Millionaire Drawbacks

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So you want to be a millionaire? You might want to think again.

According to the last personal wealth statistics study conducted by the IRS about 2.7 million Americans held gross assets of $1.5million or more. And with the game shows and the lottery and the contests everyone is looking to break into that tax bracket. But according to the investment dictionary Investopedia.com the golden life might be a little tarnished.

The website says with great wealth comes great worries, and there are more drawbacks to being a millionaire than you think. For example you’re going to become very close with your tax man. A bigger bank account means a bigger chunk of change to Uncle Sam. And when the federal government is done with you, your state government will move in. And it’s not looking good for the wealthy. Last year eight states imposed a new tax bracket of 6.25% on state income tax filers who earned over a million dollars. To see the other reasons seven figures might not be worth it keep reading. Might make you appreciate your next paycheck.

1. Meet Mr. Tax Man
As a millionaire, you're going to be on the hook for doing a greater amount of (financial) good for your country.
And it's not just Uncle Sam that will ask for his bigger portion of your paychecks -- an increasing number of states will have their eye on your bottom line. Last year, Maryland became the first state to impose a new tax bracket (6.25%) specifically for state income tax filers who earn more than $1 million. Eight other states -- Connecticut, Delaware, Hawaii, New Jersey, New York, North Carolina, Oregon and Wisconsin -- followed Maryland's example and hiked their tax rates on the wealthy.

2. It's like taking a second job
Possessions take time to maintain. Whether you're talking about clothes, cars or chateaus -- the more you have of anything, the more time it will take. Money is no different.
Once you have millions, you won't be able to just pay a few bills and balance your checkbook at the end of the month.
It will take a significant amount of your time to budget, pay taxes, invest, give, plan spending, meet with professionals, etc.

3. Meet the Joneses
Vaulting into a higher economic stratum comes at a literal price. Once you have the means to buy a bigger house, purchase a nicer car and join that nearby golf club, you're most likely going to meet a whole new group of people -- wealthier people. And becoming their friends can open up a whole new world. That world, while enjoyable, often raises your expectations about your standard of living overnight. All of a sudden, dining out means a waterfront table for tapas, not McDonald's and a movie.
Whether you intend to begin the "keeping up with the Joneses" game or not, once you make those more expensive choices and move in those more expensive circles, you're more likely to find yourself paying a lot more attention to what others are doing and join right in. It's easier to swim with the current than against it.

4. 'But you shouldn't have!'
No more bargain shopping for birthday presents.
Friends, family members, co-workers and employees begin to expect bigger, nicer and, well, more expensive gifts. You'd better budget for that. See No. 2.

5. They will come out of the woodwork
Just ask lottery winners like Twila Shultz, who won the Super 6 Jackpot in 2001. After winning $8.4 million, her family had to deal with all kinds of people approaching them for money. She told the Pittsburgh Tribune-Review that "one even showed up at the door wanting to borrow $100,000. . . . She even (brought) pictures of her husband's feet. She wanted the money for (surgery on) his feet."

Having money will attract people who need or want money. You'll need a plan for how to deal with them -- whom you want to give money to and whom you want to turn away. And then you'll have to take action every time the request comes. See No. 2 again.

6. It's a roller coaster
As your portfolio value increases so, most likely, will your anxiety over market
fluctuations that could quickly erode your net worth. Never before did you lose sleep over a sagging dollar or what the Shanghai stock exchange did overnight.

Welcome to a millionaire's world -- where stocks and sleep don't necessarily mix well.

7. Whom can you trust?
It's not just long-lost friends and family members who are bound to come knocking -- it's professionals as well. You will likely receive a steady flow of e-mail, snail mail and voice-mail offers from lawyers, investment advisers and tax attorneys all eager for your money -- or, that is, your "business."

If you don't have a strong background in personal finance, investing or taxes you could probably benefit from assembling a team of credible, experienced professionals who can give you some much-needed advice.

The question, again, becomes whom should you trust? You'll need to talk with trusted friends, undertake research and do your due diligence. Sounds a lot like No. 2.

8. You'll suddenly be less secure
As a millionaire, you are now a target for an unwelcome group of people: criminals. A bigger house in a nicer community could attract burglars. A more expensive car could attract the attention of car thieves. A fatter investment portfolio invites potential perpetrators of fraud and other crimes against people with a high net worth.

Suddenly, Saturdays are spent checking out home and car alarm systems and your investment adviser's professional background to make sure your wealth and possessions are safe. Once again, we're back to No. 2.

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