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Entries in Millionaires (9)

Sunday
Jul282013

Only 28 Percent of Millionaires Think They're Rich, Study Finds 

iStockphoto/Thinkstock(NEW YORK) -- If you had investments worth a million dollars, would you consider yourself rich? How about $5 million? Well, hold to your wallet because a new study has found that the majority of millionaires don't consider themselves rich.

According to a the study from investment bank UBS, entitled "What is Wealthy?," 40 percent of those with $5 million in investable assets said they didn't feel they were rich. And only 28 percent of investors who had between $1 and $5 million in investable assets viewed themselves as rich.

"To us, the surprise was that that many people with $1 million or more did not consider themselves wealthy," said Emily Pachuta, head of investor insights at UBS Wealth Management Americas. "We think it shows a very interesting mindset shift. People have certainly experienced a shock from the volatility of the market, and they are very aware that it takes a significant amount of money to have that dual feeling of having enough money and no financial constraints."

According to the opt-in, online survey of 4,450 Americans ages 25 plus with a minimum of at least $250,000 in investable assets (half with at least $1 million in investable assets), 50 percent of investors define wealth as "having no financial constraints on what they do." However, although the $5 million-plus investors are twice as likely to feel wealthy as investors with $1 million to $5 million in assets, only 64 percent of the former and 62 percent of the latter felt confident that they would achieve their goals.

If this outlook seems a little odd—especially when you consider that the median household income for May 2013 was $51,500 and the average 401(k) account has about $80,000—experts are not especially surprised.

"It's shocking to those of us who are not personally in that range, but it's not surprising when you take into the account the costs and expenses that are associated with people at that level of wealth," said Cliff Goldstein, a personal finance associate at Nerd Wallet, a cost comparison website.

Indeed, of those who have adult children, 80 percent said they are providing financial support for adult children, grandchildren or aging parents. "Unemployment, the economy and aging parents cause concern about the financial situation," he said.

David Cay Johnston, the Pulitzer Prize-winning author of books including The Fine Print and Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich—and Cheat Everybody Else, said he wasn't surprised by the Poor-Me-Millionaires.

For starters, research has shown that many rich people are afraid they will lose it all. Secondly, wealth is relative, especially in a world that is trying to keep up with the Jones's (whoever they are).

"In New York City, being wealthy enough to own upright a property worth $5 million doesn't make you feel rich, because you're surrounded by people who can buy and sell you in a two hours income," he told ABC News. "There are always some people around you who have more. Also, having $5 million in Keokuk, Iowa, is a lot different than having $5 million in New York or Silicon Valley or Seattle."

What's more, he says, most people don't understand money. "Handling assets and understanding what they are is a skill very few people have," he said. "To most people money is a stream and not a pool of assets."

One thing that does make investors feel confident is holding a significant amount of cash. According to UBS, despite significant market gains over the past year, investors keep an average of around 20 percent of their assets in cash, as they have for the past three years. Sixty-four percent feel they have the right amount of cash, and 56 percent expect to keep the same level of cash for the next 12 months.

Wealthy investors' two top personal finance concerns are long-term care and the finances of their children and grandchildren. While most feel highly prepared in their retirement planning (62 percent), 36 percent said they were not prepared at all.

"These people have a lot of money," said Goldstein. "But the reason they don't feel wealthy is because they don't feel like they have a comprehensive financial plan in place to take care of all of these longer-term costs."

Copyright 2013 ABC News Radio

Tuesday
Oct022012

Thousands of Millionaires Collect Unemployment

Brand X Pictures/Thinkstock(WASHINGTON) -- A new report shows that some 2,400 millionaires received unemployment insurance benefits during the economic downturn, a number that has caught the attention of politicians who funded extensions of benefits for up to 99 weeks as the economy crumbled.

In 2009, 2,362 millionaires received unemployment benefits, down from 2,840 the year prior, according to a study from the Congressional Research Service, a non-partisan arm of U.S. Congress that provides policy and legal analysis. Of the 2,362, more than 1,000 receiving unemployment benefits had a household adjusted gross income of $1.5 million in 2009.

The report titled “Receipt of Unemployment Insurance by Higher-Income Unemployed Workers” found that 0.02 percent of tax filers that received unemployment benefits in 2009 were millionaires. A total of $20.8 million in unemployment benefits went to this group.

“It sounds scandalous when you hear that millionaires are going to collect unemployment insurance,” Bill Frenzel, guest scholar at the Brookings Institute and former Republican member of Congress, told ABC News.  “On the other hand, millionaires get unemployed too and have made payments into the unemployment insurance.”

In 2010, 4.6 million people were kept out of poverty due to unemployment benefits, according to the Center on the Budget and Policy Priorities.

Frenzel says if they made a million dollars in income the year prior, “they could probably stand being barred from unemployment this year.”

And, apparently one member of Congress agrees.

“Sending millionaires unemployment checks is a case study in out-of-control spending.  Providing welfare to the wealthy undermines the program for those who need it most while burdening future generations with senseless debt,”  Republican Senator Tom Coburn, M.D. of Oklahoma said in a statement to ABC News.  Based on the report from the senator’s office, millionaires received $74 million in unemployment insurance from 2005 to 2009.

According to the Center on Budget and Policy Priorities, the average individual collects about $300 per week from unemployment compensation.

Early last year, Sen. Coburn introduced “Ending Unemployment to Jobless Millionaires Act of 2011,” which is currently languishing in the House of Representatives, a bill which sought to halt payment of federal funds for unemployment compensation to individuals whose “resources in the preceding year” was $1 million or more.

But millionaires aren’t the only individuals to benefit from unemployment benefits. A few other high-income brackets receive compensation from the government. More than 8,000 tax filers making $500,000 to $1,000,000 received unemployment benefit income in 2009 and more than 900,000 tax filers that made $100,000 to $500,000 received unemployment benefit income.

Copyright 2012 ABC News Radio

Wednesday
Jun202012

Report: Number of Millionaires in Asia Tops Those in North America

iStockphoto/Thinkstock(TORONTO) -- For the first time ever, the number of millionaires in the Asia-Pacific region surpassed those in North America last year, according to a new report by Capgemini and Royal Bank of Canada Wealth Management.

The World Wealth Report 2012 found that in 2011, there were 3.37 million high net worth individuals -- defined as those with having $1 million or more to invest -- in the Asia-Pacific region, a 1.6 percent increase from the year before.

In comparison, North America had 3.35 million, putting the region in second place.

North America, however, remained the largest region of wealth last year, with $11.4 trillion, according to the report.  The Asia-Pacific region followed with $10.7 trillion.

[CLICK HERE TO VIEW THE FULL REPORT]

Copyright 2012 ABC News Radio

Wednesday
Nov162011

Nearly Half of Congress Members Are Millionaires, Research Shows

iStockPhoto/Thinkstock(WASHINGTON) -- It’s no secret that many members of the U.S. House and Senate are millionaires -- their salaries paid for in part by the American taxpayer. But their six-figure salaries are just the tip of Congress members' earning potential.

The Center for Responsive Politics has crunched the numbers and released the results on its Open Secrets blog: “About 47 percent of Congress, or 249 current members are millionaires...In 2010, the estimated median net worth of a current U.S. Senator stood at an average of $2.56 million.”

“Despite the global economic meltdown in 2008 and the sluggish recovery that followed, that’s up about 7.6 percent from an estimated median net worth of $2.38 million in 2009...and up 13 percent from a median net worth of $2.27 million in 2008...Fully 36 Senate Democrats, and 30 Senate Republicans reported an average net worth in excess of $1 million  in 2010.  The same was true for 110 House Republicans and 73 House Democrats,” the Center’s research went on to say.

“The vast majority of members of Congress are quite comfortable, financially, while many of their own constituents suffer from economic hardships,” said Sheila Krumholz at the Center For Responsive Politics. “Few Americans enjoy the same financial cushions maintained by most members of Congress -- or the same access to market-altering information that could yield personal, financial gains.”

A recent 60 Minutes feature blew the lid off of one major moneymaking perk: insider trading laws don't apply to members of Congress, allowing them to legally buy and sell stock with market-shaking knowledge of upcoming patents, drug approvals, key economic data, and the like.

Such market activity would be a federal crime to anybody else, including so-called Wall Street "fat cats" some of the same members of Congress publicly decry.

Copyright 2011 ABC News Radio

Tuesday
Oct112011

Occupy Wall Street's 'Millionaires March' to Pass by Homes of 'the Rich'

Spencer Platt/Getty Images(NEW YORK) -- Occupy Wall Street protesters will be making their way to New York City's Upper East Side Tuesday to march by the homes of some of the city's top moneymakers including News Corp. owner Rupert Murdoch.

"[The] tour will visit homes of some of the most well-known millionaires in New York City specially chosen for their willingness to hoard wealth at the expense of the 99 percent," organizers told Capitalnewyork.com.

The march will begin at 12:30 p.m. and protesters will reportedly carry oversize checks to symbolize how much less the wealthy will pay when New York's 2 percent "millionaires' tax" expires in December.

The "Millionaires March," which was organized by the Working Families Party and New York Communities for Change, will pass by the apartment buildings of David Koch, real estate developer Howard Milstein, hedge fund manager John Paulson and JPMorgan CEO Jamie Dimon.

The Occupy Wall Street movement is in its fifth week and has spread to 150 U.S. cities and Europe.

Earlier Tuesday in Boston, about 100 demonstrators gathered as part of an Occupy Boston movement were arrested when they moved into an area outside of the designated protest space, Boston police said.

The Boston protest group started in late September and has planned assembly meetings every day during October.

One arrest related to the Occupy Chicago protests was made Monday for the alleged battery of a police officer.

Copyright 2011 ABC News Radio

Tuesday
Sep202011

Warren Buffett Rule: Class Warfare or Tax Fairness?

Pixland/Thinkstock(WASHINGTON) -- In proposing the "Buffett Rule," President Obama is invoking a name synonymous with success to raise taxes for the wealthy in what political analysts are saying will be a tough sell to Congress.

The chairman and chief executive of investment company Berkshire Hathaway is widely known to have friends on both sides of the aisle, including former Treasury Secretary Henry Paulsen and Federal Reserve chairman Ben Bernanke -- both Republicans.  Of course, he is known for being a billionaire businessman who lives rather modestly in Omaha, Nebraska.

In opposition to the Buffett Rule, Republicans have attacked the president's proposed tax hikes, crying "class warfare."

"Class warfare will simply divide this country more.  It will attack job creators, divide people and it doesn't grow the economy," Rep. Paul Ryan said on FOX News Sunday.  "Class warfare may make for really good politics, but it makes for rotten economics."

Joseph Stiglitz, Nobel Prize winner in economics and professor at Columbia University, said he disagrees.

"It's not class warfare to ask everyone in the country to pay their fair share.  To say the wealthy have taken advantage of their political position and have not paid their share of taxes is not class warfare.  It's a statement of fact," Stiglitz told ABC News.  "The fact is they are paying lower taxes and most Americans think this is unjust and unfair.  Tax loopholes don't just appear out of thin air.  They are the result of big political investments that rich people have particularly made to get tax preferences."

In an ABC/Washington Post poll in July, 72 percent of those surveyed supported raising taxes on people with incomes of more than $250,000 a year to help reduce the national debt, while 55 percent supported it strongly.  That was the most popular of nine different debt-reduction approaches tested and the only one to win majority "strong" support.  The next closest was raising the amount of income taxable for Social Security purposes.

Stiglitz said there is "no justification" why hedge funds should be taxed at a lower rate than workers.  He said it is possible that raising taxes by 0.5 percent, particularly with millionaires, could raise gross domestic product (GDP) by 1 to 1.5 percentage points.

"This could make a significant contribution to the country, especially if we spend it well," he said.  "So from an economic point of view, the current tax system is a distortion and this is a partial fix for that distortion."

Buffett and billionaire George Soros have also said if the wealthy make certain sacrifices, it could be a sign of national solidarity.

Copyright 2011 ABC News Radio

Saturday
Aug062011

Almost 1,500 Millionaires Do Not Pay Income Tax

Comstock/Thinkstock(WASHINGTON) -- At a time when America is borrowing about 40 cents of every dollar it spends because tax revenues cannot keep up with government spending, hundreds of America's wealthiest households are paying no income tax at all.

According to a recently released IRS report, almost 1,500 of America's 230,000 millionaires avoided paying any federal income tax in 2009.

So how did they do it? Were they scamming the system? Evading the IRS? Stashing their cash in elusive off-shore, untraceable bank accounts?

Actually, they were probably donating to charity, investing in local and state government bonds and making most of their money overseas.

Mark Robyn, an economist at the Tax Foundation, said foreign income tax credit avoids the problem of double taxation.

"That generally seems like a pretty acceptable feature of a tax code -- to avoid unfairly taxing people twice for the same income," Robyn said.

But the foreign tax credit could be just one of many reasons that almost 1,500 millionaires are not paying U.S. income tax, Robyn said.

"A lot of factors go into it," he said. "High-income people have lots of income sources that the average person like you or me doesn't really experience."

Millionaires are more likely to qualify for tax deductions, for example, by earning non-taxable income from interest on state and local bonds or donating to charity.

"There are a whole bunch of provisions in the tax code that lower people's taxes," Williams said. "And those disproportionately go to people with higher incomes."

But these millionaires are not the only Americans skipping out on federal income tax. A full 46 percent of the population pays zero income tax. The vast majority of these income-tax-free households have low incomes and qualify for child tax credits.

Income tax is a small slice of the complex tax pie, however. Even those that don't pay it are still on the hook for payroll tax, which funds Medicare and Social Security, excise taxes on gasoline, cigarettes and alcohol, and sales tax.

While most lawmakers have said they support reforming this complicated tax puzzle, exactly how to change the tax code is highly disputed.

GOP presidential candidate Michele Bachmann, a former IRS tax attorney, said she would revamp the tax code if elected by lowering overall tax rates and getting "rid of all the deductions" so that more people paid into the system.

Copyright 2011 ABC News Radio

Wednesday
Jun222011

More Wealthy People in Asia Than Europe, Says New Report

Comstock/Thinkstock(WASHINGTON) -- Asia can now claim more millionaires than all of Europe combined, and the rapidly climbing number wealthy people in places like China is closing the gap with North America's number of millionaires and billionaires, according to the latest annual Merrill Lynch-Capgemini World Wealth Report.

Altogether, the number of millionaires and billionaires in the world was up 8.3 percent from 2009 to a total wealth of $42.7 trillion in the hands of the richest people in the world in 2010.

Although the average yearly income in many Asian economies is still very low -- in China it is still only $3,600 -- the number of high net worth individuals (HNWI) in the Asia-Pacific region expanded 9.7 percent to 3.3 million.

In Europe, there are 3.1 million HWNI's. North America still leads the pack of millionaires and billionaires with 3.4 million, but our growth rate is significantly lower than Asia's.

Along with those rising numbers of wealthy people comes a rising number of millionaires spending those millions.

"China's rich people have become what they are now only in the past 10 to 15 years," Chinese demolition tycoon and philanthropist Chen Guangiao, told ABC News last year.

"The thing that's unusual is that 30 years ago, there really weren't people of great wealth, so what you have is first-generation fortunes," billionaire Bill Gates said at a news conference in Shanghai last September.

One of the ultimate symbols of success is a private executive jet. Not surprisingly, sales are taking off in Asia, especially in China.

A $1.4 billion yacht port is currently under production in the Chinese city of Tianjin. The port, to become the largest in China at its completion, will hold 750 berths to accommodate luxury yachts up to 295 feet long.

However, the United States remains the world's largest yacht market with 17 million privately owned recreational boats, but that may change in the current trends in the movement of the world's wealth continue.

Copyright 2011 ABC News Radio

Monday
Mar142011

Survey: Four Out of Ten Millionaires Do Not Feel Wealthy

Adam Gault/Thinkstock(BOSTON) -- The nation's millionaires have spoken, and the magic number above which they feel wealthy is $7.5 million. Four out of 10 millionaires surveyed say they do not feel wealthy, even though they reported an average of $3.5 million in investable assets.

Among the 58 percent of responders who do feel wealthy, they said they began to feel so at $1.75 million in investable assets.

Gail Graham, an executive vice president in Fidelity Institutional Wealth, the group that conducted the survey, said the she believes different definitions of "wealthy" are can be attributed "how much retirement influences how people feel."

While their near-term confidence in the U.S. economy remains negative, their outlook is at the highest level since Fidelity began tracking millionaires' views in 2006.

Graham said the attitudes of millionaires are both a "leading indicator and a causal factor" of the direction of the economy. Representing 56 percent of the nation's wealth, she said the millionaires "have the power to make what they believe happen."

The survey of 1,011 financial decision makers in U.S. households with investable assets of at least $1 million, excluding any real estate holdings and workplace retirement accounts, was conducted online Oct. 18-29, 2010.

The average millionaire who participated in the survey is 56 years old, male, and has $3.5 million in investable assets with an annual household income of $379 thousand. The majority -- 86 percent -- have college degrees, and 46 percent hold graduate degrees.

Those surveyed represent only 5 percent of U.S. households. Sixty percent of participants were male, while 40 percent were female.

Copyright 2011 ABC News Radio







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