What It Means to Be ‘Wealthy’ in America Today

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Correction appended: July 24, 2013, 11:03 p.m. E.T.

The rich don’t really think they’re rich. In a new survey, the vast majority of investors with $1 million in assets don’t consider themselves wealthy. Which brings up the question: What do the terms rich and wealthy really mean?

A new report from UBS surveyed investors who on the surface all appear to be pretty well off. Of the survey’s 4,450 participants, half had $1 million or more in investable assets, and all had at least $250,000 in investments. Compared with the huge portion of the population that barely has any savings — about half of Americans don’t have an emergency fund that’d cover three months of expenses — it sure seems like the people in the survey are doing quite well financially. But do these people think they’re rich? For the most part, the answer is no.

Of those with investable assets worth $1 million to $5 million, only 28% answered yes to the question “Do you consider yourself wealthy?” The majority of investors surveyed with $5 million or more in investable assets consider themselves wealthy, but perhaps not in the overwhelming numbers you might imagine: just 60% answered yes to the question. In other words, 4 in 10 Americans with assets of $5 million or more think they’re not truly rich.

What would have to happen for these individuals to consider themselves rich? Well, that’s another question asked in the UBS survey. The most popular answer, selected by half of those surveyed, was “no financial constraints on activities.” The idea that you’re rich, then, seems to have a lot to do with what kinds of things you’d like to do, rather than hitting some specific asset or income number.

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Or does it? The Chicago-based Spectrem Group, which has been publishing surveys about wealth for several years, asked “What defines a rich household?” Nearly three-quarters of respondents (73%) answered “wealth level,” with just 48% choosing “lifestyle” as an indicator of whether or not one is rich.

These surveys are among the many that deal with our fascination with “being rich” and trying to define wealthy — a term whose meaning has changed over the years, and that can mean very different things depending on where one lives and works and the lifestyle of the person next door. As the Wall Street Journal’s Wealth Report blog noted when the latest wealth-survey data hit the wires in 2008, people tend to look at individuals doing twice as well financially as they are as rich. “Those with $100,000 in incomes say $200,000, while those worth $5 million say $10 million,” the story explained.

One’s age — and peer group — has a lot to do with one’s perspective on wealth. In the Spectrem Group’s 2013 survey, 45% of Gen X and Gen Y investors (basically, those 40 and under) said a person needed a net worth of at least $1 million to be rich. Among investors ages 60 and older, however, only 22% said someone with $1 million was rich.

During the Occupy Wall Street demonstrations, those in the demonized top 1% income bracket were pointed at as undeniably rich. This elite 1% included anyone earning $343,927 or more in 2009, according to IRS data.

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Yet everything’s relative, and the terms rich and wealthy can be applied in very different ways depending on the circumstances. Personal-finance writer Liz Weston noted that pulling in the median household income in the U.S. (around $52,000) would put you in the top 1% of earners worldwide. In a story published late last year, researchers for the Wall Street Journal quantified the concept that where you live in the U.S. has a lot to with where you land in the income hierarchy, and how rich (or not) you feel:

A prince of income in Danville, Va., is a relative pauper in New York City. In Danville, the threshold for the top 1% of earners kicked in at $179,000, while it took $588,000 to reach the top 1% in New York City and northern New Jersey.

During the debates about the fiscal cliff a few months back, the subject of who is truly wealthy — and who should be taxed as if they’re truly wealthy — came up again and again. Roberton Williams, a senior fellow at the Tax Policy Center, gave CNN Money probably as good an explanation of “rich” as there is — vague and variable as the statement is.

“Who’s rich? It’s a good question,” Williams said. “Rich depends on where you live and with whom you are comparing yourself.”

An earlier version of this article misstated the name of a research firm. It is Spectrem Group, not Spectrum.