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9 Uncomfortable Truths About Money Only Rich People Understand

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Who does not want to be rich? While it is true that money can be the solution to many of your problems, it is also true that money itself can bring a lot of problems. Having millions of dollars of net worth can easily put even the brightest minds out of their wits. Getting rich is one thing, and sustaining the money to stay rich is a different story.

So, what are some uncomfortable truths about money that only rich people can relate to? Despite having tons of money, here are some money-related issues that rich people face.

1. Tax Planning Becomes More Complex

Tax planning for the ultra-wealthy is a complex and ever-changing process. As recently as 1980, the top tax rate for UHNWIs was 70%; in 1963, it was a staggering 91%. However, taxes on long-term capital gains for the highest earners are at 20% today. The Trump administration’s Tax Cuts and Jobs Act signed into law on Dec. 22, 2017, reduced the top tax rate from 39.6% to 37%. These changes are temporary and are expected to expire in 2025.

Moreover, Biden’s proposed tax policy aims to increase taxes for the highest earners. His proposal includes a new top-income tax rate of 39.6%, targeted at those making more than $452,700 a year and married couples making more than $509,300. The capital gains tax would also increase to 39.6% for those earning $1,000,000.

The ultra-wealthy have access to various financial tools that most people do not. These can include trusts, offshore accounts, and creative accounting practices that can help them to legally reduce their tax bill. However, it can be difficult for the wealthy to keep up with tax laws and regulations changes and determine the best course of action for their specific financial situation.

2. Estate Planning Becomes Critical

Ultra-high-net-worth individuals constantly struggle to maintain their fortunes while planning for the future. Not only do they want to preserve their wealth for their lifestyles, but they also want to ensure that their heirs inherit as much of it as possible without government interference.

One way the government can interfere with the inheritance of the ultra-rich is through estate taxes. Estate taxes only apply to the wealthiest individuals, with the top 10% of earners contributing more than 90% of the tax. Even more remarkable is that the richest 0.1% of individuals pay almost 40% of all estate taxes.

To minimize the amount of estate tax owed, UHNWIs must navigate a complex set of constantly changing regulations. For example, the Tax Cuts and Jobs Act increased the exemption for estate taxes to $11.4 million for the 2019 tax year. While this may seem like a lot, anything beyond that amount is taxed at 40%.

Despite the increase in the exemption, the maximum estate tax rate has decreased over time. In 1997, any amount above the $600,000 exemption was taxed as high as 55%. However, the more an estate is worth beyond the exemption, the greater the amount of money at risk of being taxed.

3. They May Still Feel Like They Don’t Have Enough Money

Surprisingly, many millionaires don’t feel wealthy enough, even with a million dollars in investments. According to an ABC news report, only 28% of investors with investable assets between $1 million and $5 million viewed themselves as rich. 

The report states that 40% of those with $5 million or more in investable assets also did not feel rich. People who have experienced market volatility know it takes significant money to have no financial constraints.

Moreover, wealth is relative, especially in a world where people try to keep up with the Joneses. Most wealthy people have concerns about the financial situation of their children and grandchildren and long-term care. So, they hold around 20% of their assets in cash. 

Even with a significant amount of money, they don’t feel wealthy because they lack a comprehensive financial plan to cover these longer-term costs.

[Related: What Rich People Do Differently With Their Money]

4. Lifestyle Inflation Can Be A Trap

Lifestyle inflation can be a trap for rich people because it can derail their finances and limit their saving potential. When people’s expenses increase along with their income, it’s natural to want to buy more luxurious things or take more vacations. However, unless their savings rate keeps up with their rising expenses, they could end up worse off than when they earned less. 

But why can that be so difficult after all? It is because lifestyle inflation can be much higher than the prevailing inflation rate. So, while inflation at present is around 6% per annum, lifestyle inflation would be much higher, say 20%. Lifestyle inflation is hard to avoid because it often happens slowly and isn’t always easy to detect.

For instance, if you changed jobs and earned a $50,000 raise, you might be tempted to buy a new car, upgrade your gym membership, and eat out more often. Such expenses can add up quickly and reduce your savings rate. Even if you cut back on some expenses, your ability to improve your bottom-line savings is still capped unless your income increases. 

5. Philanthropy Becomes A Priority

Philanthropy has become a priority for many wealthy individuals. In fact, many of the world’s wealthiest individuals, such as Warren Buffett and Bill Gates, have pledged to give away a significant portion of their wealth to charitable causes. 

Among the billions donated by the riches of the US, the majority of donations of over $1 million are given to colleges and universities. However, about 12% of such donations go to health-related charities and hospitals.

Moreover, charitable giving has been on the rise in recent years. In 2019, charitable giving in the US amounted to $449.64 billion, with charitable giving by foundations growing by 17% from 2020 to 2021.

It is also interesting to note that the percentage of the charitable deduction as a percentage of adjusted gross income increases with income. For example, individuals with an adjusted gross income of over $10 million have a charitable deduction of 9.3%. In comparison, those with an adjusted gross income of under $50,000 have a charitable deduction of only 8.4%.

6. They Are More Prone To Financial Scams And Fraud

According to statistics from the Federal Trade Commission, consumers reported losing up to $8.8 billion to fraud in 2022. which is more than a 30 percent increase compared to last year. What’s worth noting is that many of those who fell for fraud were wealthy and educated.

The category with the highest reported losses was investment scams, which totaled over $3.8 billion in 2022. This amount more than doubled the reported losses in 2021. Imposter scams ranked second with reported losses of $2.6 billion, an increase from $2.4 billion in 2021.

Fraudsters often successfully deceive even the most respected and experienced professionals by exploiting their psychological weaknesses. Therefore, the list of high-profile figures defrauded is long and continues to grow. 

For example, FTX founder Sam Bankman-Fried was able to attract star-studded investors and endorsers, including celebrities like Steph Curry, Tom Brady, and Naomi Osaka. 

FTX, Bankman-Fried’s crypto exchange, collapsed in November 2022, and FTX is now bankrupt. He is also facing multiple charges of fraud.

Similarly, Elizabeth Holmes, the founder of Theranos, once regarded as the youngest female billionaire, also duped a long list of investors, including some renowned names, like the Walton family and Rupert Murdoch. Holmes fled away to Mexico after her conviction in 2022.

7. They Are Also Worried About Managing Debt

Managing money can be challenging, even for the wealthy. According to a recent Bankrate survey, 46% of US adults with a net worth of at least $100,000 are likelier to have credit card debt than those with a negative net worth. 

Lifestyle creep, better access to credit, and lack of liquidity are reasons the wealthy can have problems managing their debt. According to a USA TODAY report, US adults with a net worth over $1 million are the most likely to be credit card debt free, while about 46% of those with a net worth between $200,000 and $1 million carry credit card debt. 

Strangely, according to data from the Federal Reserve, Americans with the highest incomes borrow more than those with the lowest incomes. Only 36% of the total debt is held by the bottom 50% of the population, compared to 4.6% held by the wealthiest 1% of the population. 

So, even rich people occasionally need to borrow money. Besides, it is also clear that debt is not necessarily a sign of financial instability.

8. They Are More Likely To Face A Lawsuit

With greater wealth comes increased visibility and a higher likelihood of being targeted by litigation. The wealthy may face lawsuits related to business dealings, personal injury, property disputes, or even frivolous lawsuits. Moreover, fewer than 20% of those with a net worth of more than $1 million fear being sued, while 80% of those with over $20 million net worth have a fear of being sued.

The wealthy are perceived as attractive targets for lawsuits. According to the World Report and US News, people with high net worth are seen as deep pockets who can easily settle any lawsuit. They also tend to have more assets, which makes them more likely to be involved in legal disputes, such as property or business-related issues.

Moreover, some wealthy people may be tempted to take advantage of their financial power, which can lead to accusations of fraud or other financial crimes. That is why high-profile individuals like Mark Cuban are extremely cautious about investing in any venture that has even a small risk of being sued.

9. Planning For Retirement Without Sacrificing The Current Lifestyle Is Difficult

Planning for retirement without sacrificing the current lifestyle is difficult for rich people. According to a CNBC report, with persistently high inflation and market volatility, 55% of working Americans now feel they are behind in their retirement savings. 

With nearly 24.5 million millionaires nationwide, the US economy is seeing a rise in millionaires. However, even seven-figure savings cannot offer the security it used to, especially with inflation-infested market swings. 

According to the same CNBC report, 58% of high-net-worth individuals said they would have to keep working longer, and 36% worry that retirement may not even be an option. Shockingly, 35% of millionaires said their ability to be financially secure in retirement will ” take a miracle.” Moreover, Americans now expect to need $1.25 million to comfortably retire as higher costs strain household budgets. 

Is Money Management More Difficult For Rich People?

Money management is not more difficult for rich people. Regardless of one’s income or net worth, sound financial education and knowledge are crucial in sustaining one’s money through inflation or other economic challenges. It is possible to create a budget, invest wisely, and plan for retirement with discipline, regardless of one’s financial status. 

While having more money may offer more options and flexibility, the fundamentals of financial management remain the same for everyone. Ultimately, it’s about making informed decisions and being mindful of one’s spending and saving habits.


Do Rich People Also Worry About Money?

Wealth preservation, lifestyle maintenance, financial obligations, and unexpected expenses are some concerns that can trouble rich people. They are also anxious about sustaining the wealth they inherited or built through a successful business. So, having money won’t make you immune to financial worries or concerns.

Is Investment Only For Rich People?

No, investing is not only for the rich. Investing is accessible to anyone who has money to put into investments, regardless of income level or net worth. In fact, investing can be an excellent way for individuals to grow their wealth. With the increasing availability of online investing platforms, investing has become more accessible to people of all income levels.

How Much Do You Need To Earn To Be Called Rich In The USA?

According to recent data from the United States Census Bureau, to be considered “rich” in the US, you would need to earn an annual income of at least $200,000 as an individual or $335,891 as a household. It will put you in the country’s top 5% of earners. 


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Managing Editor
Deanna Ritchie is a managing editor at Due. She has a degree in English Literature. She has written 2000+ articles on getting out of debt and mastering your finances. She has edited over 60,000 articles in her life. She has a passion for helping writers inspire others through their words. Deanna has also been an editor at Entrepreneur Magazine and ReadWrite.

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