The Millionaire is Not Me

Recently I read the book, The Millionaire Next Door. It was a fairly easy read and contained good information. The paperback edition that I read was published in 1998 when the economic outlook was far different than what we experience now. Even so, the main principles are still valid: create a budget and stick with it to save money. The authors give examples of the type of car the "average" millionaire owns, neighborhoods they live in, stores they shop in and so forth. According to them, millionaires don't tend to be flashy and they generally buy American cars.

I'm not terribly old, but I am single and do think about retirement needs in case a sugar daddy doesn't come along. Well, towards the end of the book, there is an equation to determine how much wealth one should have to prepare for retirement.  --Multiple your age times your pretax annual household income from all sources except inheritances. Divide by ten. This, less any inherited wealth, is what your wealth should be.--
Well, as my accountant friend, Krista, can attest I'm not great at maintaining great financial records. I don't have a record of my pretax income, however thanks to the Social Security Administration I recently received a record of my social security earnings. I know that this is lower than my pretax amounts, but you work with what you have...

Aforementioned friend, Krista sent me a very nice spreadsheet so all I had to do was plug in the numbers from the social security statement and voila! the amount of wealth pops up. I know that Krista is a wiz with spreadsheets, but I still double checked the formulas when I saw the amount of money that I should have as current wealth and compared it with my retirement savings. My number was half of what it should be according to the book!! Thankfully I remembered that wealth includes not just retirement savings, but also my other assets. With the addition of the equity in my house I'm in pretty good shape. Of course, at retirement I will still need somewhere to live, hmmm...