Like the kids in the back seat of the car, “are we there yet”? As a point of fact, this is not a political statement. It is merely stating facts from very reliable sources. If people are interested in a comfortable Futuristic Retirement Income, this question has to cross their mind.
Are we Rich Yet?
The President, during the last election season, made a really big deal about whether or not the “rich people” would have to pay their “fair share” in taxes. Polls, and the election results, have indicated that the majority of voters believe that they don’t.
OK, so, how do you define “Rich”? Who is “rich” and what is “fair”?
So Define “Rich”
Our answers may differ because, frankly, what is “rich” is a matter of opinion. Here are the facts: Our IRS tells us that the top 10% of income earners make 43% of all the income, also they pay 70% of the total taxes. Really….so, how fair is that? If it is not fair, how much should they pay …75%, 80%… 90%, all of it? What about the infamous 47% that Mitt Romney was recorded talking about? Is it fair that they pay no taxes at all? The election proved that the opinions vary but the majority seems to think that it must be OK.
Also, if you ask the IRS, the top 2% of income earners, who just had their marginal tax rate raised by 13% to 39.6%, already pay approximately half of all income taxes. The President feels that it is about time this top 2% “chipped in”. Really?
Well, Are YOU?
Are you rich yet? Let alone the truism that you are rich if you enjoy good health, loving family, great friends, and you have a variety of interests. Our leaders (and most voters apparently) seem to believe that a person’s wealth can be determined by his or her income. We would argue that you determine real wealth by looking at your balance sheet, not just an income statement. So, let’s look at both?
If you listen to the Tax Policy Center:
1 If your annual household income is $107,628, you are in the top 20% of income earners
2 If your income exceeds $148,687, you are in the top 10%.
3 If your income is $208,810, you are in the top 5%.
4 And, if your household income is $521,411, well good for you, you’re in the top 1%…and, more than likely, demonized by those who view hard work and risk-taking as a matter of good genes and good fortune.
While this may cause some concern, net worth may well be a far better way to measure wealth (how rich you are).
Let’s have short discussion with information from the Federal Reserve. Their “Survey of Consumer Finances” tell us:
1 A net worth of $415,700 puts you in the top 20% of American households.
2 You are in the top 10% if your net worth is $952,200.
3 If your nest egg totals $1,863,800, you are in the top 5%.
4 And, drum roll please, if you have a household net worth of $6,816,200, you are in the top 1%… and possibly frowned upon by many who people who resent folks that live beneath their means, save regularly, and handle their financial affairs prudently.
How do WE get there?
So, right now, you are not really all that rich, right? How do you get there? What path shall you take? The basics are really quite simple, if you think about them:
2 Minimize your outgo (by living beneath your means).
3 Religiously save the difference. (Easier said than done.)
4 And follow proven investment principles.
Frugality pays off!
According to extensive surveys, the most productive accumulators of wealth spend far less than they can afford on homes, cars, clothing, vacations, food, beverages, and entertainment. The Futuristic Retirement Income minded person will be frugal, work hard and invest wisely.
Warren Buffet still lives in the very same modest home he has been in for years. Don’t remember how long, but we were very impressed when we saw it.
Those people with higher than average incomes, but not much net worth, are merely “aspirational” in their quest for riches. They buy expensive clothes, expensive wines and liquors, high priced luxury cars, big powerboats, all kinds of diamonds and bling, and, very often, more house than they can comfortably afford. Their problem, in essence, is that they’re trying to look rich. This prevents them from becoming rich.
How does a Millionaire Live?
It surprises many, but the vast majority of millionaires in the United States:
1 Lives in a house costing less than $400,000
2 Wears lower priced watches and not Rolex
4 Will drive a Buick rather than a Mercedes
5 Pays less than $400 on a new suit
6 Is reasonable, like $15 for a bottle of wine
Yes, they’re frugal. But they’re also happy, not to mention financially free. They are not dependent on their families, their employers, or the federal government. What a feeling. What a Futuristic Retirement.
We hope this may help some of you with what is going on in your life. We hope you can find some value in what is here. That is why we post to this blog. If you have any comments, please click below. The bottom line here is simple. If you want to become a millionaire, you should cease the acting rich and start acting like a millionaire.
Live for your Futuristic Retirement,
Bea & Terry Reeves
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