Reply to At what net worth are you considered wealthy ?

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[quote=Anonymous][quote=Anonymous]People are confusing near-term liquid net worth with net worth. The most common DMV $5M net worth is:

* $2.5M home with $1.5M mortgage ($1M)
* $2M retirement funds
* $500K 529
$ $1.5M brokerage

Only the $1.5M is accessible. Risk-free that throws off $60K per year. The mortgage payment on the above is $110K per year. This means you need an income of $300K to live, minimum. That's not wealthy. At $10M, you're throwing off $260K / year. Now you're wealthy.[/quote]

I’m single and have nowhere near the net worths listed in this thread.  But I have always agreed with the point made in the above post, that the following two things make one feel poor, regardless of one’s net worth: having a big mortgage and having a lot of your money tied up in retirement accounts.

For these reasons, I’ve gone in the opposite direction: I paid off my mortgage and I don’t contribute to retirement accounts at all. My net worth is $1.2 million—a paid-off $550,000 condo and $650,000 in my brokerage account.

The $650,000 in brokerage can spin off $26,000 in income. And with no mortgage, I wouldn’t need to spend more than $50-$60,000 to have a great quality of life. That means I only need to plug a gap of $2-$3,000 per month, which is easy to do with any type of job.

Because of this, I don’t really fear job losses and such. I know people rave about the tax benefits of retirement accounts and the advantages of not paying off a mortgage, but I don’t know if they fully appreciate the quality-of-life advantages that come from my approach.[/quote]

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