If you're worth 7 figures, you're a millionaire.
Of course you can be in a situation where you don't have much cash flow even though you've got a relatively high net worth. And being a millionaire ain't what it used to be, of course. It doesn't go as far as it did a generation or 2 ago.
I've been an advisor for 11 years. Most people simply spend too much money and live too high. Most people are a paycheck or 2 away from BK, no matter how much they're making.
By the time you retire, you should have all debt paid off and have a big enough nest egg that you only need to pull 4-5% or so a year out to live on. You need to have health insurance, at least several months of emergency savings, etc. If you're used to living on $400-500k a year, you'll likely need at least $10 mil liquid saved up.
To get to that point, you have to be disciplined. Most people are fucked in that regard. I could retire now and live a much more extravagant and wasteful lifestyle if I chose. But I enjoy what I do and am obsessive about it, and find wasting money to be dumb.
90% of all businesses fail, usually due to a lack of cash flow. It's very risky, nowhere near a guarantee. I have built my business with lots of hard work and a little good luck, but it didn't happen overnight. The get rich quick fantasy is just that for just about everyone.
I know guys who sold their businesses for 8-9 figures after decades of building them with lots of hard work, often paying themselves a relatively modest living along the way. A buddy of mine is the sole heir to a 4th generation oil company worth just under a billion that has taken nearly 100 years to get where it is.
The guy who starts a software company or record company out of his basement with $10k and sells it a year or 2 later for 9 figures or more is a very small percentage of the population. Most of us have to work many years to build most or all of our wealth, and many people must do it by working for someone else - which is not necessarily a bad thing if you're high enough up on someone else's totem pole to be making at least a good living or hopefully big bucks.
A guy who retires from a chemical plant who may have never made much more than $150k a year, who has no debt, doesn't try to live like the Sultan of Brunei, and has $3 mil in retirement savings he's wanting to roll over to me is every bit the multi-millionaire that the rapper is who earned $200 mil but blew just about everything and is down to his last $3 mil. And I'd rather have the first guy as a client, because he's going to listen to me and not waste my time and blow that nestegg like the rapper will. I'll still be making money off the first guy after several years, and he'll be even richer, while the rapper will have gone through that last 3 mil.
No....the 7 figure is absolutely pointless, If you have amassed a million yet your earnings are average that million doesn't hold as much value.
I started out as a financial advisor, I came across a lot of asset rich cash poor individuals who lived in nice neighborhoods in big houses...but at their old age the income element was very low. I can tell they were struggling to make ends meet and if you have a pile of cash with low/no income at 70 you've no idea whtwher this will need to last you 6 yrs or another 25yrs.
The Millionaire Next Door preaches a formula which could easily lead many to the above scenario.
I wasn't talking in my example about Entrepreneurs riddled with debts...I'm saying stop earning and don't focus on saving and put your efforts instead into making money in tangible and sustainable amounts.
