Dad, Are We Rich? • Hacker News Board

Re: Dad, Are We Rich?

#131

Post by harryh » Thu, Jun 06, 2019, 5:42 PM UTC

trowawee wrote: post #117

harryh wrote: post #97

Earlier quoted context omitted.

The world income comparison thing at the end is not meaningful in the slightest. Why not? I would say that it's very important to understand that even middle class Americans are quite well off when compared to the vast majority of the rest of the world.

Because Americans aren't buying groceries or paying rent in the rest of the world, they're doing that in America. Knowing that you're theoretically well-off in comparison to people living in other places doesn't put food in the fridge, and it tends to be deployed to shame people who are having a tough time making ends meet.

Knowing that you're theoretically well-off in comparison to people living in other places

It's not theoretical. It's factual.

Re: Dad, Are We Rich?

#132

Post by harryh » Thu, Jun 06, 2019, 5:46 PM UTC

sudosteph wrote: post #113

harryh wrote: post #97

Earlier quoted context omitted.

The world income comparison thing at the end is not meaningful in the slightest. Why not? I would say that it's very important to understand that even middle class Americans are quite well off when compared to the vast majority of the rest of the world.

It's not meaningful because it doesn't address the heart of the question the kid was asking. A child doesn't ask if their parents if they're rich because they looked up the GDP of various nations. They ask their parents if they're rich because they see differences between the things they have access to and the things their peers have access to. Even a child knows that when they have a bigger house, receive better gif…

This is a great answer. Thanks.

Re: Dad, Are We Rich?

#133

Post by Spooky23 » Thu, Jun 06, 2019, 5:48 PM UTC

lotsofpulp wrote: post #30

Spooky23 wrote: post #13

Earlier quoted context omitted.

The costs of having children are dramatically over-costed on internet forums. People going the DINK route are mostly prioritizing careers over life. It's a vicious cycle for many, who end up changing their mind and spending alot of money and opportunity cost trying to make up for it.

It's not the cost of birthing/feeding/clothing/daycaring. It's the cost of having a house in the best school district you can afford, sending your kids on ski trips or international vacations with their friends who also have higher income parents, and various other activities that are involved with being in the "up and coming" social group.

That's just pride and puffery. Extravagant kid stuff is about you, not the kids!

If you choose to join the cool kids club, you're paying the price of admission. I coach little league ($120/season) and do all sorts of activities with the kids that are fun, enriching and not outrageous. My kids will not see the Louvre or work on their Spanish in Barcelona on a school trip, but will somehow muddle through.

Re: Dad, Are We Rich?

#134

Post by treis » Thu, Jun 06, 2019, 5:49 PM UTC

jedberg wrote: post #111

treis wrote: post #100

Earlier quoted context omitted.

>My measure of rich is "Can I live my current lifestyle without regular income from a job?" I would say that's wealthy. Rich, to me, is if you have the means to buy and do what you want for a reasonable set of desires. In other words, you can buy a nice house in a nice area, drive a new luxuryish (i.e. BMW level) car, go on vacations, and buy stuff like a big TV without worrying. Somewhere between 150k and 300k salar…

So then if you lose your job you're no longer rich? Are you then poor? The problem, to me, in differentiating rich vs wealthy based on how you get your money is that it makes things too fluid.

>So then if you lose your job you're no longer rich?

A rich person will have enough of a buffer to still spend like a rich person until they find their next job. If you can't find one then yeah eventually you slide down from rich.

Re: Dad, Are We Rich?

#135

Post by benj111 » Thu, Jun 06, 2019, 5:49 PM UTC

jedberg wrote: post #108

benj111 wrote: post #50

Earlier quoted context omitted.

That makes rich relative though? If you're into fast cars and faster women but you're only earning $1million a year you aren't rich, whereas if you live like me, you're rich because you have $1million in the bank. While I don't think your definition is bad per se, if you start mixing with people who define wealth as $10 in the bank, you aren't going to have a very useful conversation, so I think you at least need a d…

> That makes rich relative though? Yes, that was my main point. But my other point was that there is an upper limit, probably in the tens of millions, where no matter what your lifestyle is you can afford it without work.

I don't think there's an upper bound on spending though.

There will always be some subset of people that will spend everything, as my example attempted to show.

Re: Dad, Are We Rich?

#136

Post by saltcured » Thu, Jun 06, 2019, 6:04 PM UTC

harryh wrote: post #103

rootusrootus wrote: post #99

Earlier quoted context omitted.

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…

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-... "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 tha…

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)...?

Re: Dad, Are We Rich?

#137

Post by g_sch » Thu, Jun 06, 2019, 6:21 PM UTC

crispwafer wrote: post #114

g_sch wrote: post #9

I think the author is a bit too narrow in their definition of "political clout". They seem to define it as the ability to personally influence federal policy. However, as a class, people with $4M in wealth or more have an immense amount of political clout. Most contemporary US local, state, and even federal policies are geared toward attracting and retaining these people. Think property tax caps, mortgage interest de…

This is such a weird, backwards way of framing the situation. People in that income/wealth group fund essentially the entire government budget while also costing essentially nothing, so of course there is an incentive to retain them, but generally governments are trying to just stop one cent short of bleeding them so dry that they move away. In 2018: "The top 1 percent paid a greater share of the federal tax revenue…

> In 2018: "The top 1 percent paid a greater share of the federal tax revenue (37.3 percent) than the bottom 90 percent combined (30.5 percent)." Put another way - your local school would be in trouble if all you had were families on $40k sending 3 kids to public school, it's being funded by the family on $300k and sending their kid to a separate private school.

This kind of statistic would benefit from being balanced against the share of income and/or wealth held by the top 1%. Taking wealth, for example: the top 1% owns 35% of the wealth in the USA as of 2014. [0]

This proportion has been increasing over time, so even if governments were attempting to "bleed[] them dry" (I don't believe they are), they're not doing so very effectively.

[0] https://en.wikipedia.org/wiki/Wealth_inequality_in_the_Unite...

Re: Dad, Are We Rich?

#138

Post by cr0sh » Thu, Jun 06, 2019, 6:24 PM UTC

bob33212 wrote: post #11

simonh wrote: post #2

Some wealthy trust fund babies were asked how much wealth they thought they would need to really feel financially secure long term. They had inherited wealth ranging from tens, up to hundreds of millions. Almost all of them named a figure about double their personal net worth, regardless of what that net worth was.

Humans naturally anchor to their social network. If those people grew up in rural West Virginia with coal miner family income they would tell you that 250k/year is wealthy. You have to actively resist this anchoring behavior. You have to remind yourself that just because your neighbor has a 50k car, it doesn't mean that your 10k car is not a good fit for you.

I own a Jeep. That thing keeps increasing in value massively on a yearly basis...

/just add up everything I spend on it...

Re: Dad, Are We Rich?

#139

Post by themagician » Thu, Jun 06, 2019, 6:25 PM UTC

mrep wrote: post #38

bagacrap wrote: post #31

The wealth figures for X percentile seem low. I wonder where he's getting them. When I Google it, 2.4M was the 95th percentile two years ago.

The income levels are also way off on globalrichlist.com $60,000 a year makes you the 11,425,788th richest person in the world? US median household income was $59,039 in 2016 and if there are 125 million households in the US, then that means you are only the 62th million richest person in the US alone let alone the world.

$60,000 a year is HOUSEHOLD income. In more than half of households there are at least two earners. This perctange rises when you look at median income households.

The typical median income household is where both parents make around $30k–which is right around minimum wage. If you, as an single individual, are making $60,000 you have about TWICE as much money as the average, middle income American.

I don't think you realize just how poor the average "middle class" person is.

Re: Dad, Are We Rich?

#140

Post by username90 » Thu, Jun 06, 2019, 6:28 PM UTC

rootusrootus wrote: post #99

harryh wrote: post #93

Earlier quoted context omitted.

I very strongly suspect that the overlap between people in the 1% income level and people in the 1% wealth level is extremely high.

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…

> To hit 1% in income, you need to make about 750K a year.

Source? Looks like the cutoff is just 300k a year. A pretty large fraction of developers at big companies like Google and Facebook should get above that in their lifetime.

https://dqydj.com/top-one-percent-united-states/