Bernie is worth $2.5 million. How y'all doin'?

The Democratic Socialist Bernie Sanders hits the headlines: He's worth $2.5 million. Newspapers called it a fortune and qualified Mr. Sanders as rich. Where does everybody else stand? (All numbers in U.S. dollars, USD)

Forbes – Apr 12/2019
How Bernie Sanders, The Socialist Senator, Amassed A $2.5 Million Fortune by Chase Peterson-Withorn
Sanders, 77, [has] amassed an estimated $2.5 million fortune from real estate, investments, government pensions—and earnings from three book.

MarketWatch – Jan 29/2019
What’s your net worth, and how do you compare to others?
A household in the U.S. has an average net worth of $692,100, according to the most recent data from the Federal Reserve’s Survey of Consumer Finances. [These appear to be 2016 numbers.]

Shocked by that figure? That’s because the average (aka the “mean”) is skewed by the nation’s super wealthy. The median net worth of the average U.S. household is $97,300. Median is the middle point where half the households have more and half have less.

Bernie Sanders = $2,500,000

Mean (average) = $692,000

Median = $97,300

Wikipedia: List of countries by wealth per adult
These are based on "Global Wealth Report 2018" by Credit Suisse.

Bernie Sanders = $2,500,000

Mean (average) = $403,974 (United States)

Median = $61,667 (United States)

It's interesting to compare the United States to other countries. For average (mean) wealth, the U.S. is #5 on the list. For the median, the U.S. is #21. That is, people in general are wealthier in Norway, Iceland, Australia, and Canada than in the United States. The U.S. may have more wealth overall, more millionaires, but it seems the overall populations of these countries are better off.

In thinking about income equality, let's admit to the concentration of wealth by looking at the entire world. At last count, there are 7.7 billion people on the planet.

World mean (average) = $63,100

World median = $4,209

The 99%
Whether I use the MarketWatch median of $97,300 or the Credit Suisse median of $61,667, 50% of Americans have assets of less than one hundred thousand dollars. How far can anybody go?

The above MarketWatch article provides a detailed breakdown: Median and average net worth by age:

• Under 35: Median net worth: $11,100 (average net worth: $76,200).
• 35-44: $59,800 ($288,700).
• 45-54: $124,200 ($727,500).
• 55-64: $187,300 ($1,167,400).
• 65-74: $224,100 ($1,066,000).
• 75+: $264,800 ($1,067,000).

First off, let's emphasize the huge difference between mean (average) and median. The top 1% skew the mean, while the median is more representative of the reality. Second, it stands to reason that the older a person is, the more wealth they would have accumulated. By age 65, the usual age of retirement, we could expect a person has paid off their home and has a pension of some sort. Nevertheless, the above chart shows $224,000 for a person 65 and over. I repeat: How far can anybody go?

This past week, I had lunch with a childhood buddy, two retired men reminiscing about their youth. (my blog: Broke and Sexy - Apr 18/2019) Chad is American, and I'm Canadian. He told me how his wife had to have cataract surgery last year, and they faced an unexpected medical expense of $20,000. They weren't quite making it, so Chad's going to do some part-time work. My doctor has told me that I, too, have a cataract and will require surgery at some point. I didn't tell Chad that my cost will be nothing.

I've heard other stories of Americans having to deal with an emergency, usually a health issue, and breaking the bank: mortgage the home, cash in a pension, take out a loan, even declaring bankruptcy. How much does one need for a rainy day, but what if that rainy day turns out to be a torrential downpour?

Bernie Sanders wrote a book
He suggested anybody can write a book and become a millionaire. Is that true? I like to humorously point out that for every winner of a million bucks you see in a headline, nine hundred and ninety-nine thousand, nine hundred and ninety-nine people lost. In other words, as I like to joke, winding up on the New York Times list of bestsellers is something akin to winning a "literary lottery". E. L. James has sold over seventy million copies of her 50 Shades of Grey trilogy, but your average author isn't even coming close.

The Guardian – May 24/2012
Stop the press: half of self-published authors earn less than $500 by Alison Flood
Comprehensive survey of DIY writers suggests that despite a few high-profile successes most authors struggle to sell.

Without Bullshit – Apr /2019
Do bestselling authors become millionaires? by Josh Bernoff
Mr. Bernoff, a published author, analyzes Bernie's claim. Even if somebody sells 40,000 copies a year, one definition of a "best seller", they are not going to end up with a million dollars. How then, according to Mr. Bernoff?

The easiest way to do it is to start famous. If you are an actor or a politician (like Bernie Sanders) who already has established national presence, your book will sell. You could even pay somebody else to write it for you and still clear a bundle.

Final Word
I retired a year and three months ago. I've agonized over my finances repeatedly, wondering if I have enough to get by. I look at the above numbers, and realize I have to count my blessings. I'm not rich, but I'm okay. Unlike Chad, I don't foresee having to go back to work to make ends meet. You may say that I worked hard, and I deserve it. Yes, I did, but I also recognize that I'm lucky. Old saying: You can work hard and still fail.

The above numbers indicate that the general state of affairs in the United States is not good. I know that Americans loathe with a passion anything which smacks of "socialism", but wouldn't it be a good idea to come up with a system which benefits all citizens? Canada is not a socialist country, and yet, we have have universal healthcare. Chad had to pay $20,000 last year for his wife's cataract surgery. When I have it, it will be free.


References

my blog – Dec 29/2010
Book Review: The Millionaire Next Door
[The authors] found a group of relatively unknown people in society who were actually wealthy. Now not wealthy in terms we would usually consider, certainly not wealthy like a Donald Trump, but they did have a net worth of one million dollars or more. It just didn't show when you looked at them.

Wikipedia: Survey of Consumer Finances
The Survey of Consumer Finances (SCF) is a triennial statistical survey of the balance sheet, pension, income and other demographic characteristics of families in the United States; the survey also gathers information on the use of financial institutions.

It is sponsored by the United States Federal Reserve Board in cooperation with the U.S. Treasury Department. Since 1992, data have been collected by the National Opinion Research Center at the University of Chicago, located in Chicago, Illinois. Data from the survey are widely used, from analysis at the Federal Reserve and other branches of government to scholarly work at the major economic research centers.

2019-04-23

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