Saturday, October 29, 2011

Are You in the Top 1%?

I know I'm usually helping pump up your consulting income here, but occassionally we need to look at the bigger pictures of happiness and true wealth.

With the Occupy Movement sweeping the country, a lot of attention has been given to the 99% vs. the 1%.  The movement is really about attitudes, values and policy and not income.  There are those in the 1% of money that identify with the movement and clearly many in the 99% that do not.  However, occassionally we see a media emphasis on a "top 1%" in terms of money, which in this consumptive society usually means income.  You may have heard the number $343,927 being used.  According to this article, and many others, $343,927 is the 99th percentile for adjusted gross income (AGI) on a tax return, as of 2009.

However, before you compare your AGI to this number, I suggest that AGI is not the true measure of comparative monetary wealth.  Net worth is.  After all, the word millionaire specifically refers to someone with over $1 million in net worth.  Net worth is highly misunderstood and largely uncalculated by the 99% (now using the term to mean top percentile of AGI).  The 1% know theirs and use it as the true measure of comparative wealth.

While income is obviously important in terms of growing a net worth, the spending side of a ledger is very important as well.  Books like "The Millionaire Next Door" and a recent read of mine, "Enough" by John Bogle speak to this.

So if your're comparing yourself this way, what is the threshold for top 1% net worth?  This is harder to find!  We are so geared to spending, not saving.  Below are some nuggets from the internet.  Naturally, some are in contradiction.

·         America's richest 1%, as surveyed by U.S. Trust have an individual net worth greater than $3.75 million.

·         The couple’s net worth of roughly $3.5 million places them in the top 2 percent of families in the United States

·         Mr. Kremen estimated his net worth at $10 million. That puts him firmly in the top half of 1 percent among Americans

·         Fewer than 1 percent of Americans are millionaires

·         A household with $1 million net worth, excluding primary residence, is in the top 6%

·         The number of American households with a net worth of $1 million or more… fell 27% to 6.7 million in 2008 (2007 estimate of households in the US: 111,162,259)
So, now you know some parameters of comparison.  Comparision may be fun, but it shouldn't define your happiness.  Let's drop the word "comparative" and when you just look at "wealth", know that it's personal and your primary goal is to stay above your happiness threshold.