So what is considered seriously wealthy?

I have been asked what is considered seriously wealthy by a number of people and the magical number bandied around is seven and a half million dollars. But where did this number actually come from?

A millionaire was once considered wealthy but with the effects of inflation, being a millionaire in Australia isn't such a big deal anymore - still a nice figure though. The term millionaire has a certain ring to it, that's for sure but is it really that affluent? The average homeowner in Australia is pretty much halfway there, add superannuation entitlements and if dual income households are involved then both incomes feed into the assets.

But this is working families, rarely do they get to handle such large transactions. The real money is small business owners, business executives and the CEOs that rake in unbelievable sums relative to their output. Research indicates many small business owners have all their capital invested in their business and hold insufficient funds in the personal superannuation funds for a comfortable retirement.

So where did the figure $7.5 million come from? I'm not sure, during some research I found a definition of sorts where men and women were surveyed with men nominating $5.3 million whilst women nominate $4.8 million. At time of research, the average Australian salary is $81,947 giving roughly 64 times average annual earnings to reach that figure; that's out of reach for most people.

Whilst not an Australian definition, the US based Fidelity Investments surveyed more than 1000 millionaires in the United States to determine their definition of wealthy. Their definition of a millionaire differs to the conventional definition as they only consider $1 million in investable assets that don't include the primary residence or retirement accounts.

I find this definition extraordinary as why wouldn't you include a retirement account? After all, it is your money. I believe their definition may come from seeking funds to invest but even then, a mortgage may be taken out against a primary residence to invest.

In Australia, the option of a self managed superannuation fund is an excellent vehicle (even with the recent government meddling) to build a decent retirement income. If you control the assets in the SMSF then you are the investment manager and if you are one paying in the contributions then the beneficiary is you.

I believe they want you to spend like a millionaire so they are able to generate earnings from your savings. They want you to go all Hollywood and spend like a movie star instead of acting like the conservative millionaire next door who is relatively anonymous.