You Must Be Rich Theory

I was recently at a family event where I found out a distant relative of mine actually retired in their late forties.  It was amusing to watch the response from some of my family.  One of them in particular instantly said “Oh, they must have won some money or something.  They must be rich to retire that early.”

I tried to point out they might have just lived below their means for a while and saved it up, but that family member won’t have any of it.  It was like they couldn’t conceive of the idea that if you save for a long period of time and don’t spend like mad that it is entirely possible to retire just before 50.  The person in question suffers from the “You must be rich” theory.

For people caught in the trap of that theory they really honestly don’t get it.   They can’t conceive that is it is possible to not spend a good chunk of your income and instead save it.  Or perhaps they don’t understand the miracle of compound interest.  Or perhaps they lack the idea you can live off less than $30,000 a year and be happy. Something is lacking in their mind to understand that just about everyone can become rich slowly.  Not by winning the money, but investing slowly over decades until you no longer need to work.   Honestly I’ve never sure which concept is missing from their understanding.  In any case those are the people that will work until they are 65 or later because they assume they need to.

People like this often don’t understand money and don’t want to understand it.  As such they are often doomed to lose it to good advertising or salespeople pushing high fee investments.  Then they wonder why they don’t have any money to save when they are literally bleeding cash from a thousand small places.

What frustrates me the most the “you must be rich” theory is the label is often wrong.  Some people aren’t rich with huge sums of money to their name who leave work a bit early.  Instead they often live modestly because they have modest income from investments and/or pensions.  It also frustrates me that I won’t be able to share my good fortune later on in life with people that this.  They won’t understand it, so why bother telling them.  Instead I’ll just say I changed careers, which will be true.  I just might not get paid for my next one after I retire.

So have you seen a suffer of “you must be rich” theory?  If so have you ever seen one see the light and get past it?

6 thoughts on “You Must Be Rich Theory”

  1. In any case those are the people that will work until they are 65 or later because they assume they need to.

    I would postulate that those are the people that will work until they are 65 or later because they do need to; in the sense that they did not save up nearly enough money over the years to retire any earlier than that.

  2. This is so true! Add to that, if you ARE retired young, people assume you are rolling in the dough, when actually that dough has to last the rest of your life. So while you may have been “rich” while you were still pulling down an annual salary, not so much anymore.

    My working friends have a lot more room for error than I do, but most people don’t see it that way.

  3. I’ve learned not to talk about my plans to retire (or semi-retire) later this year at the age of 44. If I hear one more person say “you’re so lucky” – I’ll scream…
    Meanwhile, they’re living in their $500k house (10% down!) with 2 new cars with loans and payments out the wazoo. I guess I am lucky – to have parents that taught me how to be frugal, and that I was “lucky” enough to start copying their ways with money in my 30’s.
    And I won’t be “rich” (in money) either – comfortable, but definitely not rich.

  4. People who suffer from lifestyle inflation
    have a different mind set.
    The more they earn,the more they spend,there is little left over to be saved.
    The gap between what they would need to retire early and what they actually have becomes too wide.
    Some sort of financial windfall would be required to close the gap.

    Of course,they could close the gap by controlling their spending and saving,but apparently this does not occur to them.

    You gotta feel sorry for the them.

  5. Syd & Jacqueline,

    Well it appears the problem is wide spread. Thanks for the feedback. It’s nice to know I’m not the only one hitting this wall with people.


    Good point. That might very well be the issue with these people.


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