Are You Are Wealthy? It All Depends on Your Standard of Living

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John D. Rockefeller Sr. was, at one time, the richest man in the world. He spent the last 40 years or his life giving his money away to family and various charities.

He owned two homes, one in Sleepy Hollow, New York and one in Ormond Beach, Florida. His Sleepy Hollow home, known as the Kykuit Rockefeller Estate, was very large and very expensive to maintain.

Because he had given away most of his wealth, he was forced to borrow money from his son, John D. Rockefeller Jr.. He only had about $7 million left ($131 million in today’s dollars), and that money did not generate enough income for him to maintain his standard of living.

I do quite a few media interviews on my Rich Habits research. Almost every time, I am asked the same question – How much money do you have to have in order to be considered wealthy?

But, what does wealthy mean?

Wealthy means your invested assets generate enough income to fund your standard of living and pay the taxes on that income.

Alternately, if you have no invested assets, but are one of the lucky few who have a pension, you would be considered wealthy if your pension generates enough income to fund your standard of living and pay the taxes on that income.

Fine. But if you’re not one of the lucky few who receive a pension, what is the amount of wealth you need? What is the number?

While there is no easy answer to that question, I am fairly certain that the most correct answer is $3.2 million.

$3.2 million, if invested prudently, should generate about $150,000 – $160,000 a year in passive income. Even in expensive states like California, New York and New Jersey, $150,000 should be more than enough to enjoy a comfortable, financially-free, lifestyle.

So, $3.2 million, I would argue, would make just about anyone “wealthy”.

But you don’t need $3.2 million to be considered “wealthy”.

If your standard of living is low and your monthly nut is less than, say, $3,500, you could be considered wealthy if you had $1.2 million in invested assets. If invested prudently, $1.2 million should generate between $50,000 – $60,000 a year in passive income.

So, at the bottom level of wealth, $1.2 million is the number.

For John D. Rockefeller Sr., $131 million was not enough to maintain his standard of living. And, no matter how much money you have, if you’re John D. Rockefeller and you have to borrow money to maintain your standard of living, you won’t consider yourself “wealthy”.

The key to being wealthy, therefore, is standard of living costs that are less than your passive income. Your standard of living can make you wealthy or it can make you poor.

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Thomas C. Corley About Thomas C. Corley

Tom Corley is a bestselling author, speaker, and media contributor for Business Insider, CNBC and a few other national media outlets.

His Rich Habits research has been read, viewed or heard by over 50 million people in 25 countries around the world.

Besides being an author, Tom is also a CPA, CFP, holds a master’s degree in taxation and is President of Cerefice and Company, a CPA firm in New Jersey.
 
Phone Number: 732-382-3800 Ext. 103.
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