One key aspect of retirement – whether you take a phased approach or not – is your personal financial situation.  If you haven’t addressed your financial needs you may have to continue working and putting off retirement until you’ve built up a more sustainable cushion.

Today I want to share “part one” of what it means to me to be wealthy.

First and foremost, income does NOT equal wealth – although in America we certainly seem to think that someone with a big income is wealthy.

IRS data from 2021 adjusted to 2024 dollars indicates that you’d need to have total income of $290K or more to be in the top 5% of earners in America. 

That’s great, but it doesn’t mean that you’re wealthy. It only means that you have a relatively high income and are well positioned to be or become wealthy.

Admittedly, $290,000 is a lot of income, but if you have a large amount of debt and perhaps expenses greater than your lofty income, you are not likely creating financial wealth for yourself.

In a recent paper, an economist at the Economic Policy Institute posed the important question, “What does it mean to be rich?” But I thought they missed the mark with their options which included:

“Does it mean you have more money than other people, or does it mean that you have a higher standard of living?  Is it a measure of how comfortably you can live, or is it a measure of how well you do relative to other people?”

Wealth is inherently subjective, but it doesn’t necessarily mean that you “live higher or better” or that your financial numbers are higher than average.

As I mentioned, wealth is NOT income, but it could look more like a comfortable financial situation where your needs are covered for now, and well into the future.  And your needs may be less than others which makes wealth easier to achieve.  It might mean not having day-to-day financial concerns and sleeping well.  For you, it might mean working when you want to, doing work that you want to do with people you want to work with.

And ‘financial wealth’ is also only one aspect of the overall “wealth factor.”  Consider these facets and see where you’re perhaps already wealthy:

Time wealth: the real luxury of having control over your time and spending it as you wish.

Health wealth: perhaps the true test of being wealthy. Good health to be able to enjoy life is a critical component of overall wealth.

Emotional and relationship wealth: strong positive relationships with family and friends can help foster your overall emotional well-being and enjoyment of life.

Stayed tuned for part two of what I think it means to be wealthy!