When a million is not enough

In a time when a television network can afford to run a game show called Who Wants To Be a Millionaire but the average Sydney house costs $600,000, it's time to re-assess the value of $1 million dollars.

Can it still guarantee you financial freedom when whole residential blocks in Sydney are lined with homes carrying million-dollar plus price tags?

Do you need something closer to $10 million or $20 million to attain the symbolic separation from the masses a million once bought?

“You were generally considered to be rich if you had $1 million in the 1950s and now nobody would say you were seriously rich unless you had $10 million,” author and sociologist Michael Pusey says.

“But if you're talking about a sum of money that leaves you without economic insecurity then probably no sum will do it because expectations have risen and the multimillionaires themselves are at risk of going bankrupt and they want more and more … in order to feel safe.”

The professor of Public Ethics at Charles Sturt University, Clive Hamilton, agrees that the noughties' equivalent of a 1950s millionaire is someone with between $10 million and $20 million to burn.

And Eddie Maguire's television show is his proof.

“We now have a television program called Who Wants To Be A Millionaire, that would have been impossible 30 years ago because no television company would have been willing to stump up prize money of a million dollars, it would have sent them broke if anybody had won,” Professor Hamilton said.

“So now $1 million dollars is perhaps not chicken feed … but it just doesn't have the punch that it used to have.”


The magic million may not have the same cache it once did but that will be little comfort to the many Australians who found themselves kicked out of the club during the GFC.

A study compiled by financial research company CoreData found nearly a quarter of the 1700 Australians with investment assets of more than $1 million were pushed out of the $1 million-plus bracket by the global financial crisis.

Another survey in the Boston Consulting Group's latest global wealth report, reported a 40 per cent drop in the numbers of millionaire households in Australia.

The survey excluded individuals' businesses, homes and luxury goods, a key differentiator in the wealth race.

“It's about money that you could use, money is hard to use if it's tied up in your house,” wealth researcher Simon Kelly says.

“If you talk about people having $2 million to spend that's quite a different sort of person to one that's just worth $2 million.”

Professor Kelly, working at the University of Canberra's National Centre for Social and Economic Modelling, says international benchmarks have declared US$2 million to be “the new $1 million dollars”.

“And that's excluding houses … because particularly in places like Sydney, there'd be whole suburbs where the value of each house is worth $1 million dollars and they take that out.”

A Sydney-based funds management specialist, who wanted to remain anonymous, says $10 million – split just about evenly between property and income-generating assets – would have him sleeping soundly at night.

“Enough to form a stash to generate comfortable annuity for a period of 30 years,” he says.

But Professor Pusey says it is impossible in today's economic, political and social climate to confidently predict what “enough” might look like.

“In the baby boomer times we assumed that we would be able to buy a house on one income; we assumed that we would have quality health care for nothing; we assumed we'd have enough education as we wanted or needed for nothing; we assumed that the pension with our own savings would support us in our retirement and we assumed that we would have the resources to set up our children with those things,” he says.

“Today you would need vastly more than $1 million to achieve those ends for yourself.”

Professor Pusey says incomes are much more volatile these days, people enter the full-time labour market later and are often forced out earlier but live for much longer.

“The good news is you're going to live until you're 82-and-a-half, the bad news is you get pushed out of the labour market in your 50s if you can make it that long,” he says.

"There is no economic security and [people] need vastly more money to get it because their incomes are insecure and because debt levels are much higher than they were."