained three degrees. Two in business with a concentration in finance and one in accounting (also obtained a CPA & CFA designation). Over the past twenty years of working I’ve learned a lot….

    Let me tell you how this really works. Most people make enough money to get by even the “Rich”. Some do it in a bit more style. Some are very disciplined and they save a good part of it (savings also know as delayed consumption). Along the way they pay 30-50% in taxes (FICA, SUTA, FUTA City, State, Federal and sales tax). Then when they are in the last years of life and they are lucky enough to have savings, health care costs will take up a great portion of the estate and in many cases drive the people into near bankruptcy. I had a parent in assisted living and it can run 80-120k a year depending on the level of care. That will wipe out most estates quickly.

    Then you die and if you are lucky, hard working, entrepreneurial enough your estate will pay up to 50% in estate taxes. Unless you are crazy rich then money gets divided between the government and heirs pretty quickly and will disappear relatively quickly.

    Just as an example looked at one of the world’s richest people ever John D. Rockefeller. He’d be worth $200-300 billion inflation adjusted today. If you looked at Senator Jay Rockefeller, the great grandson he has a Net Worth of $100 million. Don’t get me wrong that is a lot of money but in 3-4 more generations the Rockefeller name won’t mean you have a hundred million or billion dollars because the wealth would have been almost completely redistrubted via taxes and children by then.

    In most situations the best you can hope for is to lead a conservative life and teach your kids good values and morals as well as give them the skills to fend for themselves. Because unless you are in the .1% of the population you can’t really sit on your butt and get anywhere not being a productive member of society…..

    So to the angry people who looks at the rich in disgust. Most worked their ass off to give their families a decent go of it. And to summarize, when a newspaper reported asked John D Rockefeller’s attorney “how much did he leave” the lawyer responded ” all of it”.

  64. Pingback: How To Save More Than One Hundred Thousand A Year Pre-Tax: Open A SEP-IRA Or Solo 401k | Financial Samurai

  65. why should i care about rich people ‘only’ taking home 300k after taxes?? Do you realize how many people are being neglected from the US shit social services? How many people are dying from lack of healthcare families who are struggling to make it on our criminal minimum wage. That being said we could easily provide free healthcare education and housing if we didnt spend half of our budget on imperialistic wars for oil. IMO if you can comfortably afford food healthcare and a place to live you are rich since only a small minority of people can say they have this.

  66. everyone cant just increase their income money isnt just spontaneously generated there is a fixed amount of it or at least a fixed amount of the power it signifies. As long as wealth is concentrated at the top poverty will remain. Even middle class people in america depend on the exploitation of billions of people to extract cheap resources and manufacture cheap clothing and food. We live on a planet with finite resources which we must all share to survive. However a small amount of people control those resources which is why more than half of all people on earth make less than a dollar a day. This wont change from having a better outlook or mindset thats bullshit the rich make up to make stupid people think they can work themselves into wealth.

  67. fredjohnson

    I live in Minneapolis and in this town $350k puts you in the lower part of the upper class rather than the upper part of middle class. Above this income I think income taxes are much more of a concern. We have a high State tax rate. I make over $500k a year, but not much more than that and my total income taxes are a bit over $300,000 a year.

    1. I’m not sure where I fall, but I make $90k/year before taxes. I’m single, 31 years old, college-educated, and able to buy a $168k new, 3 bedroom 2-story house in Charlotte, NC all by myself. While I have a fixed-rate 30 year mortgage, I’m paying extra on it and my new 2013 Ford Focus (leather seats, GPS, back up camera, park assist…honestly, same features as BMW) is paid off and my student loan will be finished this year.

      While I have a mortgage and a negative net worth until it’s either paid off or I have more saved, I’m super happy to be able to have my own house by myself and still have money to spend on “fun” as well as save. Working for a company remotely has GREATLY increased my happiness by waking up later, less gas, no rush hour or dressing up.

      Part luck, part work, part being appreciative. While I’d love a massive house with an elevator and indoor pool and more space for my Lego hobby, I’m also not willing to risk money/time, raise capital, get sued, or do the conplex work in starting a company. I’m too anxious and cautious for all that.

      I think class is more than just wealth. It’s spending wisely, saving, and planning a career if not starting a business. You probably won’t be ultra wealthy, but in the end I just want a decent house, good health, and the ability to retire at a reasonable age to enjoy hobbies more. Free time with good health and a stable living situation is the ultimate wealth to me.

      People compete so much for designer clothes, popularity, fame, the next million, plastic surgery, fancy cars… All that sounds great, but won’t necessarily make you happy. Strive for more, but don’t get discouraged because someone else always has better X than you.

      1. You’ve captured it perfectly. Eventually a mansion is just like any other house and a bentley is just like any other car once you get used to it. The problem is most very high earners sacrifice their time for money, and never even get to enjoy the fruits of their labor. Saved time, reduced stress, no commute, no depressing cubicle, no workplace politics etc as a result from working remotely is the ultimate freedom. You’re basically retired at this point in terms of freedom. You could be working from the beach in the south of France if you wanted to and no one would be able to tell. In my opinion if you’re making $200k working 50 hours a week from home, you have it better than someone making $500k working 80 hours a week from an office. I definitely wouldn’t trade my freedom and time to make an extra $300k for added stress and more hours. I wouldn’t even have time to enjoy it and even if I did, more vacations, a bigger house, more toys etc over what the $200k can already afford me isn’t going to make me any happier. In fact I would be more depressed from the stress.

        1. One thing that I have realized is that in US majority of people are obsessed with wealth…. by wealth I mean materialistic objects, cars massive homes etc. I have a cousin who has been working his butt out to become a millionaire, last year alone he has made close to $500k but at what cost? He worked 24/7, spent a little time with his daughter and barely anyone else. I have experienced a civil war in my own country and have actually seen true value of materialism… basically it is 0… I realized that when I had liitle I was happiest then so now All I do is travel at any opportunity I get. I make half of my cousin but I have twice as much time to spend with loved ones. Enjoy every moment that you can grasp because you will never get it back. Many people never even reach retirement age. Plan for your retirement but don’t bank of it. Everyone has a right to choose their own path, I don’t envy rich because I bet they really worked hard to get there but what they value in life might not neccessarily mean much to me.

  68. Daundra Campbell

    Honestly, after skimming this article and reading most of the comments, I belive that “rich” or the idea of being or not being wealthy is all in your head and up to you to decide. It’s not about how much money you make, but how you spend it. I don’t know, I’m omly 15, however, I do know when I get older I will make alot of money and I defiantly will be considered rich!!!!!!

  69. Plenty of ignorance here. Wealth and income are two different things. Wealth is about net worth. You can have a high net worth with ZERO income, or a low net worth with a high income.

      1. Justin Clarke

        Hi. I have a question. I’m in college now, and will be for the next 4-6 years. I’m planning to be a CRNA. All said and done, I’ll have 100-150k in debt, which I’m okay with. The median pay for CRNA is about 150k in the US at the moment. My big worry was when I was planning on savings, debts, lifestyle, etc., I didn’t take into consideration the humongous amount taxes take out. I imagined far less than 30%. So, my question is, how can people with less, justifiably ask for those with more to pay more, when I myself would be making more than the national average but not making enough to be what I consider rich? Also, what ways can I save money from federal taxes?
        Note: I plan to move to Washington state where there is no state income tax.
        Note: I live in Texas at the moment, so even if I had to work for a year here before moving, I would still not have to pay state income tax.
        Note: I plan on being single as long as possible. I’m 18 at the moment.

        Thanks Financial Samurai!

  70. TheOpinionator

    This is such a load of BS!!! Whoever wrote this, is obviously completely ignorant to the reality of the common/average persons financial situations and what’s considered a good and decent salary and standard of living. Do not listen to this pile of crap and do not be discouraged. The only thing that matters, is how you feel about your standard of living and what you consider to be “rich”, but more important, happy. Anyone who does not feel rich with $400K, or even $150K per year, is either a complete moron when it comes to managing money, or a pompous douchebag who refuse to buy a scarf that cost less than $10.000……

      1. TheOpinionator – You are heavily discounting the cost of having a family. Childcare is going to be $40K-$50K per year. Living in a safe neighborhood is now insanely expensive($40K-$60K) per year. Both of these expenses are after-tax. No way in hell you can live a middle class lifestyle on $150K per year.

  71. this is discouraging.. im a freshman in college ( fidt class is aug 25 2014) my husband and i make about 1600 a month and have a son and pay 685 rent 150 electric … what are some steps we can take to better our financial situation..

  72. Your article is accurate considering you specifically stated that your only referring to high COL areas when you are talking about income levels. However, overall the limits are much lower in the USA for being defined as “rich” and “upper middle” class. For example:

    An income of 100K puts you in the
    -Top 20th percentile of all households in the USA. Based on the economic definition of upper middle class, that certainly qualifies as upper middle class income.

    -Top 7th percentile in terms of individual income. Your still upper middle class in terms of income but probably towards the top of the range when considering individual income.

    Now defining what income in general would qualify as “rich” in general is subjective upon what percentile would be considered “rich.” Do we go by the top 5%? 2%? 1%? .5%? Off the top of my head I believe 400K puts you at the 1% of households if we use that as a benchmark of rich.

  73. I think your levels are actually a bit conservative. I don’t consider anything below 7 figures a year anywhere close to being rich. The truth is, the majority of the individuals that think “200k” is rich have never experienced that level of income. They’re not speaking from experience. I know a lot of people that make between 200-300k per year and not one considers themeselves rich. The very interesting twist is that they had always considered that level of income rich BEFORE they were actually earning it.

    I am in the same boat. I actually grew up very very poor. Up until recently I’ve stayed poor. I just turned 33, and had my first 7 figure year last year….and worked extremely hard to get to that point. Prior to success, I had always envisioned the point I would hit 100k, I’d be rich. Once I hit that level it was very underwhelming once I realized how much I had to give back to the government, as well as how expensive it is to live well in this country. People don’t understand all the intricacies of expenses, taxes, etc of a 6 figure income until they actually hit that point. My 7 figure year last year resulted in over 50% federal/state tax alone. And it doesn’t stop there, believe it or not.

    The point: those without actual first hand experience earning a specific amount of income have no solid ground to base their opinions on about that income level. Zilch. Nada. First hand experience trumps second hand opinions.

    I have a unique perspective on living both extremes on the wealth spectrum and can honestly say that anyone that thinks 200k is rich is either extremely frugal or they have simply never hit that income level. I’m sure the latter makes us 99% of the scenarios.

      1. Oh, I wasn’t referring to you. I’m sure you’ve experienced the income levels first hand. I was referring to the commentors that think we’re crazy to believe 200k is not rich. However, how can they have any opinion on it until they’ve actually experienced it? It’s not the ’60s anymore, 200k doesn’t get you as far as some may think. It’s crazy how expensive life can be, even if you have a humble house, cars, toys, etc. 200k is well off and comfortable-ish. But rich? No way. Talk to my buddies that pull in 7-8 figures per MONTH. They live a rich lifestyle. 200k is not rich by any stretch, unless you live in Thailand or something. If you live in SF, 200k is barely middle class. I know, because I’ve live there making a little over 200k not too long ago at ancestry.com branch. First hand experience.

        BTW – I’m 33. Net worth is low 8 figures, but soon to be less as we’re buying a new home. I’ve worked very hard for what I have, but there’s always an aspect of luck and chance involved. I’ve had my share of lucky breaks and not-so lucky breaks.

  74. contribute to a roth ira if single and make less than 114000/year. you can contribute up to the max

  75. Peter Daveloose

    I’m sorry but this article just plain sucks sucks. The author should try googling “social class in the usa” because there is no way in hell that 100k income is middle class. In fact, earning 100k a year means you make more money than 93.4% of people in America. Source: Wikipedia.

    The median wage in USA is about 32k a year. At 250k a year you are in the 1%. Consider yourself educated.

    1. He is only talking about high cost living areas. 100k may be upper class in a low cost area but in Arlington va where the median home prices are ~600k, you are middle class making 100k. To me, it’s a matter of what the median household income is in the area. Arlington’s is around 100k, so how does being at the average for an area make you rich? My personal definition of rich would be the top 10% income wise for any given area, which is probably close to what Sam lists.

    2. Half the country is also on government aid, that don’t earn enough to even pay a positive in net taxes.

      Rich isn’t a comparison to how much you make compared to a group of poor people. Rich is a lifestyle regardless of how much others make, and if you think 100k is enough for a rich lifestyle you’re off your rocker. Especially if you live in high cost areas, where 100k is literally near poverty and Especially if you’re married with kids in a high cost area. My friend just got a lower management job at 115k salary in SF, and is married with 3 kids. Not long ago he commented on how he felt more wealthy as a poor single college student, living off small student loans, than he feels now. No house, drives an older civic, and not much debt. Life is expensive and little things add up!! His rent alone is ridiculous for how small his apartment is.

      100k as a single person in Texas or Indiana may pass off as a wealthy lifestyle, but that’s severely pushing it. The dollar isn’t worth what it used to be. Especially not in SF or NY.

      1. Exactly! I live in the north east, where $150K is consider middle class, and most people pay $20K in City Taxes alone. When it comes to pays cal it all depends on location.

  76. Larry Reardon

    It seems that we are using an economic model, whose language is outdated; to describe wealth and the lack of any financial resources. Take the myth of the “1%”. If for simplicty’s sake, we make believe we are talking about a 1% comprised of single adults, then we are talking about apx. 3 million Americans. At the center of this vast hoarding of wealth are 447 billionaires. Which leaves me wondering if the $500,000 marker represents the lowest rung(the poor) of the wealthy?

  77. So much ignorance here. Income and net worth are two different things. The are people with low incomes who are multi-millionaires, and there are people who make 300K and are broke.

  78. I made 235k last year on logistics, I own no debt, my housed is paid (nice 35k rathole), still single (engage) and owned my first car still (2005 Saab).
    Not much of a spender, don’t really buy fancy crap or have the use for fancy gadgets besides smartphones

    All and all, I’m projecting to be making 500k a year by the time I’m 35, I’m crossing my fingers for now, I’m currently making my incredible income based on a handshake and good relations, I could loose it all tomorrow if they choose it to be, which is the reason I started investing outside my field, I bought a 150k bread route that is netting me 950/wk after all cost including driver. I’m thinking on buying 1-2 every yearon separate companies (Pepsi, Fedex, Tastycake) and keep myself diversified. I think when I’m making about 10k a week I will relax and call it a day.

    I at my age, 27, I consider myself very lucky and successful, at least compare to the rest of my family. It was more luck than investment, and or prudent planning to be honest, but you know what they say: Better to be lucky than good.

  79. I like this article. I was curious about the various income levels and what people would consider rich or well off. Out of all of the sites I read it seems everyone has their own perception of what rich is. I guess that the term rich is subjective. It seems to depend upon a persons point of reference. A person with lower income would probably feel being rich begins at a lower threshold than someone who has a high level income. That’s just my two cents.

  80. I find it interesting that you say the following:

    “$350,000: Still upper middle class. ” – And apparently not rich…

    Very interesting. Especially considering your own blog points out that the upper 1% of Americans make greater than $350,000. So what exactly are these people at $350,000 being the “upper middle” part of?

    The best definition I have seen for middle class is 3-12 times the level of poverty.
    3-6x or $51,000-101,000
    6-9x or $101-151,000
    9-12x or $151-204,000

    Still that isn’t quite right considering 50% make less than $34,000.

    Everyone wants to think they are middle class but even the above numbers show that those in the 3-12x the level of poverty group make up only about 20% of Americans.

    1. Hmm, never heard of a multiple based off poverty. Is this not somewhat of a defeatist attitude? Saying you have 5x more income than poverty just sounds weird.

      I’m basing the numbers in my article off housing and living costs in the most expensive parts of the US and the world.

      Median home price is $600,000-$700,000 in SF and that buys you junk. I don’t call having an income half the value of your house rich.

      Best to use high comparables to be conservative.

      1. Hmm…
        I think the figures are OK for ridiculously expensive cities like NY, SF or LA.
        which you correctly admit but thats not representative of what most of the country is like.
        even with NY & SF, I don’t think most people make that much.
        median incomes from these cities will prove my point.
        its just that overcrowding puts pressure on real estate and inflates prices.

  81. I like how you break it down very well. But there seems to be more to it than just the numbers alone to me.

    For example, I feel that I am in a better situation making 160k a year than my friends who make 250k+ a year. I happen to save more money than they do when all said and done. This all depends on how much you spend and what your expenses are. To me if you can make 150k but you can live a lifestyle of about 50k your doing great! But if you make 250k but your lifestyle is maxed out that your spending 200k of it. Who is in a better situation in the long run?

    Sorry if my points and questions are off topic. I tend to do that a lot.

  82. This is quite a clique – when most of the country is living with median incomes just shy of 50k, here we are complaining about how really not rich we are. What a bubble. Since I know people in the real world that are not like myself, top 4% and all, let me just say Obama is right. 200k is rich, with opportunity, if you make the most of it. That taxation is an incentive for everyone to do so. We got a good deal, and frankly squandered the two tax cuts that W put on credit card, which just went to a big red debt mound. Reversing that will compel people to put their capital to better work and yields. It has singularly put a number of states including Calif back in surplus for the first time in decades as capitalist sell off their gains now to avoid higher gains taxes later. That is the way it’s suppose to work.

    1. I know this is an old post but – this irks me – the Bush tax cuts did NOT cause significant deficit spending. A commonly stated thing but factually off-base. From 2000-2007, federal taxes collected went up at a CAGR of 4%! And that was at the previous peaks high which had dotcom bubble and y2k spending. The reason the deficit went nuts is because federal spending went up at a 7% CAGR. Blame Iraq/Afghanistan, Medicare Part D, No Child Left Behind, etc but there is no empirical proof the tax cuts caused significant deficits.

      One other thing – the effect tax rate the rich paid during the Bush years was basically the same as the 50s and 60s. Virtually no one paid the headline top rates – many, many things were tax deductible back then that aren’t today. This is why they added the Alternative Min Tax at 21% on the super rich – because 140 millionaire incomes paid 0 taxes the year before. The rich have paid an effective tax rate of between 18-25% since WW2.

  83. CloudHeights

    Great read! I completely agree with your assessment of the levels of income and it varies by locale. Just turning thirty and my wife and I gross approx. 470k. We were making 200k annually a couple years ago, and did not feel rich by any means especially considering kids in near future. I must say though, 470k in Austin, TX is very comfortable. No state income tax, although high property tax but the housing is not like California or NYC. We were able to get a great place on the lake for 700k, so shelter costs are relatively low. The area where we are lost is retirement planning and this was very helpful!

    1. Hi Mate, 470K in Austin must be incredible! If you like Texas, then you’ve got it made given the costs and no state income taxes. 470K would be like $1 million here in SF I’d have to imagine. I’d consider signing up with Personal Capital with that type of income to track your finances. It’s free and it’s helped me manage my wealth better now that I’m retired. Welcome to my site! Best, Sam

    2. R U guys in the medical field? 470k in Austin is lot of money if you are not in medical field or have your own business.

  84. Interesting thoughts….. Living in NY and making 430k is far from middle class for my family. After the mortgage, taxes, bills, daycare etc I am left with 1700 a month to spend as I please. No big holidays or fancy cars on my horizon.

    My 2 cents.

    1. Wow…. only $1,700/month left making $430,000 a year is pretty tight. Hopefully you’ve put away at least $50,000 in savings on top of maxing out the 401K and then have $1,700/month left? Tell me $1,700/month isn’t all that’s left for savings.

      1. calvin bridges

        most people don’t even have $200.00 at the end of the month I consider that a blessing and its to the person choice of how they choose to live there life notice they describe raising a family. putting kids in school or college isn’t cheap, let alone raising them, to be able to stay above all that., I give them two thumbs up!!!!

        1. calvin bridges

          I use to live in new York myself I personally know how expensive it can get, and average house is 500k to 1 million dollars to own, taxes are $10,000. minimum on houses let alone school taxes, paying taxes at your level can be as much as 55% depend how you corporate your business, also let not forget about all the employees who work for you and much much more expensive s. I’m proud of you.

  85. @ Jai Catalano
    After reading your, and many others, definition of rich I feel it’s gotta be based on net worth. A person or couple making 500k a year with very little savings can become lower middle class very fast with poor financial decision making, or say for example the loss of a job. If the “rich”couple haven’t saved, get caught up in lifestyle additions and are carrying debt, to me they aren’t rich at all. I net 650k after tax, have 728k liquid, own a shopping plaza and 7 rental homes, 16 businesses etc…and not to sound whiny, but I DO NOT feel rich at all. I read in one of the comments that the more you make your definition of rich changes…almost, well exactly like a sliding scale. I am what most consider to be a high net worth(6.4 million) individual, but I am a small fish compared with a few people I associate with. I live in a military town, so to 99.9 percent of those around me I am “rich”, and while I do feel upper middle class, I do not feel rich. You would never know I make and have what I do. My closest friend and mentor has a 60million net worth, and he is like me..not a “flasher”…the people that flaunt money and want people to believe they are rich usually are not. If you feel rich, well who can argue with that. If you don’t,same thing…I am self made, started my businesses with a 500 dollar loan. I feel successful but not rich….yet

    1. So BD wolf, interesting post because I’m somewhat similar to you, maybe a little bit farther down the path but still think the same way as you sometimes. I’ve been blessed to have some very weathly mentors that have guided me and collectively the group I hang with probably averages in the $50~$70M net worth…next to them I don’t feel rich. I do live my life though 100% debt free and save a ton each year, so I do actually feel “rich”, because rich to me equates to being able to do what I want to do when I want to do it. I’m not flying private all the time, but that’s not important to me…what is important is not having the stress of life wear on you. It is probalby good not to feel rich so it keeps you grounded, some of what I stuggle with though is getting to the end and having the huge pile of money that I probably didn’t deploy to maximize life enjoyment…it is a tough balance!

  86. been 25 doesnt mean anything of how much you can make… my wife and i operate cellphone stores. i am 25 also.. like the person above you pay whatever you want..take whatever cash you want and use credit card on anything including vacation and everything will come from the business… so, if i made over 300+ last year which will be more than 350 this coming year i can put that i only made 80k a year and pay little tax.. still spend around 50k year coming form business expense and save 60k from check and save another 180k cash for a rainy day.. i have a morgage of 1500 but make payments of 2500, plus add a bonus extra each year… i just bought the house and plan to pay it all in 3 years

      1. And telling a burglar you only have 10 dollars instead of 100 is burglarry fraud because the burglar was gonna give it for someone’s medical bill/ education/ unemployment. Why don’t you just shut up.

    1. calvin bridges

      I don’t believe in mortgages, just another form of being a slave to the leader or borrower, you don’t own the house until you have a free and clear deed. I rather work with what I have and leverage my income first and then buy the deprecation house later, free and clear. No Head aces, its a lot easier to plan well and keep you investments growing rather just having it sit in a saving account depreciation of cause. As for deductibles under a llc or any corporation, I the I the R the S is 3 people you don’t want to play with. Keep them as your best business friend relationship always, that is a IRS tax consultant, CPA and lawyer. Don’t be the jack of all trades for you really will get screw, they can go back 7 years and pull a magic rabbits out of there black hats if you know what I mean, truly you can cross all your Ts and Dot all your I and they still can go back and say you made an error, even if they approve your deductibles. Best rules keep your I.R.S. AS CLOSER FRIENDS THEN YOUR REVENUE SHARING BUDDIES. I RATHER PAY THE 34.42% ON $340K AND DON’T GO TO PRISON “RATHER THEN TO SIT NEXT TO A GUY WHO HASN’T BATH IN 20 YEARS, WITH A MOUNTAIN FULL OF MUSCLES, NAME BUBBLE, HE LOOKING AT ME LIKE AS HIS FAVORITE PIECE OF MEAT. SAYING MEAT MEAT MEATTTTT!!!!” NO WAY!!! Learn to be honest in all your dealings and operation please.

      1. In reality you never really own a home if you have to pay property taxes and the government can repossess your home (Florida is an exception). Don’t believe me? Stop paying your property taxes. Homes are just another asset to store wealth in. Mortgages are beneficial in avoiding the larger opportunity cost of buying a home out right and a potential hedge against short term fluctuations in housing values.

  87. My business grossed 510k last year (I own 4 Fedex routes), after paying the other drivers I still made 340k. I’m 25 with no kids or wife, I own a 1996 Altima (First car and only car I ever bought) and live in apartment owned by my dad.
    I have no expenses what so ever, not one… besides utilities.
    After the accountant is done, I only paid taxes on 117k of the overall amount of 340k income.

    It all varies per case, I have a business and a LLC so I can deduct practically anything from my income… is different when you have a set salary… you’re screwed.

    I consider myself rich, point and simple.

    With that being said, I inhered all of this from my dad.

    1. Miguel,

      I was just going to ask how you were able to get 4 FedEx routes at the age of 25 and make an operating profit of $340,000 before taxes until you said you inherited this all from your dad.

      Does this mean your dad is no longer with us? Or, does he have other businesses to run?

      What are your thoughts about being rich through inheritance vs. through your own work? I love understanding the psychology of wealth.

      Thx, Sam

        1. calvin bridges

          Hey I rather have the gold and the right lady who want some of my gold, she going to have to dig really really deep, because its well hidden and its going to take some considerable to find. I.E. she going to have to be a treasures hunter, I will give her a map and she just going to have to figure it out herself. My treasure is in my heart and if she can find that she won me over.

    2. I know that taxes seem mean but they serve a purpose.If you make all the taxes at zero the rich will eventualy buy everything.Play monopoly and take a look.This is what has happed to the us.Take a look around every town is the same most of the restaurants are the same all franchises.The cars have shrank home prices have risen.You said it 1.1 million to live in samfansico.Im poor I live in a dubble wide trailer with a fire place cost 42 grand pluss closeing cost.It has 1650 square feet not bad compared to 1.1 million for 2200 square feet.I have 2 acres of land too.I make about 35 grand a year.I cut my own grass.do my own mantanice.If taxes on the rich were so bad how do you explain the 50s and 60s?The rich still want to buy cars from the 50s and 60s hint hint.Do you love the world you created .

      1. It’s mostly that, the only reason why the rich are able to be rich is because there’s a system in place and whoever has the money to pay should pay, that’s why we pay an equal share. Without this system, the rich wouldn’t be rich… because there wouldn’t be a paying system where people can go to work and purchase the products that in the end make the rich, rich… as there would be no public safety.

        1. Methinks you need to read the millionaire next door book. You’d be surprised at who ends up being rich. The vast, vast majority in the US of those that amass a million or more in net wealth grew up in families that made middle middle class income or lower and never made above middle class wages themselves.

          While a person born to a family with a million or more in assets is 3x more likely to become a millionaire than one not born into assets (1:7 vs 1:21 circa late 90s), the fact is over 80% of people born into millionaire household’s don’t become millionaires themselves.

          I’m a great example of class mobility in the US. My grandfather was a HS dropout and a truck driver. My father was a HS grad and was lower middle class most of my early life (he now makes middle class income and has about $300k in net worth after decades of savings in mid 60s). I ended up getting a college degree and an MBA and make 6x more than what my father’s peak salary was at the age of 35 and have a much higher net worth (my brother who is one year younger than me has 0 net worth). I started my career as a college dropout as a cashier making $7/hr retail world, moved up to corporate management on my own and paid for my own way for college/mba without any help from my folks all while working a full time career. The only help I’ve received from my parents was a $500 loan for a new car when I was 23 which i paid back 3 months later.

          While class mobility has lessened in recent years, the US still has massive opportunity for those with IQs > 100, good work ethic, and spend time investing and savings. Even just putting 10% of your income aside for a 45 year career, you’ll end up with several million in assets. If you can convince the next gen to live the same way, the second gen could easily leave $10M+ in assets to the third generation – all on middle class income.

          1. Alan N Finkelstein

            I come from a similar background. My father was a high school dropout and my mom graduated high school and was bank head bookkeeper. They sent me and my two brothers to college (state universities). They gave us all a work ethic. We all work hard every day. I became a CPA and reached the age of 70 and still work EVERY day. One of my brothers worked his butt off and got a PhD in history and became dean of the college of history at a local community college. He is a legend at that particular institution. He still works EVERY day. My youngest brother is a college graduate who is an expert in restaurant management and works EVERY day. The three of us came from nothing and now our children are moving up the ladder by working EVERY single day. Upward mobility is alive and well in the USA. It is up to each individual to make the most of the life given to him by the Creator. My children and the children of my brothers will have a leg up no doubt on some of their contemporaries but they also have the intangible of having had in house mentors to help them succeed in life. And they will be left assets to use beyond their wildest dreams. Keep the faith, upward mobility can be had by anyone willing to work hard to get it!!

            Alan F.

    3. Congratulations, I hope to do same for my children to inherit. I live very fugal I live just to be happy I don’t need expensive things I just live with things I need and just save money for their future and hope that they use it wisely!

  88. Helene Leclerc

    I think that $200,000.00 after income tax and social security tax is a good figure to use to be considered “well off.” What one chooses to invest in or contribute to is their choice. The average American should not have to make up for what someone who makes 200,000. chooses to use for tax deductions. I’m not talking about businesses, I am talking about the working taxpayer, not a business. Businesses should pay taxes based on the balance of income after deductible expenses. We live on approximately $45,000.- per year. We have no health insurance except for Medicare. We do not envy those who have more than us but we do expect those who have more to pay their share.

      1. Akslaejkaslje

        Interesting read, and I apologize for necro posting.. BUT!
        When we’re talking about the wealthy, we usually refer to the top 1% and yet for your tax figure you’ve had to bunch up the top 10%. I think you know as well as I do that’s because the majority of the tax burden is on the middle and upper middle class, those between the 90th and 99th percentile. The top 1% actually pay less taxes, percentage-wise.

  89. deleted repost 85 percent percent of americans make 100000 or less 95 percent of canadians make 100000or less stop feeding the innocent lies

  90. woww most of you act like money is falling from the sky please explain to me how the fuck making 200000 grand a year is middle class both in canada and the usa sure the cost of living eats up alot of income 85 percent of the american population makes 100000 or less thats 95 percent in canada gross income the top 1 percent control about 43 percent of financial wealth in the us lets be real people anything over 150000 ur balling compared to ur country

    1. Angry much?

      Obama and Romney say $250,000 and under is middle class, so who are we to argue?

      Money is raining from the sky. Look at Apple’s earnings and the number of people spending $500-$1000 for an iphone5 they don’t need.

    2. toronto – Money is literally raining from the sky. The Fed has actually used this quote in press conferences. Something about dropping money from helicopters to stimulate spending…Take me for example. My house went up $200K in value in 5 years and made another $200K-$300K in the stock market in the same period. All because the Fed manipulated interest rates and bought bad assets. The Fed dumped half a million on my house over the past 5 years. When everyone is getting free money it drives up the cost of living to the point where even somebody making $250K can’t compete for the scarce amount of housing and childcare.

      People that are earning $250K are battling over $1.2M tear down bungalows and daycare centers that have lead piping and crack addict caregivers. Trust us, $250K is definitely middle class in America these days.

  91. OK so here I am and know what it is to work 2-3 jobs at a time. Have never been wealthy, in fact my best years I got 16,000 and that was working 3 Jobs. In all my years of working, SO FAR I have yet to see a poor or real middle income person Employ anyone. Was working at a Machine shop, they got their taxes raised again, besides all the other increases to take in consideration for expense, I got my hours cut and another one also. SO now why do we want to increase the taxes on the rich (225,000 or more) for? Am lost with the question, Someone show me the math, Poor people Do not create or maintain employees….Rich people do! AND they need some sort of incentive!!

    1. Abe, great perspective given your income.

      I’ve never met a poor person employ anybody either.

      But, it’s easier to vote on raising taxes on others so we can benefit rather than work harder ourselves! Go USA!

      1. Abe the hard work you did working three jobs is the equivalent of 1/15 of the hard work that a rich person is doing. That means you need to work 15 years to be worth what this one person is able to do. When a CEO cuts himself a check for 10,000,000 dollars after working for two years for a company and the company loses value during their term imagine how long it would take you to make that much money. 500 years at 20,000 a year. I definitely need to educate myself through this website about taxes but thinking about compensation like that for a person who seemingly works hard vs. a higher up can be difficult to swallow.

  92. what i do is pay every expense with my company so i spend 50k a year in food and gas alone.. through the company.. in my area you can be rich with 250k.. of course saving more thank 100k a year.. right now i am saving around 180K.. my car is paid and only owe 180k for the morgage

  93. My wife and I have a combined gross of ~$184K (net ~$135K) and I have to say that I feel anything but rich. I live just outside of Cleveland Ohio, and we are likely in the top 2-3% of households in Northeast Ohio in terms of income, but I feel like the government (at all levels) takes from me far in excess of the value that it provides. The effective tax rate for my household is around 28% factoring in all levels of government.

    I am fed up with people telling me I’m rich… I am not rich!

      1. I work in IT (contracting as a software engineer which leads to better hourly rates than I could achieve as a salaried worker) and my wife is a bench scientist (medical testing). We are both highly educated (masters plus) and we have both been high achievers since our school days.

        I don’t know if it would quite equate out to a million in SF, but it is rather comfortable. I’d like to think that though we have made both good and bad decisions that we’re on a rather solid path. For example, I purchased a home a few years back when I was single, and making less, that was only 2.25X my gross rather than the nearly 6X the bank said I could “afford” but on the flip side of that coin we managed to accumulate nearly $100K in student loan debt between the two of us. I’m not super worried since most of the student loan debt is at bargain basement rates right now thanks to Mr. Bernanke, and I’m in no hurry to repay loans that have negative “inflation-adjusted” interest rates.

        Last time I did the calculations we’ve got a savings rate of about 35% of net across all of the vehicles available to us. We’re a bit behind the guidelines for savings based on our ages (I turn 30 in 5 days, and my wife is about 6 months younger than I), but I blame that on a later start due to graduate school. Either way, I’m working on a solid dividend performers portfolio that’s already replacing around 8% of our yearly expenses, and compounding rather quickly due to reinvested dividends and monthly contributions.

        Modern finance is truly a beautiful thing if you’re willing to devote a little bit of brain power to crack open Excel and run the numbers.

        1. I think you don’t feel rich b/c you are only 29 years old. Give yourself a full 10 years of working, saving, and investing and I’m sure you will start feeling very rich, especially if you stay in your state!

    1. Vinay Singh

      You’re complaining because you don’t think you’re rich, but people keep telling you that you are? Wow, that is a sad story. I would have the blues too. It’s almost as bad as having chapped lips!

  94. Wow. Your article, although interesting, feels depressing and out of touch.

    $350,000 is not rich? How far does the middle class stretch??

    $200,000 per person (I’m not talking per household) is at the very least upper middle class.
    As far as I am concerned, anyone making $200,000 or more is rich, unless they have a money management problem.

      1. I don’t know where you got this idea, but I’m from Paris and I can tell you that 350k is considered as rich there…

      2. This is the only article that got it right. One thing that warps everything is have 3 kids and sending them all to private school. Ours are still little and our bill is $36,000.
        In 3 years it will be $45,000 and after that $50,000-$60,000.

        And I’m thinking of going for number 4. And we live in one of the big, pricey cities you mentioned.

        At $250,000 I DO feel rich though. What I mean by that is that I am able to save a significant amount every month without living frugally. I don’t waste money, but I do have a full time housekeeper, nice cars, and give $25,000 a year in charity etc.

    1. TheOpinionator

      Exactly!!! I was just trying to make this same point, but think maybe it was censored. If you’re not rich with $300k anywhere, then you definitely either have money managing issues, or you’re just a greedy, never satisfied person with distorted priorities. I’m not saying this, because I’m poor and jealous. I’m pretty well off and live in Los Angeles and happens to be in touch with reality.

      @Fred: Very true. $350 is rich everywhere. Paris, London, Copenhagen, Los Angeles etc etc and I have lived most these places. Who ever says otherwise, are the ones who’s out of touch and I pity those who do not see and enjoy what they have, but only strive to get more!

  95. The wife and I pull in a little over $300k/yr and with taxes (NY residents BTW) and child support, gas, mortgage, camps, piano lessons, lacrosse, soccer, food….I am just scrapeing by. We live in a modest ranch house have 2 crappy cars and play muni golf. We dont go to fancy restaurants or live an extravagant lifestyle. On what planet am I considered wealthy? And they want to raise my taxes? Are they @#$# nuts?

    1. Skip Moreland

      Let’s see child support, camps, piano lessons, lacrosse, soccer, etc. You are far better off than the ave NYer or most people anywhere. Many people would love to have a portion of what you have. Most people don’t live that well. So yes you are rich compared to the rest. I would be willing to bet that your modest ranch probably goes for 300k and your two crappy cars are between 20-30k when bought. About 80% of us would love to suffer like you do.

  96. My husband and I made a combined income of $77,000 last year we have cut corners on everything we live in a tiny tiny home 350sqft. We use free firewood in winter we moved to the back areas of east tn to afford to keep living we eat not more than 3ounces of meat three times per week and beans and rice the rest of the week. We have cut healthcare and everything possible to cut last year we came out even and we can not seem to find one dollar to save. We never leave home we work from home so transportation cost is next to nothing. We really have cut every corner we can so in my humble opinion this article is on the money about it depends on where you live how much you earn but the numbers are all off because this past year groceries alone ran us almost $10K and we do not have special diets or anything and we do not buy alcohol or anything expensive all beans and rice so short of going hungry and never leaving home and only buying what you truly need in a cheap are cost $77K for two people then to me it takes at least $150K to be happy and able to save a bit for retirement and have some for travel and some to have folks over for a meal etc… None of which we have been able to do. Not certain where the numbers above come from but life is expensive period.

    1. i don’t understand your predicament being the way it is in Tennessee.. i just got out of college and i can live off of 200$ of groceries a month and i live in Charleston SC.. my friend lives with her bf in outside of chapel hill and make way less than y’all do… somethings wrong there.

    2. Are you serious 10k in groceries? I live in Denver and support 3 people and we spend maybe 400 tops per month on food. We eat good meals all the time on that budget. Where are you shopping????

  97. well… ugh… i feel sick. It’s time you clows to a walk on “reality” street. It’s clear that most of you have never been poor. It takes almost nothing to survive.

    Comparing your “money” to the country’s averages? Compare it to the world. Think, india, china and south america for instance, forget about africa because you already have forgotten about it.

    You eat once a day? Clean water? a roof over your head? You’re rich. FU.

    1. stop patronize china for god sakes..geez
      china is richer than you think ,in fact, in cities like wen zhou ,or any one that near sea or port,
      ppl makes more than 30k USD on average and living cost is much much lower.
      so stop worrying about us and be more concerned about your government with their debt.(number will stun you,hahaha) .this is also to sam.

      my entirely earning are from foreign so i am not quiet familiar with your tax system even though i live here. i been follow this blog for a fairly long time and i notice a huge lot of saving that sam promoted is depend on this 401k.is that like pension?

      anyway i have read an article on forbes or somewhere else that US government are missing 20 trillions in their pension and that problem is gonna blast soon.but worst of worst is this one interesting fact, that your government ,who is in debt of 547 trillions ,has a tax earning that can’t even pay off the interests that those huge debt generates.

      thats hilarious,right? let’s think of this goverment as a person.so it will be like this.
      that he borrowed say 100k from the bank to buy a car with no down payment. he plans to pay it off in next five years.lets consume the interests rate is mere 2 percent yearly ,so roughly he ought to pay the bank interests for about 2k every year for the next five years.and now guess what? he founds out that after all the spending he can’t even pay off the 2k due every year. not to mention the 100k itself.

      interesting right? because in the scenario china is the bank. you americans really need to work on your illusions and grow some brian.not to listen to the first thing your media and government promoted is the first step to facing the reality.

      but really ,this whole you own us thing is less of our concern as we don’t need the money urgently anyway. in the economic crysis china has huge shares of all the investment bank that survived in united states and our government is nice enough not to pulled out their investment.and if we did, there will probably be no wall street now.

      so really ,think about this ,what if when you are old ,you thought you have everything planed only to founds out that your government has no money to pay off your pension?
      and yea, definitely not vote for obama. he taxed your butt off and still the government is in new debt? with all the taxes obama s getting, the chinese government can probably build ark that can survives 2012 for everybody on the earth and still have plenty left.

      1. Yea, but we bail out entire countries, die for other countries, hunt terrorist for the worlds protection, search for missing people and planes, buy Chinese crap for the Chinese people, give the Chinese and multiple other countries our jobs. Feed the hungry all over the world, actually we’d rather take more care of other countries than the our own. Teach & train other countries. So guess what – I don’t care whose money it is. It’s not lining my pockets in any way shape or form.

    2. Seriously…..your comments are flat out insulting ! You have ZERO IDEA what people have done in their life to end up where they are after lots of years of busting ass, saving pennies – then dollars, scraping buy, working 80-100 hours a week, losing jobs, being laid off with a newborn baby, etc. Yes…..now ( Im 60 ) ive got a really nice nest egg saved and have no debt that will allow my wife and I to retire next year. Ive worked ETHICALLY for every nickel I have made and saved and for you to say FU and act like we are a bunch of criminals…..your a total ignorant dick. Have a great day !

  98. @paul
    I must agree Paul. I am a mother of two living on 22k a year, it is about 18k after taxes… Meaning I have about 1500 a month to pay all my bills and support my 4 year old and 5 year old. I live in pa. I have a garden to supplement my groceries, I am not not complaining but am saying that the only way I am getting through is by instinct, self sustainability. When it gets over whelming I just think it could be worse. I get quite upset when this rich topic comes up, because I feel if you can cover your basic needs, you are good, if you can afford multiple cars and vacations in exotic places, multiple homes, etc… You need to be so grateful, you are rich. I know first hand life can be gone in a second, the money is worth nothing to you then. Live a rich life on what you have. Sorry to carry on I hope I have contributed something to the discussion. I guess the point is, it really is all relative.

  99. i think you are all on drugs and a bunch of cry baby’s. only 17% of this country make over 100 k.
    they say 52k is the medium income but this figure is distorted due to the outrageous amount of money the 17% make. in this country 58% make less than 27k and 17% make less than 57k. that equals 75% of this country under 57k. fs states that someone making 50k could save 22k. i strongly disagree. i make 50k and 12%goes to my 401k, 4%goes to savings. that leaves a whopping 2000 per month take home. the total of just my rent and utilities is 1400 a month. this leaves 600 to pay for any debt inured medical food gas. that’s is 150 a week to live on.
    you people should feel fortunate you are in the upper income level. i know people that have 1-3 children making 25k per year working 2 jobs about 50+hours per week. how do you suppose they survive after all their expense’s. you people need to stop wining.

      1. Come on Samurai. What is your effective tax rate????
        If one pays more taxes, it’s because one makes more money and brings more money home! Tax rates are marginal!

          1. She’s right. We have much more expendable income. My taxes (AMT, property, state) eat a huge chunk of our income, but I’d rather be on this side of the fence, don’t you agree?

            BTW, where did you get your degree?

    1. YOUR OUT TO LUNCH. YOU YOURSELF DESERVE A BETTER QUALITY OF LIFE AND YOU NEED TO DESIRE IT, AND ALSO FEEL THAT YOU TRULY DESERVE IT, AND YOU HAVE TO OPEN UP YOUR MIND TO TAKING BETTER CARE OF YOURSELF, EVEN IF YOU NEVER GET THERE 100%

    2. I know! I definitely agree with the president that 200,000 is rich, just look at all those people making so much less per year. People need to stop whining about taxes. You make more, you can afford to contribute more, and just be thankful that you are in that situation.

      1. Thankful to whom and for what? Thankful to God perhaps, for the desire and ability. Other than that, there is none to thank but oneself. Hard work and sacrifice are required to be successful. Whining? Seriously? How about a flat tax? The rich will still pay more and I will definitely stop ‘whining’ about taxes.

        1. Skip Moreland

          A flat tax hurts the poor more by taking a larger % out of their pay. But then again, people like you don’t care about the poor. That’s obvious.

    3. “l. i know people that have 1-3 children making 25k per year working 2 jobs about 50+hours per week. how do you suppose they survive after all their expense’s” It’s called self responsibility. Don’t have kids if you can’t afford them. Go to college, get a job, save money, and move up the ladder until you can afford to support a family. Then have kids. Also when you are dedicating your time to work and education, you would achieve more. It’s really just common sense. How do you think the upper middle class is able to make so much money?

      1. But what if you are really horny and can’t help yourself? Shouldn’t those with lots of children’s be supported by those with less children or no children’s in America?

        Afterall, the government provides a $1,000 child tax credit for income earners below $65,000 or so. Why do you think that is?

        1. don't care to be right wing

          Are you psycho! People choose to not have children because they do not want to pay for them. I for one hate that I pay fees and taxes for schools that even if I had children they would not step foot into. Horny or not get clipped, take the pill, and choose partners that want the same things as yourself. Let people take care of themselves, maybe, they would learn to get off the coach and do something productive or maybe, they would kindly reduce our population. Anyone notice that what we pay to keep people that don’t earn enough money could pay off our nations debt. Maybe, there are just to many people.

      2. Although I agree that you should plan to have children when your situation is ‘good,’ what if that never happens? To say the poor should not reproduce has a name – Eugenics. Besides, not all of us can be at the top, or even the upper 50%, can we? It’s impossible.

        1. Oh jeez – He wasn’t referring anything remotely like eugenics. To say he was is pretty extreme.

          “Good” is relative and will be different for everyone. There are a lot of people that aren’t ready for children, both emotionally OR financially ….their poor situation is exacerbated by the emotional and financial expense of raising a child and they become a strain not only on themselves, but the rest of the country.

          “Good” does not have to mean $100k salaries and white picket fences. A couple with very little expenses, debt, are emotionally ready, and that only make $20k a year can definitely be in a good situation to have children – even though they are below the poverty line. While another couple making a $150k salary with a high debt to income ratio, and an emotionally unstable environment might not be ready and therefore should think about possibly waiting until they are in a better position to bring a new person into the world. Obviously you are your partner are the only one’s able to decide when to have children, and that will vary greatly from couple to couple depending on the situation.

          And nobody has the right to decide if another can have children or not – but people that have children (that aren’t ready), complain they can’t get ahead in life, then turn around and blame “the government” or another unrelated entity on their poor financial situation, all while collecting government checks month after month can put enormous strain on the economy and give welfare programs a bad reputation. By simply waiting until their financial situation improved, they could have saved themselves and governmental welfare programs a lot of money and headache.

  100. Drgnflykween

    And here I was getting excited over my husband and I combined making over $100,000 a year LoL..and we are not even out of college yet.i feel screwed lol. Being a clinical child and adolescent psychologist (average $70000 a year) and husband civil engineering ($100,000 a year) we will obviously not make enough..yikes! Any suggestions on how to make more off what we earn? As you can see I am money dumb lol. by the way we live in Tulsa, Ok.

    1. No, you’re fine. You’re really fine. And you’re not even out of college?
      You’ll receive raises, do not fear.

  101. Finally – someone who got it right! There are so many articles out there trying to define “rich” and I have to constantly say that my annual HH income of $200k is certainly not “rich” even if I live in the state free tax of Texas. No debt and live in a modest 3700 sq ft home, by Texas standards that’s an average size home. Spouse and I left California for a better cost of living.

    No kids, although we wanted some. It just hasnt happened for us yet. We contribute the max to 401k and still qualify to contribute to Roth IRAs and we max out our pre-tax FSA accounts as well so that strips us down a quick $54,000. We invest about $10,000 on top of that every year and the rest goes to daily living expenses. Surely we live well but we have to keep working to keep building that retirement account. Plus if that family ever happens for us, we’ll need a nice cushion of savings because I’m going to take a few years off. If it doesn’t happen, then I’ll start looking for a different job that is something “fun” instead of staying on the hamster wheel making the big bucks. Money isn’t everything although it is sure nice to not worry about who’s making the mortgage and electric bill payment!

      1. Hello D,
        Spouse and I work corporate jobs. I had corporate mentors and got my undergrad and MBA on full scholarship. It helps to not start out in debt to begin with. I started my career in sales, quickly climbing to top sales person within a year. Commissions were huge and that opened doors to being on the fast track at my Fortune 10 corporation that I worked for. Advancement came quickly into management then more senior management positions. Not a lot of people are resilient to moving across the nation every few years but we did. We moved for strategic promotions with relocation packages – saving all along the way. Having a supportive spouse who is on the same page with life, career and financial goals is key. That and having great mentors who will champion your career.

    1. Jean, I can’t believe nobody called you out (on a financial website) when you said you live in a modest 3700 SF home which is just average in Texas??? Maybe if you have 4 kids and are in the “rich” category but you say it’s just your husband and you and you make $200K/year? I also live in Texas, in a 2000 SF home, just my wife and I, no kids, no debt and we make more than you and save much more than you.

      My first rule of financial well being is to reduce your biggest expenses first, which is usually your House. In Texas we dont’ have state income tax, which you mention, however the state receives the same amount of taxes as every other state they just get it through different methods. Property Tax in texas is ridiculously high and is based on the appraised value of your home. The bigger the home, the higher the appraisal. Even if you’ve paid off the mortgage the operating expense of a 3700 SF home is going to be much higher than a smaller home. Americans believe they need a big home and new cars but reality is those things are a financial ball and chain.

    2. If you are making 200k, that puts you in the top 5%. Statistically you are not middle class (remember the bell curve?). If you are investing 25% of your income, you are accumulating wealth, not spending it.
      It’s all about what you want out of life. My elderly in-laws are millionaires who can live off of their pensions & social security alone, but they cannot stomach spending anything more. Moderation.

  102. Hey man good article.
    I made just enough to be considered rich on your list,good thing is that i do not have to pay that much tax,since tax rate in hong kong for me is roughly overall 15%.
    Just found out your blog and am fully intrigued.will follow.

    1. It’s all good Jenn! The great thing if you are young is that you can always find a way to get richer if you wish! And if you are happy with your current income, then does it really matter if you are poor?

      1. Sam. Can you explain AMT tax to me. I make a substantial amount of money, more the 500k but i ultimately would like to parlay that money into investing into real estate development and some other investments and not live the 9-5 life in the next 3-5 years. How will AMT taxes come into play if i have a lot of itemized deductions in the future…I cant seem to wrap my head around this tax and how it works. Thanks man

        BK

      2. Look at the AMT worksheet the IRS provides. Mortgage interest and charitable donations are examples of deductions that are not subject to AMT, while property taxes are. Meaning that they can be added back into your income and taxed! If you can, maximize charitable donations, make an improvement on your home… But choose an area to live where property taxes are lower. Of course there are a few more variables, but I can’t remember offhand.

  103. The Joneses.

    I think your views a little skewed. To you $50,000 for a single person is the starting point for lower middle class. And those people have 401Ks etc…So after all the savvy savings, a mere $2000 a month is enough for a frugal lifestyle. Well…think on this: I was raised in a family of 5 to immigrant parents making $38,000 annually TOGETHER. We didn’t have 401ks, IRAs, bonds, etc…And we didn’t live a frugal lifestyle. We lived within our means and managed to save for rainy days. Even with that income, my parents manged to take us on vacations. Maybe we didn’t go to Disney world or go on cruises once a year but we had adventures together. And they put 3 of their kids through college. So, you saying that $50K for a single person is lower middle class to me sounds as if you’re spoiled and privileged. You want to live the life of a luxury that you cannot afford and think that’s the only way to live. Anything beneath it is a frugal lifestyle. We didn’t have a lot of money to burn but we weren’t dirt poor. We learned to prioritize and live on a budget. So a single person making $50K a year compared to us should be able to accomplish a lot more than just a frugal lifestyle.

      1. Perhaps, FS, you’re out of touch with most of America. The median household (not personal) income is right about $50k. That means more than half of American families are poor by your definition of what is rich. Do we really want to live in a country where so many people are poor? Do we really want to live in a country where so many entitled people, who are in the top 2% of all income earners, do not feel “rich”?

        Yes, FS, you’re one of the entitled, and so are many of your commenters. You load up your “expenses” with personal savings, which you get to keep. Other people here say they have to pay for private school because public schools are not good enough for their special snowflakes.

        How about working to make public schools better? Oh no, that would take realistic tax rates.

        How about social programs so people in our country don’t go to be hungry? Oh no, that would take realistic tax rates.

        How about paying for all of the programs that we use instead of putting it on the national credit card (public debt)? Instead of making our kids pay for our mistakes? Oh no, that would take realistic tax rates.

        What you wrote here makes me sick. You want what this country offers you, but whine when it comes time to pay the bills. I’ll bet you call yourself a patriot, but you’re probably not a vet like me. Refusing to pay for what you say you’re “entitled” to is unpatriotic as well as pathetic.

        Just to avoid the usual BS, I grew up lower middle class or even poor. I went to public schools. I now have several graduate degrees. I have a side business as well as a professional job. My household’s income puts us in the top 5%. Our net worth puts us in the top 3% because we save money instead of living in a McMansion and buying every piece of electronic garbage out there.

        1. Jerry had some weird point of view.
          Charity and earring is not opposed to each other.

          When I was 16,made first 10K,I donated all of them to red cross and have worked there part time for free till now.that does’t stop me from building my own business and living relatively large.

        2. To some degree I agree with you but we’ve increased per capita spending astronomically in the last 50 years and have had no results. I don’t think spending is the issue when it comes to education. The cost of public schools is already almost as expensive as private schools in most states.

  104. Why do you have someone making $50,000 putting nearly half of their gross income into a 401k and such, but someone making TWICE that, putting $5,000 *less?* That doesn’t make any sense.

  105. So much ignorance here. The author, and most of you, don’t realize that “rich” is about assets – not income.

    If I inherit $50 million, don’t invest it (and have no income), I am not rich???

    If I make $400K but owe $7 million, I am rich? Nope.

    Stupid confusion displayed here.

  106. I live in Los Angeles, and I made about $200k last year from my job, plus another $24k from rental income. But I’m losing about $1,500 per month from the rental per month, and I am under about $200k for both my primary and investment property. So I definitely don’t feel rich and would be extremely ticked off if I get taxed any more! Also, with my income level, I can’t even take any passive losses on my investment property.

    1. Not being able to take passive losses on your investment property is where things are a bitch. I think the income threshold is around $150,000 AGI right? Seems so arbitrary and unfair.

  107. Mark D. Cook

    Where you’re located definitely need to be factored in to who is considered “rich.” Cost of living makes quite a difference. What is considered “wealthy?”

  108. I think you mean your mortgage would be $6,000 a month, not $60,000 a month on a million dollar home.

  109. JerrellStair

    While the idea of being ‘rich’ is a simple one, it is actually a concept with many different ideas and viewpoints. Depending on your income level your idea of ‘rich’ might be different. The more income you currently have, the more additional income it will take to consider yourself ‘rich’.

    1. Right! Just like the older you get, your definition of “old” keep getting higher and higher!!

  110. Average income in the U.S. is ~ $50,000 which is a “middle-class” income in most places.

    $200,000-250,000 is considered VERY WEALTHY in the vast majority of the United States.

    $200K -$250K might not be all that much if you blow it all living in EXTREMELY high cost of living cities such as San Fan, NY City, etc but general speaking $200-250K is a hell of a lot of money NOT just “middle-class”. Who says you have to have 4 kids, pay 40K+ for their college, save $$$ and so on??? Trying to somehow justify how 200K isn’t a shit-ton of money? That’s not fooling anybody.

    100K is considered “upper middle-class” in most areas of the United States. Nobody said you have to live in the most expensive cities (NY, San Fran,etc) in the U.S. and save 1/2 your income, pay $40K for college, etc.

    500K and beyond is just stupid wealthy compares to the average American. Even 100K rates in the upper 15-20% of income earners.

    Some folks are apparently living in a fairy tale World.

  111. Giuseppe Johnson

    I give some, I spend some and I save some. I give a tithe and then spend a tenth in wild and complete abandonment, as long as it’s in budget. Per investing, I am a tad unique, with RMD from an inheritance, I am near the $5K max per year for tax advantage accounts (also I’m overweight in stocks) so investing is in bonds/bond funds (purpose of the bond fund is to save up to have enough for a lot of 5 [munis]). So the article does not quite fit my situation, for regardless of size it goes toward my long term rebalancing act.

  112. Interesting break down. In Canada our taxes are even higher. Youch.

    I think being rich all depends on where you live, the cost of living, and what you have in your life to support. I also think being rich is a perspective. You can own a small house in a small neighbourhood and have no debt and be rich but people wouldn’t necessarily think you are.

  113. BusyExecutiveMoneyBlog.com

    Great post! It’s shocking when you see the number laid out that way. I spend some time on this subject as well as I believe high income earners are also highly susceptable to bad decisions. Notably lifestyle creep.

  114. I love the Jon Kabat-Zinn reference. I think what is amazing about income, wealth and this numbers game in general is that it is whatever you want it to be and the potential to reach a level of wealth that at one point seemed impossible becomes entirely possible! Will you soon see me out of debt and on the road to building income and capital? Yes, because I’m totally focused on it!

  115. It’s interesting how “rich” is such a relative term. For someone like yourself who lives in a wealthy area and hangs out with some pretty “well-to-do” folks, half a million a year in income seems about right. For myself, living in rural Canada, I would consider a family income of 250K to be “rich.” Yet I recognize that is really isn’t “rich” in terms of standard of living for someone living where you are. So aren’t both of us right? This is why I prefer consumer taxes to income taxes. The more you spend the more you owe, it rewards people who are focused on building wealth.

  116. Where I live in, $350,000 is enough for being rich. Important factor is the calculation is pro big city dwellers. If we consider rest of the population who live in much cheaper places, its equivalent to tax opportunity loss for the state.

    Shouldn’t there be a mathematical formula to determine your tax rate? Rather than income being the only criteria..oh yeah its called income tax!

  117. Good post.

    I think it’s good you’ve clarified the two aspects of monetary wealth – income and capital.

    Just because you make good money, doesn’t mean you are rich.

    I also agree with your income levels. Anyone making $500K+ should be “rolling in it”. They could be rolling in something else, but mostly likely that income should provide a very, very fine standard of living! :)

    Without making tons of money myself, I’ll have to go the capital route – smart investing. Hopefully every month and year along, I’m getting there.

    Cheers Sam!
    Mark

  118. John, if you are happy with where you live (where is this?), then more power to you. Living in a nice place with good weather and food is unfortunately one of my weaknesses. Hence, I’ve gotta pay up!

  119. Why are we dividing people into classes, Sam? If the idea of a tax is unjust, then it must be unjust period, not simply unjust because we happen to be in whatever bucket the government has placed us into. Doesn’t this attitude of placing people into categories just divide us more?

    I believe that we are all rich, relatively speaking, and we are all blessed to be alive today. I don’t make a six figure salary, and yes, sometimes I do get envious — I am human, after all. However, the best way for me to benefit is to turn this envy toward making my own circumstances better, and in doing so, I can add back more value into the world.

    1. Because the term “rich” is attempted to be defined by my post.

      It’s not bad to be lower middle class just like it’s not bad being rich.

      It’s only bad when you are lower middle class and act rich and blow yourself up. We have to spend accordingly.

  120. I really like the idea of finding a mentor, but getting the right one is easier said than done. I’ve had “part-time mentors” at various points in my life for various things, but most were very specialized in certain aspects of life. There are definitely avenues of life right now where I could use a good sounding board. On the flip side, I love taking the opportunity to help out others and be a mentor the rare times it comes up.

    So Sam, maybe you should write a post about how to find a mentor!!!

  121. Rich is a function of location, age, income, and assets. To try and define rich by any single variable ignores other important features.

    You could have a paid for residence, have a massive portfolio with conservative investments and be living outside of Southern California or the Eastern Seaboard with an income of “only” $100k and not be rich, but live in either of those areas and have no assets, a massive mortgage, and make $250k a year and be rich.

    Fact of the matter is that the current tax structure isn’t designed to handle such massive discrepancies in cost-of-living from location to location. The government recognizes the difference when it comes to employee compensation, by don’t they recognize it with respect to the income tax.

    If you are going to use income to define rich, it should be based on a comparison with the local median income for the surrounding area. If you are at 3 or 4 times the median income for an area (For example: metropolitan area if urban, county if rural) then it is safe to say that you are rich (at least relative to where you live) [A better measure might be 2 standard deviations above the median]

  122. You & I seem to be very similar in our definitions of rich.

    Thanks to my stupid decisions (& our bankruptcy) I feel like I’m just now starting the first leg of a race that was started 15 years ago. Almost like we were frozen in time for a long period of time. I’m WAY behind where I should be at this point for retirement savings. The only way to ‘fix’ that is to find a way to increase our income to try to make up for lost time.

    All actions have consequences.

  123. Growing up in a lower middle class family, I think I have a whole different perspective on what it means to be rich. I have 3 brothers and 1 sister (5 of us total) and I don’t think my parents ever made more than $100,000 a year. Most of the time it was $60,000 or $70,000. Now that my wife and I make more than that with no kids, we feel extremely wealthy. I can’t even imagine making $350,000 per year. If we kept our lifestyle the same, we could invest $300k per year and retire in 5 years…. crazy.

  124. I really believe that it is a bad idea to create class war by targeting certain income level for the tax hike. Instead, best way to mobilize economy and to create wealth is to cut taxes. President Regan did that in early 80’s and the time is ripe now for the new leader to so.

    1. Yes he did – cut taxes – but ALSO – cut deductions, loopholes, credits, etc.

      I would love to see us go back to something similar to what the tax reform act of 1986 created. Chances of that happening anytime soon – Slim to None!!! Unfortunately.

  125. Darwin's Money

    I think I agree with your assessments; often times people consider something like 200K “rich” but that’s not, especially for someone without much saved. I think when you’re hitting 400-500K and more, that’s outside the range of even doctors, lawyers, etc and usually into execs and entrepreneurs – long-term wealth.

  126. Love this post and the debate it sparked.

    My husband and I are considered by the government to be in the top 1.5% of wealthiest Americans… but we live in Southern California!! How far our salaries go out here cannot even compare to other parts of the country.

    I do agree that “rich” is more about lifestyle than income, although I believe actual “wealth” requires a substantial capital base.

  127. I’m in the camp that rich is a lifestyle, not a paycheck. It does help to have a big income to live a rich lifestyle, but it is possible to do amazing things on $40k or $50k per year depending on your goals, dreams, and circumstances.

  128. I think the part where you mention having a capital base is probably the best definition of rich in there. Income can change, whether you decide to stop working or life decides for you. Your income certainly influences capital, but as we know, lifestyles, friends, and co-workers have expectations. If you make 500k and only set aside 10k a year in savings are you rich? I don’t think so. Grant following Sam’s strategy will help you put more away, but unless you really have something to fall back on, income is transitory, wealth lasts.

  129. Dollar Disciple

    Even after reading this post, I still think that $200k is rich. I base this on the fact the making 200k+ puts you in the top 1.5% of income earners (according to wikipedia). Of course, I guess I’m still thinking about it as someone who lives in a low cost-of-living area. I don’t make anywhere NEAR 200k but yet I still feel rich in that I have enough money for everything I need and then some.

    1. If you never lived in NYC (or similarly expensive local) you just won’t get it. My wife and I have a combined gross income over $200k. We live in a modest 1 bedroom apartment and drive an 8 year old car. Our commute to the office on average takes one hour, each way. We don’t have children and thus are saving quite a bit each month, but as we look to buy a home to raise a family, we are finding out that our income doesn’t take us very far. Homes that are just 10 minutes closer to Manhattan can cost anywhere from $600k to well over 1 million. Two bedroom apartments as large as our 1 bedroom start at 1 million. It’s pretty crazy. $200k in NYC is most certainly middle class – an average 3 bedroom home in the suburbs, a typical long commute to the office, kids in public schools with one or two vacations per year – a decent lifestyle, but certainly not rich.

        1. Yeah, crazy right. I was speaking about a nice 1 bedrooms in Manhattan. There are small 1 bedrooms avail for less. Outside of Manhattan, prices drop considerably, but are still expensive compared to the rest of the country. We’re currently saving about half of what we net each month (non retirement).

  130. Jeffrey Trull

    I think this is the best case for calling a $350,000 income “upper middle class” and not “rich” that I have ever seen! Seems hard to believe when you say it, but with your analysis only based on expensive cities, it’s easier to see what you’re saying.

    I still think it’s hard to define “rich” based on income. It’s really about your net worth and not what you make, but there’s no way that makes sense to tax people based on what they’re worth.

    1. Thanks Jeff. I encourage everyone to do the math and calculate what their after tax income is, rather than speculating what it is.

      And really, is it so bad to be “upper middle class”?

      1. Not at all in my opinion!

        Based upon what you have written above I would be upper middle class – however, I grew up pretty poor – thus I feel rich.

        I earn more and have saved more than I ever in my wildest dreams imagined.

        I grew up in a family of nine children and my father died when I was 4 months old at 35 years of age. We grew up on social security. Did I ever go to bed hungry – no. However, did I get an allowance or even 1/4 of the spending money other people got to go to the store – also no. We grew up with a black and white television and of course did not have cable.

        I have great memories of my childhood and now I really appreciate every dollar I earn save, invest, and/or spend.

        I’m unbelievable happy being upper middle class!!!!!!!!

  131. Huge difference between being monetarily wealthy, and *feeling* wealthy. Obviously you’re talking about monetary wealth, but take a look at this comment stream of New Yorkers making $700K+ and feel “poor”. It’s insane.

    Here in Hawaii, we need about $50K year to send our kids to private school (public schools here are known for being not so great), plus if we ever wanted to buy a house with 3 bedrooms and a yard we’d be shelling out close to $700K. That would be another $4000+ mortgage and property taxes a month – so just for those two expenses that’s over $8K/month already. Ouch!

    We make $32K/year. I think we’ve got a long way to go…lol.

  132. Craig Mathews

    Nice and relevant post Sam. I put emphasis on another financial aspect besides income. It’s the savings.. To me savings is the ultimate income one can have. It does not matter if you earn $200 or close to it.. if you cannot save enough bucks, you will start at the beginning next month. So, savings is must.. nice post..

    1. Which begs the question: Why don’t more people save more money?

      A lot of folks on my recommended savings post say they felt like they got their guts kicked bc they were light compared to the chart.

  133. Stephanie Taylor Christensen

    Scientific research has identified the number somewhere around $70K-$80K in annual income, in order to “feel rich.” As many have pointed out, however, that is practically poverty level in some parts of the country in the sense of “real life”, especially if a family is living on that income. But, from a quality of life standpoint, research shows that is the tipping point between being very financially stressed, and having more flexibility to not worry about every dime is within that range. Additionally, it is the “ceiling” where you may feel happier, or not, based on your income and financial stress. Income above that, again, according to research, doesn’t impact your happiness level.

  134. Having lived and grown up in a high cost city (Los Angeles) then moving to a low cost mid-western city, these numbers definitely look legit to me. My parents made right around 100k when I was growing up around 10 years ago. Obviously they didn’t give me their tax return but it’s not terribly hard to figure it out. I would have called us middle class, but it felt like lower middle class because of some of their choices. They owned a home, but the neighborhood is not great, and the house is small. They drove newer cars, but not brand new most of the time. They paid for private school because the school near our home was unsafe. It also lost its accreditation 3 years after I graduated. Compared to the people in the private school I went to, we were poor. Compared to the people in my neighborhood we were upper middle class. Had they lived where I lived now, they could have owned a nice home in a nice neighborhood and pocketed the private school costs because the schools are great. Until you’ve actually lived in one of these cities, it’s difficult to comprehend the difference in cost of living.

  135. We’re right smack in the middle of middle class. We are somewhat frugal and Portland is not that expensive compare to CA so we are comfortable. :)
    Yeah, I would say 500k income is rich.

  136. What a lot of naysayers don’t realize is how much income taxes are paid at higher levels. They are talking out of their ass if they think $200,000 is rich, simply b/c they have no idea.

    In NYC, I would say $500,000 is “upper middle class”. San Francisco… perhaps the same although your dollar goes 20-30% farther for property.

  137. In my area, making 100k a year would put you pretty far ahead of the rest of the people in town, so I’d say that would be considered rich. You’d be able to live very comfortably, and probably purchase a house outright (even after retirement account maxing) in 3-5 years, depending on other goals and lifestyle. There’s not really much of a chance of me justifying my own income here, because I dont make anywhere near 100k!

  138. MacroCheese

    The bubble of NoCal really skews your perspective on these things.

    Your categories build in substantial lifestyle inflation that makes it look like people earning huge sums of money are just “middle class”.

    This is just not true – a family making wise choices with a $100K income can be “rich” while a family making poor choices, such as a $1.1M mortgage, with a $500K income can be “poor”.