12 ms·

Dad, Are We Rich?

97 points by redm 7y ago

simonh 7y ago
Some wealthy trust fund babies were asked how much wealth they thought they would need to really feel financially secure long term. They had inherited wealth ranging from tens, up to hundreds of millions. Almost all of them named a figure about double their personal net worth, regardless of what that net worth was.
- bob33212 7y ago
  Humans naturally anchor to their social network. If those people grew up in rural West Virginia with coal miner family income they would tell you that 250k/year is wealthy. You have to actively resist this anchoring behavior. You have to remind yourself that just because your neighbor has a 50k car, it doesn't mean that your 10k car is not a good fit for you.
  - geggam 7y ago
    I came from a poor area. I used to think 80k/yr was rich. Time passed, I got work in Silicon valley with a wife and kids. Living there I think 500k would be middle class. Not even upper middle class. Perspectives change as you are exposed
    - silverfox17 7y ago
      80k/yr CAN be rich, it all depends on location. 80k/yr would be poverty in the valley, most of that money going to just having shelter.
    - gnaritas 7y ago
      You're way off base, median income in Silicon Valley is $110,373; 5x median income is not middle class by any stretch of the imagination. There is no city in the world where 500k a year isn't rich.
    - ac29 7y ago
      80th percentile household income in Santa Clara County is $200k/yr [0]. The linked dataset doesn't go any higher, but I suspect 500k/year is 95th percentile or above, which puts you in the upper class. Even in the Bay, $500k/yr is the "own two homes and a few Porches" level. [0] http://www.vitalsigns.mtc.ca.gov/income http://www.vitalsigns.mtc.ca.gov/income
      - geggam 7y ago
        If you are single maybe. I think of a middle class man being what my old man was. Single income, wife stayed home and he provided for everyone. 4 kids. Good luck having 2 homes and some porsches with only 500k in the valley supporting a wife and kids
        brokensegue 7y ago
        plenty of people support a family on $60k/yr so take the remaining 440k minus taxes and buy two porsches outright. You should be able to save enough for a down-payment on each house given a year of saving.
        geggam 7y ago
        No one supports a family on 60k a year. Healthcare alone for a family runs 20k/yr plus simply for insurance
        brokensegue 7y ago
        You typically get free insurance when you have a job paying 500k/yr...
        geggam 7y ago
        Its not free. CFO is very aware of your total cost and its starting to show up on W2's.
        7y ago
    - brokensegue 7y ago
      500k/yr is definitely, at least, upper middle in the bay area.
  - ikeyany 7y ago
    I know you mean well, but people tend to want to fit in with their milieu.
    - gowld 7y ago
      Milieu is made of people. You can improve your milieu by being a leader, not a follower.
  - dgabriel 7y ago
    I grew up with an engineer's family income, and 250k still seems pretty wealthy. That puts you in the top 5% of US earners.
  - cr0sh 7y ago
    I own a Jeep. That thing keeps increasing in value massively on a yearly basis... /just add up everything I spend on it...
- schwabacher 7y ago
  I'd define being 'financially secure', as being confident that you will not need to make changes to your lifestyle for financial reasons. It makes sense that that depends pretty heavily on how expensive your current lifestyle is.
  - saltcured 7y ago
    Right. It sounds funny to have a 2x guestimate from many people though. Is that evidence of a common mental heuristic for estimating and mitigating future risk? I personally can think of a net worth figure which seems like it might be comfortable under lucky circumstances (no major crash or catastrophic health issue). And, right now I also feel like twice that would make me feel pretty secure. In spite of my concerns about the future unknowns, having that amount would probably cause me to essentially retire, turning my career into a hobby so I could shed the less enjoyable parts...
    - gowld 7y ago
      "2x" is the same thinking behind "if you don't have a backup for it, you only have it temporarily" , for anything "it" may be. The thread starter is ambiguous about whether "secure" means "secure in what you currently temporarily have" vs "secure to have a reasonably acceptable life".
      - Zaak 7y ago
        > "if you don't have a backup for it, you only have it temporarily" Fabulous line. Is that attributable to anyone in particular?
- ryandrake 7y ago
  I don’t think that mentality is limited to rich people. If you went back in time to each of the last 20 years and asked me how much savings I think I’m going to need in order to retire, the answer I’d give you (regardless of my current savings in that year) would have been “about 10X what I already have saved.” At this point I’ve admitted to myself that I will need to work until I die!
- lumberjack 7y ago
  The courts think in a similar manner. When rich couples divorce, the courts mandate that the poorer parent and kids get enough from their other parent to retain the same lifestyle the were used to previously. If that means enough to maintain a private jet lifestyle, so be it.
- jaccarmac 7y ago
  Sounds fascinating, got a source for that? Seems to dovetail with the research re: happiness and net worth not being correlated after a point.
  - zaius 7y ago
    I'm guessing GP read in in the interview with Abigail Disney https://www.thecut.com/2019/03/abigail-disney-has-more-money-than-shell-ever-spend.html https://www.thecut.com/2019/03/abigail-disney-has-more-money... > They did a study at the Chronicle of Philanthropy years ago where they asked people who inherited money, “What amount of money would you need to feel totally secure?” And every single one of them, no matter what they had, named a number that was roughly twice what they inherited. So that’s what you need to know about money, right? If that is your primary measure of success or value in life, then good luck with that, because it will never feel good.
octosphere 7y ago
> The bad news is that 1M isn’t what it used to be. It would take 20M to match the buying power of 1M from a century ago. Wholly disagree with the purchasing power notion. I have lived frugally for years and 1M is enough to set me up for life (providing I don't have kids). This is because budgeting is now an ingrained habit and I wouldn't suddenly stop budgeting just because I can now spend more on things.
- war1025 7y ago
  Having kids is the wrench in the gears for many people I'd guess. There's a reason for the term DINK (Dual income, no kids). Edit: Also to clarify, I absolutely agree with the living frugally thing, and think most people would be in general better off if they focused less on spending every penny they make.
  - lotsofpulp 7y ago
    The second you have dependents, the equation changes. Now you're optimizing not just for your remaining years of life, but for your children and possibly their children. Which, in most cases, means living in higher cost of living areas to get them in better schools and access to wealthier networks. Also, any adverse health events can sink your whole family, so you need to keep on the treadmill until you have sufficient passive income to keep any health issues from causing financial insecurity. I have noticed that my friends and family that grew up in higher cost of living, higher income areas and went into the standard higher paying careers (doctor/lawyer/finance/engineering) are more financially secure than those who weren't as fortunate or focused on the rat race. At what mental/other cost though, I can't say. Edit: The most financially secure are those who invested in commercial real estate and development.
    - _bxg1 7y ago
      Yeah, the author curiously neglected to factor dependents into all his numbers, which makes a massive difference. I think lots of people have kids as a "default option" in their life roadmap, without considering how big of a sacrifice it will be in terms of time and money (and the fact that it's optional!). It's important to put things in perspective before making that kind of decision; making kids may be free, but raising them is anything but.
docker_up 7y ago
My kids asked me this and I said we are "comfortable". We are easily 1%-ers in terms of income level but we don't consider ourselves rich. I consider someone rich who has the luxury of not working and still maintaining a very good lifestyle. In Silicon Valley you can't do that without substantial net worth. The reason why we don't consider ourselves rich is because both my wife and I have to work very hard. We love our jobs and don't mind working hard, but we do have to work very hard. My work-life-balance is better than my wife's so I do more of the child-rearing, but I still jump online to finish some work after the kids are asleep.
- lotsofpulp 7y ago
  It's volatility that makes people feel not rich, even though they are 1%-ers. Annual income is meaningless if you feel like there is a substantial risk of you losing that income and having to make lifestyle adjustments. In a dual income household, if you live in a high CoL area and want to send your kids to the best schools, then you're competing with other dual income households, so if one spouse loses their job or has a health issue, it will cause financial instability. Question is are you willing to downgrade to a single income lifestyle (while still earning two incomes and investing the rest), in exchange for sending the kids to a school in a lower income area and whatever consequences that would have.
- rootusrootus 7y ago
  The way I look at it is that there is a significant difference between being 1%-er by income, and 1%-er by net worth. The former is not terribly uncommon in the tech industry, but the latter is what counts as real wealth.
  - harryh 7y ago
    I very strongly suspect that the overlap between people in the 1% income level and people in the 1% wealth level is extremely high.
    - rootusrootus 7y ago
jedberg 7y ago
My measure of rich is "Can I live my current lifestyle without regular income from a job?". If the answer is yes, then you are rich. The trick here is to make sure to keep your lifestyle costs in line with your salary when you first start out, so that as your income grows you can save. So yeah, if you want a big house and nice cars and nice vacations, you wouldn't consider yourself rich compared to people who don't have those things and don't want them. But at some point, no matter how you live your life, you get to a point where my initial statement is true, usually around a few tens of millions, which is why we can draw a definitive line around there and call everyone above it rich.
- benj111 7y ago
  That makes rich relative though? If you're into fast cars and faster women but you're only earning $1million a year you aren't rich, whereas if you live like me, you're rich because you have $1million in the bank. While I don't think your definition is bad per se, if you start mixing with people who define wealth as $10 in the bank, you aren't going to have a very useful conversation, so I think you at least need a different term. BTW this guy spent nearly £10million in 4 years, I don't think he could ever be rich by your definition. https://en.m.wikipedia.org/wiki/Michael_Carroll_(lottery_winner) https://en.m.wikipedia.org/wiki/Michael_Carroll_(lottery_win... Edit: Also this only takes account of assets, not income. If you're earning $1million a year in a safe steady job you are rich, even if you don't yet have enough to retire.
  - jedberg 7y ago
    > That makes rich relative though? Yes, that was my main point. But my other point was that there is an upper limit, probably in the tens of millions, where no matter what your lifestyle is you can afford it without work.
    - benj111 7y ago
      I don't think there's an upper bound on spending though. There will always be some subset of people that will spend everything, as my example attempted to show.
g_sch 7y ago
I think the author is a bit too narrow in their definition of "political clout". They seem to define it as the ability to personally influence federal policy. However, as a class, people with $4M in wealth or more have an immense amount of political clout. Most contemporary US local, state, and even federal policies are geared toward attracting and retaining these people. Think property tax caps, mortgage interest deductions, zoning, traffic and transit policy...etc. If you have $4M in wealth, you might not be able to personally call up a lawmaker and get them to pass your pet law, but governments everywhere are bending over backward for you and people like you.
- Spooky23 7y ago
  Remember the audience is doctors. Doctors make bank but work hard and don't have the time to participate in the political process. A small/mid time real estate guy with a similar net worth will have much more political clout because he has the time to do political events and interact with that strata of people.
- pranjalv123 7y ago
  $4M in wealth is certainly enough to get a lawmaker to pass a "pet law" - some minor change to a zoning code or regulatory infrastructure that matters for your business. At least, if there's no concerted opposition to your pet law.
- tvanantwerp 7y ago
  In my opinion, the easiest way to have personal influence on federal policy is to be willing to spend your twenties working for peanuts on the Hill. Those staffers are the ones doing most of the real work.
- crispwafer 7y ago
  This is such a weird, backwards way of framing the situation. People in that income/wealth group fund essentially the entire government budget while also costing essentially nothing, so of course there is an incentive to retain them, but generally governments are trying to just stop one cent short of bleeding them so dry that they move away. In 2018: "The top 1 percent paid a greater share of the federal tax revenue (37.3 percent) than the bottom 90 percent combined (30.5 percent)." Put another way - your local school would be in trouble if all you had were families on $40k sending 3 kids to public school, it's being funded by the family on $300k and sending their kid to a separate private school.
chrismeller 7y ago
So “comfortable” (or what I will equate with upper-middle) is now somewhere between 100k and 15m? Even excusing cost of living differences (BFE Kansas vs Market District, SFO or Manhattan), that’s a hell of a range. Assuming I’m single and have no kids one of those is, to me at least, comfortable to the point that I’m comfortable traveling pretty much whenever and wherever I want. The other is quite literally “f* you” money.
- ultrasaurus 7y ago
  I tuned out there as well. To describe upper middle class as those earning between 112k and 1.5MM a year... well sounds exactly like what someone peddling financial advice to doctors might say.
Zaak 7y ago
I have some Pacific Islander friends that consider me rich because I live in a nice house (rented), own three cars (bought used), and have a steady desk job (after many years of recurring job instability). Of course, that's wealthy compared to most of the world.
koolba 7y ago
The Cosby Show had a great take on this question: https://www.youtube.com/watch?v=gJ92MLZSMXM https://www.youtube.com/watch?v=gJ92MLZSMXM
vernie 7y ago
LOL fucking Dinesh D'Souza.
didip 7y ago
Being rich is a measure of assets generating income relative to future expenses. Once your passive income can cover your monthly expenses, you are already veering into rich territory.
scoutt 7y ago
I think the questions following 'are we rich' can be harder to answer, because the answer may produce a different (bad/good) lesson in a child. Like... why are we rich? / why are we not rich? or maybe... if we are rich, what are we doing for those who are not? etc...
bagacrap 7y ago
The wealth figures for X percentile seem low. I wonder where he's getting them. When I Google it, 2.4M was the 95th percentile two years ago.
- mrep 7y ago
  The income levels are also way off on globalrichlist.com $60,000 a year makes you the 11,425,788th richest person in the world? US median household income was $59,039 in 2016 and if there are 125 million households in the US, then that means you are only the 62th million richest person in the US alone let alone the world.
  - gowld 7y ago
    Due to the mixture of children and adults and eldert, singles and households, it's impossible to correctly combine stats from multiple sources, or even properly understand a single metric.
  - tshibley 7y ago
    They could be going off of per capita income rather than household income - US per capita income is closer to $32k a year[0], so 60k a year would put you quite high on that distribution. 0. https://www.census.gov/quickfacts/fact/table/US/SEX255217 https://www.census.gov/quickfacts/fact/table/US/SEX255217
  - themagician 7y ago
    $60,000 a year is HOUSEHOLD income. In more than half of households there are at least two earners. This perctange rises when you look at median income households. The typical median income household is where both parents make around $30k–which is right around minimum wage. If you, as an single individual, are making $60,000 you have about TWICE as much money as the average, middle income American. I don't think you realize just how poor the average "middle class" person is.
rb808 7y ago
I think the HN bubble is far detached from the real world. If you own 100k+ of assets, most of the people in the world will see you as incredibly rich. If you own a house in the Bay Area even with a mortgage most Americans will see you as rich. Sure you might not feel rich because you have to go to the office each day and you dont have a sports car, but you are. Median and mean wealth per adult, in US dollars. USA: 61k World: 4k https://en.wikipedia.org/wiki/List_of_countries_by_wealth_per_adult https://en.wikipedia.org/wiki/List_of_countries_by_wealth_pe...
- throwayEngineer 7y ago
  The Physician takes for granted that his profession has a monopoly on perscriptions and declaring medical necessity. >Laughably some consider me rich I know the article is supposed to hate on the 0.1%ers, but since Physicians always say this crap about their income, it's important to know Healthcare costs are terrible because he is paid so well.
  - empath75 7y ago
    Says the software developer that makes about as much as a doctor for writing Jenkins pipelines or something else essentially valueless to most people.
    - twoheadedboy 7y ago
      Most software devs aren't even close to doctors in terms of salary.
  - teachrdan 7y ago
    A small correction: In the US, Nurse Practitioners are able to write prescriptions. These are nominally under the authority of a supervising doctor, but in practice their scrips are mundane and approved with minimal scrutiny.
  - fucking_tragedy 7y ago
    You can easily look at physician income over time to see that this isn't true. However, hospital administration and billing have shot up considerably over the last few decades.
seanalltogether 7y ago
It's interesting to me that most classifications put middle class at the point when you earn more then 50% of the population. You would think middle class should be defined as the 50% of people that straddle the middle of the income bell curve.
legitster 7y ago
The vast majority of policy happens at the local level. Zoning, municipal ordinances, occupational licensing, elected judges, etc. Unless you live in NY,LA,SF the 0.01% has little impact on these. Even making over $100k can have a huge and oversized impact on politics. They are the ones who can afford time to show up to PTA meetins, public hearings, donate to campaigns, etc. The average American city is designed to meet their needs.
themagician 7y ago
Only wealthy people have a hard time figuring out what the correct measurement is for rich. It’s a total lack of perspective. It’s always laughable to me what rich people consider “middle”. It’s like the word has a different meaning. Middle, to a wealthy person, extends from the middle all the way up to the top 10% by any measure. Maybe even to the top 5% of they want to talk about how expensive it is where they live, which is totally a choice they are wealthy enough to make. Poor people are treated as non existent. This kind of tone deafness is why Trump won and why he will continue to win. The actual middle class is tired of hearing about how people making $100k+, with $750k in assets who say, “a million isn’t what it used to be” are somehow in the same socioeconomic class as the actual middle class. I’m not sure that wealthy Americans understand just how many of their fellow countrymen are in their 30s, 40s and beyond making $20 an hour and living paycheck to paycheck. Average household income is two people working just a few dollars above minimum wage to support their kids.
- scient 7y ago
  I think you are the one lacking perspective here. The same way you are trying to make a point, I can make a counter point. The person making $20 is considered comparatively rich by someone making less than a dollar a day in some underdeveloped country. Everything is relative. If you make $100k and you live paycheck to paycheck because of housing costs, education costs, grocery cost etc., how can you claim their should shut up because they are rich?
  - mtVessel 7y ago
    Yes, but the point is that the gap between rich and middle-class in a single nation, under a single political system, perhaps shouldn't be as wide as the gap between developed and developing nations.
  - themagician 7y ago
    Everything isn’t relative. The middle is still the middle. When you are in the top 10% by income claiming to be in the middle you are failing to realize that their are some 250 million people in your own country that are below you. The people who make your coffee, butcher your meat, package your products. You are failing to realize that there are 100-200 million people living either an actual middle class life or are in poverty by any standard you would understand. Living in a place with high costs is a choice. It’s s choice that wealthy people get to make. Living in San Francisco in a small studio on a $100k+ salary and jokingly “feeling poor” is a choice that wealthy and privileged people get to make. It’s a choice I’ve made. It’s probably a choice you’ve made. But I’m not going to pretend for a moment, if I’m being honest, that my life even approaches an actual middle class life. I get to live in one of the best places on the planet with the best food, weather, museums, drinks, bars, technology, etc.. I have access to the best of everything… how the hell is that being in the middle? Go spend a summer in middle America where everything is cheap and see how most people actually live. Hell, take the BART to the end of the line and drive one town further and try living and working there for a bit.
maerF0x0 7y ago
I think a massive issue in America is the growing Urban vs Rural wealth divide. Progressive tax brackets that make sense in the countryside are punitive in an urban environment. Eg: making $150k in SF isnt "that much" yet it's taxed at a higher rate than someone making the same where housing is 50% cheaper (or more). I'm starting to think that tax brackets ought to be converted to PPP within their respective zone.
teachrdan 7y ago
Was anyone else surprised that Dinesh D’Souza defines anyone who earns up to $15 million as "Upper Middle"? That can't be correct, can it?
- mtVessel 7y ago
  This isn't a single number in TFA that makes sense. $100K was merely "adequate" in 1970? The whole thing is suspect.
- ac29 7y ago
  $15M net worth or $1.5M income. Seems reasonable.
- gowld 7y ago
  You just can't fit such a wide range into a small number of levels. And at higher wealth numbers, there is a huge difference in total wealth including past expenditures for the same current wealth.
sudosteph 7y ago
It's a bit ridiculous to see the hoops that some of the wealthy will jump through so they don't have to feel guilty about their position in the world. The person writing this article is almost certainly "rich" by any reasonable standard. Meanwhile, most families making 60k in the US (especially in areas with the best job markets and high COL) - are not. The world income comparison thing at the end is not meaningful in the slightest. If that is actually what he's telling his children, he's doing a great disservice to them. The difference between 60k income and 200k income matters for a lot more than vacations. It impacts things that will directly affect opportunities for your children. This includes: - Being able to live in a neighborhood with good public schools - Being able to live in a home without having concerns about the safety of it (both neighborhood safety and environmental safety factors come into play) - Being able to afford additional educational experiences for your children - things like tutoring, summer camps, musical instrument lessons - Having higher status professional connections that can help your child get into schools, internships, jobs, or just expose your child to higher paying career options in general. The difference in long-term opportunity between middle and upper-middle class is admittedly much smaller than the difference between middle class and poverty, but it's still a real difference. It doesn't do anybody any good to pretend like the children of the wealthy don't actually have a leg-up just because their parents worked hard to get there or achieved class mobility on their own.
- 5trokerac3 7y ago
  Studies show that money can, in fact, buy happiness, but its effect starts to plateau at the point someone makes enough to not worry about whether they can pay their monthly bills. IMO that's the real separator you're getting at here - which, of course, fluctuates based on location.
- strikelaserclaw 7y ago
  It must be where i grew up but in St.Louis and Kansas city, you could give your children most of these opportunities with roughly a middle class dual parent income. The smartest kids in my class became doctors, stanford phds, etc... None of them were what i consider upper middle class (provided they came from both parent educated households).
legitster 7y ago
> Using the popular “4% rule” 1M would generate 40K per year before taxes – hardly a way to live in style! That income is less than 80% of the average U.S. household income. This is hands down the worst way to look at this number. That's income for not doing anything! That's also generational wealth! 1M dollars in the bank is an order of magnitude better than a 40k year salary and it's a bit of a joke to compare them against each other.
xwdv 7y ago
I’m rich, but you’re not: The only suitable answer for a child who asks this question.
_ah 7y ago
I think there's an important distinction to be made between rich and wealthy. Rich is defined by income level, and often by lifestyle. A high-spending star athlete can be rich AND broke. There's a reasonable argument to be made that a high-income, high-expense lifestyle in the Bay means that you are NOT "rich". Wealthy is a measure of saved, investable assets. Wealth is not income-dependent, and ideally grows over time rather than diminishing. A person with wealth may also be rich depending on the income generated by that wealth and their local cost of living, however they may also be merely comfortable. The key point is: if you are Rich, good for you! But use that income to build Wealth which will serve you better.
- DanBC 7y ago
  > I think there's an important distinction to be made between rich and wealthy. No there isn't, these are synonyms in any decent dictionary. Chambers uses them to define each other. "Rich: having a lot of money, property, or possessions; wealthy" "Wealthy: possessing riches and property; rich or prosperous". Everything else in your post is just stuff you've made up, which is mildly interesting but has nothing to do with those words as they're used in the real world.
cr0sh 7y ago
I don't typically worry about my level of income or whatnot, except when I think of retirement (which I also don't think will happen, honestly). I'm more concerned on whether my family (wife and dogs - no kids - talk about a money sink) is happy and safe. On that level, we are doing very well. We have a roof over our head in a relatively safe, if older, neighborhood. We have reliable vehicles (ok, both of mine are money pits - but off-roading ain't cheap). We have electricity, water, cooling and heating. We have time and money for regular entertainment and minor "luxuries". We have good health, and can afford a doctor's or dental visits. We have vision care. We can and do eat well. We have time for leisure and laying around doing virtually nothing if we want. We can afford hobbies and other interests. By such a measure, and yes it is arbitrary and may not fit with other's ideas - we are "rich". But more than that, we are happy and safe. We have decent incomes, modest savings, and virtually zero debt (other than our mortgage, which is secured debt and doesn't really count - we didn't buy our house as an investment, but rather to live in - amazing idea, huh?). Yes, we both know we are rich. To that end, when and where and how we can, we also donate to charities and other non-profit causes, respective to our values. At the same time, I know monetarily I am not "rich" compared to even my local peers in the software engineering realm. I am sure that if I tried and looked (though my age might be a hindrance), that I could probably break six figures as an SWE here in the Phoenix area. It kinda irks me that I haven't yet, despite having over 25 years of experience, but it's mainly because I tend to enjoy and thrive at working for smaller software engineering businesses which tend to have few employees, and smaller client contracts. I'm fine with that, as I am happier in such places than in larger ones with more internal politics; or at least that's how I perceive it. I don't make as much as I could - but I make enough to keep my family and I happy, safe, and comfortable. That's my definition of rich, for as little as it's worth I guess.
samingrassia 7y ago
Rich = can you live off the interest from the risk free rate(US Treasury coupon)? In the US - thats about $5mm saving or pretax $100k interest income.

97 points by redm 7y ago

Some wealthy trust fund babies were asked how much wealth they thought they would need to really feel financially secure long term. They had inherited wealth ranging from tens, up to hundreds of millions. Almost all of them named a figure about double their personal net worth, regardless of what that net worth was.

bob33212 7y ago
Humans naturally anchor to their social network. If those people grew up in rural West Virginia with coal miner family income they would tell you that 250k/year is wealthy. You have to actively resist this anchoring behavior. You have to remind yourself that just because your neighbor has a 50k car, it doesn't mean that your 10k car is not a good fit for you.
- geggam 7y ago
  I came from a poor area. I used to think 80k/yr was rich. Time passed, I got work in Silicon valley with a wife and kids. Living there I think 500k would be middle class. Not even upper middle class. Perspectives change as you are exposed
  - silverfox17 7y ago
    80k/yr CAN be rich, it all depends on location. 80k/yr would be poverty in the valley, most of that money going to just having shelter.
  - gnaritas 7y ago
    You're way off base, median income in Silicon Valley is $110,373; 5x median income is not middle class by any stretch of the imagination. There is no city in the world where 500k a year isn't rich.
  - ac29 7y ago
    80th percentile household income in Santa Clara County is $200k/yr [0]. The linked dataset doesn't go any higher, but I suspect 500k/year is 95th percentile or above, which puts you in the upper class. Even in the Bay, $500k/yr is the "own two homes and a few Porches" level. [0] http://www.vitalsigns.mtc.ca.gov/income http://www.vitalsigns.mtc.ca.gov/income
    - geggam 7y ago
      If you are single maybe. I think of a middle class man being what my old man was. Single income, wife stayed home and he provided for everyone. 4 kids. Good luck having 2 homes and some porsches with only 500k in the valley supporting a wife and kids
      - brokensegue 7y ago
        plenty of people support a family on $60k/yr so take the remaining 440k minus taxes and buy two porsches outright. You should be able to save enough for a down-payment on each house given a year of saving.
        geggam 7y ago
        No one supports a family on 60k a year. Healthcare alone for a family runs 20k/yr plus simply for insurance
        brokensegue 7y ago
        You typically get free insurance when you have a job paying 500k/yr...
        geggam 7y ago
        Its not free. CFO is very aware of your total cost and its starting to show up on W2's.
        7y ago
  - brokensegue 7y ago
    500k/yr is definitely, at least, upper middle in the bay area.
- ikeyany 7y ago
  I know you mean well, but people tend to want to fit in with their milieu.
  - gowld 7y ago
    Milieu is made of people. You can improve your milieu by being a leader, not a follower.
- dgabriel 7y ago
  I grew up with an engineer's family income, and 250k still seems pretty wealthy. That puts you in the top 5% of US earners.
- cr0sh 7y ago
  I own a Jeep. That thing keeps increasing in value massively on a yearly basis... /just add up everything I spend on it...
schwabacher 7y ago
I'd define being 'financially secure', as being confident that you will not need to make changes to your lifestyle for financial reasons. It makes sense that that depends pretty heavily on how expensive your current lifestyle is.
- saltcured 7y ago
  Right. It sounds funny to have a 2x guestimate from many people though. Is that evidence of a common mental heuristic for estimating and mitigating future risk? I personally can think of a net worth figure which seems like it might be comfortable under lucky circumstances (no major crash or catastrophic health issue). And, right now I also feel like twice that would make me feel pretty secure. In spite of my concerns about the future unknowns, having that amount would probably cause me to essentially retire, turning my career into a hobby so I could shed the less enjoyable parts...
  - gowld 7y ago
    "2x" is the same thinking behind "if you don't have a backup for it, you only have it temporarily" , for anything "it" may be. The thread starter is ambiguous about whether "secure" means "secure in what you currently temporarily have" vs "secure to have a reasonably acceptable life".
    - Zaak 7y ago
      > "if you don't have a backup for it, you only have it temporarily" Fabulous line. Is that attributable to anyone in particular?
ryandrake 7y ago
I don’t think that mentality is limited to rich people. If you went back in time to each of the last 20 years and asked me how much savings I think I’m going to need in order to retire, the answer I’d give you (regardless of my current savings in that year) would have been “about 10X what I already have saved.” At this point I’ve admitted to myself that I will need to work until I die!
lumberjack 7y ago
The courts think in a similar manner. When rich couples divorce, the courts mandate that the poorer parent and kids get enough from their other parent to retain the same lifestyle the were used to previously. If that means enough to maintain a private jet lifestyle, so be it.
jaccarmac 7y ago
Sounds fascinating, got a source for that? Seems to dovetail with the research re: happiness and net worth not being correlated after a point.
- zaius 7y ago
  I'm guessing GP read in in the interview with Abigail Disney https://www.thecut.com/2019/03/abigail-disney-has-more-money-than-shell-ever-spend.html https://www.thecut.com/2019/03/abigail-disney-has-more-money... > They did a study at the Chronicle of Philanthropy years ago where they asked people who inherited money, “What amount of money would you need to feel totally secure?” And every single one of them, no matter what they had, named a number that was roughly twice what they inherited. So that’s what you need to know about money, right? If that is your primary measure of success or value in life, then good luck with that, because it will never feel good.

octosphere 7y ago

> The bad news is that 1M isn’t what it used to be. It would take 20M to match the buying power of 1M from a century ago. Wholly disagree with the purchasing power notion. I have lived frugally for years and 1M is enough to set me up for life (providing I don't have kids). This is because budgeting is now an ingrained habit and I wouldn't suddenly stop budgeting just because I can now spend more on things.

war1025 7y ago
Having kids is the wrench in the gears for many people I'd guess. There's a reason for the term DINK (Dual income, no kids). Edit: Also to clarify, I absolutely agree with the living frugally thing, and think most people would be in general better off if they focused less on spending every penny they make.
- lotsofpulp 7y ago
  The second you have dependents, the equation changes. Now you're optimizing not just for your remaining years of life, but for your children and possibly their children. Which, in most cases, means living in higher cost of living areas to get them in better schools and access to wealthier networks. Also, any adverse health events can sink your whole family, so you need to keep on the treadmill until you have sufficient passive income to keep any health issues from causing financial insecurity. I have noticed that my friends and family that grew up in higher cost of living, higher income areas and went into the standard higher paying careers (doctor/lawyer/finance/engineering) are more financially secure than those who weren't as fortunate or focused on the rat race. At what mental/other cost though, I can't say. Edit: The most financially secure are those who invested in commercial real estate and development.
  - _bxg1 7y ago
    Yeah, the author curiously neglected to factor dependents into all his numbers, which makes a massive difference. I think lots of people have kids as a "default option" in their life roadmap, without considering how big of a sacrifice it will be in terms of time and money (and the fact that it's optional!). It's important to put things in perspective before making that kind of decision; making kids may be free, but raising them is anything but.

docker_up 7y ago

My kids asked me this and I said we are "comfortable". We are easily 1%-ers in terms of income level but we don't consider ourselves rich. I consider someone rich who has the luxury of not working and still maintaining a very good lifestyle. In Silicon Valley you can't do that without substantial net worth. The reason why we don't consider ourselves rich is because both my wife and I have to work very hard. We love our jobs and don't mind working hard, but we do have to work very hard. My work-life-balance is better than my wife's so I do more of the child-rearing, but I still jump online to finish some work after the kids are asleep.

lotsofpulp 7y ago
It's volatility that makes people feel not rich, even though they are 1%-ers. Annual income is meaningless if you feel like there is a substantial risk of you losing that income and having to make lifestyle adjustments. In a dual income household, if you live in a high CoL area and want to send your kids to the best schools, then you're competing with other dual income households, so if one spouse loses their job or has a health issue, it will cause financial instability. Question is are you willing to downgrade to a single income lifestyle (while still earning two incomes and investing the rest), in exchange for sending the kids to a school in a lower income area and whatever consequences that would have.
rootusrootus 7y ago
The way I look at it is that there is a significant difference between being 1%-er by income, and 1%-er by net worth. The former is not terribly uncommon in the tech industry, but the latter is what counts as real wealth.
- harryh 7y ago
  I very strongly suspect that the overlap between people in the 1% income level and people in the 1% wealth level is extremely high.
  - rootusrootus 7y ago

jedberg 7y ago

My measure of rich is "Can I live my current lifestyle without regular income from a job?". If the answer is yes, then you are rich. The trick here is to make sure to keep your lifestyle costs in line with your salary when you first start out, so that as your income grows you can save. So yeah, if you want a big house and nice cars and nice vacations, you wouldn't consider yourself rich compared to people who don't have those things and don't want them. But at some point, no matter how you live your life, you get to a point where my initial statement is true, usually around a few tens of millions, which is why we can draw a definitive line around there and call everyone above it rich.

benj111 7y ago
That makes rich relative though? If you're into fast cars and faster women but you're only earning $1million a year you aren't rich, whereas if you live like me, you're rich because you have $1million in the bank. While I don't think your definition is bad per se, if you start mixing with people who define wealth as $10 in the bank, you aren't going to have a very useful conversation, so I think you at least need a different term. BTW this guy spent nearly £10million in 4 years, I don't think he could ever be rich by your definition. https://en.m.wikipedia.org/wiki/Michael_Carroll_(lottery_winner) https://en.m.wikipedia.org/wiki/Michael_Carroll_(lottery_win... Edit: Also this only takes account of assets, not income. If you're earning $1million a year in a safe steady job you are rich, even if you don't yet have enough to retire.
- jedberg 7y ago
  > That makes rich relative though? Yes, that was my main point. But my other point was that there is an upper limit, probably in the tens of millions, where no matter what your lifestyle is you can afford it without work.
  - benj111 7y ago
    I don't think there's an upper bound on spending though. There will always be some subset of people that will spend everything, as my example attempted to show.

g_sch 7y ago

I think the author is a bit too narrow in their definition of "political clout". They seem to define it as the ability to personally influence federal policy. However, as a class, people with $4M in wealth or more have an immense amount of political clout. Most contemporary US local, state, and even federal policies are geared toward attracting and retaining these people. Think property tax caps, mortgage interest deductions, zoning, traffic and transit policy...etc. If you have $4M in wealth, you might not be able to personally call up a lawmaker and get them to pass your pet law, but governments everywhere are bending over backward for you and people like you.

Spooky23 7y ago
Remember the audience is doctors. Doctors make bank but work hard and don't have the time to participate in the political process. A small/mid time real estate guy with a similar net worth will have much more political clout because he has the time to do political events and interact with that strata of people.
pranjalv123 7y ago
$4M in wealth is certainly enough to get a lawmaker to pass a "pet law" - some minor change to a zoning code or regulatory infrastructure that matters for your business. At least, if there's no concerted opposition to your pet law.
tvanantwerp 7y ago
In my opinion, the easiest way to have personal influence on federal policy is to be willing to spend your twenties working for peanuts on the Hill. Those staffers are the ones doing most of the real work.
crispwafer 7y ago
This is such a weird, backwards way of framing the situation. People in that income/wealth group fund essentially the entire government budget while also costing essentially nothing, so of course there is an incentive to retain them, but generally governments are trying to just stop one cent short of bleeding them so dry that they move away. In 2018: "The top 1 percent paid a greater share of the federal tax revenue (37.3 percent) than the bottom 90 percent combined (30.5 percent)." Put another way - your local school would be in trouble if all you had were families on $40k sending 3 kids to public school, it's being funded by the family on $300k and sending their kid to a separate private school.

chrismeller 7y ago

So “comfortable” (or what I will equate with upper-middle) is now somewhere between 100k and 15m? Even excusing cost of living differences (BFE Kansas vs Market District, SFO or Manhattan), that’s a hell of a range. Assuming I’m single and have no kids one of those is, to me at least, comfortable to the point that I’m comfortable traveling pretty much whenever and wherever I want. The other is quite literally “f* you” money.

ultrasaurus 7y ago
I tuned out there as well. To describe upper middle class as those earning between 112k and 1.5MM a year... well sounds exactly like what someone peddling financial advice to doctors might say.

Zaak 7y ago

I have some Pacific Islander friends that consider me rich because I live in a nice house (rented), own three cars (bought used), and have a steady desk job (after many years of recurring job instability). Of course, that's wealthy compared to most of the world.

koolba 7y ago

The Cosby Show had a great take on this question: https://www.youtube.com/watch?v=gJ92MLZSMXM https://www.youtube.com/watch?v=gJ92MLZSMXM

vernie 7y ago

LOL fucking Dinesh D'Souza.

didip 7y ago

Being rich is a measure of assets generating income relative to future expenses. Once your passive income can cover your monthly expenses, you are already veering into rich territory.

scoutt 7y ago

I think the questions following 'are we rich' can be harder to answer, because the answer may produce a different (bad/good) lesson in a child. Like... why are we rich? / why are we not rich? or maybe... if we are rich, what are we doing for those who are not? etc...

bagacrap 7y ago

The wealth figures for X percentile seem low. I wonder where he's getting them. When I Google it, 2.4M was the 95th percentile two years ago.

mrep 7y ago
The income levels are also way off on globalrichlist.com $60,000 a year makes you the 11,425,788th richest person in the world? US median household income was $59,039 in 2016 and if there are 125 million households in the US, then that means you are only the 62th million richest person in the US alone let alone the world.
- gowld 7y ago
  Due to the mixture of children and adults and eldert, singles and households, it's impossible to correctly combine stats from multiple sources, or even properly understand a single metric.
- tshibley 7y ago
  They could be going off of per capita income rather than household income - US per capita income is closer to $32k a year[0], so 60k a year would put you quite high on that distribution. 0. https://www.census.gov/quickfacts/fact/table/US/SEX255217 https://www.census.gov/quickfacts/fact/table/US/SEX255217
- themagician 7y ago
  $60,000 a year is HOUSEHOLD income. In more than half of households there are at least two earners. This perctange rises when you look at median income households. The typical median income household is where both parents make around $30k–which is right around minimum wage. If you, as an single individual, are making $60,000 you have about TWICE as much money as the average, middle income American. I don't think you realize just how poor the average "middle class" person is.

rb808 7y ago

I think the HN bubble is far detached from the real world. If you own 100k+ of assets, most of the people in the world will see you as incredibly rich. If you own a house in the Bay Area even with a mortgage most Americans will see you as rich. Sure you might not feel rich because you have to go to the office each day and you dont have a sports car, but you are. Median and mean wealth per adult, in US dollars. USA: 61k World: 4k https://en.wikipedia.org/wiki/List_of_countries_by_wealth_per_adult https://en.wikipedia.org/wiki/List_of_countries_by_wealth_pe...

throwayEngineer 7y ago
The Physician takes for granted that his profession has a monopoly on perscriptions and declaring medical necessity. >Laughably some consider me rich I know the article is supposed to hate on the 0.1%ers, but since Physicians always say this crap about their income, it's important to know Healthcare costs are terrible because he is paid so well.
- empath75 7y ago
  Says the software developer that makes about as much as a doctor for writing Jenkins pipelines or something else essentially valueless to most people.
  - twoheadedboy 7y ago
    Most software devs aren't even close to doctors in terms of salary.
- teachrdan 7y ago
  A small correction: In the US, Nurse Practitioners are able to write prescriptions. These are nominally under the authority of a supervising doctor, but in practice their scrips are mundane and approved with minimal scrutiny.
- fucking_tragedy 7y ago
  You can easily look at physician income over time to see that this isn't true. However, hospital administration and billing have shot up considerably over the last few decades.

seanalltogether 7y ago

It's interesting to me that most classifications put middle class at the point when you earn more then 50% of the population. You would think middle class should be defined as the 50% of people that straddle the middle of the income bell curve.

legitster 7y ago

The vast majority of policy happens at the local level. Zoning, municipal ordinances, occupational licensing, elected judges, etc. Unless you live in NY,LA,SF the 0.01% has little impact on these. Even making over $100k can have a huge and oversized impact on politics. They are the ones who can afford time to show up to PTA meetins, public hearings, donate to campaigns, etc. The average American city is designed to meet their needs.

themagician 7y ago

Only wealthy people have a hard time figuring out what the correct measurement is for rich. It’s a total lack of perspective. It’s always laughable to me what rich people consider “middle”. It’s like the word has a different meaning. Middle, to a wealthy person, extends from the middle all the way up to the top 10% by any measure. Maybe even to the top 5% of they want to talk about how expensive it is where they live, which is totally a choice they are wealthy enough to make. Poor people are treated as non existent. This kind of tone deafness is why Trump won and why he will continue to win. The actual middle class is tired of hearing about how people making $100k+, with $750k in assets who say, “a million isn’t what it used to be” are somehow in the same socioeconomic class as the actual middle class. I’m not sure that wealthy Americans understand just how many of their fellow countrymen are in their 30s, 40s and beyond making $20 an hour and living paycheck to paycheck. Average household income is two people working just a few dollars above minimum wage to support their kids.

scient 7y ago
I think you are the one lacking perspective here. The same way you are trying to make a point, I can make a counter point. The person making $20 is considered comparatively rich by someone making less than a dollar a day in some underdeveloped country. Everything is relative. If you make $100k and you live paycheck to paycheck because of housing costs, education costs, grocery cost etc., how can you claim their should shut up because they are rich?
- mtVessel 7y ago
  Yes, but the point is that the gap between rich and middle-class in a single nation, under a single political system, perhaps shouldn't be as wide as the gap between developed and developing nations.
- themagician 7y ago
  Everything isn’t relative. The middle is still the middle. When you are in the top 10% by income claiming to be in the middle you are failing to realize that their are some 250 million people in your own country that are below you. The people who make your coffee, butcher your meat, package your products. You are failing to realize that there are 100-200 million people living either an actual middle class life or are in poverty by any standard you would understand. Living in a place with high costs is a choice. It’s s choice that wealthy people get to make. Living in San Francisco in a small studio on a $100k+ salary and jokingly “feeling poor” is a choice that wealthy and privileged people get to make. It’s a choice I’ve made. It’s probably a choice you’ve made. But I’m not going to pretend for a moment, if I’m being honest, that my life even approaches an actual middle class life. I get to live in one of the best places on the planet with the best food, weather, museums, drinks, bars, technology, etc.. I have access to the best of everything… how the hell is that being in the middle? Go spend a summer in middle America where everything is cheap and see how most people actually live. Hell, take the BART to the end of the line and drive one town further and try living and working there for a bit.

maerF0x0 7y ago

I think a massive issue in America is the growing Urban vs Rural wealth divide. Progressive tax brackets that make sense in the countryside are punitive in an urban environment. Eg: making $150k in SF isnt "that much" yet it's taxed at a higher rate than someone making the same where housing is 50% cheaper (or more). I'm starting to think that tax brackets ought to be converted to PPP within their respective zone.

teachrdan 7y ago

Was anyone else surprised that Dinesh D’Souza defines anyone who earns up to $15 million as "Upper Middle"? That can't be correct, can it?

mtVessel 7y ago
This isn't a single number in TFA that makes sense. $100K was merely "adequate" in 1970? The whole thing is suspect.
ac29 7y ago
$15M net worth or $1.5M income. Seems reasonable.
gowld 7y ago
You just can't fit such a wide range into a small number of levels. And at higher wealth numbers, there is a huge difference in total wealth including past expenditures for the same current wealth.

sudosteph 7y ago

It's a bit ridiculous to see the hoops that some of the wealthy will jump through so they don't have to feel guilty about their position in the world. The person writing this article is almost certainly "rich" by any reasonable standard. Meanwhile, most families making 60k in the US (especially in areas with the best job markets and high COL) - are not. The world income comparison thing at the end is not meaningful in the slightest. If that is actually what he's telling his children, he's doing a great disservice to them. The difference between 60k income and 200k income matters for a lot more than vacations. It impacts things that will directly affect opportunities for your children. This includes: - Being able to live in a neighborhood with good public schools - Being able to live in a home without having concerns about the safety of it (both neighborhood safety and environmental safety factors come into play) - Being able to afford additional educational experiences for your children - things like tutoring, summer camps, musical instrument lessons - Having higher status professional connections that can help your child get into schools, internships, jobs, or just expose your child to higher paying career options in general. The difference in long-term opportunity between middle and upper-middle class is admittedly much smaller than the difference between middle class and poverty, but it's still a real difference. It doesn't do anybody any good to pretend like the children of the wealthy don't actually have a leg-up just because their parents worked hard to get there or achieved class mobility on their own.

5trokerac3 7y ago
Studies show that money can, in fact, buy happiness, but its effect starts to plateau at the point someone makes enough to not worry about whether they can pay their monthly bills. IMO that's the real separator you're getting at here - which, of course, fluctuates based on location.
strikelaserclaw 7y ago
It must be where i grew up but in St.Louis and Kansas city, you could give your children most of these opportunities with roughly a middle class dual parent income. The smartest kids in my class became doctors, stanford phds, etc... None of them were what i consider upper middle class (provided they came from both parent educated households).

legitster 7y ago

> Using the popular “4% rule” 1M would generate 40K per year before taxes – hardly a way to live in style! That income is less than 80% of the average U.S. household income. This is hands down the worst way to look at this number. That's income for not doing anything! That's also generational wealth! 1M dollars in the bank is an order of magnitude better than a 40k year salary and it's a bit of a joke to compare them against each other.

xwdv 7y ago

I’m rich, but you’re not: The only suitable answer for a child who asks this question.

_ah 7y ago

I think there's an important distinction to be made between rich and wealthy. Rich is defined by income level, and often by lifestyle. A high-spending star athlete can be rich AND broke. There's a reasonable argument to be made that a high-income, high-expense lifestyle in the Bay means that you are NOT "rich". Wealthy is a measure of saved, investable assets. Wealth is not income-dependent, and ideally grows over time rather than diminishing. A person with wealth may also be rich depending on the income generated by that wealth and their local cost of living, however they may also be merely comfortable. The key point is: if you are Rich, good for you! But use that income to build Wealth which will serve you better.

DanBC 7y ago
> I think there's an important distinction to be made between rich and wealthy. No there isn't, these are synonyms in any decent dictionary. Chambers uses them to define each other. "Rich: having a lot of money, property, or possessions; wealthy" "Wealthy: possessing riches and property; rich or prosperous". Everything else in your post is just stuff you've made up, which is mildly interesting but has nothing to do with those words as they're used in the real world.

cr0sh 7y ago

I don't typically worry about my level of income or whatnot, except when I think of retirement (which I also don't think will happen, honestly). I'm more concerned on whether my family (wife and dogs - no kids - talk about a money sink) is happy and safe. On that level, we are doing very well. We have a roof over our head in a relatively safe, if older, neighborhood. We have reliable vehicles (ok, both of mine are money pits - but off-roading ain't cheap). We have electricity, water, cooling and heating. We have time and money for regular entertainment and minor "luxuries". We have good health, and can afford a doctor's or dental visits. We have vision care. We can and do eat well. We have time for leisure and laying around doing virtually nothing if we want. We can afford hobbies and other interests. By such a measure, and yes it is arbitrary and may not fit with other's ideas - we are "rich". But more than that, we are happy and safe. We have decent incomes, modest savings, and virtually zero debt (other than our mortgage, which is secured debt and doesn't really count - we didn't buy our house as an investment, but rather to live in - amazing idea, huh?). Yes, we both know we are rich. To that end, when and where and how we can, we also donate to charities and other non-profit causes, respective to our values. At the same time, I know monetarily I am not "rich" compared to even my local peers in the software engineering realm. I am sure that if I tried and looked (though my age might be a hindrance), that I could probably break six figures as an SWE here in the Phoenix area. It kinda irks me that I haven't yet, despite having over 25 years of experience, but it's mainly because I tend to enjoy and thrive at working for smaller software engineering businesses which tend to have few employees, and smaller client contracts. I'm fine with that, as I am happier in such places than in larger ones with more internal politics; or at least that's how I perceive it. I don't make as much as I could - but I make enough to keep my family and I happy, safe, and comfortable. That's my definition of rich, for as little as it's worth I guess.

samingrassia 7y ago

Rich = can you live off the interest from the risk free rate(US Treasury coupon)? In the US - thats about $5mm saving or pretax $100k interest income.