What Does It Take to be 'Wealthy'? How About $5 Million

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When it comes to defining wealth, the line between the rich and everybody else can be unclear. Admittedly, the trappings of wealth are fairly obvious -- expensive cars, huge houses, big yachts, and miniature giraffes all come to mind -- but as for the specific number, the precise sum that one needs to possess to be truly rich, definition becomes a little harder. Recently, however, a survey from Swiss financial services company UBS drew the wealth line in the sand: According to the respondents, the magic number is $5 million.

The survey's methodology was fairly clear: UBS asked 4,450 high-net-worth investors if they considered themselves wealthy. Among those with between $1 million and $5 million in investments, 28 percent claimed that they were wealthy. Meanwhile, among those with $5 million or more in investments, the number jumped to 60 percent.

Of course, the definition of wealth is also a factor. Common definitions of wealth -- having a large bank account, owning your own home, driving a luxury car -- tend to be vague. Then again, according to UBS's respondents, the rich persons' definition of wealth is also pretty fuzzy: The survey found that the majority of investors defined wealth as "having no financial constraints on what they do." This definition could have endless meanings, ranging all the way from "devoting my life to providing healthcare around the world" to "getting away scot free after running over a cop's foot." Sadly, it isn't hard to find high-wealth people on both ends of that spectrum.

While the UBS survey's $5 million figure is steep, it comes in well below the amounts cited in previous studies. In his 2007 book Richistan, author Robert Frank cited a survey by PNC Advisors that found that, for most rich people, the amount of money that they needed to consider themselves truly rich was roughly twice what they had on hand. Thus, people with $1 million wanted $2 million, people with $5 million wanted $10 million, and so on. A 2011 survey echoed this, finding that 42 percent of respondents needed at least $7.5 million to feel wealthy. The average wealth of respondents was, not surprisingly, about half that: $3.7 million.

The reasons for the $5 million wealth line are surprisingly familiar: Like most of us, wealthy people are worried about providing for themselves and their families. The majority maintain at least 20 percent of their assets in cash, so they can quickly get hold of money if they need it. Eighty percent help provide for their adult children or parents and 20 percent have a grown child or parent living with them. And, given that medical bills are the major cause of U.S. bankruptcies, it's not all that strange that 55 percent of young high-worth investors are worried about paying for their health care.

In other words, when it comes to deciding when you're wealthy, forget about the big cars and little giraffes: Real security comes from being able to pay your doctor bills!

Bruce Watson is DailyFinance's Savings editor. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.

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Dad

It strickly depends, real wealth today is measured on how many workers you can hire at miinimum wage, without any benes and keeping them under 30 hours a week. This is now becoming the standard for American workers so their CEO's can be assured to receive the 5 million dollars bonus each year.

July 26 2013 at 1:00 AM Report abuse rate up rate down Reply
jona817

What a stupid question. Most Americans in this economy would be happy to just be out of debt, pay their mortgage, and feed their families.

July 25 2013 at 11:57 PM Report abuse rate up rate down Reply
Howdy, Susie

Amy-

July 25 2013 at 10:00 PM Report abuse rate up rate down Reply
Howdy, Susie

amy-

July 25 2013 at 10:00 PM Report abuse rate up rate down Reply
mikejeristeve

I consider myself weathy just having good health -- anyone who wants millions to be cool is a total ******* and thats what makes country pure ****

July 25 2013 at 5:29 PM Report abuse rate up rate down Reply
slid470936

For retired people who were self-employed, the 5 milion is needed to produce an income of 50,000
a year. Before Obama and the reduction of interest rates, one million would do the job. Now retired people who saved could find themselves on welfare in a few years if they had to go to a nursing home at the cost of almost $100,000 a year. Thanks Obama.

July 25 2013 at 5:28 PM Report abuse -5 rate up rate down Reply
Lifes a Beach

If you put 500,000 in tsla 4 months ago when it was $35 a share & sold it a week ago when it was $135, after taxes you'd have made 1 mil in 4 months (you'd also have your initial 500k). That's how easy getting rich quick can be.

July 25 2013 at 4:01 PM Report abuse rate up rate down Reply
1 reply to Lifes a Beach's comment
Rene'e

Life's a Beach - You re very wise and thank-you for sharing that info with the people. However, another faster way to get rich is to rip off your close relatives of their inheritance, as happened to me (a single working mother) and my child several years ago ... and, of course, wouldn't you know this man and his wife were already wealthy in their own right, as well as owners of a yacht and a home overlooking the Pacific in California!

July 25 2013 at 7:24 PM Report abuse rate up rate down Reply
1 reply to Rene'e's comment
Lifes a Beach

That's terrible to hear Rene'e, crime against the family is a special kind of ugly. Have you discussed your loss w/a lawyer? These guys will often take cases on contingency so even if it never wins, it won't cost you money. Don't let family do this to you. (Oh, & I'm not that wise, hindsight can easily be 20/20. I do watch the market some, & ev is a tech I'm interested in, but I didn't have 500k 4 mos ago to invest with so I missed it like most of the rest of us). I do wish you the best of fortunes, & please, don't let these people rip you off.

July 26 2013 at 6:54 AM Report abuse rate up rate down
foosielucy

I have a relative with 61/2 billion
I'd rather be me because I would curl up and die if my
name was linked to things his is - although we did share the
same last name before I married....However with 3 amazing
places to live in - He has his private jet fly the family to the
French Riviera for a vacation ...It's another planet totally
and no there is no contact -we speak in different tongues!

July 25 2013 at 2:44 PM Report abuse +1 rate up rate down Reply
idcsr1

I can have everything I need for $ 26,000 / year, and everything I ever wanted for twice that. If you can't figure out how to honestly say the same then you must be stupid. It is not possible to honestly earn more than 52K / year anyway, anything above that is not honest earnings. It's theft.

July 25 2013 at 2:18 PM Report abuse -3 rate up rate down Reply
2 replies to idcsr1's comment
westjr0

does the word socialist mean anything to you???

July 25 2013 at 4:29 PM Report abuse -1 rate up rate down Reply
amyandarthur

What a stupid comment.....Many people earn way over 52K a year in honest, moral,ways,....while helping humanity and supporting charities.

July 25 2013 at 5:08 PM Report abuse rate up rate down Reply
Eric

3.5 million in the bank is where the term 'wealthy' should begin. That's $100,000 a year for 35 years. If you can't live comfortably on that for the rest of your life, you're an idiot.

July 25 2013 at 2:03 PM Report abuse +2 rate up rate down Reply
1 reply to Eric's comment
rkeeeballs

....I'm think'in that should do it !....Problem is....wealth is like a virus that gets you high....folks just can't seem to get enough. People drunk on money want to keep it as well as make more.....something like a power trip....control freaks !

July 25 2013 at 2:17 PM Report abuse +2 rate up rate down Reply
1 reply to rkeeeballs's comment
westjr0

you don't want more money???

July 25 2013 at 4:30 PM Report abuse rate up rate down