# What is wealth now? Is it still $1,000,000?



## tech/a (23 February 2008)

For as long as I can remember $1,000,000 has been the figure that most aspire to.
Back in the early 20th century a Million was a massive sum.
Today its a bit ho hum.

So how do you determine real wealth that point at which your financially secure.
I'm 54 and told that 3 mill is the minimum for retirement for me and my financial requirements.
There are many sites around that have various calculators to determine your figures.

For someone in their 20s that could/will be way off beam when they reach my age.

How do you determine changes in amount needed.A good dose of inflation or deflation can play havoc with those who have a nest egg and those who are building one.

I remember my father retiring 30 yrs ago on $400,000 owning his property.
That then was seen as very well off---today he is on the pension and has to watch every cent.

Interested in comments and ideas or helpful links.


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## insider (23 February 2008)

*Re: hat is wealth now? Is it still $1,000,000?*

I also think it has a lot to do with age... to own 1,000,000 bucks, no debt, by the age of thirty is pretty damn good if you ask me... I think with a global melt down in markets 1,000,000 bucks is still a number to aspire to...


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## David123 (23 February 2008)

To me wealthy is having enough passive income to cover my expenses..im in my 20's and im a third of the way there..

People i know tend to own at least one investment property and have started to buy more.

I guess to me it aint a figure as such, its just being able to choose what you do with your time and have a passive income covering everyday expanses.

David123


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## trillionaire#1 (23 February 2008)

1 million dollars wealth,a millionaire!
In the last 20 years with the real estate boom, anyone owning their home with an investment property or two,a thriving small business and maybe some resource shares would have sailed past 1000000 with ease.
Many people out there fill this bill so I'd guess 1 million may not cut it anymore!

Im in my 30's and 1 million is some way off,but if I was at retirement age now,living in a capital city,wanted to travel,live comfortably and have plenty tucked away for the unforseen, yeah, 3 million sounds very nice thankyou!


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## Porper (23 February 2008)

tech/a said:


> For as long as I can remember $1,000,000 has been the figure that most aspire to.
> Back in the early 20th century a Million was a massive sum.
> Today its a bit ho hum.
> 
> ...




Realistically 1 mill isn't enough nowadays.Lets say a conservative 7% interest, that is only 70,000 a year, with a wife like Mrs Porper, that wouldn't even pay for the hair do's.

It depends on so many things also, expected lifestyle when retired, age when retiring, expected life expectancy,  whether you own your own home etc.For me (43) I am looking at 2 mill for a reasonable lifestyle hopefully in 10 yrs time.

It is very difficult not really knowing what inflation will be up until then, especially in this uncertain time with economies in trouble (supposedly).

Any financial planner worth there salt can give you an idea of where you are at & where you need to get to.


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## cuttlefish (23 February 2008)

$1,000,000 only buys a semi detached house where I live.


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## sam76 (23 February 2008)

Porper said:


> Realistically 1 mill isn't enough nowadays.Lets say a conservative 7% interest, that is only 70,000 a year, with a wife like Mrs Porper, that wouldn't even pay for the hair do's.
> 
> It depends on so many things also, expected lifestyle when retired, age when retiring, expected life expectancy,  whether you own your own home etc.For me (43) I am looking at 2 mill for a reasonable lifestyle hopefully in 10 yrs time.
> 
> ...




LOL 

I worked out our expenses the other day with the wife.

Rent - $1050 (brand new 2 bedroom house 5 mins from city)
Food - $400 (that includes prime scotch fillets etc...)
Petrol - maybe $40 a month (renault clio sport and motorbike)
I have beers up at the fire station every friday night ($2 each) so that covers the socialising.

Add $400 (generous) a month for insurance (health and contents) and utilities

and we come to the grand total of....

$1900 appx a month to live well.  (try and do that in Melbourne)


I'd love to have retire on 70 grand a year  

Moving to the country was the best thing we could have done.

That's my 

Cheers y'all


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## tech/a (23 February 2008)

Porper 

I've obviously married your wifes sister!


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## Happy (23 February 2008)

Every 7 to 10 some say 12 years money halves in value.

30 years ago $1,000,000 would have buying power of about $3,000,000 now.
30 years from now $1,000,000 will be worth about $300,000


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## Bill M (23 February 2008)

Personally I think 1 Million $ is the right amount for retirement for couple with no debts, no car payments, no hanger on-ers (kids) and your own home fully paid for.

If you don't have your own home then it won't be enough.


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## theasxgorilla (23 February 2008)

Bill M said:


> Personally I think 1 Million $ is the right amount for retirement for couple with no debts, no car payments, no hanger on-ers (kids) and your own home fully paid for.
> 
> If you don't have your own home then it won't be enough.




I agree with that 100%.  Although if we're answering the question, what is wealth?  This is not it.  It's a middle class existence at best.  "Well off" to me means at least upper middle, and to have "wealth" is somewhere higher than that.

And of course, it depends on your stage of life.  If you're 30-35 and have $1 million already and a decent household income (> $100k a year), then you could definitely afford an upper-middle class lifestyle.  Are you wealthy...not yet...but you've got an excellent launching pad.

On the other hand, as I mentioned, $1,000,000 at 60 y.o is commendable, but not 'wealth'.

ASX.G


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## roland (23 February 2008)

Monetary wealth is is having more than enough income than you want to, or have to spend

our wealth expectations increase as our wealth increases, problem arises when our real wealth decreases from one value to a lower value and our expectations don't - hard to wind back your expectations.

$1,000,000 is still quite an ambitous goal to have as free capital - at any age, so to answer the question - yes, a million dollars would have to be considered a wealthy sum


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## osmosis (24 February 2008)

According to Wikipedia:

"In private banking, a high-net-worth individual (HNWI) is a person with a high net worth. Typically these individuals are defined as having investable assets (financial assets not including primary residence) in excess of US$1 million. [1][2] The number of high net worth individuals worldwide is estimated at 9.5 million."

AND

"UHNWI refers to Ultra-High-Net-Worth Individuals, individuals or families who have at least US$30 million[1][2] in investable assets. The number of ultra high net worth individuals worldwide is estimated at about 95,000."

So that's the current formal definition.


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## Porper (24 February 2008)

tech/a said:


> Porper
> 
> I've obviously married your wifes sister!




You have my sympathy Tech, only joking wouldn't swap Mrs Porper for the world.

Just wondering if anybody has thought of taking a few years off before retirement, then going back to work for a while after to top up the account again.

Maybe 5 years off, do all the travelling while still young, maybe in your 50's, then work another 5 yrs before retiring fully.I am seriously thinking about this, you never know what health will be like when 65.It's achievable for most owning their own home on a reasonable salary, no kids etc.


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## tech/a (24 February 2008)

Some interesting replies.

Passive income very important if we wish to keep in front of inflationary erosion of any retirement funds.

Every 10 yrs money halves in real value.

Only .0015% of the worlds population has the elusive million.
In Australia 96% of the population will require government support at retirement.

Is $1 mill enough.
If you were 65 today and retired today with $1 million and wanted to live on $70,000 a year---bearing in mind in 10 yrs time that $70k would have the buying power of 35k then the answer is a resounding *NO*.

Have a play with THIS calculator to see where you stand.

http://www.yourmortgage.com.au/calculators/retirement_savings/

At 54 I'm OK but I'm sure you'll find most results pretty distressing.
There is a great deal one can do to alter your outcome.

But as you will notice when playing with the calculator it all hinges on compounding returns on investment into your super.


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## nioka (24 February 2008)

Good news. According to the calculator I can enjoy myself until I am 120 yrs of age. I hope medical science can keep up to me or I will feel robbed.


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## Aargh! (24 February 2008)

nioka said:


> Good news. According to the calculator I can enjoy myself until I am 120 yrs of age. I hope medical science can keep up to me or I will feel robbed.




I'm in the same boat with savings to go to 120yrs of age! Also accumulating a cool $9 mill in savings! Was conservative in my figures as well. On my side was age (27) and current savings.


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## Porper (24 February 2008)

Aargh! said:


> I'm in the same boat with savings to go to 120yrs of age! Also accumulating a cool $9 mill in savings! Was conservative in my figures as well. On my side was age (27) and current savings.




Not many Paupers on ASF then, must be a rich bunch.


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## nioka (24 February 2008)

Aargh! said:


> On my side was age (27) and current savings.



Age is on my side too I'm retired now, more or less,So that takes out a lot of the risk. As the saying goes "there's many a slip between the cup and the lips". And there has been.


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## Aargh! (24 February 2008)

Porper said:


> Not many Paupers on ASF then, must be a rich bunch.




Rich no, good income and savings/investments yes, bottomless other half no. If the calculator incorporated another half I'm sure I'd be looking at a retirement savings in the order of minus $200,000


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## julius (24 February 2008)

I think the general perception of wealth has been massively skewed by the property bubble.

1,000,000 cash/cash equiv. is still a massive amount of capital...but in comparison to the price of a house, then no it isn't anything substantial.

If you were to accumulate $1M through savings it would take even a wealthy couple most of a life time...and then you get to start working on the super

Even more reason these property prices can't last.


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## tech/a (24 February 2008)

> even more reason these property prices can't last




Maybe not but those of us who took part in this boom turbo charged our Super and in some of our cass age wasnt/isnt on our side.

Frankly I believe that $1mill will be a drop in the ocean for those retiring in 20+ years---3 will be more the norm.
Those retiring now or soon beter have a way of growing there super while with drawing as their million will evaporate often quicker than they will!


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## ROE (24 February 2008)

Wealth is 
1. a place to live
2. not starve
3. have fun once a week

I think with the government pension can provide you with 1 and 2
all you need is 3


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## niknah (25 February 2008)

If you have $1mill I think you're wealthy.
But it's not the $1mill I knew when I was a kid, back then $1mill meant you lived in another suburb far away and had multiple servants.  Now it just means a neighbour with a bigger house.

The calculator link has a 120yr limit on it, whatever I put in it doesn't go past 120yrs.


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## GreatPig (25 February 2008)

ROE said:


> I think with the government pension can provide you with 1 and 2
> all you need is 3



The wife can provide #3 

GP


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## nizar (25 February 2008)

I think that if most of your wealth (more than 50%) is not tied up in the principle residence that you own, then you can be considered wealthy, in my opinion.

I went to my boss' place for dinner the other night -- Very flash. Attention to detail and no expense spared. Probably worth about $4mil. The beauty of it is that this isn't even 20% of his total asset value. Now thats wealth.

You can have $1.5mil and be wealthy OR not.
eg. wealthy if your house is worth $500k and you have $1mil of investable assets.
OR not, if your house is worth $1.2mil and you have $300k of investable assets.

Obviously age is also important. If you are in your 20s potentially you have 50-60 years to live but if you are in your 50s you would need less as you have only 20-30 years to live.


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## Julia (25 February 2008)

ROE said:


> Wealth is
> 1. a place to live
> 2. not starve
> 3. have fun once a week
> ...




ROE, the government pension is not too bad for a couple with debt free home.  But for a single age pensioner, even again with own home, it's often difficult.  It's only $500 odd a fortnight which, once basic necessities like rates, car rego/insurance, house and contents insurance/ health insurance/maintenance/electricity/water  etc etc, and food, are paid, there really isn't enough left for travel or entertainment.

And for those who are paying rent on a single age pension, it's almost impossible with rent for a basic 2brm unit usually a minimum of $200 p.w.

So, no, I'd say the government pension is something no one ever would want to be dependent upon if there's any alternative.


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## tech/a (25 February 2008)

I'll take a punt and say ROE is under 40.

Add quality of life to needs
Along with Health.
A dose of freedom which a degree of wealth can bring.
Ability to help Family,Friends and even deserved strangers as another from me at least.

My level of required wealth is I agree somewhat higher than some.
Average scares the hell out of me.
I'm not going to be "The Average Pensioner"---or any other average for that matter.


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