16 ms·
Are You Rich? This Income-Rank Quiz Might Change How You See Yourself
- esotericn 7y ago> In your view, being “rich” means having an income in the ... > Don’t know/none of these Wealth. Or unearned income. Which approximately no-one actually thinks about when they say "income". Basically the whole thing is pointless due to that.
- harryh 7y agoWealth and income are very highly correlated especially when you also take into account age.
- zeroonetwothree 7y agoI would even argue consumption is the best measure to use.
- nraynaud 7y agoeven that have been gamed, when CEOs make their company pay for a lot of their stuff, or people have a non-profit owning their mention.
- asark 7y agoI see that sort of thing come up a lot, but is there, like, a blow-by-blow guide out there for how they get to that position without running afoul of the law? Is it something you can only do with expensive tax lawyers and money to throw around for a bunch of temporary maneuvers, or is it something your average freelancer/consultant with an LLC can pull off?
- nraynaud 7y agothe fix cost is too high for non wealthy people to do it, you need a few thousands of dollars in layers, accounting, various registrations, etc.
- harryh 7y agoThe IRS has very strict rules on what counts as compensation. The idea that CEOs are significantly circumventing them is mostly wrong.
- esotericn 7y agoBollocks. Half of the families in London sitting on hundreds of thousands in net worth earned around median in their primes. The same is likely true in SF and elsewhere.
- human20190310 7y agoLondon and San Francisco are not typical cases though. Most people earning median income, but living elsewhere, did not participate in a housing market with such dramatic price increases. (As a side note, it's now impossible for people earning median income to participate in those markets, due to the expense). EDIT: That said, I do think that income is over-emphasized in categorizing people as rich or not. A person who lucked into a house that went up in value might not feel rich, but they definitely are richer than the person that has to borrow a million more dollars to live in the house next door.
- harryh 7y agoAnd even for people who have most of their net worth tied up in appreciated housing have high incomes when you count imputed rent. Which, if you are not counting, you are just being silly.
- harryh 7y agoAnd those people now have high incomes due to the return on capital they can get from their net worth.
- esotericn 7y agoAddressed in my OP. The man on the clapham omnibus will not tell you that a person who owns a house and works in the supermarket has a high income. They might say that they're rich though. Because wealth is the thing that makes you rich.
- deleted 7y ago[deleted]
- zeveb 7y agoYup, exactly. To me, 'rich' means having the wealth to live off of the interest (where 'wealth' is defined rather expansively to include things like disability, Social Security & pension benefits as well as simple capital).
- romaaeterna 7y agoVery true. If a person has $1M wealth, it's $40K interest in his pocket forever, assuming he invests wisely and follows the 4% drawdown rule. If you have a job that makes $100K over 10 years, it would be about $20K in taxes, $40K in expenses, and (max) $40K in savings. At the end of 10 years, you'll have half a million, and the person with wealth will still have his million. He'll also possibly have spent the last 10 years starting a business, improving his education, or earning a salary on top of his wealth. You will both be 10 years older and closer to the end of prime earning years. Of the two of you, you will still need your earning years, because interest on your $500K is only $20K/yr, but he will not. Wealth is far different from income.
- Super_Jambo 7y agoAnd yet all these newspapers owned by hugely wealthy individuals keep conflating the two! Weird isn't it? It's almost like there's an incentive for the media landscape to muddy the waters between well paid execs and the person who owns the company.
- thatfrenchguy 7y agoTheir journalists are clearly not rich though ?
- lonelappde 7y agoIt's just that most people aren't very smart, including most journalists. It's a not a grand conspiracy to protect billionaires. They pick on Jeff Bezos plenty.
- opo 7y ago>...If a person has $1M wealth, it's $40K interest in his pocket forever, assuming he invests wisely and follows the 4% drawdown rule. You are overstating the results of the Trinity Study: >...The 4% refers to the portion of the portfolio withdrawn during the first year; it is assumed that the portion withdrawn in subsequent years will increase with the consumer price index (CPI) to keep pace with the cost of living. The withdrawals may exceed the income earned by the portfolio, and the total value of the portfolio may well shrink during periods when the stock market performs poorly. It is assumed that the portfolio needs to last thirty years. The withdrawal regime is deemed to have failed if the portfolio is exhausted in less than thirty years and to have succeeded if there are unspent assets at the end of the period. https://en.wikipedia.org/wiki/Trinity_study https://en.wikipedia.org/wiki/Trinity_study Nothing in the study indicated that its "in his pocket forever" - just that historically, withdrawal rates of 4% were able to last 30 years before the assets were totally depleted. (Also the wikipedia article has a number of criticisms of the study.)
- opportune 7y agoCompletely agree. Sure a young person making $200k+ in the Bay Area is “rich” but it’s not even comparable to people who have inherited massive amounts of wealth or have become rich through ownership in a rapidly growing company (which also isn’t income, but capital gains). You can’t even afford a 2k sqft home in a nice (accessible, safe, decent schools) area on that income - doesn’t feel rich to me. This kind of logic is what keeps the upper-middle class of the US paying high taxes but shields the truly rich, I mean filthy stinking ungodly rich, from paying their fair share. Because they don’t acquire their massive wealth via income, but through inheritance and capital gains
- chrisco255 7y agoWhich is why, in my opinion, a federal sales tax would be far better at capturing value from the wealthy (than an income tax) without penalizing people trying to earn and reinvest their earnings.
- lonelappde 7y agoSales tax is non-progressive.
- bradstewart 7y agoIt's progressive in the sense that rich people generally buy more (and more expensive) things.
- thatfrenchguy 7y ago> You can’t even afford a 2k sqft home in a nice (accessible, safe, decent schools) area I think a lot of people conflate "nice" with "one of the richest/best" in the Bay Area, conflating middle class with upper class. With 200k, you can afford around a million dollar home. There is a lot of places in the bay area where you can afford a house in that range.
- lonelappde 7y ago
- mbesto 7y agoThis is by far my biggest pet peeve with media and finance... Income != Wealth/Assets And the two are used interchangeably all of the time, which gets misused. And it happens right here on HN "omg Uber is worth $160B, how can they not pay developers more?!"...
- sct202 7y agoI feel like being rich is a combination of income and like assets/net worth. Like I know people who make 6 figures+ and live pay check to pay check because they have a lot of expenses.
- lotsofpulp 7y agoI wouldn't consider myself rich if a health issue can knock my family off course. Which basically means if you can't live off the labor of others, i.e. you own capital that generates cash flow.
- harryh 7y agoIf you have a high income you can more easily solve this problem with insurance than accumulating a huge amount of capital.
- metalliqaz 7y agoHe's talking about not being able to work anymore.
- harryh 7y agoYes, I know. That is what disability insurance is for.
- lotsofpulp 7y agoCost of family health insurance is $20k to $25k per year, plus a $13k out of pocket maximum, so annual healthcare costs with insurance can be $40k pre-tax easily. Not including any travel, hotel stays, spouse having to take time off work to take care of you, etc.
- iron0013 7y agoIf you were living off the labor of others, wouldn't a health issue be able to knock those laborers' families off course?
- Simulacra 7y agoWell according to this I'm not rich, but I'm getting close. I'm disappointed it doesn't include property ownership because that might put me up there over the magical rich line.
- sct202 7y agoThere's similar calculators you can use to calculate net worth rankings instead of income based ones. https://personalfinancedata.com/networth-percentile-calculator/ https://personalfinancedata.com/networth-percentile-calculat... https://dqydj.com/financial-calculators-investment-calculators-economics-health/ https://dqydj.com/financial-calculators-investment-calculato...
- nsxwolf 7y agoIs this broken? My only choice after completing the questions is "[Click here to skip the exercise altogether and see the answer for a New York area household earning $150,000 a year.] "
- dandigangi 7y agoSame! What the heck!
- kasperni 7y agoYou might want to note in the title that this quiz is only applicable for residents in the US.
- harryh 7y agoThis tool is important because it makes clear one of the biggest problems in America: the rich refuse to believe they are rich. In Europe, top income tax rates kick in at far lower incomes often just 2-3X the median income. The additional tax revenues generated here are used to fund things like national health care. Similar programs will never be possible in the US unless more Americans come to the realization that they are, in fact, rich and deserved to be taxed as such.
- lotsofpulp 7y agoAs an American, if I didn't have to worry about healthcare expenses for me and my family, then I would place my idea of rich at a much lower threshold. But because there is no safety net, everyone has to accumulate that much more to have security and peace of mind.
- harryh 7y agoI definitely agree that path dependency issues are deeply connected to this problem.
- arcticbull 7y agoWelcome to America where the rich believe they're middle class, and the poor believe they're middle class too.
- atemerev 7y agoWith around $130k/year in Switzerland, I am not rich, by any margin. Also, being rich is not about beating 99% people in monetary income. Being rich is about being able to live without toiling.
- qes 7y agoYou know what realization I've come to? That an _actual_ rich person can light 10 years of my quite substantial salary on fire and not be affected in any way whatsoever.
- sidlls 7y agoThe tool is next to useless because it conflates income with wealth and, worse, it doesn't distinguish between income earned from work (e.g. salary) and income earned from assets (e.g. rents, equities). Aside from that, it has other flaws. For example, I'd classify myself as "rich" by the (flawed) measure of household income used by the survey--but because I overestimated the percentile range my household income is in the survey result indicated I thought I wasn't rich.
- romaaeterna 7y agoIf you think that "rich" is about income and not wealth, you're probably not rich.
- asark 7y agoYup. Rich is when money's just there. Like water on tap. Maybe you'd think twice about running a hose out in the street and turning it on for a week straight, or filling an olympic swimming pool. But if you want a glass to drink, to rinse off a dish, to wash your hands, to run a bath, whatever, all you do is turn a knob and there it is. You don't even think about it.
- hurrdurr2 7y agoThis is a great analogy. My sister married into a wealthy family and they have so much money and assets it's no longer a concern for them. They literally stopped thinking about money as an issue as you described.
- tbirrell 7y agoI feel like age shouldn't factor in, only location. Granted expenses will be different based on age, but they don't seem to be using expenses to determine "rich-ness" at all.
- metalliqaz 7y agoAge is strongly correlated to income. People with experience generally get paid more. It's not particularly useful for a 25 year-old to compare themselves to a 55 year-old.
- non-entity 7y agoI wish they were smaller though. I'm 21, I'm grouped in with people over a decade who are in a completely different stage of life than myself.
- tbirrell 7y agoWell sure, when talking about experience. But not wealth. A millionaire living in my city is objectively wealthy regardless of age. I'm not "wealthy" by any means. Despite that, my income is top 1% for my age-group. However the median income for my peers is also barely above minimum wage, so thats not a terribly helpful metric. Knowing I'm in the top 11% regardless of age is far more helpful in understanding how I fit into my local community.
- Scuds 7y agoThere's 'no trouble paying a mortgage' money and then there's "oh that's one of Bill or Jeff's 'toy' companies" kind of money
- metalliqaz 7y agoThis didn't change how I see myself at all. For me it shows that a BS and MS at a state university, plus more than 10 years of experience working in aerospace, will get you to about 60th percentile in the Northeast US. I should have got a god damn finance degree...
- deleted 7y ago[deleted]
- EGreg 7y agoSpeaking of feeling rich or not, Anyone ever follow this guy’s blog? https://www.mrmoneymustache.com/all-the-posts-since-the-beginning-of-time/ https://www.mrmoneymustache.com/all-the-posts-since-the-begi... https://www.mrmoneymustache.com/category/mmm-classics/ https://www.mrmoneymustache.com/category/mmm-classics/ Like “hacking hedonic adaptation to get the most out of your money” And so on.
- asark 7y agoSome of the general attitude-toward-spending stuff is fine. His specific advice is sometimes iffy, and any anecdotes/figures about his personal situation should be taken with a huge grain of salt. Essentially treat the voice of the blog as a character the writer's creating (as one of his jobs...) and you'll be approaching it with the right frame of mind.
- j79 7y ago> No, you’re not rich. Thanks for confirming.
- tosser0001 7y agoFor the Boston-Cambridge-Newton area they have this: Top 5% More than $374,000 So 1 in 20 people in this area bring in more than 374K a year? That is sort of mind-blowing. I thought I was doing fairly well, but now I feel like I'm missing out on something...
- deleted 7y ago[deleted]
- percentiles 7y agothat's not how percentiles work. also, you'd need to know whether that value they use is the lower bound on the top 5% and how that compares to the top 5% for the general population
- anpama 7y agoThat's exactly how they work...? And it's stated explicitly that it's a lower bound ("More than").
- percentiles 7y agono it is not. in any case it's referring to household incomes and only between people who are 35 to 64. so again, no, 1/20 people are not making that much. again, percentiles do not work in a fashion where you can take one group (35 to 64) and apply it to the entire population. i repeat, that's not how percentiles work.
- anpama 7y agoThat's exactly how they work: if the top 5% of people in some cohort earn $X or more, then that means 1 in 20 people in that cohort earn $X or more. OP may have confused one cohort (households) for another (individuals), but that's irrelevant to how percentiles work.
- percentiles 7y ago
- dandigangi 7y agoI can't get this page to load / render correctly worth a damn. Even with my ad blocker off. Lame.
- JMTQp8lwXL 7y agoThe dichotomy for people earning high incomes, but viewing themselves as "average", stems from the fact that you need to be in the top 5% of income if you want to live a stereotypical 50's style "middle class" life in a high-cost of living area: a (modest) single family home, a car, 2 kids, health care, children's college paid for, saving for retirement, etc. All of the above were easily had back then on the median income. Everyone lower than you on the income curve is cutting in places you can't see (retirement accounts). If you observe conspicuous consumption by peers making less, they're going deep into debt to make it happen. The only thing not 1950's about our middle class ideals: your spouse probably works to make ends meet.
- ac29 7y agoAccording the to the linked site, the top 5% income in the Silicon Valley area, probably the highest cost of living area in the US, is over $500k. Yes, all of the things you mention are getting more expensive, and median incomes would certainly be difficult (median for the same area is $133k). But, top 5%? At that income level, you can have all of the things you mention and still retire very comfortably by 40.
- JMTQp8lwXL 7y ago> the top 5% income in the Silicon Valley area, probably the highest cost of living area in the US, is over $500k That's household income, aged 35-64 (prime earning years). For the same age, top 5% individual income is $332k. Top 5% individual income for ages 18-34 is $179k. Most couples earning $500k at ages 35-64 weren't likely earning that much earlier in their career, so it's hard to say retiring "very comfortably" by 40 would be the case.
- lm28469 7y agoWe also have much more shit to spend our money on. Phones, computers, streaming services, ride sharing, food delivery, shit delivered right to your door in 2 hours by Bezos & co, &c. Young people live like there is no tomorrow and then complain they can't save money, yeah dude if you take an uber every 2 days, get food delivered every day, get your daily $12 frappudingus from starbucks, spend 250 a months on various subscription services and want to follow your favorite instagram influencer during his vacation you'll have a hard time saving money. If you're healthy and working in a first world country (US excluded) you should be able to live comfortably. Don't have kids before 25, don't have kids without having a plan, don't buy a fucking iphone on credit, no, you don't _need_ that 65" TV.
- TomVDB 7y agoFor the South Bay, the top 5% household income is apparently $523k. But this dumb website doesn’t even allow entering a household income that’s higher than $400k. So if you think 1% or 5% is the threshold for being rich, then nobody who fills in this survey will ever be declared rich. Edit: turns out you can enter your income in the field right above the slider. But that’s not obvious at all IMO.
- kristopolous 7y agoYet another visceral example of why you shouldn't try to control the scroll with javascript.
- aresant 7y agoFYI this site employs 3 sophisticated ad networks and several other deep tracking scripts. No reason to expect that the information you fill in here on your actual income, etc doesn't wind up in an leaky ad profile.
- sidlls 7y agoThe sites that aggregate these data and sell them for marketing think I'm all of the following: - An unmarried male in my 20s with three dogs - A married male in my 50s with two mortgages and high credit card utilization - A high-school dropout and smoker with bad credit and a spotty work history - An affluent divorced male with two children and a boat among my assets Their incompetence and lack of care has been more effective at anonymizing me than I ever could be.
- payne92 7y agoFirst, I suggest doing this in private/incognito mode. Second, the "survey" misses the most important distinction: investment income vs earned income. Or, more directly: wealth. A family making (say) $300k from only wages is in a VERY different situation than the same family making that income from investments.
- lacker 7y agoThis tool doesn't even work in the San Francisco area! The top income they let you select is "$400k+", but you need an income of $498,000 to be top 5% here.
- bettergood 7y agoThis Global Rich List does this for the global distribution and offers it for income, and more importantly, wealth (http://www.globalrichlist.com/wealth http://www.globalrichlist.com/wealth)