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Why So Many Rich People Don’t Feel Very Rich

economix.blogs.nytimes.com

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Re: Why So Many Rich People Don’t Feel Very Rich

#91

Post by aprrrr »

jbooth wrote: post #48
bhousel wrote: post #32

Earlier quoted context omitted.

Exactly.. At least the last 3 or 4 White House Press Secretaries made that same salary "joke" upon leaving the position and returning back to their high paying private sector media jobs.

Yeah, but more notably, they all left after a couple years. I think it's a pretty high stress job, and leaving is probably more about the stress than the salary. It just manifests itself as "I'm not getting paid enough for this shit".

More cynically, to the extent that ex-press secretaries' private sector value derives from their access to those in power, they're worth more while their crew is still in office.

Re: Why So Many Rich People Don’t Feel Very Rich

#92

Post by loewenskind »

r0h4n wrote: post #45

Spend one week in India and you will feel like a Billionaire for the rest of your life.

A lot of people from india work in the west, send that money back home to have a mansion (servants and everything) and live like a billionaire for the rest of their life (well, presumably. I obviously don't know any that have done this and died of old age yet).

Re: Why So Many Rich People Don’t Feel Very Rich

#94

Post by Retric »

jasonkester wrote: post #34
boredguy8 wrote: post #27

My adult life began with several years at a non-profit making $18k/yr. I've worked to avoid dramatic changes to my standard of living since then and it's helped me put money in the bank regardless of where I fell on the income scale. I also find that I need to "reset" my spending every 6 months or so, because it's trivially easy to start spending more than you realize, for no practical gain. Sometimes I get jealous o…

The cool thing about this approach is how nicely it works with compound interest. Live like a college kid for the 5 years after you leave college, and I defy you not to put $10k per year into the market. Fresh out of school with my $32k salary, I'd regularly find month-old paychecks lying around undeposited because I simply didn't need the money to support my cheap apartment, used car, and 10lb sack of potatoes. With…

To really understand the situation start running the numbers of late life salary bumps.

It is difficult to balance lifestyle, income, and savings as you start to ramp up your salary AND your lifestyle. If your salary doubles between 20 and 30 and then again between 30 and 40 your savings does not change. So even if your saving 20% of your income every year you are not going to be able to safely retire at 80% of what you make at 40. Unless, you get a salary bump and don't increase your lifestyle.

Take it further; someone that sees a 3x gains from 30 is going to need to save ~40% a year to avoid a lifestyle drop. Meanwhile your friends are all raping up their spending and possible over extending.

Re: Why So Many Rich People Don’t Feel Very Rich

#95

Post by jhamburger »

narrator wrote: post #28

The reality of this phenomenon is that people who have done everything "perfectly" in their life and academic career feel a bit cheated when their income tops out in between 100k and 200k. They might be senior engineers or doctors or lawyers but they've hit this brick wall as far as income, sometimes in their 30s and yet there are all these people out there that make more than 10x or even 100x their annual income. No…

The obvious lesson here is if you spend your time feeling jealous of those who are doing better than you, you'll never be satisfied.

Re: Why So Many Rich People Don’t Feel Very Rich

#96

Post by webwright »

jasonkester wrote: post #34
boredguy8 wrote: post #27

My adult life began with several years at a non-profit making $18k/yr. I've worked to avoid dramatic changes to my standard of living since then and it's helped me put money in the bank regardless of where I fell on the income scale. I also find that I need to "reset" my spending every 6 months or so, because it's trivially easy to start spending more than you realize, for no practical gain. Sometimes I get jealous o…

The cool thing about this approach is how nicely it works with compound interest. Live like a college kid for the 5 years after you leave college, and I defy you not to put $10k per year into the market. Fresh out of school with my $32k salary, I'd regularly find month-old paychecks lying around undeposited because I simply didn't need the money to support my cheap apartment, used car, and 10lb sack of potatoes. With…

5% per year doesn't stack up very fast when you consider inflation (2.56% over the last decade was the average).

Re: Why So Many Rich People Don’t Feel Very Rich

#97

Post by oostevo »

schammy wrote: post #59
jeremymims wrote: post #38

This article wonders why the rich are getting richer and the answer is compound interest. Having $1 million in the bank will reliably generate between $25k and $50k per year. Having $2 million in the bank will reliably generate between $50k and $100k per year. Having $3 million in the bank will reliably generate between $100k and $150k per year. So someone with $3 million in savings and still working their 200k job w…

I know of no such bank offering interest rates even close to that. You're talking 2.5% - 5%. That's unheard of these days. At my current bank, $1M in a money market account would generate about $2,500/year, which is nothing short of insulting. Who are these fabled banks offering 10x the interest rate?

I think your mistake is in assuming that he meant a standard, FDIC-insured savings account by "in the bank." It's not terribly hard to find ~5% dividend yields in the stock market, particularly if you look outside the United States.

Further, in the US, once you have a net worth of a million dollars, you qualify as an accredited investor, opening up a plethora of new investment opportunities to you.[1]

[1] http://en.wikipedia.org/wiki/Accredited_investor

Re: Why So Many Rich People Don’t Feel Very Rich

#98

Post by xmr »

schammy wrote: post #59
jeremymims wrote: post #38

This article wonders why the rich are getting richer and the answer is compound interest. Having $1 million in the bank will reliably generate between $25k and $50k per year. Having $2 million in the bank will reliably generate between $50k and $100k per year. Having $3 million in the bank will reliably generate between $100k and $150k per year. So someone with $3 million in savings and still working their 200k job w…

I know of no such bank offering interest rates even close to that. You're talking 2.5% - 5%. That's unheard of these days. At my current bank, $1M in a money market account would generate about $2,500/year, which is nothing short of insulting. Who are these fabled banks offering 10x the interest rate?

a close friend just put away ~$2.5M for a year and is only getting 1.25%. They're more concerned with stability/low risk than growth.

Re: Why So Many Rich People Don’t Feel Very Rich

#99

Post by dev_jim »

Alex3917 wrote: post #16
AlexC04 wrote: post #4

Perhaps it's because the definition of "rich" that they would need to feel is one where they'd never have to work again if they didn't want to. The article points out an annual income of $172,000 as being rich, but by implication, these people still have to work for their money. Therefore probably don't feel "rich" If they could maintain that income or even half that income in perpetuity without working. If they coul…

"The article points out an annual income of $172,000 as being rich, but by implication, these people still have to work for their money." I think the real issue is that someone making 300,000 probably doesn't have much more disposable income than someone making 80,000. Whatever extra money they have is likely just going to a slightly nicer house, their IRA, dental insurance, a slightly better preschool for their kids…

> I think the real issue is that someone making 300,000 probably doesn't have much more disposable income than someone making 80,000.

I think the term disposable income gets misused a lot. People don't see the money they spend on the BMWs, or the part-time nanny, or the private school, or any number of everyday luxuries as a use of disposable income. But they are every bit as much as those trips to Hawaii.

Re: Why So Many Rich People Don’t Feel Very Rich

#100

Post by Retric »

beoba wrote: post #75
jeremymims wrote: post #38

This article wonders why the rich are getting richer and the answer is compound interest. Having $1 million in the bank will reliably generate between $25k and $50k per year. Having $2 million in the bank will reliably generate between $50k and $100k per year. Having $3 million in the bank will reliably generate between $100k and $150k per year. So someone with $3 million in savings and still working their 200k job w…

Additionally, if that income has a label of 'capital gains' slapped on it, it's only taxed at up to 15%, rather than up to 35%.

Include SS and Medicare and it's not hard to hit 40%.
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