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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 r

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
    That may very well be true, but I don't have any good data. To hit 1% in income, you need to make about 750K a year. To hit 1% in net worth, you have to clear a bit more than 10M. So the question would be how many people hit 750K for a year, or a few years of their life, without accumulating 10M in net worth? Depending on lifestyle and location, I bet there are plenty of people who make a load of money but also spend a load of money.
    - harryh 7y ago
      Look at it from the other direction: How many people are in the top 1% of NW but fail to be in the top 1% of income? Surely some but I bet not a ton. EDIT: I found this - https://economix.blogs.nytimes.com/2012/01/17/measuring-the-top-1-by-wealth-not-income/ https://economix.blogs.nytimes.com/2012/01/17/measuring-the-... "Some readers wondered if the 1 percent by wealth weren’t an entirely different group of people from the 1 percent by income. But there is substantial overlap: the Fed data suggests that about half of the top 1 percent of earners are also among the top 1 percent in the net worth category. Almost all the rest of the top earners are still in the top 5 percent when it comes to net worth."
      - saltcured 7y ago
        Going by the thresholds above (I don't know that they are correct), sitting on $10M in assets would require a 7.5% annual income return to reach the $750k threshold. That sounds very unlikely, if the person is living on passive investment income. Even with a well-performing stock or real estate portfolio, to have that level of returns you are mostly talking about unrealized gains. Those would not count as income if someone is living in equilibrium, growing their assets over time. You would only realize those investment gains as income if you were liquidating your assets to fund a lavish but limited duration lifestyle. Edit: noting your addendum, I guess we're looking at the difference between a technical implication (you must have this income if you have these assets) versus a behavioral trait (most people don't live frugally or complacently with big piles of assets)...?
    - username90 7y ago
- strikelaserclaw 7y ago
  Even in the tech industry it is uncommon to make top 1% income, even if it is household income.
  - rootusrootus 7y ago
    Agreed. It's higher than I remember. OP mentioned making 1% money, but he may be under the same delusion I am :). 1% is 750K, and that is exceedingly rare in tech. Aside from some niche cases like self-driving car engineers at Google, it probably only happens in senior management.
themagician 7y ago
You don’t consider yourself rich because you are tone deaf and lack perspective, not because you work hard. I doubt you have any idea what it means to work hard. Jumping online to finish some work on a computer isn’t working hard. Lmao. Working hard is sitting on an assembly line putting clamshells together all day until your hands hurt, then having to wake up and do it again the next day. I too get to live the luxury of pretending I work hard while sitting behind a computer in a comfortable environment. But seriously man, get some perspective.
harryh 7y ago
We are easily 1%-ers in terms of income level but we don't consider ourselves rich I'm forced to wonder how many policy problems in America are due to people like this failing to acknowledge just how good they have it and thus failing to be comfortable contributing to the greater good because they "don't consider themselves rich."
pnathan 7y ago
I thought that the point of the article was that he was reflecting on wealth, and answering his children in such a way that they did not walk around like privileged gits, while still being truthful. Comfortable is also my answer that I've prepared for the same question. I'm considerably less wealthy than OP, I suspect, but, supposing things continue roughly as they have been, my child will never really know hunger or want. We are _comfortable_. Which, in my understanding of my religion, gives us an obligation to help the less comfortable and to never take our assets for granted. The distinction between rich and wealth that you point out is, I think, astute - it's something like the difference between poverty and being broke. For some of us, it's a state of being, for others, it is temporary.
brokensegue 7y ago
you are rich

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
  That may very well be true, but I don't have any good data. To hit 1% in income, you need to make about 750K a year. To hit 1% in net worth, you have to clear a bit more than 10M. So the question would be how many people hit 750K for a year, or a few years of their life, without accumulating 10M in net worth? Depending on lifestyle and location, I bet there are plenty of people who make a load of money but also spend a load of money.
  - harryh 7y ago
    Look at it from the other direction: How many people are in the top 1% of NW but fail to be in the top 1% of income? Surely some but I bet not a ton. EDIT: I found this - https://economix.blogs.nytimes.com/2012/01/17/measuring-the-top-1-by-wealth-not-income/ https://economix.blogs.nytimes.com/2012/01/17/measuring-the-... "Some readers wondered if the 1 percent by wealth weren’t an entirely different group of people from the 1 percent by income. But there is substantial overlap: the Fed data suggests that about half of the top 1 percent of earners are also among the top 1 percent in the net worth category. Almost all the rest of the top earners are still in the top 5 percent when it comes to net worth."
    - saltcured 7y ago
      Going by the thresholds above (I don't know that they are correct), sitting on $10M in assets would require a 7.5% annual income return to reach the $750k threshold. That sounds very unlikely, if the person is living on passive investment income. Even with a well-performing stock or real estate portfolio, to have that level of returns you are mostly talking about unrealized gains. Those would not count as income if someone is living in equilibrium, growing their assets over time. You would only realize those investment gains as income if you were liquidating your assets to fund a lavish but limited duration lifestyle. Edit: noting your addendum, I guess we're looking at the difference between a technical implication (you must have this income if you have these assets) versus a behavioral trait (most people don't live frugally or complacently with big piles of assets)...?
  - username90 7y ago
strikelaserclaw 7y ago
Even in the tech industry it is uncommon to make top 1% income, even if it is household income.
- rootusrootus 7y ago
  Agreed. It's higher than I remember. OP mentioned making 1% money, but he may be under the same delusion I am :). 1% is 750K, and that is exceedingly rare in tech. Aside from some niche cases like self-driving car engineers at Google, it probably only happens in senior management.

themagician 7y ago

You don’t consider yourself rich because you are tone deaf and lack perspective, not because you work hard. I doubt you have any idea what it means to work hard. Jumping online to finish some work on a computer isn’t working hard. Lmao. Working hard is sitting on an assembly line putting clamshells together all day until your hands hurt, then having to wake up and do it again the next day. I too get to live the luxury of pretending I work hard while sitting behind a computer in a comfortable environment. But seriously man, get some perspective.

harryh 7y ago

We are easily 1%-ers in terms of income level but we don't consider ourselves rich I'm forced to wonder how many policy problems in America are due to people like this failing to acknowledge just how good they have it and thus failing to be comfortable contributing to the greater good because they "don't consider themselves rich."

pnathan 7y ago

I thought that the point of the article was that he was reflecting on wealth, and answering his children in such a way that they did not walk around like privileged gits, while still being truthful. Comfortable is also my answer that I've prepared for the same question. I'm considerably less wealthy than OP, I suspect, but, supposing things continue roughly as they have been, my child will never really know hunger or want. We are _comfortable_. Which, in my understanding of my religion, gives us an obligation to help the less comfortable and to never take our assets for granted. The distinction between rich and wealth that you point out is, I think, astute - it's something like the difference between poverty and being broke. For some of us, it's a state of being, for others, it is temporary.

brokensegue 7y ago

you are rich