I own a house, so I am wealthy!

Why would so many Americans think they are so wealthy?  Looking at a New York Times study of class in America, one particular statistic stood out to me: 

First of all, setting the question of realism aside, it’s an amazing statistic that almost half (45%) of Americans think they will be wealthy in their lifetimes.  Here are a list of reasons why you might think you will be wealthy when actually you won’t.

I can buy practically anything I want to, already!  Having a credit card with a $30,000 credit limit doesn’t actually mean you have $30,000.  Just because the price of flat-screen TVs is dropping does not mean that you must buy one.  The content of your cable channels is still the same junk, they’ll just look better. 

My house is already the size of Versailles!  Just because you used an ARM to buy a five-bedroom six-bathroom house with a three-car garage for you, your wife and your dog Mimzy in anticipation of having 1.3 kids does not make you Louis XIV. 

My house is already worth more than Buckingham Palace!  Just because you go to zillow.com or talk to your real estate broker and hear that your house is worth 50% more than you paid for it two years ago does not mean you have cash in hand or that you could actually sell it for that much.

My retirement accounts are full of investments returning 14% annually!  After you net out fees and expenses and account for the inevitable higher taxes when you withdraw (because the bill will come due for the Baby Boomers) you’re looking at 3% per year, and inflation ate that up.

The United States’ economic power is everlasting and all-powerful!  While the US economy remains the engine that drives the world forward, imbalances in our trade accounts, a weak dollar and an increasingly robust European economy are going to start to take their toll in the next 25 years.  If you are relying on that S&P 500 index fund to return 10% per year forever, you may be disappointed.

I know that I often take the view that managing life and career and personal finance are battles.  I think of them as zero-sum games, and they are not; sometimes we can all win.  But if you have the mindset that 50% of the population could become wealthy in their lifetime, then something is wrong with my definition of wealthy.