Do you consider yourself wealthy, or are you financially confident enough to say you’re super rich? Feeling wealthy and actually being wealthy may be two different things, but that doesn’t mean you can’t aspire to build your bank account like any high-net-worth individuals you admire.
Check Out: 10 Genius Things Warren Buffett Says To Do With Your Money
Advertisement: High Yield Savings Offers
For You: 7 Tax Loopholes the Rich Use To Pay Less and Build More Wealth
Of course, Americans of varying income classes have an equal amount of varying concepts as to what makes someone rich. Though financial confidence can depend on lifestyle factors to the size of your paycheck, here are a few key takeaways on what many economic analysts consider to be wealthy:
-
In general, most Americans agree that an average net worth of about $2.5 million is necessary to be considered rich.
-
Many economists agree that annual household incomes between $106,000 and $150,000 are generally considered to be within the upper-middle-class range, or somewhat wealthier Americans.
-
How much you make, or can save, is directly correlated to where you live, your lifestyle, how many passive income streams you have and the general cost of living. Even high earners might not be able to afford much more than housing and healthcare, especially those susceptible to lifestyle creep.
-
When it comes to how rich you need to be to retire comfortably, many financial experts say you may need to save around eight to 10 times your final working year’s salary, which could translate to a nest egg of roughly $1 million or more for most people.
If you are tired of not being rich, there are a few tips and tricks you can glean from the how-to-be-wealthy handbook. Here are three accounts that super-rich people use to grow their wealth — and you can, too.
A Roth IRA is an attractive retirement account to consider, whether you are already rich or trying to build your net worth. When certain requirements are met, you can withdraw tax-free, keeping more of what you earn.
Keep in mind that Roth IRAs do have income limits, but that doesn’t mean wealthy people and high earners are immune to them. For example, you can transfer the funds from a backdoor Roth IRA to turn it into a traditional IRA, so it’s an account with the more expected tax benefits of this type of account.
Wealthy people tend to be tax strategists. They know that while there may be taxes involved on any growth as you transfer the accounts, this method offers the opportunity for those earning above the income limit to contribute to a Roth IRA.
