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Comment by Swizec | Hacker News Reader

> Now start talking the top 1-2% and the story changes dramatically.

Probably the top 5-6%. The numbers are lower but the behavior is similar. You’d be surprised how soon you hit the “More money than I know what to do with” line.

Make 150 to 200k/year (not uncommon on HN) and what are you gonna do, buy a new car every year? Rent is paid, food is paid, clothes are good, 1 or 2 vacations per year, go out to eat whenever you want, one-off nice purchases aren’t a big concern ... it’s cushy. Not enough to buy real estate cash or anything like that, but def more slosh than you need.

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My ex...liked to spend money. We made 300k combined in 2019 in a MCOL area, and I still have no idea where it all went. Mortgage, nice cars, eating out, a couple vacations - all gone! I’ve heard of people making 7 figures and can barely afford their lifestyle. Rule of thumb, people spend what they make. Some spend on saving/investing. I think that’s what sets apart the top percentage with a few exceptions, they make money work for them, not the other way around.

Most people just ramp up their lifestyle when they make more money.

I've been petty conservative about doing that and living below my means since the start of my career. In the beginning I was saving 80% of my income. That dropped over time as I got married and had to accept ramping up my expenses, but I've saved enough over the years to be about halfway to financial independence by my mid thirties. I strongly recommend intensely saving as the only fiscally responsible way to live. I don't think it's affected my happiness negatively at all. I couldn't buy everything I wanted, but having that safety net was well worth it in exchange.

The trouble with this approach (although rational for an individual) is that if everyone who can does this, we end up with even more of a global savings glut than we already have, and interest rates go even more negative.

As an aside, it's very odd to me that we have so much money sloshing around, and yet we're not spending it on infrastructure that would help us get off the fossil fuel treadmill and towards a more sustainable system.

Eh it’s not really odd. You are mistakenly believing that your goals (and mine here are the same) align with others and that it is an obvious course of action. For most Americans “drive my SUV down the 10 lane highway” is normal and ideal. They don’t give a shit about anything else. Sorry to say.

The biggest predictor of future economic growth is the amount of savings the people have. Not a huge surprise there. So I don't think it's bad even at a societal level.

The top percentage have no idea how to manage money or budget, they have people that do it for them.

You'd be amazed how easy it is to spend $10m a year.

Real-estate, private jets, yachts, trophy cars, trophy alimony payments, security, art collections, horse breeding, interior design, fashion, private islands, expensive educations for the kids, bequests, public philanthropy, legal fees covering both public and personal disputes, investment management fees, political sponsorship and activism...

I'm not suggesting anyone needs this level of spending - just pointing out that the people who operate in that bracket wouldn't necessarily consider themselves completely secure and comfortable, even though they're spending sums that are unimaginably huge for most of the population.

Oh for sure. But there’s this wide spot in the mid 6-figure range where you can’t afford any of that and have way more than you can spend. Typical middle class trappings aren’t a concern, upper class trappings are inaccessible.

So what do you do? Personally I’m dumping it into index funds and business ideas. Maybe thinking about buying a house soonish.

All the art of your fursona you could ever want.

Boy, I don't understand this scenario at all. At 150-200k/year, a lot of people are just going to try and save like crazy. CAPE is high, financial planners are saying that "safe withdrawal rates" are no longer 4% or even 3.25%, but below even 2.5% - even if you're not in the very HCOL areas, you're looking at needing to save more than three million dollars to retire, which can take a very long time when expecting muted market returns in the future.

> a lot of people are just going to try and save like crazy

Exactly. You save the money you don’t know how to meaningfully use right now.

I can see using a lower withdrawal rate (approximating the yield on 10-year treasury bonds) if one is investing mostly in bonds. But two caveats:

(1) Adding stocks to one's portfolio makes it easier to succeed with a 4% withdrawal rate in very low interest-rate environments: https://thepoorswiss.com/updated-trinity-study/

(2) Life expectancy. People who retire at a young age, should use a lower withdrawal rate. But a person age 75, expecting to die before age 100, could have a withdrawal rate of roughly 4% (reciprocal of 100-75) in a zero-interest-rate environment.

Kids are expensive, especially if going the private school route.

A Bay Area house that isn’t total trash is easily 3M on the peninsula.

Elsewhere, yeah - you’d be fine if you don’t spend stupidly.

For an example: https://www.redfin.com/CA/Palo-Alto/3785-Park-Blvd-94306/hom...

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