And Who is Really Wealthy?
A recent survey by Fidelity Investments showed: “Some 42 percent of more than 1,000 millionaires . . . said they did not feel wealthy. Respondents had at least $1 million in investable assets,” and that did not include real estate or retirement accounts. In other words, they each had a million dollars that were liquid and available. They were not exactly poor.
To be sure, such feelings are highly subjective. Moreover, a million dollars is hardly what it used to be. But, still, the results of the survey call for some explanation.
Michael Durbin, president of Fidelity Institutional Wealth Services offered two: “They compare themselves to their peer group … and they are also thinking about the long period they will have in retirement.” (See, “What It Takes to Feel Wealthy.”) I find the first explanation more compelling. The perspective of retirement makes us all feel insecure, especially after the gyrations of stock markets in the last three years. It is easy to feel you need a lot more than you actually have to make sure you have enough.
Such judgments depend on context. A five year old child can feel “big” after a growth spurt, but what will those extra inches feel like ten years later? I feel “strong” for an old guy, but compared to my trainer I’m a weakling. “Wealthy” compared with what?
The relevant context here is the growing gap between the rich and the poor. That makes the poor feel poorer, but it also makes the rich at the bottom end of the spectrum feel poor as well. According to Forbes, last year there were 1210 billionaires in the world, with total assets of $4.5 trillion. Compared with so many billions, a million looks puny.
And the standards keep going up. If you want a decent apartment in Manhattan, you have to spend several million. Even a time-share at a luxury resort can be pricey. You don’t need your own plane to be wealthy, but more and more of the rich have gotten used to “flying private.” Goods and services for the wealthy keep pace with their ability to pay.
Almost as an after-thought, the Reuters report on the survey commented: “Fidelity noted the wealthiest 5 percent of Americans hold more than 55 percent of the nation’s wealth.” That’s the point. Those with just a few million may well be right to think that if you want to find those who really deserve the term these days, you have to look much higher up the ladder of success.