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I'm not sure a $500k white shoe lawyer is middle class. Sure, they may work for a living, but they're also likely to have enough investments that they can just

I'm not sure a $500k white shoe lawyer is middle class. Sure, they may work for a living, but they're also likely to have enough investments that they can just live off the interest if they wanted. I mean, $500k a year is a LOT of money, even in places like SF.

mattnewton 10y ago
Eh, taxes and other expenses add up. I don't think it would be very comfortable to stop working. 500k today isn't what it was just a decade ago.
- dlp211 10y ago
  And a 100k isn't what it was a decade ago either. While I understand your underlying point (and somewhat agree with it), how you got there was a bit bizarre. We are talking about making 500k this year, which would be obviously less a decade ago when adjusted for inflation.
- Avshalom 10y ago
  500k is still over 20 years of working full time at target.
derefr 10y ago
Given that consumption (almost always) scales with social position, I imagine people will only really consider someone "rich" when they can still buy whatever they like, for the rest of their lives without working for a living.
- Retric 10y ago
  Bill Gates can't buy everything he might want to for the rest of his life. While people tend only think of things they can afford as reasonable expenses, there is no clear line between an iPad and paying for a Mars mission. If anything the Medean income seems like a good ballpark for enough. But, it's really hard to stop.
  - pyronik 10y ago
    Maybe so, but when its not worth it to you to pick up off the ground more than what other people make... I think its close enough to not quibble.
  - maxerickson 10y ago
    The clear line is a yacht with 2 helipads.
    - alasdair_ 10y ago
      Is that above or below two yachts with a helipad each?
    - vidarh 10y ago
      Like Paul Allen's [1] you mean? " Octopus sports two helicopter[2] pads on the top deck, a twin pad and hangars at the stern and a single pad on the bow; and a 63-foot (19 m) tender docked in the transom. There are a total of seven tenders aboard. The yacht also has a pool, located aft on one of its upper decks[citation needed], and two submarines (one of them operated by remote control for studying the bottom of the ocean).[citation needed] Side hatches at the water line form a dock for jet skis. " [1] https://en.wikipedia.org/wiki/Octopus_%28yacht%29 https://en.wikipedia.org/wiki/Octopus_%28yacht%29
  - jfoutz 10y ago
    Well, Bill Gates is a bit of an odd example. He's very thrifty. He could certainly afford $50 hamburgers, but due to the cost decides he doesn't want them. Even if MicroSoft didn't take off, he'd still be wealthy. He's the kind of guy that waits to get the absolute maximum value out of each dollar he spends. That's not a bad thing, by the way, just unusual.
    - Retric 10y ago
      He lives in a 'thrifty' 66,000-square-foot house. Sure, he could spend 10x as much on his lifestyle, but there is a point where more expencive does not mean better. As to being rich, sure he inherited millions. But, connections, background, timing, and luck only go so far. You really can blow any amount of money.
- jasode 10y ago
  Yep, it's the "keeping up with the Jones" and the Hedonic Treadmill.[1] The $500k lawyer isn't going to just drive a Honda. He has to have the BMW 7 Series ($130k) -- and he wants a brand new one every 2 or 3 years. Instead of getting a mortgage that consumes a tiny fraction of his income or buying a cheap house free & clear, he'll take on a mortgage up to the max credit limit allowed by the bank. Hence he has a $2+ million dollar estate in a gated neighborhood. Does he have kids? Well then, it must be private school. The most desirable private schools in NYC cost $40k tuition per student per year. 3 kids means $120k/year. Basically, you do the arithmetic and $500k/year is abject poverty -- uh I mean -- middle class. [1]https://en.wikipedia.org/wiki/Hedonic_treadmill https://en.wikipedia.org/wiki/Hedonic_treadmill
  - rayiner 10y ago
    I know a lot of people in that income bracket. I don't know anybody with a 7 series or an estate in a gated neighborhood. They're comfortable, but more like Audi A3 than 7 series. Few lawyers (or consultants or bankers) can make $500k in Iowa City (or even Seattle for that matter). Someone with a household income of $120k can easily afford a 2400 square foot house (that's the national average for a new house) within 30 minutes of work in a good school district near Des Moines. I'd estimate same combination takes an HHI of around $300k in the DC metro area. Jump to $500k (at that bracket you're losing almost half in taxes), and you're wearing nicer suits and saving better for retirement and your kids' college, but saving $100k per year isn't going to let you quit your job and live off interest any time soon.
nugget 10y ago
Here are some numbers to consider. $500k pre-tax is about $325k after taxes (SF or NYC). Spend 50% ($162.5k), save 50% ($162.5k). After 10 years of a consistent $500k pre-tax income (no burnout, no voluntary breaks, no unemployment), with modest annual stock market growth, and no black swawns (family illness, lawsuits, divorce), you've saved up about $2 million. The rate at which you can spend money and not run out before you die (called the Safe Withdrawal Rate or SWR) is about 4% (some will argue closer to 2.5-3%). 4% of $2 million is $80k/year pre-tax. How long you need to work to cover your $162.5k/year lifestyle becomes an obvious function of savings rate and market returns over an extended period of time (decades). The bottom line is that it's extremely difficult for working professionals to become ''rich'' in the sense that they can indefinitely sustain an upper class lifestyle on passive investment income alone. Read ''The Millionaire Next Door'' by Thomas Stanley (http://fave.co/2cLN5gp http://fave.co/2cLN5gp) to learn more about how wealth is truly accumulated and managed in the United States. This book had a greater impact on me than pretty much any other I've ever read.
- grecy 10y ago
  Which is why the number of years until you can retire has nothing at all to do with how much you earn, and everything to do with how much you save as a percentage of your income. http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/ http://www.mrmoneymustache.com/2012/01/13/the-shockingly-sim...

mattnewton 10y ago

Eh, taxes and other expenses add up. I don't think it would be very comfortable to stop working. 500k today isn't what it was just a decade ago.

dlp211 10y ago
And a 100k isn't what it was a decade ago either. While I understand your underlying point (and somewhat agree with it), how you got there was a bit bizarre. We are talking about making 500k this year, which would be obviously less a decade ago when adjusted for inflation.
Avshalom 10y ago
500k is still over 20 years of working full time at target.

derefr 10y ago

Given that consumption (almost always) scales with social position, I imagine people will only really consider someone "rich" when they can still buy whatever they like, for the rest of their lives without working for a living.

Retric 10y ago
Bill Gates can't buy everything he might want to for the rest of his life. While people tend only think of things they can afford as reasonable expenses, there is no clear line between an iPad and paying for a Mars mission. If anything the Medean income seems like a good ballpark for enough. But, it's really hard to stop.
- pyronik 10y ago
  Maybe so, but when its not worth it to you to pick up off the ground more than what other people make... I think its close enough to not quibble.
- maxerickson 10y ago
  The clear line is a yacht with 2 helipads.
  - alasdair_ 10y ago
    Is that above or below two yachts with a helipad each?
  - vidarh 10y ago
    Like Paul Allen's [1] you mean? " Octopus sports two helicopter[2] pads on the top deck, a twin pad and hangars at the stern and a single pad on the bow; and a 63-foot (19 m) tender docked in the transom. There are a total of seven tenders aboard. The yacht also has a pool, located aft on one of its upper decks[citation needed], and two submarines (one of them operated by remote control for studying the bottom of the ocean).[citation needed] Side hatches at the water line form a dock for jet skis. " [1] https://en.wikipedia.org/wiki/Octopus_%28yacht%29 https://en.wikipedia.org/wiki/Octopus_%28yacht%29
- jfoutz 10y ago
  Well, Bill Gates is a bit of an odd example. He's very thrifty. He could certainly afford $50 hamburgers, but due to the cost decides he doesn't want them. Even if MicroSoft didn't take off, he'd still be wealthy. He's the kind of guy that waits to get the absolute maximum value out of each dollar he spends. That's not a bad thing, by the way, just unusual.
  - Retric 10y ago
    He lives in a 'thrifty' 66,000-square-foot house. Sure, he could spend 10x as much on his lifestyle, but there is a point where more expencive does not mean better. As to being rich, sure he inherited millions. But, connections, background, timing, and luck only go so far. You really can blow any amount of money.
jasode 10y ago
Yep, it's the "keeping up with the Jones" and the Hedonic Treadmill.[1] The $500k lawyer isn't going to just drive a Honda. He has to have the BMW 7 Series ($130k) -- and he wants a brand new one every 2 or 3 years. Instead of getting a mortgage that consumes a tiny fraction of his income or buying a cheap house free & clear, he'll take on a mortgage up to the max credit limit allowed by the bank. Hence he has a $2+ million dollar estate in a gated neighborhood. Does he have kids? Well then, it must be private school. The most desirable private schools in NYC cost $40k tuition per student per year. 3 kids means $120k/year. Basically, you do the arithmetic and $500k/year is abject poverty -- uh I mean -- middle class. [1]https://en.wikipedia.org/wiki/Hedonic_treadmill https://en.wikipedia.org/wiki/Hedonic_treadmill
- rayiner 10y ago
  I know a lot of people in that income bracket. I don't know anybody with a 7 series or an estate in a gated neighborhood. They're comfortable, but more like Audi A3 than 7 series. Few lawyers (or consultants or bankers) can make $500k in Iowa City (or even Seattle for that matter). Someone with a household income of $120k can easily afford a 2400 square foot house (that's the national average for a new house) within 30 minutes of work in a good school district near Des Moines. I'd estimate same combination takes an HHI of around $300k in the DC metro area. Jump to $500k (at that bracket you're losing almost half in taxes), and you're wearing nicer suits and saving better for retirement and your kids' college, but saving $100k per year isn't going to let you quit your job and live off interest any time soon.

nugget 10y ago

Here are some numbers to consider. $500k pre-tax is about $325k after taxes (SF or NYC). Spend 50% ($162.5k), save 50% ($162.5k). After 10 years of a consistent $500k pre-tax income (no burnout, no voluntary breaks, no unemployment), with modest annual stock market growth, and no black swawns (family illness, lawsuits, divorce), you've saved up about $2 million. The rate at which you can spend money and not run out before you die (called the Safe Withdrawal Rate or SWR) is about 4% (some will argue closer to 2.5-3%). 4% of $2 million is $80k/year pre-tax. How long you need to work to cover your $162.5k/year lifestyle becomes an obvious function of savings rate and market returns over an extended period of time (decades). The bottom line is that it's extremely difficult for working professionals to become ''rich'' in the sense that they can indefinitely sustain an upper class lifestyle on passive investment income alone. Read ''The Millionaire Next Door'' by Thomas Stanley (http://fave.co/2cLN5gp http://fave.co/2cLN5gp) to learn more about how wealth is truly accumulated and managed in the United States. This book had a greater impact on me than pretty much any other I've ever read.

grecy 10y ago
Which is why the number of years until you can retire has nothing at all to do with how much you earn, and everything to do with how much you save as a percentage of your income. http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/ http://www.mrmoneymustache.com/2012/01/13/the-shockingly-sim...