However, Income Figures
Understate Inequality
Wealth is not the same as income. Wealth includes assets of all sorts: real estate, stocks, savings, valuables of all sorts.
Wealth is harder to track than income. It also shows much starker differences. The vast majority of wealth in the US is owned by a very small part of the population. For example, the wealthiest 1% of Americans own 53.5 percent of all stocks and mutual funds held in the US.
Wealth Distribution in the United States
| Wealthiest 1% |
32.3 |
| 90th to 99th percentile |
37.7 |
| 51st to 90th percentile |
27.8 |
| Bottom 50% |
2.3 |
Next: What Americans say they think about inequality
photo: main hall of The Breakers, the Vanderbilt "summer cottage," Newport, RI.
About 12% of US families have net worth at least $1 million. That sounds like a lot, but is $1 million really a lot of money? First of all, having $1 million in net worth is a lot different than having $1 million in assets that can be easily spent. For many with that much in net worth, the majority of their financial worth is home equity. That is definitely financial value but it's not fungible (that is it can't easily be spent). Beyond that $1 million is far more than the vast majority of the world's population will ever have... and more than what 90% of Americans will ever see. It will buy a lot of stuff. You could buy a entry level BMW for yourself and 9 of your friends and still have more than half left over. On the other hand, it's no where near enough for you to quit your job and just live luxuriously on your money. A safe withdrawal rate for investments is about 4%.* That means that a million dollars invested produces a safe income stream of about 40,000 a year. That would put you at around the 39th percentile of US households. That's great! About 130 million Americans are living at or below that income. However, you aren't going to feel rich.
*A "safe withdrawal rate" is the amount of money you can withdraw each year without spending your capital. That is, if you have a million dollars invested and you spend $40,000 of it each year, at the end of 10 years, you should still have at least a million dollars (plus an inflationary increase).