It used to be that becoming a millionaire was regarded as a huge achievement. In today's dollars, however, it is fairly trivial, thanks to inflation. In fact, today's new rich is over $5 million.

According to the Department of Labor's inflation calculator, $1 million today was worth only $183,285 in 1970. But $1 million in 1970 had the same buying power as $5,456,005 today.

Depending on your lifestyle, if you have amassed $1 million at age 65, you may not even have enough to retire. At age 65, you can withdraw only 4.36 percent of your assets each year to ensure you don't deplete your savings before you die. So if you are just a millionaire, you must be able to live on an annual income of $43,600. And if your lifestyle demands twice that amount, you don't have enough money to retire yet.

Many of our parents and grandparents were fortunate enough to have pension plans that continued to pay their salary in retirement. Even though they never had a large investment account, those guaranteed benefit plans were extremely valuable. A pension paying $43,600 a year starting at age 65 is worth $1 million in the bank. Our parents and grandparents were truly millionaires, although they didn't know it!

But the days of defined benefit plans are over. Most employers today provide defined contribution plans. They define the amount they contribute to your retirement, usually in the form of matching dollars, and you are responsible for saving a sufficient amount and investing it wisely. Thus employees must amass $1 million for every $43,600 they'll need when they retire.

Want a higher lifestyle? Save $1.5 million, and you can spend $65,400 each year. Save $2 million and you can spend $87,200. At $2.5 million you can spend $109,000. So don't think people with a big income don't have to worry about money. Those accustomed to a high lifestyle can find it very difficult to save enough to retire.

All this information leads us to the most important lesson about wealth. You can live rich or you can be rich.

Many people live as though saving and investing wealth was wrong. Yet consider the alternative: Is spending every dime you earn virtuous? Isn't it better to produce more than you consume? Isn't it preferable to consume less and therefore have more wealth that you can invest and put to work creating jobs and producing goods?

After all, the economic definition of capital is deferred consumption. Can you put off spending or decline to consume long enough to create investment capital that creates factories, businesses and jobs so others can benefit?

Consider two families with identical incomes. Family A lives rich, buying high-definition TVs, indulging in luxurious vacations, dining out frequently, and so on. Family B chooses to save and invest instead. Which family is wasteful and addicted to wealth, the family that is living rich or the one that is growing rich?

Family B may live simply and modestly below their means during their entire working careers. Amazingly, for every $100 a month they save and invest at 10 percent, they will have $1 million more when they retire. The two families may have the same income, but Family A spends $250 each month on a richer lifestyle. Meanwhile, Family B retires with $2.5 million in assets. Interestingly, one of them we encourage, help and support and one we envy, tax and ridicule.

The members of Family A who have lived rich will have no assets at retirement and will further strain the Social Security and Medicare systems. We perceive them as the truly needy when in fact they have lived life as the truly greedy. They could have taken care of themselves, but instead they burdened society simply by ignoring their retirement.

To add insult to real societal injury, these same people often claim they just don't care about money. They are above amassing wealth and instead just live to enjoy themselves. If they truly were indifferent about money, however, they would be able to live on 15 percent less than their take-home pay and save and invest the difference.

A couple I know just retired with $2.5 million after working and earning quite modest salaries. They lived simply and practiced frugality. Nothing was wasted. They waited a few years before purchasing the latest technological gadgets and then bid for them on eBay. They made do or did without. They grew rich by shopping at sales and avoiding impulse buying on credit.

We won't be able to help the truly needy until a majority of Americans realize they are part of the problem. People's failure to save for their retirement stresses our governmental programs with those who ought to be multimillionaires. Saving just a few hundred dollars a month over your working career makes the difference.

No matter what your income, a similar family is living off half of your salary and still saving more than 15 percent of their take-home pay. Another family is earning twice what you earn and struggling to make ends meet. Nearly every family wishes they had an extra $10,000 a year to make life easier.

Because of inflation, the gap between the rich and the poor is growing. If $5 million today is less than $1 million in 1970, the absolute dollar difference between the rich and the poor has to be at least five times greater. The poor always have zero.

Greg Mankiw, a professor of economics at Harvard, offers an interesting analysis: "If we compare the incomes of the top and bottom fifths, we see a ratio of 15 to 1. If we turn to consumption, the gap declines to around 4 to 1.

"Let's take the adjustments one step further. Richer households are larger —an average of 3.1 people in the top fifth, compared with 2.5 people in the middle fifth, and 1.7 in the bottom fifth. If we look at consumption per person, the difference between the richest and poorest households falls to just 2.1 to 1," he continues

Decide to be rich. Your retirement, and the country's welfare, depends on it. ________________________________________

Marotta Asset Management, Inc. of Charlottesville provides fee-only financial planning and asset management. Visit www.emarotta.com for more information. Questions to be answered in the column should be sent to questions@emarotta.com or Marotta Asset Management, Inc., One Village Green Circle, Suite 100, Charlottesville, VA 22903-4619.