Is $250,000 a Year Rich? Let's Break It Down

http://www.cnbc.com/id/49807529

by codegeek • 14 years ago

2 2 14 years ago

tolos• 14 years ago

Starting at the end and working your way towards the beginning, you can save a lot of time:

> Bottom line: For folks like the Joneses who live in high-tax, high-cost areas, who save for retirement and college, pay for child care to enable two incomes, and pay higher prices for housing in top school districts, $250,000 does not a rich family make.

> Some of the expenses incurred by couples like the Joneses may seem lavish -- such as $5,000 on a housecleaner, a $1,200 annual dry cleaning tab and $4,000 on kids’ activities. But when both parents are working, it becomes nearly impossible to maintain the home, care for the kids and dress for their professional jobs without a big outlay.

Andddd, I stopped reading.

rskar• 14 years ago

The BLS (see http://www.bls.gov/oes/current/oes_nat.htm ) says the median hourly wage in May 2011 is $16.57 across all occupations (mean hourly is $21.74). That fact should help put things in better perspective.

Assuming $20/hr as a good ballpark figure for most working people, that would mean working 12500 hours to gross $250000 in a year. Clearly one person couldn't possibly do all that; so in a double-income household that's really only 6250 hours each. That's a 17 hour workday, taking no days off. Unless they really insist on having a day off every so often, in which case that'll be 20 hours a workday.

In all seriousness, if it's a power-couple pulling in $250k gross annually, that's somewhere in the neighborhood of $60/hr for each of their jobs, which is about three times the median overall, and more than what the "median" scientist or engineer makes (per BLS stats). According to BLS, median wages are over $50/hr for these occupations: doctors, psychiatrists, Chief Executives, dentists, Petroleum Engineers, senior managers, judges, magistrates, Air Traffic Controllers, pharmacists, lawyers, and physicists. The median for "Computer and Mathematical Occupations" overall is about $36/hr.

So who are among the roughly $20/hr crowd? They would include (within median wages $18 thru $22): Heavy and Tractor-Trailer Truck Drivers, Museum Technicians and Conservators, Credit Counselors, Statistical Assistants, Mental Health Counselors, Machinists, Carpenters, Surgical Technologists, Licensed Practical and Licensed Vocational Nurses, Sheet Metal Workers, Interpreters and Translators, Medical Equipment Repairers, Firefighters, and Structural Iron/Steel Workers, etc. These occupations sound like middle-class lifestyles to me.

Assuming a two-income household, each working 1800 hours at $20/hr, the annual household income is $72000 gross (hopefully with benefits). And there you go, a fairly objective definition of a middle-class family, of about $70k a year.

To anyone blessed with over $200k/yr, just consider you're really at a place where you could buy - lock, stock, and barrel! - the sort of residence the $70k/yr live in every few years. Really! Just cut back on your extravagances, and you could own a fine middle-class home outright in five years or less. The $70k/yr folks may take decades to achieve the same.

This is not to say you shouldn't enjoy, or that you haven't earned, your success - nothing of the sort. It's just that nobody really believes that someone who has the means to own a nice home in rather short time is middle-class too.

Is $250,000 a Year Rich? Let's Break It Down

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