How to Tell if You're Rich

If your household income is $250,000, other people might consider you rich—even if it feels as if you're just getting by.

The big debate over tax cuts—and who, exactly, constitutes the middle class that should get most of them—usually focuses on a single income number. Barack Obama wants to target his tax cuts at people making $200,000 or less, and his tax increases at those pulling in $250,000 or more. John McCain appears to have a more expansive view of the middle class. When asked earlier this year what the income threshold for "rich" people should be, he took a stab and suggested $5 million.

Whatever the number, focusing on income alone overlooks many factors that affect whether people feel rich or not. Where you live is obviously one of them, since $250,000 buys a lot more in Milwaukee than it does in Manhattan. And as any parent knows, household income tends to evaporate when the bills for diapers, daycare, braces, and college come due.

So we crunched some numbers to figure out what it takes to be rich in 40 cities across America—for a typical couple with no kids, and for a family of four. We started with Census Bureau data for household incomes in 2007 and ran two sets of numbers, since people define "rich" differently: average incomes for the top 20 percent of earners in each city, and for the top 5 percent. (View our methodology, and the complete results.)

If you take the more rarified view of the rich—the top 5 percent of earners—then nationwide, their average household income is about $311,000. But that average covers everybody from widows living alone to families with three kids in college. The average U.S. household is home to 2.54 people, so factoring in the actual size of your household produces a more realistic estimate of how much income it takes to live like the wealthiest 5 percent of Americans. For a family of four, nationwide, that's $490,000.

By the same measure, here's the household income required to be "rich" in the five most and least expensive cities in our sample:

                                   (View our list of all 40 cities.)

Some other revelations about how widely incomes range across America:

There's no single cutoff point that defines "rich." As our estimates show, the household income for a rich family varies greatly, from $350,000 in El Paso to more than twice as much in New York—$718,000. If we included smaller towns where many Americans live, the disparity would very likely be even greater.

Wealth isn't so transferable. If a rich family from Omaha or Colorado Springs moved to San Francisco, they'd need about $300,000 in added household income to maintain the same lifestyle. By the same measure, a family moving the opposite direction would feel even richer, as long as they didn't endure a pay cut.

"Rich" people live on the coasts. By Obama's definition of rich, the top 20 percent of households in San Jose, San Francisco, and Washington would be targeted for higher taxes. But in 32 other cities with a lower cost of living, households in the same upper quintile would qualify for tax breaks, because they earn less than $200,000, Obama's cutoff point. In six remaining cities, average incomes for the top 20 percent are between $200,000 and $250,000; these households, Obama says, would see neither a tax cut nor a tax increase.

It's easier to be rich without kids. Parents know this, needless to say, but families tend to have fewer earners contributing to household income, compared with childless couples—and more mouths to feed. By our estimates, a family of four has to earn about $180,000 more than the average household of 2.54 people in order to feel rich. That makes it even more important to find wealth in those little faces gathered around the table.