I've read Old Timer's fine diary written in response to bink's diary on those who have the temerity to suggest that it's hard to make ends meet on a quarter-million dollar income.
Making ends meet is putting food on the table, and a roof overhead, and that's about it. It does NOT include your kids' tuition, your IRA, or the $750,000 house you're in.
When the higher-incomed cast their troubles as an inability to "make ends meet," I find that offensive. That is not an applicable phrase to their situations. There's a tone-deafness to the Pete Peterson article that is galling beyond belief.
Now, with that being said, I feel that there can be a broader point to be made: I think there's a definite difference between being rich and simple financial security. I'm not unsympathetic to those who are genuinely striving for such security, even if it's hard to tell the difference between that and being rich when looking up from below -- but trying to conflate scrambling to keep your retirement fully funded with, say, us scrambling for funds to keep our jalopies in running order will not win you any friends amongst jalopy owners. Plus, it's just rude.
So how much money would you need to make to feel secure in your life, for your kids, and in this economy?
A lot, I think it turns out. So you're right -- maybe you aren't "rich," but you do have the opportunity to attain a level of personal security most people can only dream about. Your problem is that you're trying to have it all, and can't quite afford it. $20,000 for leisure activities? C'mon. $5,000 for housecleaning? A 750K house? If your appetites rise along with your income, you'll be struggling no matter what you make.
So cut that crap out. Then, you might have a position to argue from. Because then, there will still exist a fundamental fact:
In the eyes of most U.S. people, in order to be secure, you're required to be rich.
Why?
Why is it, that my desire to grant my kids an opportunity to further their education requires me to be rich?
Why is it, that my desire to not be an overwhelming burden to the medical or social system requires me to be rich?
Why is it, that my desire for Mom to live in a minimum sense of comfort, where the standard of care is just a little higher than merely seeing that she's turned over like a chicken on a spit twice a day, requires me to be rich?
Because that's the way it is.
My personal wish list for security isn't long, but once added up, sure enough it's an eye-popping amount of money that I'll never attain: I'd like to pay my house off before I forget that I live there. Like to have some modest upgrades to it, too. I'll send the kids off to college (the local state school), so they ain't strangled with a lifetime of debt; get my retirement up and funded; have enough saved up so that when the hammer drops and I wind up unemployed and have to work at 40% of my previous wages, I can still pull through until something better comes up; and lastly, be able to kick in some money to Mom so that when she inevitably goes to a retirement home in a couple years, it won't be one of the rock-bottom ones.
Turns out the required figure is a hell of a lot larger than a living wage, such a concept assuming I'm only responsible for my own skin. Even in the best of times, I'll never meet all those goals. And that seems to be the crux of it. For the figure assumes that socially, nothing will ever get any better. Ever.
There's an article in Public Radio International titled, The Perfect Income for Happiness, which pegs that amount at $75,000, according to a Princeton study. I think that's a little low, but that may be because it's averaged out geographically. Below, I've kinda put together an income strata from what I think the levels of secure living could conceivably be like. Disclaimer: I'm using Seattle-area dollars -- your mileage may vary. Peace.
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1. a) Below $20,000/year: you're living with your parents -- don't piss them off.
1. b) You're living with three roommates -- don't piss them off. They're less forgiving than your parents, and you're only one bad argument away from being out the door.
1. c) You're lucky if you're under 26 -- you can be enrolled in your parent's health bennies, of which you ain't gonna be able to afford otherwise.
2. a) $20K - $30K: You might be able to afford your own apartment, if your credit is stellar, and you don't have kids, though it might not be true in either case. But you'll be the first of the guys from item #1 to make it out on your own. Yippee.
2. b) $25K - $40K: Woah, you can afford to rent a HOUSE! Maybe. If you've lived the financial life of a saint. Bonus points if you're under 26 (medical bennies), cuz that's a hell of a lot of cost savings.
3. $40k - $55K: Assuming again that you've lived the saintly fiscal life, you can now afford to BUY a house! Insofar as it's a 2BR foreclosure for which you can cough up a 20% down payment, that is. About $30,000 that'll be. Don't have $30K sitting around? No problemo, there are still plenty of outfits willing to take you for a financial ride help you out. You don't have to rely on reduced-priced lunches for the 3 kids anymore.
4. $55K - $75K: Congrats! You've got a 3BR house, making regular payments, you have your own medical bennies (maybe), the kids are fed and clothed. What sucks is that you still have the single-pane windows and the oil furnace that you can't both afford to replace and still keep up with the regular household maintenance. On the plus side, though, you do develop some skills in making moderate improvements to the place. You're also starting to think about kicking in for the kid's higher education. And your retirement.
5. $65K - $90K: In this area, you're starting to creep into into the higher tax brackets. You're still in the old house and now you have some choices: maybe upgrading it, knowing full well that the double-pane windows, the high-efficiency heat pump, replacing the siding, modernizing the kitchen and baths, replacing the galvanized plumbing, etc, are only gonna make sense if you're in the same place for the loooong term (and it will take a while before that $100K upgrade is paid off); or maybe setting some money aside for the kids' education, because holy crap, tuition at UW doubled over the last four years to $12,000. Start 'em out in Community College, that's the ticket. You also are starting to put in a little more than the minimum towards your retirement. Now is also the time to realize that if that income is spread across two earners, it's gonna hurt a fucking LOT if that income stream is broken. Maybe setting some cash aside in a rainy day fund is called for, because adding the stats up, there's a pretty good chance that either you or spouse at some point will become involuntarily unemployed. Oh, and don't forget Mom -- she's up in years and is finding it hard to get around at her place. Gonna need some arrangements made for when she can't take care of herself. NOT looking forward to that.
6. $90K - $150K: Okay, now You're officially in the higher tax brackets. Your income is now rising faster that the costs of day-to-day living (that is, gas, food, housing, clothing, etc, when viewed from this level, become smaller and smaller portions of your overall income). As a bonus, since you're passing the Social Security cap, it feels like you've just gotten a raise in your pay stubs for the last few months of the year. You actually start looking around you and realize that some of the things you only dreamed about are becoming reasonably attainable: funding the kids' education; getting a nice nest egg going; retirement's fully funded; Mom can be in a reputable, if spare, assisted-living facility instead of those other places that smell of pee and disinfectant and are filled with moaning and you sometimes read about them in the paper (and it's never good news); maybe even buy a new place (a modest one -- you want to be able to pay the thing off before your wrinkles get deep enough that you can store stuff in them). Oh, you still can't afford all of this at this time-- you're not, you know, like rich -- but you are starting to feel....secure in your station. True, it's still likely that you or your spouse may become unemployed at some point, but even then, you can look at those potential bad times with the attitude that they'll be survivable.
7. $150K - $200K: This is like item #6 with a darker side. As your income climbs through this level, so will your appetite for finery. Most of your associates will share this level, or even be above it, and you may start desiring to "keep up" with the trappings of their lifestyles: more expensive cars, a house with a water view, a toy or two, that kind of stuff. Perversely, your spending on foofery has a negative impact on your feelings of security, because you've overextended yourself and are now back to juggling which bills to pay. This is that Peterson area where you might plaintively wail to the lesser-incomed, "Hey, I'm struggling, too!" to which the inevitable reply is, "Cry me a river, fucker, if your cabin cruiser gets repo'd when you lose your job." And you'd deserve that response, too. You're not rich; you're fake rich. You traded security for style, and you're blaming your tax bracket for your struggles.
On the other hand, if you do it right, your life is now manageable and comfortable and prepared for life's inevitable ups and downs. All of item #6 is taken care of. You may not feel "rich," probably don't even look it, but you will soon own your modest house free and clear, and in a few decades, when the time comes, you can choose your own retirement community, and spare the kids the hell that you went through with Mom.
8. $200K - $300K: Okay, NOW's the time for some foofery! You don't really have to worry about unemployment; at your station in life, the jobs come looking for you instead of the other way around. Most people will consider you rich, and you can totally see their point. Although you might just see yourself as being "well-off." Get those trust funds established for the kids.
9. $300K and up: Beyond a certain level, extra income doesn't really add to one's life security. And that, I think is the area when one becomes truly rich, in the Gilded-Age meaning of the term. Money loses its meaning as a medium of exchange; it is now just a means of keeping score. And you're all about the score.