Feeling “rich” is an increasingly elusive concept in contemporary society. Even among those with substantial financial resources, only a mere 8% characterize themselves as truly wealthy.
The Perception of the Upper Middle Class
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A recent Ameriprise Financial survey reveals the intriguing fact that approximately 60% of investors with $1 million or more of investable assets consider themselves more likely to be upper middle class rather than wealthy.
The Middle-Class Perspective
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Contrary to conventional expectations, a significant 31% of respondents from the same survey identify themselves as decidedly middle class, emphasizing a nuanced and diverse perspective on financial status.
Economic Challenges and Financial Confidence
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Persistent inflation, high-interest rates, and geopolitical and economic uncertainty have collectively eroded Americans’ confidence in their financial standing, including millionaires.
No Standard Definition of Wealthy
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“There is no standard definition of what it means to be wealthy, but in general, investors associate it with having the means to live life on their terms,” said Senior Vice President of Financial Advice Strategy at Ameriprise, Marcy Keckler.
The Discontent Among the “Regular Rich”
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Even highly paid professionals like doctors and lawyers, often called the “regular rich,” express dissatisfaction with their financial well-being. Surprisingly, some even describe themselves as feeling poor, as revealed in a Bloomberg survey.
Contradictions in High-Income Demographics
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A separate survey indicates that among those making more than $175,000 a year – the top 10% of tax filers – a quarter considers themselves either “very poor,” “poor,” or “getting by but things are tight.” This sentiment persists even among those with annual incomes exceeding $500,000 and $1,000,000.
The Discomfort Despite High Net Worth
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Despite their high net worth, only 44% of millionaires feel “very comfortable,” according to a report by Edelman Financial Engines, revealing a surprising level of financial unease.
The Ambiguous Path to Feeling Wealthy
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Jason Van de Loo, chief client officer at Edelman Financial Engines, asserts that the path to feeling wealthy is an elusive journey that requires “more.” The benchmark for financial contentment, it seems, is a constantly moving target.
Monetary Requirements for Feeling Wealthy
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Edelman Financial Engines found that while most people believe $1 million in the bank would suffice, high-net-worth individuals set the bar much higher, with over half stating they would need more than $3 million.
One-third claimed it would take more than $5 million.
Salary and Financial Security
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According to a separate Bankrate survey, Americans believe they would need to earn an average of $233,000 to achieve financial security. However, the bar is set significantly higher – at an average of $483,000 – to feel truly rich.
Struggling to Make Ends Meet
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Rising costs in various aspects of life, including surging child-care expenses, ballooning auto loans, high mortgage rates, and record rents, make it increasingly challenging for households to make ends meet.
The Rise of Credit Card Reliance
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Due to financial strains, more people use credit cards to cover day-to-day expenses. In the past year, credit card debt has surged to an all-time high while the personal savings rate has fallen.
The Decades-Long Deterioration
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Mark Hamrick, Bankrate’s senior economic analyst, suggests that the deterioration of the American dream has been decades in the making.
Long-term structural changes have adversely affected Americans’ ability to manage their personal finances.
The Vanishing Single-Wage Earner Household
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Hamrick notes a significant shift from a time when a single-wage earner could support a household with children. This change is evidence of the lasting impact of structural shifts in the economic landscape.
Money as the Primary Source of Stress
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Jason Van de Loo emphasizes that money continues to be the number one source of stress among households, and recent years have only exacerbated these concerns, igniting a sense of financial insecurity.
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