7 ms·

A million dollars is actually not enough to secure a dignified existence in the US. Nonsense: http://ryanwaggoner.com/2010/08/how-to-retire-at-30-on-1-million

A million dollars is actually not enough to secure a dignified existence in the US. Nonsense: http://ryanwaggoner.com/2010/08/how-to-retire-at-30-on-1-million/ http://ryanwaggoner.com/2010/08/how-to-retire-at-30-on-1-mil... Not to face bankruptcy if a major health problem arises? Health insurance isn't that expensive unless you have a pre-existing condition [1]. I won't talk about the college and home ownership questions other than to say that families have figured out how to live happy, healthy lives on far, far less. Go to a good state school, get some scholarships, don't live in Manhattan. And you're only making my point: you don't really want the money. You want the things that you think only an abnormally large amount of money can buy. Sorry, but that just seems like lazy thinking to me. 1. And my sincere condolences to those that do. Seriously, that sucks and we need to fix the system somehow.

Alex3917 16y ago
The cost of raising a kid right now if you want them to have a typical upper middle class upbringing is somewhere between 800k - 1.6M (2007 dollars) from birth to age 17. The exact figure depends on whether you want to send them to private school, whether you are feeding them all organic food, and a couple other things. Even the most basic middle class (no after school sports, summer camp, etc.) upbringing costs $500,000 - $635,000 from birth through college, with the range mostly depending on whether they go to a public or private university. source: http://online.wsj.com/public/article/SB117288281789725533-WZk_5xPQiihWpVM8_WCB9I_GjM0_20070402.html?mod=tff_article http://online.wsj.com/public/article/SB117288281789725533-WZ... edit: The second set of figures was from p.6 of Parenting, Inc., which I believe come from here: http://www.cnpp.usda.gov/Publications/CRC/crc2009.pdf http://www.cnpp.usda.gov/Publications/CRC/crc2009.pdf You can actually read the entire opening of Parenting, Inc. for free on Amazon: http://www.amazon.com/Parenting-Inc-Pamela-Paul/dp/B003V1WDFA/ref=sr_1_1?ie=UTF8&qid=1292874053&sr=8-1 http://www.amazon.com/Parenting-Inc-Pamela-Paul/dp/B003V1WDF...
- tptacek 16y ago
  It does not cost us anything resembling $66,000/yr (no, wait: 2 kids - $120k/year [?!]) to provide two school-age children with an absurdly privileged upbringing. I suspect college tuition is queering those numbers.
  - jessriedel 16y ago
    Four years of full tuition at an Ivy League school is $200k, so that doesn't even explain the absurd numbers. (And at Princeton, for instance, less than half of the students pay full price.)
  - m4wk3r 16y ago
    there's also the opportunity cost of spending the money on child-rearing for 17 years and not letting it sit and accrue interest somewhere. great use of "queering", by the way.
  - deleted 16y ago
    [deleted]
  - damoncali 16y ago
    True, but take a more reasonable number like $20k/year/kid, factor in the time value of money and you can quite reasonably hit a future value of half a million or more to get a single kid to college (let alone through it). In other words, what would you have if you invested the cost of children for 17 years? a shitton of money. (Granted, $20k/year is a hefty spend on a kid where I come from).
  - cookiecaper 16y ago
    Why is college tuition even considered an expense that parents have to shoulder? If you're rich enough and you want to pay the tuition, then that's just great, but is it really so bad to imagine that someone hovering around 20 would work for something useful for themselves? Sure, it's nice to have rich parents who will pay your expenses so you can "focus on school" (heh), but it's by no means a requirement.
    - tptacek 16y ago
      IT'S NOT. You're not supposed to pay into your kids college fund until you've fully funded your own retirement. There are college loans. There aren't retirement loans.
- ryanwaggoner 16y ago
  Can you post some sources? I'm extremely skeptical. If you have three kids in America, you're telling me that parents need to make $100k / yr just to cover the cost of the kids, not to mention their own costs? And triple that for an "upper middle class" upbringing? Yeah, I'm really skeptical. The median household income in America is way, way less than that and I don't think most kids in America are living in the abject poverty these numbers would suggest.
  - m4wk3r 16y ago
    it's not that absurd when you consider opportunity costs. even if your actual expenses are only 10k/yr, at a 7% avg rate of return, after 17 years you're down 170k plus ~140k in lost interest. at 20k/yr you hit 340k plus ~280k in lost interest.
    - gnaritas 16y ago
      This presumes people who don't have kids save the money instead, which quite frankly isn't at all true. People who don't have kids in large part just never learn to tighten their budget the way parents do, they live a higher cost of living lifestyle; in short, they act like single people. Now you could say "oh but I'd live broke like parents do and save the money" but frankly I wouldn't believe anyone who said that for a second. In fact, I'd bring up the opportunity cost of maturity that having children brings you that you'd otherwise be missing out on by not having them. Maturity that quite frankly, probably saves you more money than you'd lose by having the child.
      - m4wk3r 16y ago
        i'd love to see that data. my runway's ~4 years long.. all savings. no children.
- yummyfajitas 16y ago
  Your article doesn't really support your position: "The government says families in the top-third income bracket will spend $279,450 to raise a child born in 2005 through age 17 -- or about $16,000 a year. " Also from the article: "Add in extras like private school, a nanny and a flat-screen TV set in a kid's bedroom, and that figure climbs to $1.6 million." "In San Diego, Jacqueline Jones recently rang in her fifth year with a $1,000 mermaid-theme party. The fête, held at a community pool, included a piñata, pizza, cake, juice boxes, customized goodie bags for 20 and a former beauty queen who arrived dressed head to toe as Ariel, the Disney princess." "...toddlers in $800 strollers to 10-year-olds with cellphones. But for many families, drawing the line between attentive parenting and extravagance is a tough call;..." "School itself is just the beginning. It might mean paying $16,500 in annual property taxes in an area with top public schools like Millburn, N.J., ..." (Note: Millburn has a median house price of $1 million, and a median income of $150k/year.) [edit, in response to your edit: the USDA comes up with $11-13k for two-parent families with income of $57-98k/year. That's about $230k/child over 18 years, for a group of families all of whom are richer than average.]
  - tptacek 16y ago
    We spent a lot on food (I goof around with cooking) and there is no way it is costing us $32,000 to raise both our children. Even if you normalized for the premium we pay on our mortgage to be in a neighborhood with good public schools, I don't think we're in that ballpark. I wonder how much of this is just people sending their kids to absurd private schools.
    - Swannie 16y ago
      Add in the parents food! If we accept that raising a child is a "full time job" (in reality it is more hours... not sure on the effort though), for their first five years, then all of the food of that full time parent eats, etc. adds in to that cost ;-P You can argue that they would have eaten that themselves, however if they weren't full time caring, they would be out, earning. So one way or another you need to include child care costs: food and necessities for the primary carer, or day care/nanny costs. I think that a lot of parents end up spending more than they need to with their children because they pander to their food requests. Learn to cook food that your children will eat, that is a simplified version of what you will eat (like my parents did)! That said, I must learn to fix my own eating habits, then work on those of my girlfriend with her... then we might actually stand a chance at that last one if we get to that stage :-P
tptacek 16y ago
We did fix that problem. Everyone will have to buy health insurance, and insurers will in large part be prevented from rejecting people for preexisting conditions.
- defen 16y ago
  I'm not a constitutional scholar so I have no idea how big of a deal this is, but: http://articles.cnn.com/2010-12-13/politics/health.care_1_health-insurance-health-care-federal-judge http://articles.cnn.com/2010-12-13/politics/health.care_1_he...
  - tptacek 16y ago
    No opinion I can give about this will result in anything less than 48 comments of pointless political argument about the Commerce Clause and health care and moral hazard and libertarianism and how someone's mom was totally able to haggle perfectly good health care out of a hospitals for pennies on the dollar and it's all the fault of people who consume HFCS and let's just bypass all that.
    - Vivtek 16y ago
      Dammit, this kind of comment is why you have all the karma it's physically possible to have.
narkee 16y ago
Of course you want things money can buy - that's implicit when someone says they want money. Because we all know that money has no intrinsic value, and saying we want money is a little easier than saying we want a magic genie that will give us things for free.
Locke1689 16y ago
I won't talk about the college and home ownership questions other than to say that families have figured out how to live happy, healthy lives on far, far less. Go to a good state school, get some scholarships, don't live in Manhattan. This is a poor answer. Just because other people are happy with something doesn't mean everyone is. What do you mean "don't live in Mahnattan"? I want to live in Manhattan. Who are you to say which of my desires are valid and invalid?
- mseebach 16y ago
  He didn't say that, he said that you don't need to live in Manhattan to have a dignified life. Nobody contests that a million dollars can buy you a lot of very nice things. The point is that too many people spend too much time fretting about going to Thailand when they get a million dollars, while completely missing the fact that a trip to Thailand is maybe $1000. It's mostly a question of priorities, and if you make your whole life about getting a million dollars, guess what happens once you get there? You're likely to start obsessing about five million, rather than retire to that beach in Thailand.
  - deleted 16y ago
    [deleted]
  - Locke1689 16y ago
    Maybe, but his thesis that most people say that want a million dollars but don't actually want the things that cost a million dollars is unsupported. I was playing devil's advocate (I probably don't want to live in Manhattan) but the idea is that none of us really know how many people actually want things that cost a million dollars and how many people just want what he terms "freedom."
- tptacek 16y ago
  The bearer of bad news about statistics, demographics, and what the rest of the country gets by happily on.
- sp4rki 16y ago
  Your dreams and desires have nothing to do with living a fulfilling "dignified" life. His answer is so full of truth. You don't need to live in Manhattan to be happy, the same way you don't need to be in the bay area to start a successful startup. If you think that the only way to be happy (in your case) is to live in Manhattan, then you have bigger problems with your priorities than the amount of money you need to live comfortably. I've love to buy a sporty Jaguar coupe which costs around 110k over here, but since I don't have that kind of money to spend on a car I make due with my 1998 truck. I'm happy. I'll probably buy a 370z in the next six months. It's not a Jaguar, but I will still be happy and live a free and dignified life.
joe_the_user 16y ago
Suppose you're 30 say and expect to live till you're 80 and to spend US median income (50K/yr) on your survival, then you expect to spend 2.5 million in your remaining lifetime. Having an extra-million to spend on consumption would put you at the ~70K/year level. That's something like a move from middle to barely-upper-middle class consumption levels. So 1 million doesn't give you an abnormal amount of money to spend unless you spend it all in one place or something. And your article on "how to retire..." isn't about how to retire at all but how to work with a million dollars and make a fair income, which is fine and good as long as you acknowledge that the person has to ... A) be moderately competent, B) be willing to accept some risks and discomforts (living Texas for example...) C) be willing to keep working (sure, maybe not that hard but still it involves effort, it's not friggin "retirement" in the normal sense).
didip 16y ago
"pre-existing condition" what does it mean? And how can old people avoid having pre-existing condition? Does that mean one has to be insured continuously to make sure no pre-existing condition arises in-between insurance gap? I'm new in the States and I hear this term is mentioned a lot.
- ams6110 16y ago
  Yes, generally by staying continually insured you avoid waiting periods for coverage of pre-existing conditions. Old people are on Medicare which doesn't, to my knowledge, exclude pre-existing conditions.
- steveklabnik 16y ago
  Insurance is based on statistics. The insurance company is making a bet across a large number of people that the people will pay them more than they'll have to pay out. If you're already afflicted with some illness (a 'preexisting condition') then the insurance company has a pretty good idea of what you'll cost them: more than someone like me, who's young and relatively healthy. So naturally, the rate for someone like this is significantly higher. This becomes a problem when people think of 'insurance' as something that's a prerequisite for life rather than what it is, insurance. This is partially because as more and more people received insurance, the price kept rising and rising, because the individuals don't see them: they only see the deductible. By now, costs are getting to be so high that it's become a reality: you pretty much have to have insurance, because if you don't, and you get seriously ill, you're pretty fucked. Like, "will be owing money the rest of your life." You hear "pre-existing condition" a lot because it became a political buzzword used to explain why Republicans want to kill your grandma.
  - ams6110 16y ago
    People get all worked up about pre-existing conditions but how many people expect to be able to buy collision insurance after they've run their car into a tree? Home insurance after their house has burned to the ground? That's not insurance... that's a bail-out.

Alex3917 16y ago

The cost of raising a kid right now if you want them to have a typical upper middle class upbringing is somewhere between 800k - 1.6M (2007 dollars) from birth to age 17. The exact figure depends on whether you want to send them to private school, whether you are feeding them all organic food, and a couple other things. Even the most basic middle class (no after school sports, summer camp, etc.) upbringing costs $500,000 - $635,000 from birth through college, with the range mostly depending on whether they go to a public or private university. source: http://online.wsj.com/public/article/SB117288281789725533-WZk_5xPQiihWpVM8_WCB9I_GjM0_20070402.html?mod=tff_article http://online.wsj.com/public/article/SB117288281789725533-WZ... edit: The second set of figures was from p.6 of Parenting, Inc., which I believe come from here: http://www.cnpp.usda.gov/Publications/CRC/crc2009.pdf http://www.cnpp.usda.gov/Publications/CRC/crc2009.pdf You can actually read the entire opening of Parenting, Inc. for free on Amazon: http://www.amazon.com/Parenting-Inc-Pamela-Paul/dp/B003V1WDFA/ref=sr_1_1?ie=UTF8&qid=1292874053&sr=8-1 http://www.amazon.com/Parenting-Inc-Pamela-Paul/dp/B003V1WDF...

tptacek 16y ago
It does not cost us anything resembling $66,000/yr (no, wait: 2 kids - $120k/year [?!]) to provide two school-age children with an absurdly privileged upbringing. I suspect college tuition is queering those numbers.
- jessriedel 16y ago
  Four years of full tuition at an Ivy League school is $200k, so that doesn't even explain the absurd numbers. (And at Princeton, for instance, less than half of the students pay full price.)
- m4wk3r 16y ago
  there's also the opportunity cost of spending the money on child-rearing for 17 years and not letting it sit and accrue interest somewhere. great use of "queering", by the way.
- deleted 16y ago
  [deleted]
- damoncali 16y ago
  True, but take a more reasonable number like $20k/year/kid, factor in the time value of money and you can quite reasonably hit a future value of half a million or more to get a single kid to college (let alone through it). In other words, what would you have if you invested the cost of children for 17 years? a shitton of money. (Granted, $20k/year is a hefty spend on a kid where I come from).
- cookiecaper 16y ago
  Why is college tuition even considered an expense that parents have to shoulder? If you're rich enough and you want to pay the tuition, then that's just great, but is it really so bad to imagine that someone hovering around 20 would work for something useful for themselves? Sure, it's nice to have rich parents who will pay your expenses so you can "focus on school" (heh), but it's by no means a requirement.
  - tptacek 16y ago
    IT'S NOT. You're not supposed to pay into your kids college fund until you've fully funded your own retirement. There are college loans. There aren't retirement loans.
ryanwaggoner 16y ago
Can you post some sources? I'm extremely skeptical. If you have three kids in America, you're telling me that parents need to make $100k / yr just to cover the cost of the kids, not to mention their own costs? And triple that for an "upper middle class" upbringing? Yeah, I'm really skeptical. The median household income in America is way, way less than that and I don't think most kids in America are living in the abject poverty these numbers would suggest.
- m4wk3r 16y ago
  it's not that absurd when you consider opportunity costs. even if your actual expenses are only 10k/yr, at a 7% avg rate of return, after 17 years you're down 170k plus ~140k in lost interest. at 20k/yr you hit 340k plus ~280k in lost interest.
  - gnaritas 16y ago
    This presumes people who don't have kids save the money instead, which quite frankly isn't at all true. People who don't have kids in large part just never learn to tighten their budget the way parents do, they live a higher cost of living lifestyle; in short, they act like single people. Now you could say "oh but I'd live broke like parents do and save the money" but frankly I wouldn't believe anyone who said that for a second. In fact, I'd bring up the opportunity cost of maturity that having children brings you that you'd otherwise be missing out on by not having them. Maturity that quite frankly, probably saves you more money than you'd lose by having the child.
    - m4wk3r 16y ago
      i'd love to see that data. my runway's ~4 years long.. all savings. no children.
yummyfajitas 16y ago
Your article doesn't really support your position: "The government says families in the top-third income bracket will spend $279,450 to raise a child born in 2005 through age 17 -- or about $16,000 a year. " Also from the article: "Add in extras like private school, a nanny and a flat-screen TV set in a kid's bedroom, and that figure climbs to $1.6 million." "In San Diego, Jacqueline Jones recently rang in her fifth year with a $1,000 mermaid-theme party. The fête, held at a community pool, included a piñata, pizza, cake, juice boxes, customized goodie bags for 20 and a former beauty queen who arrived dressed head to toe as Ariel, the Disney princess." "...toddlers in $800 strollers to 10-year-olds with cellphones. But for many families, drawing the line between attentive parenting and extravagance is a tough call;..." "School itself is just the beginning. It might mean paying $16,500 in annual property taxes in an area with top public schools like Millburn, N.J., ..." (Note: Millburn has a median house price of $1 million, and a median income of $150k/year.) [edit, in response to your edit: the USDA comes up with $11-13k for two-parent families with income of $57-98k/year. That's about $230k/child over 18 years, for a group of families all of whom are richer than average.]
- tptacek 16y ago
  We spent a lot on food (I goof around with cooking) and there is no way it is costing us $32,000 to raise both our children. Even if you normalized for the premium we pay on our mortgage to be in a neighborhood with good public schools, I don't think we're in that ballpark. I wonder how much of this is just people sending their kids to absurd private schools.
  - Swannie 16y ago
    Add in the parents food! If we accept that raising a child is a "full time job" (in reality it is more hours... not sure on the effort though), for their first five years, then all of the food of that full time parent eats, etc. adds in to that cost ;-P You can argue that they would have eaten that themselves, however if they weren't full time caring, they would be out, earning. So one way or another you need to include child care costs: food and necessities for the primary carer, or day care/nanny costs. I think that a lot of parents end up spending more than they need to with their children because they pander to their food requests. Learn to cook food that your children will eat, that is a simplified version of what you will eat (like my parents did)! That said, I must learn to fix my own eating habits, then work on those of my girlfriend with her... then we might actually stand a chance at that last one if we get to that stage :-P

tptacek 16y ago

We did fix that problem. Everyone will have to buy health insurance, and insurers will in large part be prevented from rejecting people for preexisting conditions.

defen 16y ago
I'm not a constitutional scholar so I have no idea how big of a deal this is, but: http://articles.cnn.com/2010-12-13/politics/health.care_1_health-insurance-health-care-federal-judge http://articles.cnn.com/2010-12-13/politics/health.care_1_he...
- tptacek 16y ago
  No opinion I can give about this will result in anything less than 48 comments of pointless political argument about the Commerce Clause and health care and moral hazard and libertarianism and how someone's mom was totally able to haggle perfectly good health care out of a hospitals for pennies on the dollar and it's all the fault of people who consume HFCS and let's just bypass all that.
  - Vivtek 16y ago
    Dammit, this kind of comment is why you have all the karma it's physically possible to have.

narkee 16y ago

Of course you want things money can buy - that's implicit when someone says they want money. Because we all know that money has no intrinsic value, and saying we want money is a little easier than saying we want a magic genie that will give us things for free.

Locke1689 16y ago

I won't talk about the college and home ownership questions other than to say that families have figured out how to live happy, healthy lives on far, far less. Go to a good state school, get some scholarships, don't live in Manhattan. This is a poor answer. Just because other people are happy with something doesn't mean everyone is. What do you mean "don't live in Mahnattan"? I want to live in Manhattan. Who are you to say which of my desires are valid and invalid?

mseebach 16y ago
He didn't say that, he said that you don't need to live in Manhattan to have a dignified life. Nobody contests that a million dollars can buy you a lot of very nice things. The point is that too many people spend too much time fretting about going to Thailand when they get a million dollars, while completely missing the fact that a trip to Thailand is maybe $1000. It's mostly a question of priorities, and if you make your whole life about getting a million dollars, guess what happens once you get there? You're likely to start obsessing about five million, rather than retire to that beach in Thailand.
- deleted 16y ago
  [deleted]
- Locke1689 16y ago
  Maybe, but his thesis that most people say that want a million dollars but don't actually want the things that cost a million dollars is unsupported. I was playing devil's advocate (I probably don't want to live in Manhattan) but the idea is that none of us really know how many people actually want things that cost a million dollars and how many people just want what he terms "freedom."
tptacek 16y ago
The bearer of bad news about statistics, demographics, and what the rest of the country gets by happily on.
sp4rki 16y ago
Your dreams and desires have nothing to do with living a fulfilling "dignified" life. His answer is so full of truth. You don't need to live in Manhattan to be happy, the same way you don't need to be in the bay area to start a successful startup. If you think that the only way to be happy (in your case) is to live in Manhattan, then you have bigger problems with your priorities than the amount of money you need to live comfortably. I've love to buy a sporty Jaguar coupe which costs around 110k over here, but since I don't have that kind of money to spend on a car I make due with my 1998 truck. I'm happy. I'll probably buy a 370z in the next six months. It's not a Jaguar, but I will still be happy and live a free and dignified life.

joe_the_user 16y ago

Suppose you're 30 say and expect to live till you're 80 and to spend US median income (50K/yr) on your survival, then you expect to spend 2.5 million in your remaining lifetime. Having an extra-million to spend on consumption would put you at the ~70K/year level. That's something like a move from middle to barely-upper-middle class consumption levels. So 1 million doesn't give you an abnormal amount of money to spend unless you spend it all in one place or something. And your article on "how to retire..." isn't about how to retire at all but how to work with a million dollars and make a fair income, which is fine and good as long as you acknowledge that the person has to ... A) be moderately competent, B) be willing to accept some risks and discomforts (living Texas for example...) C) be willing to keep working (sure, maybe not that hard but still it involves effort, it's not friggin "retirement" in the normal sense).

didip 16y ago

"pre-existing condition" what does it mean? And how can old people avoid having pre-existing condition? Does that mean one has to be insured continuously to make sure no pre-existing condition arises in-between insurance gap? I'm new in the States and I hear this term is mentioned a lot.

ams6110 16y ago
Yes, generally by staying continually insured you avoid waiting periods for coverage of pre-existing conditions. Old people are on Medicare which doesn't, to my knowledge, exclude pre-existing conditions.
steveklabnik 16y ago
Insurance is based on statistics. The insurance company is making a bet across a large number of people that the people will pay them more than they'll have to pay out. If you're already afflicted with some illness (a 'preexisting condition') then the insurance company has a pretty good idea of what you'll cost them: more than someone like me, who's young and relatively healthy. So naturally, the rate for someone like this is significantly higher. This becomes a problem when people think of 'insurance' as something that's a prerequisite for life rather than what it is, insurance. This is partially because as more and more people received insurance, the price kept rising and rising, because the individuals don't see them: they only see the deductible. By now, costs are getting to be so high that it's become a reality: you pretty much have to have insurance, because if you don't, and you get seriously ill, you're pretty fucked. Like, "will be owing money the rest of your life." You hear "pre-existing condition" a lot because it became a political buzzword used to explain why Republicans want to kill your grandma.
- ams6110 16y ago
  People get all worked up about pre-existing conditions but how many people expect to be able to buy collision insurance after they've run their car into a tree? Home insurance after their house has burned to the ground? That's not insurance... that's a bail-out.