I hear people use the word millionaire, but I’m not sure what it means exactly. Who exactly are millionaires who should be asked to pay more taxes to help fund schools and scholarships? By Income Or By Net Worth? 1 million or more in net worth? The popular TV show Who Wants To Be A Millionaire implies the net value description also. 1 million a year every year.
If we go by the net worth definition, we have millions of millionaires in this national country. Include Home Equity Or Not? Should home collateral be included when we calculate net worth? Home equity can be an asset. A home can be sold, refinanced, or inherited. It makes no sense if someone with a large mortgage and a big investment portfolio is counted as a millionaire but someone else that has a smaller investment portfolio but owns the house free-and-clear isn’t counted as a millionaire. They just choose to differently keep their possessions.
Many seniors living in homes without a home loan in the coastal says are millionaires. Although they might not have as much income as a younger person still working, they have a higher net well worth. Include Pension Or Not? A pension is had by Some retirees. Most public sector employees and some private sector employees have a pension still. A pension gives someone an income stream now or in the foreseeable future. A 401k or IRA balance also gives someone an income stream.
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If person A has a big IRA balance but no pension and person B have a smaller IRA balance but has a pension, who is a millionaire? 2, per month pensions with cost-of-living changes is easily worth half of a million dollars 000. The value of a pension should be contained in the net worth. Include MEDICAL HEALTH INSURANCE Or Not?
Some people have health insurance as part of their retirement package deal. Some must buy medical health insurance themselves. Since the value of a pension should be included in the net worth, the worthiness of paid-for medical health insurance should be included too. Health insurance isn’t cheap. 1, a month 000. If person A has a large investment portfolio but must buy health insurance and person B has a smaller investment portfolio but has health insurance paid for life, who’s a millionaire? One Person Or Two?
1 million are they both millionaires? Or should we separate their net value by two? I say we ought to separate by two. Two millionaires will need to have two million dollars. Adjust for Cost of Living Or Not? The cost of living in this country can be different vastly. A millionaire in NEW YORK or San Francisco doesn’t live almost as well as a sub-millionaire in Nebraska.
1 million are also millionaires. Inflation will eventually make everyone a millionaire. When I was in Chile, a can of Coke costs 1,000 Pesos. 10. If you aren’t a millionaire yet, inflation will help you. I wager many readers of this blog are millionaires. If you are not yet a millionaire, you shall be. If you are being charged by an advisor a percentage of your assets, you are paying 5-10x much too. Understand how to find an unbiased advisor, pay for advice, and only the advice.