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Comment by kangnkodos | Hacker News Reader

Someone who is retired, has a million dollars invested in the stock market, no debt and no income today is not rich. They are middle class.

Assume they are collecting an average Social Security check. That's 18K per year.

If the person draws 3.5% of their net worth each year, that will give them an additional 35K per year. (I picked 3.5% because if you look at the history of the stock market, that's a safe rate to draw money for a long period of time, even during past historical market downturns.)

So they can spend a grand total of 53K per year. That's very close to the average US salary, 52K per year.

It's true they don't have to work. But they're not rich. They are middle class.

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That is a poor comparison. The 52k is taxed. But even beyond that, your expenses can be way lower if you don't have to work - to earn good money you might need to live in a more expensive place than you would if you had total freedom; you might have daycare $$$expenses; spend more on commuting and food out, and frankly might just naturally spend more due to being more stressed from work and having less self-discipline to avoid a lot of discretionary expenses.

If I had 53k/year just to SPEND - no debt!! - I'd be extremely happy and consider myself rich as I wouldn't have to worry too much about almost anything I'd want to spend on, if I chose a reasonable COL city.

Completely agree with this as it very closely mirrors my current situation. I am retired, zero debt, live off modest investments. It is easy to minimize my taxes. I do not have the cost of a car. I select places to live that are interesting and affordable. It's quite easy to go a month and spend less than 3000 USD.

There's several websites that provide cost of living information by city on an international level.

Not sure if this is in the scope of the discussion, but there are many countries in the world where capital gains are taxed at the same rate as salary. The US is a bit of an outlier there, assuming a relatively small annual withdrawal.

In the old days class meant where your money came from.

The poor got their money from church, government poor houses. They do what they want when they want.

The working class was the manual labor class. Their nose is to the grindstone when they're at work, but they do no unpaid work.

The middle class was skilled trades, some sweaty like electrician most desk jobs like accountant, but all very month to month. They are perhaps the hardest working class in that they are required to work "for free" on salaried weekends and nights and so forth.

The upper class got all their money from investment. They do what they want when they want.

Clearly your example is upper class.

You present a coherent class framework, but it's worth noting the person you reply to isn't wrong. "Class" has always been an overloaded term, and even when you try to split it into Social and Economic Class, there are competing methods for defining it.

Your class breakdown describes someone's "working life".

You wouldn't use it to ascribe class to a person aged 12 - you'd use their parents.

Likewise, it doesn't really apply after retirement (which the OP was describing). Anyone who is retired "gets all their money from investment". That doesn't make them upper class.

The main thrust of your post is correct, but your characterization of the classes is... misinformed.

The poor and the upper class do what they want when they want? The middle class works harder than the working class? ...What?

In reality, the working class were terribly abused in the "old days." Their days were long and hard, and wage theft was (and still is) rife. For them, there was no such thing as a vacation, which is something the middle class could enjoy. The poor were much too sick and weak to do as they pleased. They had to continuously toil in things from begging and scavenging to odd jobs in dangerous places.

It is better to think of it like this. Your class depended on ownership.

Poor own nothing and in general doesn't have any way to benefit from their own labor.

Working class did not own their jobs, but did receive income from their own labor, though only a fraction of its value.

Middle class own their own jobs, keeping most of the value of their own labor.

Upper class own the means of production, keeping all of the value of their own labor, as well as the value of most of their employee labor.

If they were able to save a million, they wouldn't be getting an average social security check. They'd be getting probably the max, at 40K or so a year.

Plus, they could safely draw 4%. So that person would be at around 80K a year.

To your point, that's still firmly middle-class, but with a paid off home, it's not nothing, either.

Rich is an overloaded term. For this context, to me, rich means you can live the lifestyle of your choosing without having to be employed in any capacity.

The "lifestyle of your choosing" just scales up and down with your own desires and resources.

Someone who has accumulated a million likely has had a above average salary and SS pension, i.e. probably $30K a year. A spouse will make that $45K to $60K total. Thats a decent place to start, with additional retirement savings income.

Depends on your definition of rich. To me, it's not stuff, it's independence.

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