Are You Rich?

How much of a nest egg do you need to join the true elite?

The tool-and-die man figured he was retiring rich. After selling an Arizona business that he'd built up over 30 years, he retreated to a 30-acre spread on the coast of Oregon and handed a $10 million investment portfolio to a big, New York-based private-banking outfit. The bank, however, seemed less than impressed. Over three years, he says, he received nary a phone call from the reps in the local office. "There was no 'How are you doing?' or 'Maybe you should buy this' or 'How about some concert tickets in Portland?' There was nothing at all." The retiree eventually reached an inescapable conclusion: "I was considered insignificant."

Yes, it takes more than $10 million to be seen as rich these days. It takes more like $25 million. Not only is that the minimum for the red-carpet treatment at a growing number of banks, it is also, in the view of many experts, the sum needed for a truly cushy retirement, one free of financial worry.

"With $25 million, you can fund college and grad school for the kids, take care of your own parents, travel, start a backyard vineyard and, well, "do whatever you want," says Maria Elena Lagomasino, of GenSpring, which helps some 600 wealthy families manage their money. After all, if you simply stashed the $25 million in municipal bonds, you'd have tax-free income of well over $1 million a year.

Exactly how much money you need to retire in a time of constantly increasing life expectancies has been a hot topic of late. The Internet is teeming with calculators to help answer the question, and some of them are quite useful. But if you want to know what you'll need to really feel rich in your golden years -- rather that what you'll need to make ends meet mathematically -- just take a good look around.

Thanks to a global explosion of wealth over the past 10 years or so, the number of U.S. households with $1 million to $25 million in net worth has more than doubled. Households with $500 million and up have roughly tripled. "Heck, $1 billion isn't a lot of money," says Bill Sanderson, a broker of mega yachts in Palm Beach, Fla. Even if he's a little jaded from all his dealings with zillionaires, Sanderson could be on to something: Billionaires now occupy every slot on the Forbes 400, and that list, some bankers and consultants say, may be overlooking at least 100 billionaires-next-door whose financial dealings are too private to track.

More and more rich people certainly believe they need at least $25 million. In a recent survey by Chicago-based Spectrem Group, 25% of affluent folks said it takes $25 million to be rich, and another 8% said $100 million. Those two groups combined weren't all that much smaller than the 45% who cited $5 million.

While $1 million was once a sign that you had arrived, plenty of people with up to $10 million nowadays don't think of themselves as rich. Many actually consider themselves "middle class," according to survey work by the authors of a new book, The Middle-Class Millionaire. That's increasingly true as the $10 million crowd finds a new intruder in its gated communities: the weakening economy. The delinquency rate for "jumbo" home mortgages -- a category that includes loans for basic McMansions -- more than doubled last year, to 0.74%, according to Fitch Ratings.

True, only a tiny portion of all Americans meet our definition of rich: Just 0.20% of households have net worths of $25 million or more. But in absolute numbers, the group is considerable. If one representative from each of the 175,400 households filed into an NFL stadium at the same time, they wouldn't all find seats. In fact, they would have to go in two shifts -- and even then, some 15,000 would be left in the parking lots, tailgating in their Bentleys.

And so it is that Barron's has devised a score card for folks heading toward retirement or already there. Are you rich yet? And if so, how rich? We divided true wealth into three categories. Perhaps you fall into one of them, or aspire to. It is our fondest hope that the advice in this magazine each week -- and in the story "How to Avoid the Three Big Mistakes" -- helps you get there swiftly, enjoyably and enduringly.

Beer & Pretzels

This is entry-level rich, consisting of people with net worths of $25 million to $50 million (counting primary residences). The number of households in this group increased by a factor of four from 1998 through 2006, to 125,000, according to research by Northern Trust, a leading private bank. It bases its estimates on an analysis of net-worth surveys by the Federal Reserve.

Many people move into this group on the strengths of private family businesses (a strong initial public offering doesn't hurt). Executive-level compensation can also do the trick, along with smart investing.

Over the past 10 years, therefore, aspirants to the category have been helped by low interest rates, strong markets and rising corporate profits.

The sense of relief that comes with reaching this altitude can be extraordinary, as you leave behind a host of worries -- like health-care expenses. Spiraling medical costs are a big fear even for those who can afford doctors who make penthouse calls. "It's at the top of the list" of concerns among people with $10 million, says David Thompson of Phoenix Affluent Marketing Service, a consulting outfit.

At $25 million, you can not only breathe easier but can start buying some serious toys. With petty cash, you could buy a Bentley in the $200,000 range. "People at this level don't finance," says Hugh Bate, president of Chariots of Palm Beach.

While buying a mega yacht (a vessel of at least 100 feet) could bust your budget, chartering one is entirely possible. Want to splurge? Why not head to sea for a week on the Maltese Falcon, the 289-foot, high-tech sailing machine of venture capitalist Tom Perkins. It's available for $513,000 a week.

That swanky bank account is yours for the picking, too -- JPMorgan, UBS, whatever. You're at the level of wealth where most of the leading private banks will start showering you and your family with attention, including access to hot hedge funds and other exclusive investments.

If for any reason you don't get the treatment you think you deserve, a host of smaller banks stand ready to help. The tool-and-die entrepreneur, who is now 66 and asked that his name not be used because he doesn't like discussing his money publicly, wound up at Chicago's Harris Private Bank, where he's thoroughly content. He says he was won over when a Harris "wealth manager" arrived for their first meeting on a motorcycle, after traveling nearly five hours from the freeway to reach the retiree's retreat.

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