I saw something in the Wall St. Journal this morning that gives me pause. Probably not a good subject to discuss on a photo-oriented blog but I was surprised to see statistics showing that 16 million families in the USA have a net worth of over one million dollars. Which, of course, makes them millionaires. Eight million people over the age of 50 are multimillionaires... Far more than the 1%.
We are routinely deluged with stories about poverty and deprivation and so it's interesting to see these kinds of statistics. Especially so for people who've spent their careers in the commercial arts industries where there is a prevailing mythology of people mostly working for peanuts. The article goes on further to say that this increase in the number of families achieving this net worth rose rapidly from around 8 million only a few years ago to the current 16 million (12% of American families). The statistics also pointed to a relative (tiny) narrowing of the "wealth gap"; meaning that middle class made more advancements than the vilified one percent in that window of time.
Of course a lot of the increase in wealth is less liquid with most of the gains occurring through the course of home ownership and rising real estate prices. But college graduates; especially those between 50-70 years of age, also saw increases in net worth because 80+% are invested in equities which also rose from 2019-2022. There was an average increase in net worth of 37% in the USA between 2019 and 2023, adjusted for inflation!
It's interesting to me to write a blog for an audience that is almost completely opaque to me. In advertising we targeted our messages and chose our media based on accurate analysis of demographics. We had a good (now great?) idea of how well educated our target markets were, how wealthy they were and what their overall spending patterns were. With current analytics (via web experiences, data rich transactions, etc.) marketers have a much clearer picture of their customers. But as a single person blogging operation I have none of those numbers or trends at my disposal. I can only make wide ranging guesses.
Based on comments ( which are a small fraction of total visitors ) I can guess that most of my readers are between 50 and 80 years old. Predominantly men. And most worked in professional jobs ( medicine, tech, law and as executives in various other industries ), are currently retired or nearing retirement and have enough disposable income to at least "consider" non-essential camera purchases.
I make bad assumptions from time to time. My current potentially flawed assumption is that the majority of us were not wealthy during most of our working years and lived, well enough, in the middle strata of income. Able to afford a decent house, a working car and all the necessities but not "big spenders." I further conjecture that compound interest, inheritances from parents who were part of "The Greatest Generation" combined with the appreciation of house values and 401K holdings, have made many of you relatively wealthy but you have not fully embraced the reality of those rather recent increases in your net worth. After a life time of budgeting, saving, sometimes scrimping, that it's hard to think about spending any of the new wealth you've been lucky enough to accrue. We seem unable to process that times and our fortunes have changed. And, if you are like me, you are probably worried that this is a temporary bit of financial euphoria that could vanish overnight.....
My interests in photography are wide ranging. I love the history of the photo industry and also the art of it but I also like the technical side and, especially, the art of cameras and lenses. I like using different cameras and I like writing about them. But even though I seem to plow through cameras like crazy the reality is that I purchase only a handful per year, mostly used, and constantly sell off the ones that I've tired of.
When I write about new camera purchases there is always, ALWAYS someone in the audience who takes me to task for being a compulsive consumer, a spendthrift, a capitalist tool, and they seem to take pride in the fact that they are still using a camera from a decade ago and that the idea of prying open their change purse to actually buy a new camera is so abhorrent to them as to make us enemies. Hardly a week goes by without someone jokingly blaming me for their own camera purchase. As though I had grabbed their last dollars from their shaking hands and forced them to buy a new Sony or Leica camera instead of bread for their family. Always posited as a joke. But always with the underlying message that spending their own money is somehow bad. Or wrong. And that my example is consumerism at its worst.
It's a precarious position. To now have the means to buy whatever you want but being emotionally unable to pull the trigger and enjoy it. But I think this is a condition that's widespread.
I understand that people with close family ties are hellbent on leaving everything they can to the next generation but.....wouldn't it be fun to loosen up just a little bit and have some fun? Just askin'.
I'm sure there are many readers who are not in the demographic described above and who are dealing with real challenges. I don't mean to minimize their situations. But it amazes me to live in the middle of the most affluent society/nation in the history of the world and yet, at the same time, to feel like you're barely getting by when, in fact, many of you are actually.....wealthy. (statistics, statistics).
So, (smiley emoticon implied) next time I buy a used Leica just let it go.....
Here's the WSJ headline:
"Never Mind the 1%. Mini-Millionaires Are Where Wealth Is Growing Fastest."
23 comments:
The thing about being a "house" millionaire is that you have to live somewhere.
Kt, I haven't yet read my WSJ today but will do so now that I know there is a good article in it. Yes many of us are "fairly" affluent what ever that means. I did see a statistic that said if you were a millionaire in the 1960s that would be approximately $8 million today. I looked up how many households have $10 million net worth or more, and the internet told me (assuming you can believe it) that around 2.1 million families have that kind of wealth. Yes it does astound me that there is that kind of wealth in America today. This is not the place to go into all the reasons but you hit on some of the bigger ones, House values and 401k's, and the magic of interest compounding over time tax-free. I would suggest your audience is much more affluent than you realize. Maybe even wealthier than they themselves realize. With all that said my old adage is just because you can afford something does not mean that you should buy it. That is coming from a guy who has 3 Nikon Z cameras and all the request S glass available. I do enjoy your writing and humor as well as your photography, keep on shooting. Eric
I think you missed the lead. The increase in wealth is not just real estate money but increases in investments, increases in salaries after indexing for inflation, and the benefits of compounding interest.
I'm presuming that not all of your net worth is tied up in a house. Nor is mine. And I'd imagine that much of the increase outside of the real estate is a result of the increased value of equities and income producing alternate investments.
If you are a risk taking house millionaire you could apply for a huge line of credit using your house as collateral and roll the dice to see whether the call on the principal of the loan value or your death comes first...
Interesting to me is that a couple who both worked at above average salaries for most of their lives can, at 70+, claim Social Security benefits of approximately $8K (total) per month. Well beyond the minimum burn rate required to live nicely anywhere but NYC, Los Angeles, Aspen, etc. Especially if living in a paid for house...
Eric, now if I could only figure out how to put together a workshop they'd all buy, that I would actually enjoy doing, and I'd be really wealthy. As it is it's all used Leicas for me...
"If you are a risk taking house millionaire you could apply for a huge line of credit using your house as collateral and roll the dice to see whether the call on the principal of the loan value or your death comes first..."
That's called a reverse mortgage (well, sort of).
Out of a population of some 330 million people, a few million millionaires is still a small fraction. And one has to consider inflation. Back in the mid-20th century, being a millionaire was a big deal. But thanks to inflation, having $1M now is like having $100K back in 1950 -- nice, but not ultra-rich. You'd have to have $10M today to have the same buying power as a 1950 millionaire.
I would guess that a good number of today's American millionaires got that way by working in the tech industry. Companies like Google, Apple, Amazon, etc. have made a lot of their employees wealthy through stock options. It's not just the C-suite executives, though of course they make even more money.
One of my favorite quotes - There are three kind of lies: lies, damned lies and statistics.
I think you have the age range and gender demographic correct. Wealth is an illusive concept to nail down. First of all having a net worth of $1M just isn't the same as it used to be. There are so many things to consider. How much of your net worth is liquid? As JC alludes to, if you exclude your house, your liquid net worth is now somewhere around 1/2M. Are you planning on assisted living/nursing home care in your old age rather than living with one of your children? Are you planning on helping your adult child who is living at home, buy their first house? (Because for most, that's the only way they're going to get one.) Now your disposable income seems to much smaller. I can understand how plopping down $4K for a camera would seem foolhardy for many people who's net worth would be deemed considerable at first glance.
I would never chastise anyone for owning a luxury item if it gives them pleasure. As MJ at TOP always says, as long as it doesn't hurt anyone else.
I'm a firm believer that, if you earned the money, then you have every right to spend it how you please. After all, you can't take it with you, so enjoy it while you can. As someone I knew once said "I want the last cheque to bounce."
Just a wild guess on my part. But if you have the house paid off and six or seven million in additional assets I'm betting you'd still feel pretty comfortable even if not up to the standards of a 1950s millionaire... Especially interesting to see that the "average" household wealth is up near a million but the "median" household net wealth is something like $188,000. Including whatever equity they might have in a home. Now, it's not exactly like lying with statistics but somewhere in the ballpark...
A number of neighbors who have worth well over a few Million $$$. But - it is tied up in farmland, machinery & livestock.
When a new combine costs right around $500,000, the tractors a couple hundred thousand and these folks are all Family Farms, it ads up. We are in North Dakota. NO factory or Corporate owned farms and ranches except a closely held Family Corporation where ownership are living State residents.
Millionaires? Yep, but the money is in the working operation and not the bank.
A million bucks isn't what it use to be. Our generation was brainwashed to think a "millionaire" was something exotic. True enough when we were kids a million bucks was really something and millionaires were a rare breed. Not so anymore. They are a dime a dozen. If you wanted to buy something in 1960 that cost one million dollars you would need $10,398,277.03 today to buy the vary same thing.
So once you hit $10.4 million in assets you can consider yourself a "millionaire" by our ingrained perception of what a millionaire is.
Eric
how dare you :-) cold brew roolZ (when it's warmer than 20 degrees Celsius at least ROFL :-) ) i'm a m*llionaire in $CDN but it's all paper :-) house + RRSP (what you call a 401K) not enough for 3 people to live for another 20 years!
Roland, You are correct. Cold Brews are acceptable when the temps hit 100°. I changed all my US dollars to Canadian so I would at least sound richer....
Schwab Investment firm pegs the number that most Americans think of as the threshold for "wealthy" for net worth at $2.2 million dollars. I'm betting most of your readers are at or over that mark.
R.A.
Please keep in mind that I'm "just" a photographer, not an economist or accountant. I'm just reporting what I read in a relatively trustworthy source for financial info. Thanks!
I think you've got the demographics and relative wealth about right. I'm nearing 82, retired five years now, technically a millionaire, not counting the house, and compared to many millions of other people, my wife and I would be considered wealthy.
BUT behind that "wealth" there's decades of feeding our 401k's, avoiding credit card debt, splurging every so often but not too big, and living lower on the hog. If Social Security gets nuked by Congressional meatheads, and the 401k allocations tank, we're screwed.
There's some photography stuff I'd love to buy, but doing so depends on what and how much of the physical "stuff" I've accumulated over the years I can sell on eBay or wherever. So I dream ... and enjoy virtually the new cameras that you acquire and report upon.
I’m white, male, and just a couple of years younger than you. I’m a professional in a stable job and my domestic partner is the co-owner of a small technical business. I would say that we are part of the eroding middle class. Our lives aren’t as comfortable or luxurious as they were in the past, and retirement, when it happens, won’t be any better. Of course, it doesn’t help living in Miami, one of the costliest places in the country!
I think that life in the USA is pretty good overall, but unrealized stock market gains aren't cause for me to go on a shopping spree.
Don't take it personally if I don't have much to say in response to camera/lens du jour posts: I'm pretty much skipping or skimming everyone else's too. There's a few items that I think I kinda-sorta want, but I could say the same thing about a $200+ Lego Land Rover Discovery set, and Apple's Vision Pro. I have met my inner child, and he will eat Play-Doh if you don't keep an eye on him.
Jeff in Colorado
Kirk, I know that syndrome all too well. It's not so much about 'leaving it for the next generation though since both our kids are better off than us. It has more to do with the lean years we went through and yes, a certain level of unease that it wouldn't take much to find ourselves back there. That said I do buy new cameras from time to time, even if it means putting them on a credit card. What I really need to do is sell the old ones so there is less 'stuff' for the kids to deal with when we are no longer here.
On the subject of buying equipment I think people have to remember that you are a professional photographer and many of your readers are amateurs. You need to keep buying the most up to date gear to, well, keep up to date.
Can I manage with ten-year-old and older cameras? Sure, I'm a hobbyist. Can I survive with ten-year-old tech doing my professional job. No way! So I end up spending more, and more often, on job-related gear than I ever do on hobby-related gear. And I'm sure that's true for most professions.
in the UK 1 in 5 boomers are millionaires, at current rates $1.21millionaires, I should check how many people that is before going further, it was 267k in 2021, 53k of them millionaires out of about 70m population, so 8m out of 300m-ish seems like a much higher proportion, interesting, we have about 40% inheritance tax on assets over, well, can be about £1m I think, it's widely evaded/avoided by the super wealthy, must be other reasons, perhaps it's all that rampant consumerism in the USA that's been making people rich ;)
our stock market is much more sleepy than the american one I think
Hi Adam, Our stock market is more....schizophrenic. More like weird gambling. I'd say it's our zany lack of estate taxes on the first $12 million of inheritance that provides a lot of the "wealth effect."
yes that sounds more like it, I've been dipping my toe into your stock market this year and yes, up and down like a yoyo, mostly trying basic options trading, covered calls and cash secured puts, quite a learning curve but didn't lose my shorts yet, getting the hang of it gradually, I was seduced into it by a youtuber but am consulting a few other sources now, the volatility can be a bonus options trading but I haven't really got onto the more advanced stuff yet which can make money in either direction, iron condors and whatnot
Hi Kirk, as you’ll appreciate, there’s a big difference between wealth and income. Someone can be asset rich and income poor. Depending upon where one holds one’s wealth, that can be paper-only / fleeting too.
I work in the superannuation industry in Australia (aka pension schemes, similar to 401K) and had this conversation with a colleague yesterday. As a sweeping generalisation, building wealth requires saving and not spending some income. So to become wealthy, one spends 40+ years being conditioned to squirrel money away. You enjoy yourself, but not too much. Splurge occasionally, but it’s the exception, not the norm.
And then, when one retires, there is all this wealth that’s meant to last until you die - a largely unknowable timeframe. So people continue with the habits of a lifetime, to avoid the fear of running out of money before they die, and end up leaving most of it to the kids.
Yes, lots of sweeping generalisations in the above, but an interesting perspective on human behaviour. It really needs to be had over an evening beverage or two - unfortunately our chat was over zoom.
Post a Comment
We Moderate Comments, Yours might not appear right after you hit return. Be patient; I'm usually pretty quick on getting comments up there. Try not to hit return again and again.... If you disagree with something I've written please do so civilly. Be nice or see your comments fly into the void. Anonymous posters are not given special privileges or dispensation. If technology alone requires you to be anonymous your comments will likely pass through moderation if you "sign" them. A new note: Don't tell me how to write or how to blog! I can't make you comment but I don't want to wade through spam!
Note: Only a member of this blog may post a comment.