The "everybody seems wealthy" illusion — is it really just all fueled by debt?

[Debts_of_Despair]

Sometimes I think about the insane level of luxury I  could portray if I was dumb enough to spend everything I made.  Two leased SUVs, huge house, new clothes all the time, frequent vacations. If I was REALLY dumb and willing to incur credit card debt, I could take it to a completely different level.  My neighbors and coworkers will be so jelous when they see my new Rolex, courtesy of AMEX.  The minimum monthly payment is only $35!

Then I think about how I won't need to work a day past 55 (probably sooner) and how all these jokers will be working til they die and I instantly feel better and know that I'm making the better decisions.

[CATman]

I created an account just to chime in on this one. First off, don't be fooled by what everyone else seems to have going for them. The truth is that there is often more going on behind the scenes than people let on.

I have a friend who graduated a year after me, but we ended up working at the same company and with almost identical salaries. However, I ended up working another job on the weekend just to pay the bills. He went out and bought a BMW, would go out to bars every weekend and take trips to Vegas 3-4 times a year. I finally asked him how he was doing it and come to find out that his parents had been paying for his student loans, his cell phone and numerous other bills.

Everyone out there is going to have a different story, but all mustachians know something others don't, we're playing the long game. I've talked to this same friend about my desire for FI and while I have plans to retire early he keeps the mindset that if he just had X (nicer car, a house, etc) that it's going to take his life to the next level. We've both been experiencing increased incomes, but while I've been trying to trim as many expenses as possible, he's adding more (buying a new motorcycle, more extravagant nights out, planning a big home purchase).

The goal of all this is not to bash on my friend, whom I love dearly. But it's to illustrate that while the rest of the world may seem to "have it all", keep in mind that most of them will be working much longer than the average mustachian to "keep it all". At the end of the day, you have to remind yourself that you're making the right decision for you and while you don't have all the shiny stuff to show for it, you do have comfort in the knowledge that you're investing in the future you want and it'll be here sooner because of all your decisions now.

[jengod]

I created an account just to chime in on this one. First off, don't be fooled by what everyone else seems to have going for them. The truth is that there is often more going on behind the scenes than people let on.

I have a friend who graduated a year after me, but we ended up working at the same company and with almost identical salaries. However, I ended up working another job on the weekend just to pay the bills. He went out and bought a BMW, would go out to bars every weekend and take trips to Vegas 3-4 times a year. I finally asked him how he was doing it and come to find out that his parents had been paying for his student loans, his cell phone and numerous other bills.

Everyone out there is going to have a different story, but all mustachians know something others don't, we're playing the long game. I've talked to this same friend about my desire for FI and while I have plans to retire early he keeps the mindset that if he just had X (nicer car, a house, etc) that it's going to take his life to the next level. We've both been experiencing increased incomes, but while I've been trying to trim as many expenses as possible, he's adding more (buying a new motorcycle, more extravagant nights out, planning a big home purchase).

The goal of all this is not to bash on my friend, whom I love dearly. But it's to illustrate that while the rest of the world may seem to "have it all", keep in mind that most of them will be working much longer than the average mustachian to "keep it all". At the end of the day, you have to remind yourself that you're making the right decision for you and while you don't have all the shiny stuff to show for it, you do have comfort in the knowledge that you're investing in the future you want and it'll be here sooner because of all your decisions now.

(1) Hear, hear!
(2) Welcome, CATman.

[Comar]

Big hat. No cattle.

[DollarBill]

I have a buddy that joined the Military at the same time I did. He was always a big spender when it came to trips, cars and women. He got out after 4 years because he said the Military doesn't pay much. He then went to school and got a really good job working in IT making six figures. He never understood why I decided to grind it out for 23 years and would poke fun at my frugalness. Just the other day I was talking to him after he took his young girlfriend on an extravagant 7 Country vacation. I'm always happy to hear about other peoples stories about how they spend their money but I have a short fuse when someone makes me feel like I'm not living my life right because I'm not spending my money on extravagant things.

Well he started poking fun about my car and where I live...I had enough and told him "I would never judge you just because you can't afford my lifestyle". He laughed his ass off and said "Dude...I make like $130K a year". So I said "Fine, quit your job and lets go travel for a year". I don't think it made much of a dent but he piped down pretty quick. Maybe it was a dick move on my end but sometimes I gets to me.

Before I retired from the Military I paid off all my debt including my house and had a little money saved for investments. Every now and then I wrestle with some of my inner demons to upgrade my lifestyle...which I could easily afford by most standards but instead I try to keep it under control and live a happy/healthy life.

[TheNick]

Well he started poking fun about my car and where I live...I had enough and told him "I would never judge you just because you can't afford my lifestyle". He laughed his ass off and said "Dude...I make like $130K a year". So I said "Fine, quit your job and lets go travel for a year". I don't think it made much of a dent but he piped down pretty quick. Maybe it was a dick move on my end but sometimes I gets to me.

Haha...well played sir, sometimes people like this need smacked back to reality.  There is nothing better than a "rich" person with no significant amount of money in the bank get called out by a "poor" person with their finances in order.

[PaulMaxime]

One thing to add to this discussion is that we are not all in the same stage of life.

Many of my co-workers are 20 somethings just starting out while I'm a 52 year old guy who's been working and saving for 30 years. Of course I have a nicer house than the person who's just out of college. If I didn't there would be something wrong.

Well some of my coworkers still live in their parent's basement. If you are still doing that at 52, then something IS wrong.



I agree with the first part of your statement BUT not that because your 52 if you dont have a nicer house there is something wrong.

[GetItRight]

I think it's a mix of illusion and other circumstances, but generally spending more than they earn (debt).

You may be surprised how many people have family who buy/give them fancy new cars, house, pay their student loans, or otherwise do things that give them a huge head start. This was a surprise but helped me avoid the rat race mentality. Good for them that they are fortunate enough to have family willing and able to give that sort of help, but those are not my circumstances.

I find many people, even those given new cars and houses, complain about money and living paycheck to paycheck. I think a lot of people (most?) that appear rich are overextended and one hiccup away from a disaster. I've seen this type of thing blow up on people because they don't keep any cushion, even a $1k emergency fund or something for the minor bumps, then complain how they can't afford entirely predictable expenses on the order of a few hundred dollars.

Where I work I only know of two people aside from myself who seem to even remotely have it together. Debt yes, but not wasting money on luxury after frivolous luxury with the retirement plan being either die at work or win the lotto. Even the rich folk making a few hundred thousand seem to have a very thin cushion, but they show the obvious signs of spending more than they earn. I think it's mostly a mentality of consumer debt for luxuries is ok and burying their heads in the sand. That and an insane lack of understanding of what is necessity vs luxury.

[DollarBill]

Well he started poking fun about my car and where I live...I had enough and told him "I would never judge you just because you can't afford my lifestyle". He laughed his ass off and said "Dude...I make like $130K a year". So I said "Fine, quit your job and lets go travel for a year". I don't think it made much of a dent but he piped down pretty quick. Maybe it was a dick move on my end but sometimes I gets to me.

Haha...well played sir, sometimes people like this need smacked back to reality.  There is nothing better than a "rich" person with no significant amount of money in the bank get called out by a "poor" person with their finances in order.

It's funny because you think people making more money than you are smarter...damn if I made more with my current mindset I could make some good changes.

[tobitonic]

For example, my brother in law works in Chicago and spends $10 a day easy on lunch.

I have been thinking about that lately. I bring lunched to work everyday and it's the trouble of preparing it, transporting another bag on the bus and then lining up for the microwaves. It costs me probably around 5$ to bring my lunch. 20 days of work per month and the difference between 5$ lunch and 10$ prepared meal is just 100$ per month. Not a big item in my budget and a lot of convenience for the decade or so of work I still have to do before retirement. Maybe I am being too frugal.

Sure, but it's also a health thing. Even eating out at a 'healthy' restaurant/sandwich shop is not going to compare to a from-home meal - assuming, of course, that you are cooking/preparing healthy meals.

The line for the microwave can get long where I work, too, so many days I'll bring a beast of a salad: lettuce, tons of chopped veggies, nuts, hard boiled egg, beans, etc.

+1. My BIL once made a statement about how he didn't like going out to restaurants unless he thought they could make a better meal than his wife and he could.

At the time, I didn't think much of it...but after I really, really got into healthy eating, I agreed with him, although by "better," I mean "healthier."

When we cook, which is every night except for the occasional leftover from the previous night's cooking, it's whole wheat this, fresh vegetable that, only canola or olive oil, cage-free eggs, organic meats, ocean-caught fish, etc etc.

I know exactly what goes into every meal, and I know it's about as healthy as food gets without growing it ourselves, rather than simply sourced from the cheapest ingredients on the shelf.

I never thought I'd become a health nut, food-wise, but yeah...I can still eat out when it's a family occasion, no problem, but I definitely don't miss it the 95% of the year when we aren't eating out. It's been an interesting change.

This is exactly how I feel.

Hah, awesome. Always nice to connect with someone on the same wavelength here.

[YogiKitti]

I agree with those who say the lifestyle is fueled by a lack of savings instead of debt. I ran into a friend who I haven't seen in a while. She was telling me all about her two week vacation to some amazing tropical location. Then she proceeds to comment on how one her friends is saving 10k a year. She was SHOCKED that anyone could possible do that! And this is coming from a DINK.

[BlueHouse]

At least you got something (positive and didn't inherit someone else's debt).

??  Except in very specific circumstances (prior arranged business deals, etc), it is impossible to inherit debt.  If an estate is in a negative worth position, you inherit nothing.

Yes, of course you're right. Merely trying to make a point that some peoples' woes look awfully good to others.

[soccerluvof4]

One thing I hear more and more of in my HCOL area is my friends (middle aged) saying how there parents paid for this for there kids and that etc.... I have notice ALOT of people in my area are really supporting there life styles of competing with the Jones by one way or another getting subsidized by old money and it does bug me a bit because this wont happen for me but when i see that they just seem to keep spending the way they do I jus think when the tap is shut off for some how are they ever going to stand on there own feet.

[MLKnits]

Maybe everyone else knew about this than me, but I was overestimating a lot of people's vacation spending by comparing apples to oranges. I grew up with go-see-museums-in-Europe-style vacationing, which is legitimately hella expensive the way my parents do it (nice hotels, eating out for every meal, fancier seats on trains).

As an adult I've been constantly around people who seem to think nothing of spending a week or ten days at a tropical resort, which boggled my mind. One of my friends goes on three cruises a year, and is constantly exhorting me to go on one.

Little did I know--never having looked into it--that those trips are actually in the $4-600 per person range, all-inclusive. All this time I've thought people were throwing away outrageous sums just to lay on a beach, when they're actually--quite Mustachianly, all things considered--been getting a week's food and accommodation, plus flights, for a price I would have assumed would barely cover the plane tickets.

I still probably won't go (I'd rather go see friends and family) but that put a hugely different spin on it for me.

(Of course, when it comes to hitting Starbucks every day, etc, that probably is either just debt or failing to save. Looking at my own past, it's incredibly easy to just hemorrhage money if you're not paying attention, and most people don't want to pay attention, I think.)

[TheNick]

Little did I know--never having looked into it--that those trips are actually in the $4-600 per person range, all-inclusive. All this time I've thought people were throwing away outrageous sums just to lay on a beach, when they're actually--quite Mustachianly, all things considered--been getting a week's food and accommodation, plus flights, for a price I would have assumed would barely cover the plane tickets.

At my last job, the job I had worked my way through college with, I could sell unused vacation back to the company, and I made about 600 dollars a week take home...

I could take my vacation check, +600, then paid for a 600 dollar cruise, a 200 dollar round trip flight to get down south to a point of departure, and probably a bit more for alcohol on the cruise and paying to actually do stuff on the islands, like snorkeling, buying souvenirs, etc...all in all let's just say the flight and that other stuff ended up costing 500 bucks...that would be a -500 dollar week.

Or I could sell my vacation back for +600, show up and work for +600, and not go on that cruise for +600, and not spend money on all the other stuff for another 500...which compared to taking vacation/cruise put me +2300 ahead on the week.

I did this for years while I was in college...sacrificing vacations allowed me to get through debt free.  Meanwhile I watched other people going on fancy vacations while taking out student loans...so in the end its sort of like interest on student loans also gets added on to the cost of their vacations...so those cruises ended up costing them a lot more than the 4-600 dollar sticker price.  Of course if you have no debt, aren't living on credit, and that fancy vacation means you go from a 35% savings rate to a 30% savings rate its a totally different ball game...

[big_slacker]

That pic is pure gold! Stolen!

Although I'll say there is a fine line with social media. I share things that I think my family and friends will like to see of my life. Epic snowboard and bike pics, kids doing cute stuff and so on. No one wants to see pics of me doing command line on a router or my kids freaking out because I turned off handy manny before the credits were done rolling. I'm not faking with the intent of portraying a life that isn't true, but you're getting what I think is the good stuff.

OTOH there are the fakers who really seem to get a self worth boost for instance posting pics of trying on an acquaintance's rolex or snaking a test ride in a 911 and acting like they're ballin outta control. You might fool random 'friends' on the internet and get a few likes but your real friends know the deal and ultimately you're building a house of cards.

The only unfortunate thing about that as this thread mentions is someone else feeling they're not 'making it' due to the above.

Great thread!

Pretty much sums up social media


I come across a lot of people on social media and their lives look like they have won last week's PowerBall.  However, I look closer and see a lot of holes in their story of wealth.  One guy for example, posts photos of stacks of cash, $1,000 shoes, $10,000 bar tabs, and I end up seeing his neighborhood and that he has an entry level luxury car for his car even though he posts videos of himself driving exotics. 

Many people have hundreds of friends on social media. If those friends have just one post of their yearly trip, you'd see a vacation everyday.   When viewing social media, we are constantly seeing people "have" "have" "have".  We don't see what they sacrifice as the person mentioned earlier about Friday nights on the couch.

I go to Disneyland pretty frequently and have had to train myself not to judge some larger families who are there with food, snacks, hats, souvenirs, etc.  I have to realize that they may have been saving for this vacation for 10 years and have lived a frugal life and this is their splurge.

I like the point that someone brought up priorities.

Some people live very frugally during day-to-day stuff and then splurge on higher end items or larger items. 

I do not buy video games, game consoles, nor do I care about DVDs, CDs, and electronics.  There are times that I am very thirsty and would love to get a drink or a snack, but I just wait until I get home to drink something or snack.

I'd love to purchase foods that aren't on sale at the grocery store or to purchase every ingredient in the recipe, but I don't. ($2 for that ingredient! is it really going to make that much of a difference, haha)

But my mountain bike is one of the best mountain bikes money can buy. 

Do I have the bike AND the car AND the foods AND the traveling AND this AND that?  No... I make a lot of small sacrifices.  At the end of the day, I probably spend the same though hahaha oops.

Daily starbucks = $50/mo
One massage = $ $60/mo
cut/style/nails = $100/mo

That's $210/mo on three items that are relatively common for women in Orange County.  $210/mo on top of a simple $300/mo car allowance, opens up new doors.

[soccerluvof4]

Great thread!

Pretty much sums up social media


I come across a lot of people on social media and their lives look like they have won last week's PowerBall.  However, I look closer and see a lot of holes in their story of wealth.  One guy for example, posts photos of stacks of cash, $1,000 shoes, $10,000 bar tabs, and I end up seeing his neighborhood and that he has an entry level luxury car for his car even though he posts videos of himself driving exotics. 

Many people have hundreds of friends on social media. If those friends have just one post of their yearly trip, you'd see a vacation everyday.   When viewing social media, we are constantly seeing people "have" "have" "have".  We don't see what they sacrifice as the person mentioned earlier about Friday nights on the couch.

I go to Disneyland pretty frequently and have had to train myself not to judge some larger families who are there with food, snacks, hats, souvenirs, etc.  I have to realize that they may have been saving for this vacation for 10 years and have lived a frugal life and this is their splurge.

I like the point that someone brought up priorities.

Some people live very frugally during day-to-day stuff and then splurge on higher end items or larger items. 

I do not buy video games, game consoles, nor do I care about DVDs, CDs, and electronics.  There are times that I am very thirsty and would love to get a drink or a snack, but I just wait until I get home to drink something or snack.

I'd love to purchase foods that aren't on sale at the grocery store or to purchase every ingredient in the recipe, but I don't. ($2 for that ingredient! is it really going to make that much of a difference, haha)

But my mountain bike is one of the best mountain bikes money can buy. 

Do I have the bike AND the car AND the foods AND the traveling AND this AND that?  No... I make a lot of small sacrifices.  At the end of the day, I probably spend the same though hahaha oops.

Daily starbucks = $50/mo
One massage = $ $60/mo
cut/style/nails = $100/mo

That's $210/mo on three items that are relatively common for women in Orange County.  $210/mo on top of a simple $300/mo car allowance, opens up new doors.

^+1 I totally agree!

[dragoncar]

Fun thread... I've mentioned before that I feel kinda the opposite around here.  I don't see crazy displays of wealth even though I know people are making good money.  Maybe my circles are just less status oriented (I've heard Silicon Valley itself is the opposite but don't live there anymore so don't see it)

Edit: or maybe it's just because people spend so much on their expensive house that would be considered modest in most other locales

[bb11]

Before we all pat ourselves on the back, consider that the US has over 10m millionaire households: that's people with $1m in assets excluding their primary residence. Wealth is not rare.

That's 3% of the population.  It's not that common.


I also know people with over a million in assets who will say they aren't wealthy, and compare themselves to people with all the stuff named in this thread. Wealth is very relative.

There are actually only about 120 million HOUSEHOLDS in the US, so it's 1/12.


I think it's a combination of a lot of things. Inheritance is a big part; many people inherit $1 million or more and you have no idea about it. This can easily make up a lifetime's worth of saving for the average worker. In addition gifts from living parents are common. More than a quarter of young home-buyers have their parents pay the downpayment (source: https://www.washingtonpost.com/realestate/need-a-hand-to-buy-a-home-a-gift-toward-the-down-payment-can-help/2014/09/04/3cd8301a-eda0-11e3-92b8-52344c12e8a1_story.html). Then of course some people just make more than you. Even $10k more in disposable income can fund several nice vacations per year. Finally debt plays a part as well, and most people don't save very much unless they make a very high income.

[dragoncar]

To everyone mentioning parental help or inheritance, doesn't that imply the parents were good savers?  Has there been a delay of consumerism from the 50s to today?

[bb11]

To everyone mentioning parental help or inheritance, doesn't that imply the parents were good savers?  Has there been a delay of consumerism from the 50s to today?

Not really. Some people were good savers and some weren't, just like today. Some of the parents inherited themselves, and also get the huge headstart. That's why the talk about a housing crisis because boomers are dying doesn't make sense. Most of them will leave the house to their kids, who get a $1M boost (an entire lifetime's worth of saving for a Mustachian) just by being born to the right set of parents. Just owning a home in the Bay Area, LA, or NYC at this point gets you near to being a millionaire. Most of those homes are going to be inherited by the kids.

Take a look at this:

http://www.joshuakennon.com/how-much-money-does-it-take-to-be-in-the-top-1-of-wealth-and-net-worth-in-the-united-states/

The cutoff for being in the top 1% of wealth is $9 million. So roughly 1 in 100-200 (less than 100 because parents often have multiple kids) is going to be inheriting $9 million or more. Maybe 1 in 10 will get more than $1 million when all is said and done (in HCOL areas it's probably more like 1 in 5). These amounts fund a lifetime of extravagant spending, and there's no way you'd know if they're just a co-worker.

[cats]

I'm assuming that if you are on this board you are at least thinking about retiring.  Many Americans do not really think about retirement that hard.  Of the ones that do, many accept that they will be working to 65-70.  Retiring at 55 or 60 is considered "early" these days.  In contrast, quite a few posters on this board seem to be aiming for a much earlier retirement date.  I'd say tetiring at 50 is "late" by the standards of many MMM posters.

My husband and I are planning to be "done" by 40.  That does require some "sacrifices" relative to average American spending.  We own one older car and we don't use it that much.  We live in a small apartment and if/when we buy a house, it will probably be small also.  We don't have a gym membership, don't shop at the fancy grocery store, check out DVDs from the library rather than going to the movies or having a cable subscription, etc. etc.  We're quite happy with all of this and don't feel our lifestyle is "poor" at all, but...the fact is that it's what we need to do to make OUR goal (FI by 40) achievable.  If we didn't have that goal, we could easily free up several thousand dollars a month and direct that money to more flashy locations.

Some friends recently told us they didn't see how a family of 3-4 could get by on just one income in our area unless that one income earner was really raking in the $$$.  We were pretty surprised as we currently are quite happily living off less than half of the smaller of our two incomes, and we make about the same amount of money as this couple, so unless adding a kid into the mix will more than double our expenses...we *could* manage on one income (and still be saving a respectable amount for retirement by "normal" standards).  They aren't super flashy, but they do seem to have a lot of little money sinks that we don't and I guess that's how they afford them...they accept the idea that you "need" a second income and that it's "normal" to work to 65.  If my husband and I felt the same way we could easily spend what they spend and still pat ourselves on the back for being financially responsible.

[BTDretire]

For example, my brother in law works in Chicago and spends $10 a day easy on lunch.

I have been thinking about that lately. I bring lunched to work everyday and it's the trouble of preparing it, transporting another bag on the bus and then lining up for the microwaves. It costs me probably around 5$ to bring my lunch. 20 days of work per month and the difference between 5$ lunch and 10$ prepared meal is just 100$ per month. Not a big item in my budget and a lot of convenience for the decade or so of work I still have to do before retirement. Maybe I am being too frugal.

 MMM would say, $100 a month is $18,000 in 10 years and $55,000 in 20 years with 7% growth rate.
But if you bring that $5 down to $2.50 you'll have $110,000 in 20 years.
  It's a little bit at a time that grows to be retirement money.         

[okits]

To everyone mentioning parental help or inheritance, doesn't that imply the parents were good savers?  Has there been a delay of consumerism from the 50s to today?

For living parents, they could be broke or indebted helping their kids, or senior citizens still working just to give money to their adult children.  Not sure about the role life insurance might play, but maybe some have whole life policies in place that provide a windfall to their kids?

[TheNick]

The cutoff for being in the top 1% of wealth is $9 million. So roughly 1 in 100-200 (less than 100 because parents often have multiple kids) is going to be inheriting $9 million or more. Maybe 1 in 10 will get more than $1 million when all is said and done (in HCOL areas it's probably more like 1 in 5). These amounts fund a lifetime of extravagant spending, and there's no way you'd know if they're just a co-worker.

Its probably a heck of a lot lower than that.  Like you said...you have to account for multiple kids, plus chances are its not even all going to their kids to begin with...charities, churches, friends, family other than kids, etc, all might get something.  That is not even mentioning that your peak net worth for many people won't be the day you die...most people tend to spend it down for various reasons in retirement.

Its a bit dated at 2003, but I found this article...would be interesting if anyone has any more up to date statistics.

http://money.cnn.com/2003/11/25/retirement/inheritance/

   Inheritance�                % of population�
   $0�                                     91.9%�
   $1 - $25,000�                     4.3%�
   $25,000 - $50,000�     1.1%�
   $50,000 - $100,000�     0.1%�
   More than $100,000�     1.6%�

[bb11]

The cutoff for being in the top 1% of wealth is $9 million. So roughly 1 in 100-200 (less than 100 because parents often have multiple kids) is going to be inheriting $9 million or more. Maybe 1 in 10 will get more than $1 million when all is said and done (in HCOL areas it's probably more like 1 in 5). These amounts fund a lifetime of extravagant spending, and there's no way you'd know if they're just a co-worker.

Its probably a heck of a lot lower than that.  Like you said...you have to account for multiple kids, plus chances are its not even all going to their kids to begin with...charities, churches, friends, family other than kids, etc, all might get something.  That is not even mentioning that your peak net worth for many people won't be the day you die...most people tend to spend it down for various reasons in retirement.

Its a bit dated at 2003, but I found this article...would be interesting if anyone has any more up to date statistics.

http://money.cnn.com/2003/11/25/retirement/inheritance/

   Inheritance�                % of population�
   $0�                                     91.9%�
   $1 - $25,000�                     4.3%�
   $25,000 - $50,000�     1.1%�
   $50,000 - $100,000�     0.1%�
   More than $100,000�     1.6%�

It should be obvious your numbers are way off. The average American house is ~$200k. If your numbers were right only 1 in 100 Americans would even inherit a house.

My numbers were off the cuff and may not be spot on either. It's difficult to find data that is on Millenials rather than Boomers. Millenials will get a proportionally higher inheritance due to inflation and economic growth. Heres what i found:

https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.metlife.com/assets/cao/mmi/publications/studies/2010/mmi-inheritance-wealth-transfer-baby-boomers.pdf&ved=0ahUKEwjlmrPZ37nKAhXksYMKHc0tAMEQFgg1MAc&usg=AFQjCNFQNA1vYh7qH3AObjIlAQGAimL-eA&sig2=FZWYcpk-ULdraYaAuch4Ig

Wow that link looks long. Hope it works. Metlife study showed the median inheritance of Boomer households in the top 10% of wealth is $350k, average is $1.5 million. This obviously understates the amount because not all high wealth households receive a large inheritance.

http://www.demos.org/blog/1/21/14/reality-wealthy-inherit-ungodly-sums-money

That link has the top 1% of households by wealth inheriting an average of $2.7 million. That's understated for the same reason as the first, and also, some of these households stand to inherit more money in the future. As the title states, rich kids inherit ungodly sums of money. If they end up being your coworker, you're going to have a tough time keeping up.

Also, people in their 70s and 80s tend to be net savers according to research. This is much moreso for the typical rich person, because they have large amounts of passive income to live off of. And $9 million is the cutoff for the 1%, so most 1%ers have much more than that.

[nobodyspecial]

But only economists care about the large scale average.  There are a lot of cities where essentially all middle class family homes bought in the 1960s/70s is now worth lottery winning money.

Back in the 90s I knew graduates in London who decided at age 21 they wouldn't need to worry about a career because their parent's suburban London house was worth >£1M

Friends in SF have lead a world traveler/artist lifestyle into their 40s on the back of knowing their college professor parents 1960s house is now  >$10M

[TheNick]

https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.metlife.com/assets/cao/mmi/publications/studies/2010/mmi-inheritance-wealth-transfer-baby-boomers.pdf&ved=0ahUKEwjlmrPZ37nKAhXksYMKHc0tAMEQFgg1MAc&usg=AFQjCNFQNA1vYh7qH3AObjIlAQGAimL-eA&sig2=FZWYcpk-ULdraYaAuch4Ig

Nice link, this one had a lot of good data in it.  Mainly...it claims...

About three-quarters expect either no inheritance or less than $100,000, and 97% expect either no inheritance or less than $1 million. page 9

21% of those born 1946–1964 had no surviving parent in 2007. page 7

So 4 out of 5 boomers still have a living parent meaning they probably haven't seen their inheritance yet, and 3% of them expect to inherit a million.  In other words 21% of 3%, or 0.63% of Boomer's have inherited a million at this point.  Pretty low odds your neighbor is a total failure with money and just inherited a fortune.  If those inheriting 9 million+ are even 1/10th as numerous as those inheriting 1 million plus your boomer neighbor would be about 1 in 1600.

Even if the average house is 200k the average family size of the boomer generation was larger...so its probably getting split on average 3 ways, and that is assuming the house was paid off to begin with, there was no reverse mortgage or home equity loan or anything of the sort, the house wasn't sold to pay for a nursing home, or the family house wasn't simply sold so they could downsize to a condo or apartment.

Millenials will get a proportionally higher inheritance due to inflation and economic growth.

The above factors could lead one to conclude that the Boomers might be less likely than previous birth cohorts to leave bequests to succeeding generations.  page 14

Us younger generations actually stand to inherit less since most of our parents did a crappy job preparing for retirement compared to their parents and statistically will live longer :P

Plus we are less likely to have received inheritance from our parents yet since our parents are more likely to be alive.  Your odds of a friend/neighbor/coworker younger than the boomer generation being an inheritance millionaire at this point are ridiculously slim.

I think its just easy to assume people inherit a lot more than they do because most the time when someone has a family member that dies and they get left some inheritance, they immediately run out and spend it on a new car or vacations or something.  But that is just it, they spend it all, its not like they are inheriting millions and just spending a little while setting the rest aside for a retirement.

[Squirrel away]

But only economists care about the large scale average.  There are a lot of cities where essentially all middle class family homes bought in the 1960s/70s is now worth lottery winning money.

Back in the 90s I knew graduates in London who decided at age 21 they wouldn't need to worry about a career because their parent's suburban London house was worth >£1M

Very true, it almost makes me wish I wasn't estranged from my own parents as their homes are worth a combined fortune.

[bb11]

https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.metlife.com/assets/cao/mmi/publications/studies/2010/mmi-inheritance-wealth-transfer-baby-boomers.pdf&ved=0ahUKEwjlmrPZ37nKAhXksYMKHc0tAMEQFgg1MAc&usg=AFQjCNFQNA1vYh7qH3AObjIlAQGAimL-eA&sig2=FZWYcpk-ULdraYaAuch4Ig

Nice link, this one had a lot of good data in it.  Mainly...it claims...

About three-quarters expect either no inheritance or less than $100,000, and 97% expect either no inheritance or less than $1 million. page 9

21% of those born 1946–1964 had no surviving parent in 2007. page 7

So 4 out of 5 boomers still have a living parent meaning they probably haven't seen their inheritance yet, and 3% of them expect to inherit a million.  In other words 21% of 3%, or 0.63% of Boomer's have inherited a million at this point.  Pretty low odds your neighbor is a total failure with money and just inherited a fortune.  If those inheriting 9 million+ are even 1/10th as numerous as those inheriting 1 million plus your boomer neighbor would be about 1 in 1600.

Even if the average house is 200k the average family size of the boomer generation was larger...so its probably getting split on average 3 ways, and that is assuming the house was paid off to begin with, there was no reverse mortgage or home equity loan or anything of the sort, the house wasn't sold to pay for a nursing home, or the family house wasn't simply sold so they could downsize to a condo or apartment.

Millenials will get a proportionally higher inheritance due to inflation and economic growth.

The above factors could lead one to conclude that the Boomers might be less likely than previous birth cohorts to leave bequests to succeeding generations.  page 14

Us younger generations actually stand to inherit less since most of our parents did a crappy job preparing for retirement compared to their parents and statistically will live longer :P

Plus we are less likely to have received inheritance from our parents yet since our parents are more likely to be alive.  Your odds of a friend/neighbor/coworker younger than the boomer generation being an inheritance millionaire at this point are ridiculously slim.

I think its just easy to assume people inherit a lot more than they do because most the time when someone has a family member that dies and they get left some inheritance, they immediately run out and spend it on a new car or vacations or something.  But that is just it, they spend it all, its not like they are inheriting millions and just spending a little while setting the rest aside for a retirement.

I don't really put much stock in the "expectations" of inheritance, since we have no idea how accurate the estimates are.

My "1 in 10 households inherit a million" may be too generous. However, numbers show the top 10% of wealth households have already inherited a median of $350,000, with many who still have surviving parents so they stand to receive more. And despite possible decreased savings rates among boomers, simple inflation and economic growth ensures that Millenials will inherit a lot more than they did. $1 million will be worth a lot less in 2020 than it was in 1990. And some people own assets that will increase in value over time.

Now let's consider that those households who stand to inherit are usually the same ones who have parents wealthy enough to provide assistance while they're living. Paying college tuition and living expenses, getting first/last/security paid off when moving into a new apartment, and assistance with a down payment on a house are fairly typical of wealthy families. I know lots of friends/coworkers/acquaintances who have gotten at least one of these, many all three. All will boost lifestyle by allowing the children to use their money for something else. When you're paying all of that yourself and don't stand to inherit much, it becomes much more difficult to keep up with that lifestyle.

And again, that is one factor. Running up debt and/or not saving much is certainly an even bigger one. Also some people just get paid more than you (generic you) do.

[dragoncar]

Bb8, you can't have it both ways.  Either parents were good savers who leave a house to kids (who will likely sell it off to split the proceeds, thereby increasing supply which is hypothesized to lead to a crash)  or parents were not good savers, cash-out refinanced a lot and the kids MUST sell because equity is so low.  They can't be huge spenders AND leave a lot to their kids except in  very high earning circumstances

[Albert]

Bb8, you can't have it both ways.  Either parents were good savers who leave a house to kids (who will likely sell it off to split the proceeds, thereby increasing supply which is hypothesized to lead to a crash)  or parents were not good savers, cash-out refinanced a lot and the kids MUST sell because equity is so low.  They can't be huge spenders AND leave a lot to their kids except in  very high earning circumstances

It's not that black and white. My parents (not in US), particularly my mother, are fairly free with their money which coupled with their modest pensions don't leave them with much cushion. However they haven't been completely careless either and their primary house and rental property (both debt free) are together worth about half a million. Short of some true emergency they'll never sell and me and my sister will inherit it some day. It will probably take me another 7-8 years to catch them in net wealth...

[bb11]

Bb8, you can't have it both ways.  Either parents were good savers who leave a house to kids (who will likely sell it off to split the proceeds, thereby increasing supply which is hypothesized to lead to a crash)  or parents were not good savers, cash-out refinanced a lot and the kids MUST sell because equity is so low.  They can't be huge spenders AND leave a lot to their kids except in  very high earning circumstances

You're not addressing any point I made (I'm assuming you meant "bb11" by "bb8").

I'm saying regarding the crazy expensive lifestyles you see others living without matching incomes, some of it is because those people received inheritances or other parental assistance, a lot of it is just people not saving much and/or using debt to fund it, and some of it is that there are others who have higher incomes than you do.

[Pooplips]

Comment to follow

[Psychstache]

Bb8, you can't have it both ways.  Either parents were good savers who leave a house to kids (who will likely sell it off to split the proceeds, thereby increasing supply which is hypothesized to lead to a crash)  or parents were not good savers, cash-out refinanced a lot and the kids MUST sell because equity is so low.  They can't be huge spenders AND leave a lot to their kids except in  very high earning circumstances

You're not addressing any point I made (I'm assuming you meant "bb11" by "bb8").

I'm saying regarding the crazy expensive lifestyles you see others living without matching incomes, some of it is because those people received inheritances or other parental assistance, a lot of it is just people not saving much and/or using debt to fund it, and some of it is that there are others who have higher incomes than you do.

Must've been watching Star Wars: The Force Awakens while posting   ;)

[G-dog]

Bb8, you can't have it both ways.

You're not addressing any point I made (I'm assuming you meant "bb11" by "bb8").

Must've been watching Star Wars: The Force Awakens while posting   ;)

"these aren't the droids you're looking for"

[dragoncar]

Bb8, you can't have it both ways.

You're not addressing any point I made (I'm assuming you meant "bb11" by "bb8").

Must've been watching Star Wars: The Force Awakens while posting   ;)

"these aren't the droids you're looking for"

G-3PO: you got it

Bb8, you can't have it both ways.  Either parents were good savers who leave a house to kids (who will likely sell it off to split the proceeds, thereby increasing supply which is hypothesized to lead to a crash)  or parents were not good savers, cash-out refinanced a lot and the kids MUST sell because equity is so low.  They can't be huge spenders AND leave a lot to their kids except in  very high earning circumstances

You're not addressing any point I made (I'm assuming you meant "bb11" by "bb8").

I'm saying regarding the crazy expensive lifestyles you see others living without matching incomes, some of it is because those people received inheritances or other parental assistance, a lot of it is just people not saving much and/or using debt to fund it, and some of it is that there are others who have higher incomes than you do.

Yeah, so parents can only "assist" in two circumstances: they are using debt to fund the assistance or they saved a bunch of money with which they can assist.  If the former, then the answer to this thread is "yes, it is fueled by debt," if the latter, the answer is "no, the baby boomers saved a bunch of money and are transferring it to their children, thereby moving consumption from the 60s-90s to today"

[bb11]

Bb8, you can't have it both ways.

You're not addressing any point I made (I'm assuming you meant "bb11" by "bb8").

Must've been watching Star Wars: The Force Awakens while posting   ;)

"these aren't the droids you're looking for"

G-3PO: you got it

Bb8, you can't have it both ways.  Either parents were good savers who leave a house to kids (who will likely sell it off to split the proceeds, thereby increasing supply which is hypothesized to lead to a crash)  or parents were not good savers, cash-out refinanced a lot and the kids MUST sell because equity is so low.  They can't be huge spenders AND leave a lot to their kids except in  very high earning circumstances

You're not addressing any point I made (I'm assuming you meant "bb11" by "bb8").

I'm saying regarding the crazy expensive lifestyles you see others living without matching incomes, some of it is because those people received inheritances or other parental assistance, a lot of it is just people not saving much and/or using debt to fund it, and some of it is that there are others who have higher incomes than you do.

Yeah, so parents can only "assist" in two circumstances: they are using debt to fund the assistance or they saved a bunch of money with which they can assist.  If the former, then the answer to this thread is "yes, it is fueled by debt," if the latter, the answer is "no, the baby boomers saved a bunch of money and are transferring it to their children, thereby moving consumption from the 60s-90s to today"

Incorrect. For one, wealth is often passed down multiple times. Example:

Joe saves up and buys a house. Joe gets old and dies. House goes to his daughter. She gets old, dies. Proceeds from the house sale are split up amongst her two children. They use some of that money to each buy a house (Joe's house was in a prime area because the population of their city was smaller back then, so lower land values). Both of them pass their house to their kids, and use the rest of their inheritance to pay for the kids' college. The kids now don't need to pay a mortgage payment and had all of their college completely paid for, despite neither their parents nor their grandmother saving any money. The OP sees the two of them using their incomes to fund large vacations, while the OP has to pay down a mortgage and student loans. Confusion results. ;)

[Bolshevik Artizan]

Not really. Some people were good savers and some weren't, just like today. Some of the parents inherited themselves, and also get the huge headstart. That's why the talk about a housing crisis because boomers are dying doesn't make sense. Most of them will leave the house to their kids, who get a $1M boost (an entire lifetime's worth of saving for a Mustachian) just by being born to the right set of parents. Just owning a home in the Bay Area, LA, or NYC at this point gets you near to being a millionaire. Most of those homes are going to be inherited by the kids.

The cutoff for being in the top 1% of wealth is $9 million. So roughly 1 in 100-200 (less than 100 because parents often have multiple kids) is going to be inheriting $9 million or more. Maybe 1 in 10 will get more than $1 million when all is said and done (in HCOL areas it's probably more like 1 in 5). These amounts fund a lifetime of extravagant spending, and there's no way you'd know if they're just a co-worker.

A very intelligent post indeed. I knew a guy in Toronto who inherited four homes from a Polish immigrant mother and never worked. By his late 40s he was a drunken, weed smoking dickwad who was 800k in debt and had to sell one of the houses (the best one) to fund his no-work, all-play lifestyle. I lost contact with him (ie he left our hood, he was an ass) two years ago but presumably he has continued living off rent, smoking weed, drinking and getting in to debt. I agree with everything you have written BUT do not underestimate lifestyle inflation by the heritors. My cousin was the same - inherited US$5m fifteen years ago and now she is in social housing in the UK - she spent THE LOT in ten years...


Bolshewik

[dragoncar]

Incorrect. For one, wealth is often passed down multiple times. Example:

Joe saves up and buys a house. Joe gets old and dies. House goes to his daughter. She gets old, dies. Proceeds from the house sale are split up amongst her two children. They use some of that money to each buy a house (Joe's house was in a prime area because the population of their city was smaller back then, so lower land values). Both of them pass their house to their kids, and use the rest of their inheritance to pay for the kids' college. The kids now don't need to pay a mortgage payment and had all of their college completely paid for, despite neither their parents nor their grandmother saving any money. The OP sees the two of them using their incomes to fund large vacations, while the OP has to pay down a mortgage and student loans. Confusion results. ;)

rolleyes!  Inherited wealth that is passed onto children was by definition saved since it was not spent  If the kids parents has mortgaged the house and spent the equity, the kids would not have an inflated lifestyle

[bb11]

Incorrect. For one, wealth is often passed down multiple times. Example:

Joe saves up and buys a house. Joe gets old and dies. House goes to his daughter. She gets old, dies. Proceeds from the house sale are split up amongst her two children. They use some of that money to each buy a house (Joe's house was in a prime area because the population of their city was smaller back then, so lower land values). Both of them pass their house to their kids, and use the rest of their inheritance to pay for the kids' college. The kids now don't need to pay a mortgage payment and had all of their college completely paid for, despite neither their parents nor their grandmother saving any money. The OP sees the two of them using their incomes to fund large vacations, while the OP has to pay down a mortgage and student loans. Confusion results. ;)

rolleyes!  Inherited wealth that is passed onto children was by definition saved since it was not spent  If the kids parents has mortgaged the house and spent the equity, the kids would not have an inflated lifestyle

Sure they technically had the capability to spend even more than they did. But if I inherit a $1 million dollar portfolio, then spend the passive income from it so that I die with exactly $1 million in it (adjusted for inflation if you want), you would say I saved money?

I would think saving is spending less than you earn. Not when you're given a large amount up front and then spend 100% of your income the rest of your life, just not the principal.

Anyway, I'm not sure the point of this particular nitpick. Lots of people are advantaged by inheritance and parental assistance, and it allows them to outspend what you'd think they have based on their income from their day job. Label that however you want.

[dragoncar]

Incorrect. For one, wealth is often passed down multiple times. Example:

Joe saves up and buys a house. Joe gets old and dies. House goes to his daughter. She gets old, dies. Proceeds from the house sale are split up amongst her two children. They use some of that money to each buy a house (Joe's house was in a prime area because the population of their city was smaller back then, so lower land values). Both of them pass their house to their kids, and use the rest of their inheritance to pay for the kids' college. The kids now don't need to pay a mortgage payment and had all of their college completely paid for, despite neither their parents nor their grandmother saving any money. The OP sees the two of them using their incomes to fund large vacations, while the OP has to pay down a mortgage and student loans. Confusion results. ;)

rolleyes!  Inherited wealth that is passed onto children was by definition saved since it was not spent  If the kids parents has mortgaged the house and spent the equity, the kids would not have an inflated lifestyle

Sure they technically had the capability to spend even more than they did. But if I inherit a $1 million dollar portfolio, then spend the passive income from it so that I die with exactly $1 million in it (adjusted for inflation if you want), you would say I saved money?

I would think saving is spending less than you earn. Not when you're given a large amount up front and then spend 100% of your income the rest of your life, just not the principal.

Anyway, I'm not sure the point of this particular nitpick. Lots of people are advantaged by inheritance and parental assistance, and it allows them to outspend what you'd think they have based on their income from their day job. Label that however you want.

The "this particular nitpick" was started by you in response to my conjecture that consumption has been moved forwards in time when wealth is passed on to children.  Your responses were "not exactly" and "incorrect."  But I like how you try to portray me as the nitpicker.

As to your examples above, yes if I inherit $1 million and don't spend it then I've saved it.  From an accounting perspective, Inheritance is recorded the same as any other income. 

If I inherit $900k, earn $100k at my job, and spend $100k, my savings rate is 90%, not zero.  If I spend 900k, my savings rate is 10%, not 100%. 

Are you trying to say that inheritance unspent does NOT count as savings, but inheritance spent DOES count as spending?

[bb11]

Incorrect. For one, wealth is often passed down multiple times. Example:

Joe saves up and buys a house. Joe gets old and dies. House goes to his daughter. She gets old, dies. Proceeds from the house sale are split up amongst her two children. They use some of that money to each buy a house (Joe's house was in a prime area because the population of their city was smaller back then, so lower land values). Both of them pass their house to their kids, and use the rest of their inheritance to pay for the kids' college. The kids now don't need to pay a mortgage payment and had all of their college completely paid for, despite neither their parents nor their grandmother saving any money. The OP sees the two of them using their incomes to fund large vacations, while the OP has to pay down a mortgage and student loans. Confusion results. ;)

rolleyes!  Inherited wealth that is passed onto children was by definition saved since it was not spent  If the kids parents has mortgaged the house and spent the equity, the kids would not have an inflated lifestyle

Sure they technically had the capability to spend even more than they did. But if I inherit a $1 million dollar portfolio, then spend the passive income from it so that I die with exactly $1 million in it (adjusted for inflation if you want), you would say I saved money?

I would think saving is spending less than you earn. Not when you're given a large amount up front and then spend 100% of your income the rest of your life, just not the principal.

Anyway, I'm not sure the point of this particular nitpick. Lots of people are advantaged by inheritance and parental assistance, and it allows them to outspend what you'd think they have based on their income from their day job. Label that however you want.

The "this particular nitpick" was started by you in response to my conjecture that consumption has been moved forwards in time when wealth is passed on to children.  Your responses were "not exactly" and "incorrect."  But I like how you try to portray me as the nitpicker.

As to your examples above, yes if I inherit $1 million and don't spend it then I've saved it.  From an accounting perspective, Inheritance is recorded the same as any other income. 

If I inherit $900k, earn $100k at my job, and spend $100k, my savings rate is 90%, not zero.  If I spend 900k, my savings rate is 10%, not 100%. 

Are you trying to say that inheritance unspent does NOT count as savings, but inheritance spent DOES count as spending?

It really is irrelevant to the OP. But if someone says they saved up a million dollars, then no I don't think they're implying they just inherited it. Nor would I consider an heir a "saver" just because they haven't spent their entire big inheritance. But again, what does it matter? Either way they got help that a lot of people may not have.

[dragoncar]

Incorrect. For one, wealth is often passed down multiple times. Example:

Joe saves up and buys a house. Joe gets old and dies. House goes to his daughter. She gets old, dies. Proceeds from the house sale are split up amongst her two children. They use some of that money to each buy a house (Joe's house was in a prime area because the population of their city was smaller back then, so lower land values). Both of them pass their house to their kids, and use the rest of their inheritance to pay for the kids' college. The kids now don't need to pay a mortgage payment and had all of their college completely paid for, despite neither their parents nor their grandmother saving any money. The OP sees the two of them using their incomes to fund large vacations, while the OP has to pay down a mortgage and student loans. Confusion results. ;)

rolleyes!  Inherited wealth that is passed onto children was by definition saved since it was not spent  If the kids parents has mortgaged the house and spent the equity, the kids would not have an inflated lifestyle

Sure they technically had the capability to spend even more than they did. But if I inherit a $1 million dollar portfolio, then spend the passive income from it so that I die with exactly $1 million in it (adjusted for inflation if you want), you would say I saved money?

I would think saving is spending less than you earn. Not when you're given a large amount up front and then spend 100% of your income the rest of your life, just not the principal.

Anyway, I'm not sure the point of this particular nitpick. Lots of people are advantaged by inheritance and parental assistance, and it allows them to outspend what you'd think they have based on their income from their day job. Label that however you want.

The "this particular nitpick" was started by you in response to my conjecture that consumption has been moved forwards in time when wealth is passed on to children.  Your responses were "not exactly" and "incorrect."  But I like how you try to portray me as the nitpicker.

As to your examples above, yes if I inherit $1 million and don't spend it then I've saved it.  From an accounting perspective, Inheritance is recorded the same as any other income. 

If I inherit $900k, earn $100k at my job, and spend $100k, my savings rate is 90%, not zero.  If I spend 900k, my savings rate is 10%, not 100%. 

Are you trying to say that inheritance unspent does NOT count as savings, but inheritance spent DOES count as spending?

It really is irrelevant to the OP. But if someone says they saved up a million dollars, then no I don't think they're implying they just inherited it. Nor would I consider an heir a "saver" just because they haven't spent their entire big inheritance. But again, what does it matter? Either way they got help that a lot of people may not have.

No one is making the bold argument or denying the underlined argument.  The point you seem to be missing is that at some point someone saved that money. So we may see kids living beyond their means now but if not debt fueled, it's the result of delayed consumption from past generations

[bb11]

Incorrect. For one, wealth is often passed down multiple times. Example:

Joe saves up and buys a house. Joe gets old and dies. House goes to his daughter. She gets old, dies. Proceeds from the house sale are split up amongst her two children. They use some of that money to each buy a house (Joe's house was in a prime area because the population of their city was smaller back then, so lower land values). Both of them pass their house to their kids, and use the rest of their inheritance to pay for the kids' college. The kids now don't need to pay a mortgage payment and had all of their college completely paid for, despite neither their parents nor their grandmother saving any money. The OP sees the two of them using their incomes to fund large vacations, while the OP has to pay down a mortgage and student loans. Confusion results. ;)

rolleyes!  Inherited wealth that is passed onto children was by definition saved since it was not spent  If the kids parents has mortgaged the house and spent the equity, the kids would not have an inflated lifestyle

Sure they technically had the capability to spend even more than they did. But if I inherit a $1 million dollar portfolio, then spend the passive income from it so that I die with exactly $1 million in it (adjusted for inflation if you want), you would say I saved money?

I would think saving is spending less than you earn. Not when you're given a large amount up front and then spend 100% of your income the rest of your life, just not the principal.

Anyway, I'm not sure the point of this particular nitpick. Lots of people are advantaged by inheritance and parental assistance, and it allows them to outspend what you'd think they have based on their income from their day job. Label that however you want.

The "this particular nitpick" was started by you in response to my conjecture that consumption has been moved forwards in time when wealth is passed on to children.  Your responses were "not exactly" and "incorrect."  But I like how you try to portray me as the nitpicker.

As to your examples above, yes if I inherit $1 million and don't spend it then I've saved it.  From an accounting perspective, Inheritance is recorded the same as any other income. 

If I inherit $900k, earn $100k at my job, and spend $100k, my savings rate is 90%, not zero.  If I spend 900k, my savings rate is 10%, not 100%. 

Are you trying to say that inheritance unspent does NOT count as savings, but inheritance spent DOES count as spending?

It really is irrelevant to the OP. But if someone says they saved up a million dollars, then no I don't think they're implying they just inherited it. Nor would I consider an heir a "saver" just because they haven't spent their entire big inheritance. But again, what does it matter? Either way they got help that a lot of people may not have.

No one is making the bold argument or denying the underlined argument.  The point you seem to be missing is that at some point someone saved that money. So we may see kids living beyond their means now but if not debt fueled, it's the result of delayed consumption from past generations

Okay fair enough. Then I suppose my point is it's not a trend of 50-60's related consumption being delayed until today, it's just a tendency for some people to die with savings, which will always happen. In a capitalist society with our inheritance laws this money can pool and compound over time, resulting in rather large amounts.

[Chris22]

No one is making the bold argument or denying the underlined argument.  The point you seem to be missing is that at some point someone saved that money. So we may see kids living beyond their means now but if not debt fueled, it's the result of delayed consumption from past generations

Not necessarily, right?  I'll likely inherit a paid-for house, is that considered "savings"?  I don't think you'd considered someone who spent every dime of their paycheck, and included in that spending was paying off a mortgage over 30 years, as having "saved" anything, but then they die and will the property down, that's not really the fruits of "savings".

[deeshen13]

Paying down principle on an appreciating asset is definitely "savings".

[dragoncar]

Paying down principle on an appreciating asset is definitely "savings".

Yup, buying the house is consumption.  Paying off the loan is savings. 

[Chris22]

So when you guys calculate your savings rate, you are including your mortgage payments, or even the part going to principle, as savings?

[honeybbq]

So when you guys calculate your savings rate, you are including your mortgage payments, or even the part going to principle, as savings?

Personally, I do. I contribute about $1500/month extra to the mortgage. Plus the amount to principal if I am calculating my 'savings rate'. But I really don't calculate that very often because I really don't care what it is at this point in my life.

I'm more interested in my estimated net worth, which I calculate all the accounts, plus the zillow amount of my home less my outstanding mortgage.

I live in a HCOLA where the houses appreciate 10% a year, so I am confident that I can get within 3% of my zillow estimate of my house at any given second. If I lived in rural Missouri, I might have a different approach.