What’s the “magic number” that makes you wealthy?

Several years ago I asked a colleague “What do you need to retire?”

His answer: “$5 million and playmates.”

Playmates?

What he meant was having enough leisure-time folks to hang out with during the day.

Related to his “magic number” … the WSJ asked some millionaires the question: “At what magic number did you consider yourself wealthy?”

  • 25% of the respondents said it was $1 million to $2 million saved
  • Another 25% said it said it was $2 to $4 million.
  • 15% said they needed $5 million to $10 million.
  • 4% (probably all New Yorkers) said they needed more than $10 million.

Are we there yet?

* * * * *

The Point:

Unlike the President, the millionaires don’t confuse “stocks & flows” … they calibrate their “wealth” by savings (a balance sheet item) not by income (obviously, an income statement item).

Also note some simple arithmetic: if a guy makes $250,000 annually and saves / invests 10% each year … and makes 10% after tax on his investments … it’s takes almost 20 years to reach the million-dollar wealth threshold.

Would somebody please mention that to the President?

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