Rich

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.

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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.

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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

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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.

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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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Wine & Cheese

THE AIR GETS NOTICEABLY THINNER AT $50 million to $500 million in net worth -- partly because you're now flying in your own jet. "The first thing people do after arriving in this group is to resolve to never to fly commercial anymore," says Lagomasino of GenSpring. The fabled Gulfstream V, which can carry more than a dozen people and fly internationally, is yours for $20 million to $50 million, depending on your preferred level of luxe.


A penny-pinching hectomillionaire might opt instead to up his or her stake in a jet through a fractional-ownership outfit. A 50% stake in a jet through NetJets, for instance, offers 400 hours of flying a year and costs $3.3 million, plus $50,000 a month for management fees. By contrast, a minimum stake of one-sixteenth offers 50 hours of flying for $417,000, plus $7,000 for management fees.

While the range of wealth in the Wine & Cheese category -- $50 million to 10 times that amount -- may seem wide, the members tend to have similar goals. Philanthropy, for instance, often becomes a preoccupation, since all members of the group are likely to outlive their money by wide margins. Many launch their own family foundations to carry out customized giving. The number of family foundations stood at 34,000 at last count, up from about 28,000 in 2001.

The opportunities for home ownership become particularly intriguing for the Wine & Cheese crowd. While lesser millionaires may have a nice second home in, say, the Bahamas or Europe, people with $50 million and up might well have three or four homes. And thanks to the private jet, the homes can be in places that are difficult to reach on commercial airlines, like Sun Valley, Idaho.

Your primary residence won't be too shabby, either. In New York City, if you have $50 million in the bank, you can probably afford a $15 million cooperative apartment, says prominent socialite Alice Mason of the Alice F. Mason Ltd. real-estate brokerage.

The rule of thumb, she says, is that you can buy a home that costs about a third of your net worth, assuming you don't want too much of your fortune concentrated in your home. She believes the "true rich" of Manhattan have net worths of $100 million, allowing them to comfortably buy $30 million Park Avenue apartments with several bedrooms.

Champagne & Caviar

WITH A NET WORTH OF $500 million or more, "You can buy whatever you want" in Manhattan real estate, says Mason. Or you can buy anywhere else. Some members of this group buy $20 million homes "all over the world," says Gary Gold, realty broker to the rich at Hilton & Highland in Los Angeles. He's been as surprised as anyone by the growing number of people who qualify for the Champagne & Caviar class. Five or 10 years ago, he says, "you'd know who they are. Now, they can have vast wealth and you don't know who they are."

Leslie Mandel, chief executive of the Rich List, a marketing company, contends there are now more than 2,000 Americans with net worths of a $1 billion or more, far more than the 400 who appear on Forbes' annual list (the cutoff for that is now $1.3 billion). Some bankers figure the number of billionaires is closer to 500, but either way, it's up remarkably from the 170 of 10 years ago.

When you hit $500 million, you can at last buy a decent mega yacht. For about $50 million -- and another $5 million a year in maintenance payments -- you can have a 200-foot yacht with 21-foot launches, 15 crew members and five or six staterooms, says broker Sanderson.

Like realty broker Gold, he says potential customers are getting harder to pick out of the crowd. "At one boat show, a guy in cutoff shorts and a T-shirt was one of the wealthiest guys I ever met," he says. "You never know."

It goes without saying that you will travel to the mega yacht in your private jet. Surprisingly, however, your kids may be getting bored with the jet. In his 2007 book about the wealth explosion, Richistan, Wall Street Journal writer Robert Frank tells the story of an 11-year-old girl who asked her father for a ride on a commercial airline even though the family owned its own jet. "I want to ride on a big plane with other people," the girl said.

The fact is, people in the Champagne & Caviar set are so rich that their money can become a burden. Everyone from your gardener to your local opera house may know about your money and want a piece of it, suggests Lagomasino. "It's kind of sad," she says. People at this level, she says, have to ask, "Do you like me or my money?"

Many Champagne & Caviar members ratchet up their philanthropy to world-saving proportions. They can scarcely get rid of their money fast enough. Bill Gates, with a net worth of $58 billion at last count, would have to spend about $10 million a day on non-appreciating items like McDonald's Happy Meals just to hold the level of his wealth constant.


Even people at some lower levels of wealth turn philanthropy into a full-time pursuit. Take John Hunting of Grand Rapids, Mich. Now 76, he inherited $140 million when a company started by his father went public 10 years ago. He set up a new foundation for environmental causes and gave it $100 million of his fortune. A bachelor with no children, he plans to give most of the rest away, too.

"I live off my income and devote myself to philanthropy," he says.

THIS IS NOT TO SAY THAT AMERICA'S rich have stopped spoiling themselves. They absolutely haven't. This May, for instance, all 750 seats at Christie's are expected to be full as a Mark Rothko oil painting is auctioned for an expected $30 million-plus says Marc Porter, president of Christie's Americas.

And for many members of all three groups of wealth, the term "credit crunch" means nothing. American Express offers the truly rich a Centurion card with such perks as zero-gravity flights with astronaut Buzz Aldrin. A person with $500 million in net worth could charge $10 million to the card for some gambling in Monaco. But even that card holder would first undergo a credit check. Yes, Virginia, there are deadbeat billionaires.