Monday, March 24, 2014

You Are Wealthy: No Liquid Assets, $50,000 In Illiquid Assets

I was taken aback by an article that appeared on the Washington Post's Wonkblog. The article title, Living paycheck to paycheck: It’s not just for the poor, states a wealthy individual is one with no liquid assets and $50,000 in illiquid assets. The relevant part of the article noted,
"The Wealthy Hand-to-Mouth," by economists at Princeton and New York University, finds that roughly one-third of American households -- 38 million of them -- are living a paycheck-to-paycheck existence. These are families who hold little to no liquid wealth from cash, savings or checking accounts. But a staggering two-thirds of these households are not actually poor; while they resemble poor families in their lack of liquid wealth, they own substantial holdings ($50,000, on average) in illiquid assets (emphasis added). Because this money is locked up in things like their houses, cars and retirement accounts, they can't easily dip into it when times get tough.
I hate to break it to many readers, but an individual or family that has an average of $50,000 in illiquid assets and no savings will not live a comfortable retirement. The conclusion of the article states this type of individual should be eligible for government entitlement programs. The article refers to these entitlements as "economic stimulus programs."

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