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How much money do you need to be “wealthy”?


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In Credit Suisse’s 2018 Global Wealth report, New Zealand was ranked the world’s sixth richest country. Only the US, Belgium, Switzerland, Norway and Australia ranked above us. This works on average wealth per person of course, and there are big differences between the wealth of the population as we know, but it’s an interesting place to start this article. Are we wealthier than we think?

Charles Schwab reported in their 2019 Modern Wealth survey, that Americans, on average, believe that it takes a net worth of US$2.27million to be considered “wealthy”. (Net worth is calculated to be everything you own, minus everything you owe.)

My view? This is absolute nonsense, and wealth is relative.

I heard a brilliant speaker a few years back from one of the global fund managers talk about wealth. His conclusion was that to be “wealthy” or “rich”, meant that you had enough money to do everything you needed and wanted (within reason), with the addition of a 25% “buffer”. If you had more than this, then you could consider yourself wealthy!


Let’s look at an example:

Phyl and Ted are aged 60 and are planning on retiring at 65, when they will both receive NZ Super. They have worked out that they need $50,000 a year to cover all of their expenses, and if possible, would like an extra $10,000 a year to travel for the first 10 years of their retirement. We assume that they are going to live until they are 85.

(To make this very simple, we’re going to assume absolutely no interest, growth or inflation over time.)

They need $60,000-$32,000 (approx. NZ Super income) for 10 years, and then $50,000-$32,000 for 10 years; a total of $460,000 in addition to their NZ Super.

If they have this $460,000, plus an additional 25% ($115,000), so $575,000, they could consider themselves wealthy.


Now there is no scientific research or evidence that I have found behind this 25% figure, but it feels about right. If you have enough to cover everything you want and need, plus a little extra “just in case” (25% or 30% or even 15%), then you could consider yourself to be wealthy.

I said earlier that this is all relative, as everyone has a different lifestyle and expectation of what they need. For some people, $575,000 as illustrated above would be “wealthy”, but your “wealthy figure” could just as easily be a lot less if you have different expectations (or a lot more for the same reasons!).

We often feel particularly wealthy when our “normal” changes. This could be after a payrise, or even something extreme like winning lottery. For a time, life is different, and we revel in the increase in our spending power, but very quickly, that becomes the new normal, and we aspire to have more again.