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My kids asked me this and I said we are "comfortable". We are easily 1%-ers in terms of income level but we don't consider ourselves rich.

I consider someone rich who has the luxury of not working and still maintaining a very good lifestyle. In Silicon Valley you can't do that without substantial net worth.

The reason why we don't consider ourselves rich is because both my wife and I have to work very hard. We love our jobs and don't mind working hard, but we do have to work very hard. My work-life-balance is better than my wife's so I do more of the child-rearing, but I still jump online to finish some work after the kids are asleep.

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It's volatility that makes people feel not rich, even though they are 1%-ers. Annual income is meaningless if you feel like there is a substantial risk of you losing that income and having to make lifestyle adjustments. In a dual income household, if you live in a high CoL area and want to send your kids to the best schools, then you're competing with other dual income households, so if one spouse loses their job or has a health issue, it will cause financial instability.

Question is are you willing to downgrade to a single income lifestyle (while still earning two incomes and investing the rest), in exchange for sending the kids to a school in a lower income area and whatever consequences that would have.

The way I look at it is that there is a significant difference between being 1%-er by income, and 1%-er by net worth. The former is not terribly uncommon in the tech industry, but the latter is what counts as real wealth.

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 a load of money.

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 that about half of the top 1 percent of earners are also among the top 1 percent in the net worth category.

Almost all the rest of the top earners are still in the top 5 percent when it comes to net worth."

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)...?

> 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/

I skipped past the dqydj.com hits on Google beacuse I don't recognize the name. Which isn't to say that it isn't valid data, just that I was looking for something that I felt was plausibly accurate. For example, this Investopedia article puts it at $718K when written [1]. CBS News puts it at 421K. CNN Money put it at $388K ... in 2014. In 2018 Forbes put it at $488K.

So it depends on who you think ran the numbers right. Or what they mean by 1% (some sources try to combine income and net worth to make a hybrid definition of 1%, which just muddies the water even more).

1. https://www.investopedia.com/personal-finance/how-much-incom...

Even in the tech industry it is uncommon to make top 1% income, even if it is household income.

Agreed. It's higher than I remember. OP mentioned making 1% money, but he may be under the same delusion I am :). 1% is 750K, and that is exceedingly rare in tech. Aside from some niche cases like self-driving car engineers at Google, it probably only happens in senior management.

We are easily 1%-ers in terms of income level but we don't consider ourselves rich

I'm forced to wonder how many policy problems in America are due to people like this failing to acknowledge just how good they have it and thus failing to be comfortable contributing to the greater good because they "don't consider themselves rich."

I thought that the point of the article was that he was reflecting on wealth, and answering his children in such a way that they did not walk around like privileged gits, while still being truthful.

Comfortable is also my answer that I've prepared for the same question.

I'm considerably less wealthy than OP, I suspect, but, supposing things continue roughly as they have been, my child will never really know hunger or want.

We are _comfortable_. Which, in my understanding of my religion, gives us an obligation to help the less comfortable and to never take our assets for granted.

The distinction between rich and wealth that you point out is, I think, astute - it's something like the difference between poverty and being broke. For some of us, it's a state of being, for others, it is temporary.

you are rich

You don’t consider yourself rich because you are tone deaf and lack perspective, not because you work hard. I doubt you have any idea what it means to work hard.

Jumping online to finish some work on a computer isn’t working hard. Lmao. Working hard is sitting on an assembly line putting clamshells together all day until your hands hurt, then having to wake up and do it again the next day.

I too get to live the luxury of pretending I work hard while sitting behind a computer in a comfortable environment. But seriously man, get some perspective.

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