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Why a Six-Figure Salary No Longer Means You’re Rich

blog.personalcapital.com

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Re: Why a Six-Figure Salary No Longer Means You’re Rich

#71

Post by Iftheshoefits »

chasing wrote: post #6

It sure as hell does mean you're rich. Median household income in the US is about $50k/yr. The average global income is about $10k/yr.

Not it sure as hell does not mean one is "rich." It is, at best, an indicator of marginal affluence. It certainly is stretching the bounds of credulity to call it "merely" middle-class, though, and forget calling it "poor."

"Rich" means more than having a relatively high income. It means having the means to obtain in relative short order, or having already obtained, relative financial independence. An income of $100,000 doesn't qualify in most places. Such a person would be required to find some income if he loses his current source, and he would almost certainly suffer financially and take many hits to his credit during a period without income. This person isn't "rich" until he's amassed enough savings that he can weather such a period without significant risk to his finances or credit, which will take literally decades in most cases.

Re: Why a Six-Figure Salary No Longer Means You’re Rich

#72

Post by smackfu »

otoburb wrote: post #61
antihero wrote: post #20

Earlier quoted context omitted.

Surely requiring two incomes in a household is extraordinarily problematic? Before, one partner could sustain the household and the other could stay at home and raise kids. Now, if both partners are expected to earn and have careers, who looks after the home life? Who looks after the kids? Surely this is really really damaging? And doesn't that mean that in real terms we're earning half as much?

It is problematic for dual-income households with kids. In these situations, kids are raised by a combination of: 1) Extended family (typically retired grandparents) 2) Daycare / child-care / "school system" 3) Private child-care (e.g. nannies or babysitters) #1 is cheapest, but ties the family down to where the grandparents are. Both parent jobs need to be located relatively close by. #2 typically take a huge chunk…

>#1 is cheapest, but ties the family down to where the grandparents are. Both parent jobs need to be located relatively close by.

Also, it's kind of shitty to your parents. Is watching your kid from 9-5 on weekdays really what they wanted to retire for?

Re: Why a Six-Figure Salary No Longer Means You’re Rich

#73

Post by ccallebs »

humanrebar wrote: post #56
ccallebs wrote: post #33

Consumerism. It convinces people that once they make $100k/year, they require a vehicle that befits someone who makes that much money. It convinces people that they require a place to live that compares to their other 6-figure earning peers. More, bigger, better -- the importance of those three things outweighs most everything else. I grew up (and now live) in rural Appalachia. The "American dream" is defined much di…

> I grew up (and now live) in rural Appalachia... In most areas of the U.S., a six-figure household income is enough to have a warm place to live and healthy food to eat.. I completely agree with everything you wrote. I grew up in a rural community, too. I see how DINKs overspend on things they "need" all the time. However, something you're missing is the safety premium. Often it's not possible to live modestly in a…

I agree with you. But with many people, I would classify the safety premium with the other things that those people "need".

When I first arrived in Austin a few years ago, so many yuppies told me to NOT go east of I35. They were paying outrageous sums of money (actually quite tame by San Francisco standards) to live far from the side of town they perceived as dangerous.

However, once I became acclimated to the city, I realized that they were blowing a lot of smoke due to irrational fears. The east side was certainly more diverse. It wasn't as white-washed as the west side of Austin. It has more graffiti and was generally poorer. But, it was not dangerous.

Again I'm making some pretty broad brush strokes. I realize that other places have dangerous neighborhoods and many cities have a legitimate need for a safety premium. My main point is that for many people, the necessity of the safety premium is perceived unjustly.

Re: Why a Six-Figure Salary No Longer Means You’re Rich

#74

Post by turnip1979 »

geebee wrote: post #69
ccallebs wrote: post #68

Earlier quoted context omitted.

San Francisco, Manhattan, D.C. -- they're all outliers. My great-aunt runs a day-care facility in Kentucky. They charge $200/month/child. (This is definitely an outlier on the other end of the spectrum) It's very difficult to talk about wealth, as wealth means different things in different places. My argument for a $100k/year salary being "rich" falls apart in expensive cities.

True, but keep in mind, 100k is a lot easier to achieve in those cities. Registered nurses and dental hygienists (and software developers), who all earn about 110k a year (median) in SF, tend to fall well below that threshold outside these centers.

Hygienists make 110K in SF? Do you have data to support this? These seem like outlier numbers to me even in a place like SF.

Re: Why a Six-Figure Salary No Longer Means You’re Rich

#75

Post by jiggy2011 »

onion2k wrote: post #44
applecore wrote: post #30

Earlier quoted context omitted.

Housing supply isn't fixed. When house prices go up, people build more houses.

In the UK when house prices go up people tend to build more houses at the top end of the market where there's the most profit. No one builds cheap houses that people on a single income could afford. I don't know if the US is similar.

But surely once the top end is satisfied the prices will have to come down or the homes will be left vacant which no developer is going to want.

Re: Why a Six-Figure Salary No Longer Means You’re Rich

#76

Post by nilkn »

specialp wrote: post #53
antihero wrote: post #20

Earlier quoted context omitted.

Surely requiring two incomes in a household is extraordinarily problematic? Before, one partner could sustain the household and the other could stay at home and raise kids. Now, if both partners are expected to earn and have careers, who looks after the home life? Who looks after the kids? Surely this is really really damaging? And doesn't that mean that in real terms we're earning half as much?

Two incomes in a home is not required, it is just that our lifestyles have evolved to "require" that. Home prices over last 40 years adjusted for inflation have not changed very much (besides in the bubble in mid 2000's). Previously on that one income a reasonable 40 years ago family could have a home, a TV, a car, and take inexpensive road trip vacations. Now the typical family has multiple cars, homes much larger t…

> Home prices over last 40 years adjusted for inflation have not changed very much (besides in the bubble in mid 2000's).

This might be true as a national average, but it is definitely not true in areas where there has been consistent competition for housing. It's that competition which will push housing prices up to levels that require two middle-class incomes.

This includes most major cities. Even excluding bubbles, desirable urban real estate in the US has skyrocketed much faster than inflation. There are a lot of factors in that, but one of them is that the market has now priced in the fact that most homeowners in these areas are now dual income.

> So if one wanted to live like in the past it is certainly attainable on a single reasonable income.

I'm not sure that's true. Take Houston, for example. Some of the most expensive neighborhoods were originally suburbs in the 1950s filled with workers who commuted downtown. Now those neighborhoods are considered urban and there is an entirely new ring of suburbs beyond them (in fact two such rings). The homes in these now-urban neighborhoods are now all $1M+.

A family with a reasonable income of $100k will be completely priced out of all those homes. They'll be forced to either live much further out (meaning very long commutes) or to live in an apartment/condo or, maybe, a townhouse. If they had lived in the 50s, they'd have been living in a neighborhood that is now reserved for surgeons, corporate attorneys, and even CEOs.

Re: Why a Six-Figure Salary No Longer Means You’re Rich

#77

Post by dkitchen »

lilsunnybee wrote: post #65
dkitchen wrote: post #14

You're rich because existence itself is shockingly improbable. Beyond that, you even got to be human, with a human mind, which as far as we know is the most expensive thing the universe has ever produced. Lucky you! You're poor because one day you will lose everything and everyone you've ever deeply cared for. That's a shame. Enjoy the few moments you have left. You will have a better chance at this if you stop compa…

Does a homeless person have a carnival of delight available to them?

No. A completely demoralized person (I think that's a better descriptor than 'homeless') would not experience much delight in life. Demoralization is genuine poverty. It's our duty to reduce and eliminate demoralization in all its forms to the greatest extent possible. You cannot do that with money, houses, or guns (aka govt. force). The character traits that prevent demoralization are courage, forgiveness, gratitude, authenticity and willpower.

But even so... finally, we all die a tragic, senseless, and humiliating death, the ultimate demoralization. So the only reasonable posture we can take towards a demoralized person (or any person for that matter) is empathy and compassion.

Re: Why a Six-Figure Salary No Longer Means You’re Rich

#78

Post by dkitchen »

dpeterson wrote: post #31

Is everyone on here a communist? Christ. The article is simple. The government uses it's hidden tax of inflation to steal the wealth of everyone and the media continues to (apparently successfully) fool people into thinking hard working wage slaves that make slightly over 100,000 are "rich". They are not. To make the equivalent of a 100k salary from 1980, you have to make 288k today. The government continues to print…

Yes! It's about creation vs. consumption. We appear to be the only thing in the universe that has a choice about which of those two activities we want to be primarily engaged in moment to moment. It's a heady responsibility.

Re: Why a Six-Figure Salary No Longer Means You’re Rich

#79

Post by umeshunni »

humanrebar wrote: post #64
skizm wrote: post #24

Earlier quoted context omitted.

You're still not poor though. In fact, if you have a million dollar net worth with expenses covered by your current income, you're definitely in the "rich" category compared to 99% of the US.

If you own a family home in some neighborhoods, you have a million dollar net worth. Even if you inherited it from your folks and minimum wage goes to property taxes instead of rent. Granted, you could sell the home and join the regular rat race with everyone else, but what's the point of being frugal if you can't leave the surplus to your kids?

Most net worth calculators (e.g. to be an accredited investor) exclude the equity in your primary residence.

Re: Why a Six-Figure Salary No Longer Means You’re Rich

#80

Post by twelve40 »

chrishallquist wrote: post #48
vittore wrote: post #12

Because we have to start with definition of what IS rich. I want to think about it of as how many months/years I can live the life I'm living right now If out of a sudden I loose a job. So being rich should be more about balance between earning and savings. And looking at those places like SF, how one can claim himself rich if 100k a year can barely cover cost of living there ( if can at all)

As someone who recently quit a six-figure tech job in SF... 100k/year does not "barely" cover cost of living. When I first got the job, I decided I wanted to live close to where I was working in SOMA, which meant paying quite a bit more in rent, but I never had any illusions that what I was paying for was a necessity of life. Though I mainly picked it out for the location, it was easy to tell the building was built e…

That's sounds awesome until you factor in a family with several kids and some retirement goals. Not everyone lives in their 20's forever.
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