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Comment by simonh | Hacker News Reader

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.

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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 came from a poor area. I used to think 80k/yr was rich.

Time passed, I got work in Silicon valley with a wife and kids. Living there I think 500k would be middle class. Not even upper middle class.

Perspectives change as you are exposed

80k/yr CAN be rich, it all depends on location. 80k/yr would be poverty in the valley, most of that money going to just having shelter.

80th percentile household income in Santa Clara County is $200k/yr [0]. The linked dataset doesn't go any higher, but I suspect 500k/year is 95th percentile or above, which puts you in the upper class. Even in the Bay, $500k/yr is the "own two homes and a few Porches" level.

[0] http://www.vitalsigns.mtc.ca.gov/income

If you are single maybe.

I think of a middle class man being what my old man was. Single income, wife stayed home and he provided for everyone. 4 kids.

Good luck having 2 homes and some porsches with only 500k in the valley supporting a wife and kids

plenty of people support a family on $60k/yr so take the remaining 440k minus taxes and buy two porsches outright. You should be able to save enough for a down-payment on each house given a year of saving.

No one supports a family on 60k a year. Healthcare alone for a family runs 20k/yr plus simply for insurance

You typically get free insurance when you have a job paying 500k/yr...

Its not free. CFO is very aware of your total cost and its starting to show up on W2's.

that's besides that point? When you quote 500k/yr salary that typically includes perks like insurance. But are we really quibbling about $20k in expenses on a 500k salary? Even if I grant you 80k/yr to run your family that still leaves more than enough for your two porsches.

A $2.5m mortgage would cost you around $13k a month, Porsche lease less than $1k a month. You've got about $15k a month left in take home pay what in the world are you going to spend that on and still feel middle class?

Just to follow up here.

500k/yr is around 41k a month. Figure you are going to be paying about 40% in taxes or 16,400 a month in taxes you get 24600 left

Considering you just spent 14k on a house and car you get 10,600k left. Groceries for a family in the bay runs around 2k a month so now you are down to 8k a month. Wife needs a car plus you need insurance gas and maintenance. Parking runs what $45 / day or 1350... lunches run around 30/day or 900... you haven't paid for clothes or extra curricular activities ( karate lessons 1k / month )

Family is not cheap, Family in the bay is hella expensive

Are these karate lessons taught by Bruce Lee reincarnate? Because that is the only way anyone is paying $1000 month.

500k/yr is definitely, at least, upper middle in the bay area.

I know you mean well, but people tend to want to fit in with their milieu.

Milieu is made of people. You can improve your milieu by being a leader, not a follower.

I grew up with an engineer's family income, and 250k still seems pretty wealthy. That puts you in the top 5% of US earners.

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

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

I'd define being 'financially secure', as being confident that you will not need to make changes to your lifestyle for financial reasons. It makes sense that that depends pretty heavily on how expensive your current lifestyle is.

Right. It sounds funny to have a 2x guestimate from many people though. Is that evidence of a common mental heuristic for estimating and mitigating future risk?

I personally can think of a net worth figure which seems like it might be comfortable under lucky circumstances (no major crash or catastrophic health issue). And, right now I also feel like twice that would make me feel pretty secure. In spite of my concerns about the future unknowns, having that amount would probably cause me to essentially retire, turning my career into a hobby so I could shed the less enjoyable parts...

"2x" is the same thinking behind "if you don't have a backup for it, you only have it temporarily" , for anything "it" may be.

The thread starter is ambiguous about whether "secure" means "secure in what you currently temporarily have" vs "secure to have a reasonably acceptable life".

> "if you don't have a backup for it, you only have it temporarily"

Fabulous line. Is that attributable to anyone in particular?

I don’t think that mentality is limited to rich people. If you went back in time to each of the last 20 years and asked me how much savings I think I’m going to need in order to retire, the answer I’d give you (regardless of my current savings in that year) would have been “about 10X what I already have saved.”

At this point I’ve admitted to myself that I will need to work until I die!

Sounds fascinating, got a source for that? Seems to dovetail with the research re: happiness and net worth not being correlated after a point.

I'm guessing GP read in in the interview with Abigail Disney

https://www.thecut.com/2019/03/abigail-disney-has-more-money...

> They did a study at the Chronicle of Philanthropy years ago where they asked people who inherited money, “What amount of money would you need to feel totally secure?” And every single one of them, no matter what they had, named a number that was roughly twice what they inherited. So that’s what you need to know about money, right? If that is your primary measure of success or value in life, then good luck with that, because it will never feel good.

The courts think in a similar manner. When rich couples divorce, the courts mandate that the poorer parent and kids get enough from their other parent to retain the same lifestyle the were used to previously. If that means enough to maintain a private jet lifestyle, so be it.

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