[veyron]

What does 'rich' mean?

If you mean upper-middle class then 4 and 5 are out of the question

If you mean upper class (top 1%) even 3 is out of the question. 500K a year is upper-middle-class in jersey and middle-class in manhattan. And after all of those expenses, you would be lucky to save 100K of that after taxes

If you mean `rich` (i would define rich as having enough money not to need a paycheck from another company -- maybe 10M in the bank is a good threshold) then 1 and 2 are the only ways to go

One thing to note: taxes are a pain. Most people in that 200-500K range are stiffed by the AMT (why I had to pay AMT at 22 is beyond me)

[maigret]

250k/y is rich, even in NY http://voices.washingtonpost.com/ezra-klein/2010/09/even_in_...

[veyron]

rich is not measured as a percentile! If you take rich as a percentile, then yes 250k is rich.

If you take an absolute measure of rich and compare cost of living, 250K is really not that much. Especially after taxes and the ilk.

[maigret]

Somehow over the last 10/20 years, the notion of "rich" has had a much bigger inflation than the rest of the world, this is particularly true in the US. If your definition of "rich" is not needing a paycheck, then 2M with 2% interests over inflation should be enough to live OK in most countries except maybe Switzerland, Denmark or Norway.

[veyron]

The rub is in the statement " 2M with 2% interests over inflation", which is harder to sustain over terms over 10 years.

[maigret]

OK... I have two answers to that. First, when you are rich, it is easier to get a better return on investment. Because you can afford better advisors, and because you work with higher volumes, bringing the transaction costs down, and possibly accessing to expensive investment products other can't afford. There are many articles on the rich getting richer, I will not post another one here.

Then, second point... Let's say you just get the return as high as the inflation... You still have a 2M pie you can eat from :) That would mean for example 50000$ a year during 40 years, augmenting pair with the inflation. I don't know well in other countries, but for me that would be enough to let the state retirement come. That wouldn't be the millionaire life but quite enough to enjoy my life with what I'd like to do. But for now I rather work and code/design things that matters :)

[veyron]

"when you are rich, it is easier to get a better return on investment" <-- This argument is valid at a scale two orders of magnitude higher than what I am talking about. It's easy to lop people with 1M net worth in the same bucket as people with 10B net worth, but there's a very meaningful difference there (beyond whether or not you decide to get a third bugatti). A million-dollar portfolio is below the thresholds that many financial institutions would consider for an investment.

"Let's say you just get the return as high as the inflation... You still have a 2M pie you can eat from :)" <-- lets say you are 25 now and you live to be 80. Even if you can just match inflation, you have less than 40K per year to play with. In most suburbs of NYC, its hard to live on that (taxes on a house alone will eat away a quarter of that).

Your arguments would be valid if I decided to move to a third world country. I could go to India and live like a king for the rest of my life on less than 300K USD. But now you are comparing apples to oranges here: taking earnings from a place where earnings and costs are high, and exporting them to a place where costs are low.

NOTE: My goal isn't to pick a fight. You will understand when you get there that a million dollars just isn't that much (and not in a keeping-with-the-joneses sense)

[usaar333]

What is someone (I assume we're talking an individual) is spending on to be left with only 100k? After taxes you should have earned something like $280k to $300k; $180k to $200k is a hell of a lot to spend a year.

I also imagine you are using a high standard for upper middle class. If you use even top 10%, you are talking professionals earning > $75,000 which most programmers hit at any company (at least in the Bay Area).

[veyron]

Ah ok I was under the presumption we were talking about a family here (because the numbers mean something completely different if we are talking about one person -- who doesnt need a large house -- versus a family -- who needs more space and has other expenses)

I assume you want to have a family one day :)