5 ms·

Tens of millions is only "pretty close to financial security". Wow.

by patrickdavey 4y ago

sitzkrieg 4y ago
only on HN
vram22 4y ago
Reminds of that "temporarily embarrassed millionaires" quote ... /cc @sitzkrieg (sibling comment)
vram22 4y ago
https://www.google.com/search?q=quote+temporarily+embarrassed+millionaires https://www.google.com/search?q=quote+temporarily+embarrasse...
IAmGraydon 4y ago
I think there's a part of the HN population that has delusions of becoming billionaires one day, so they talk about tens of millions like it's not much. They'll likely never have either.
- FooBarBizBazz 4y ago
  Financial security in the Bay Area requires a house there ($2-3M, nowadays) plus $COST_OF_LIVING/4%. This is easily $5M net worth. It's in "two Googlers and a successful exit at some point earlier" territory. Granted, this threshold is less than $10M, but it isn't orders of magnitude less All of which is to say that it is basically impossible to stay in the Bay long-term unless you make an absolute fuckton of money. Well, you do have two other options. One is to commute in 2hr or more every day. Which a lot of service workers have to do. The other is to share a house or apartment with roommates (if you're single) or with another family (surprisingly common, because what else can you do?). These are both lifestyle decisions that differ substantially from what most people think of as "normal", past your 20s. What I'm saying is, merely living a "normal middle class" lifestyle in the Bay requires absurd money. So I can understand why people act like absurd money is normal.
  - AYBABTME 4y ago
    You don't need $5M to be "safe" in the Bay Area. You do need some money - enough to afford to get a mortgage on a place to stay - but once you get past that, things get easier. The thing is, it takes money to start making money. It takes money to start to be able to afford the things that will make your cost of living go down. It does suck, but it's not $5M.
  - stackbutterflow 4y ago
    You don't have to live in the Bay Area. You don't have to commute since they were talking about retiring with $42 millions.
    - FooBarBizBazz 4y ago
      Fair. Anybody with $42M has it made, anywhere.
  - cromd 4y ago
    If you put $5M in index funds, you’d grow it by about $400k a year (8%) on average, to start. It’s hard to imagine going broke with that by doing “normal middle class” things. For added security, one could add in a part-time job.
    - FooBarBizBazz 4y ago
      8% is extremely optimistic. 4% is more like it, maybe even 3.5%. I'll use 4% for what follows. That's $200k. Take out 20% LTCG, now you're at $160k. Rent is like $3k/mo, so $36k/yr. Say you have modest living expenses of another $34k/yr. Now you're at $70k/yr to break even. That leaves you with $90k to save/compound. So, ok, you're doing very well as a renter with $5M invested, even in the Bay Area. And, given that you have more than twice the income you need, you'd probably be ok with only $2-2.5M. As in, breaking even with passive income. Which would work so long as you don't want to own a house, and so long as markets don't melt down. That extra security seems to cost extra.
      - 4y ago
- adamsmith143 4y ago
  Come on, do some math on this. Any engineer at FAANG, even excluding their stock grants, will probably have close to 10M in retirement accounts by the time they retire given max contributions and historical returns.
p1esk 4y ago
Most people spend proportionally to what they earn, so I don't see why one year salary should necessarily provide the lifetime of financial security, regardless of what that salary is.
- 2muchcoffeeman 4y ago
  That’s a trap though. It’s far more sensible for most people to live well below their means and create options for their future.
  - p1esk 4y ago
    I've stated what I've observed and experienced. Whether it's a "trap" or "sensible" is irrelevant.
    - 2muchcoffeeman 4y ago
      Fair point. But it’s a bit ridiculous to get 42 million USD and not be satisfied. And the original comment is ridiculous to suggest that it’s not sufficient compensation.
      - p1esk 4y ago
        If your salary was $25k/year (a respectable amount for the majority of world population), would $1M seem like a lifetime financial stability? I think so. Yet if your salary is $250k/year, it probably wouldn't, and this would sound ridiculous to people who make $25k/year. If you make 25k/year getting 1M is almost as good as getting 42M, because you are not used to thinking about anything you can do with 42M that you can't do with 1M. However, if your salary has been 10M/year, you most likely can easily see many ways to spend 42M, which are not something you think about often when you make 250k/year. Does this make sense?
        zarzavat 4y ago
        Most people on $250k are just trying to “survive” (as in, have a house and a family) in a high cost-of-living area. If a house costs $2M then $250k is only just sufficient after deducting taxes and living expenses. Their spending is not so different from someone earning $25k in a low cost-of-living area. There’s nowhere in the world where the cost of living requires $10M/year. To spend that much money you are forced to spend it on high-end luxuries. Of course there are people who could easily consume that amount of money, but most people on that income would put it into investment instead of consumption.
FridgeSeal 4y ago
Oh I agree 100%, personally it’s more money than I’d know what to do with, but I’m also aware that there’s a chunk of users here who’s respond with “well after tax this that, etc etc” with some justification as to why it’s not quite enough, so I thought I’d attempt to cover all bases hahaha.

Tens of millions is only "pretty close to financial security". Wow.

sitzkrieg 4y ago

only on HN

vram22 4y ago

Reminds of that "temporarily embarrassed millionaires" quote ... /cc @sitzkrieg (sibling comment)

vram22 4y ago

https://www.google.com/search?q=quote+temporarily+embarrassed+millionaires https://www.google.com/search?q=quote+temporarily+embarrasse...

IAmGraydon 4y ago

I think there's a part of the HN population that has delusions of becoming billionaires one day, so they talk about tens of millions like it's not much. They'll likely never have either.

FooBarBizBazz 4y ago
Financial security in the Bay Area requires a house there ($2-3M, nowadays) plus $COST_OF_LIVING/4%. This is easily $5M net worth. It's in "two Googlers and a successful exit at some point earlier" territory. Granted, this threshold is less than $10M, but it isn't orders of magnitude less All of which is to say that it is basically impossible to stay in the Bay long-term unless you make an absolute fuckton of money. Well, you do have two other options. One is to commute in 2hr or more every day. Which a lot of service workers have to do. The other is to share a house or apartment with roommates (if you're single) or with another family (surprisingly common, because what else can you do?). These are both lifestyle decisions that differ substantially from what most people think of as "normal", past your 20s. What I'm saying is, merely living a "normal middle class" lifestyle in the Bay requires absurd money. So I can understand why people act like absurd money is normal.
- AYBABTME 4y ago
  You don't need $5M to be "safe" in the Bay Area. You do need some money - enough to afford to get a mortgage on a place to stay - but once you get past that, things get easier. The thing is, it takes money to start making money. It takes money to start to be able to afford the things that will make your cost of living go down. It does suck, but it's not $5M.
- stackbutterflow 4y ago
  You don't have to live in the Bay Area. You don't have to commute since they were talking about retiring with $42 millions.
  - FooBarBizBazz 4y ago
    Fair. Anybody with $42M has it made, anywhere.
- cromd 4y ago
  If you put $5M in index funds, you’d grow it by about $400k a year (8%) on average, to start. It’s hard to imagine going broke with that by doing “normal middle class” things. For added security, one could add in a part-time job.
  - FooBarBizBazz 4y ago
    8% is extremely optimistic. 4% is more like it, maybe even 3.5%. I'll use 4% for what follows. That's $200k. Take out 20% LTCG, now you're at $160k. Rent is like $3k/mo, so $36k/yr. Say you have modest living expenses of another $34k/yr. Now you're at $70k/yr to break even. That leaves you with $90k to save/compound. So, ok, you're doing very well as a renter with $5M invested, even in the Bay Area. And, given that you have more than twice the income you need, you'd probably be ok with only $2-2.5M. As in, breaking even with passive income. Which would work so long as you don't want to own a house, and so long as markets don't melt down. That extra security seems to cost extra.
    - 4y ago
adamsmith143 4y ago
Come on, do some math on this. Any engineer at FAANG, even excluding their stock grants, will probably have close to 10M in retirement accounts by the time they retire given max contributions and historical returns.

p1esk 4y ago

Most people spend proportionally to what they earn, so I don't see why one year salary should necessarily provide the lifetime of financial security, regardless of what that salary is.

2muchcoffeeman 4y ago
That’s a trap though. It’s far more sensible for most people to live well below their means and create options for their future.
- p1esk 4y ago
  I've stated what I've observed and experienced. Whether it's a "trap" or "sensible" is irrelevant.
  - 2muchcoffeeman 4y ago
    Fair point. But it’s a bit ridiculous to get 42 million USD and not be satisfied. And the original comment is ridiculous to suggest that it’s not sufficient compensation.
    - p1esk 4y ago
      If your salary was $25k/year (a respectable amount for the majority of world population), would $1M seem like a lifetime financial stability? I think so. Yet if your salary is $250k/year, it probably wouldn't, and this would sound ridiculous to people who make $25k/year. If you make 25k/year getting 1M is almost as good as getting 42M, because you are not used to thinking about anything you can do with 42M that you can't do with 1M. However, if your salary has been 10M/year, you most likely can easily see many ways to spend 42M, which are not something you think about often when you make 250k/year. Does this make sense?
      - zarzavat 4y ago
        Most people on $250k are just trying to “survive” (as in, have a house and a family) in a high cost-of-living area. If a house costs $2M then $250k is only just sufficient after deducting taxes and living expenses. Their spending is not so different from someone earning $25k in a low cost-of-living area. There’s nowhere in the world where the cost of living requires $10M/year. To spend that much money you are forced to spend it on high-end luxuries. Of course there are people who could easily consume that amount of money, but most people on that income would put it into investment instead of consumption.

FridgeSeal 4y ago

Oh I agree 100%, personally it’s more money than I’d know what to do with, but I’m also aware that there’s a chunk of users here who’s respond with “well after tax this that, etc etc” with some justification as to why it’s not quite enough, so I thought I’d attempt to cover all bases hahaha.