Hmm...maybe the rich are a little bit like you and me after all. In a recent survey, more than 40 percent of millionaires said they don't feel wealthy. Then again, the similarities sort of stop cold right there. The millionaires who don't consider themselves wealthy said it would take $7.5 million in assets beyond what they have stashed in retirement accounts and excluding the value of their real estate, before they would in fact consider themselves wealthy. I am confident I could feel pretty set with far less than $7.5 million in the bank. You?
To be fair, in the Fidelity survey, the 58 percent of millionaires who already consider themselves to be wealthy said they started feeling that way once they had $1.75 million in investable assets. But even $1.75 million is still a boatload of money; having just a fraction of that amount would no doubt make most Americans feel abundantly wealthy. According to Federal Reserve data, median household wealth has shrunk from $125,000 in 2007 to less than $100,000 today, median household income is hovering right around $50,000, and plenty of Baby Boomers are staring at retirement accounts with just $200,000 or so.
So how is it that such a big chunk of the filthy rich don't feel rich? The quick and easy answer is because they are ridiculously spoiled and out of touch with reality. But there's in fact more to it. I'm not suggesting we convene a pity party for the seven-figure set, but it's interesting to consider how it is that the truly rich aren't feeling it:
- A loss is a loss is a loss. Just one-third of millionaires surveyed by Fidelity report that they've managed to claw back all their bear-market losses. Research suggests the pain of loss tends to be twice as powerful as any high we feel from gains; that's likely at play no matter how many digits are attached to your net worth.
- They're stuck on the same treadmill. Regardless of what we can afford, a common trait shared by wealthy and not so wealthy is the desire to buy our way to happiness. Yet the "hedonic treadmill" theory suggests that any satisfaction from our possessions is fleeting, and induces us to want to spend more and more. That's true whether your "more" is a trip to the mall or purchasing a bigger yacht.
- They're just as anxious about longevity. Four in 10 of surveyed millionaires -- the average age was 56 -- said their biggest financial worry is making sure they'll have enough to keep up their standard of living in retirement.
- It's not what you make, it's what you get to keep. Nearly two-thirds of the millionaires reported being "extremely or very concerned" about the impact of potential tax changes. While last December's tax bill compromise left the top income tax rate at 35 percent and long-term capital gains (and dividends) at 15 percent through 2012, everything is on the table come 2013. One faction of congressional Democrats is already pushing for a while those making over a billion dollars a year would see their top income tax rate rise to 49 percent. The bill, spearheaded by Rep. Jan Schakowsky also calls for taxing all investment gains and dividends above $1 million as ordinary income; that would essentially triple the IRS share of millionaires' investment gains.
To be sure, there's going to be plenty of Republican pushback on any such proposals. But if there is any serious discussion about dealing with the massive federal deficit, taxes have to be part of the conversation. And millionaires know that no matter what their personal sense of wealth may be at the moment, they surely don't fall into anyone's definition of middle class that would ostensibly be protected if Congress were to consider higher income tax rates.
More on MoneyWatch