[tomhoward]

Unless you're very early (and/or very lucky), you can't get "rich" (i.e., can choose never to work again and can invest in many other things) as an employee (though of course a highly-paid employee can become very well off and comfortable).

Yes you need to be lucky to get super-rich as a founder too, but you have a lot more control, i.e., you make the primary decisions that determine whether the company will make good products that people will use/buy.

[naniwaduni]

How rich do you insist on being? The bar to "can choose never to work again" is surprisingly low, it just requires a high savings rate which is quite achievable in this line of work.

[vundercind]

“Never work again” money is crazy-high for younger folks (like, not already close to qualifying for Medicare) in the US, on account of the costs and financial risks of our healthcare system.

Most of the FIRE bloggers who bother to account for this—like MMM—have a (perhaps implicit) fallback plan of returning to work somewhere with decent health insurance if they or a family member becomes very sick, but that’s quite a gamble.

(Never mind that a bunch of those sorts have jobs and couldn’t remain comfortably “retired” without them—god I really hate that part of the blogosphere, “look it’s so easy you dumb idiot” but then you start reading between the lines and realize how much of it’s just a bit)

[toast0]

> “Never work again” money is crazy-high for younger folks (like, not already close to qualifying for Medicare) in the US, on account of the costs and financial risks of our healthcare system.

Exchange plans are fine enough, and like, they're not that cheap, but they're also not that expensive either. Depending on how much you make from investments on your never have to work again horde, you may be able to qualify for rate subsidies, and then it's even less expensive. In my county, if I were 64 years old, assigned male at birth, I'm looking at about $17,000/year for a Blue Cross Bronze plan (less costly options available), with $9,200 out of pocket max. Budgeting $26,000/year for healthcare means less than $1 M should cover you for life (assume 3% perpetual withdrawal rate). Rates are lower for younger people, but budgeting based on current costs for the oldest people should help the numbers work. Double the budget if you have a spouse; do some math if you have kids you need to cover until they become independent. Definitely make sure you work until you have earned Medicare eligibility, cause it'll be handy when you reach that age.

Is $1-2 M crazy-high? Kind of, but depending on what your annual withdrawal rate target was, maybe you can just say if you've got enough to pull $100,000/year, you're good on healthcare too. Hopefully most years you won't hit the out of pocket max.

[vundercind]

> maybe you can just say if you've got enough to pull $100,000/year, you're good on healthcare too.

You’ll be exposed to tens of thousands in risk per year on top of (low) tens of thousands in premiums per year for a family Exchange plan. You’ll be burning nearly half of that (and spending all your free time trying to keep hospitals and insurers taking even more) if one of you gets cancer—or, if it’s you who gets cancer, you better hope someone else can handle that.

You also can’t withdraw at as high a “safe rate” as people planning for an ordinary retirement at ~65 do, because your fund needs to last a lot longer despite inflation and such. $2m isn’t “retire at 35” (… or 45) money. It might be “take a big gamble and maybe get lucky… for a while” money. Or semi-retire money.

[edit] at constant 2% inflation (ha!) you need a very safe source of consistent (not average!) 6% returns to retire with 80,000/yr income on $2m, without eating into principal. Anything goes wrong (“whoops, ‘safe’ wasn’t as safe as I thought!” or “whoops, we had a year of 7% inflation and my investments didn’t benefit from that!”) and you can find yourself burning principal while your account value is already down. It won’t take a lot of that before $80k is no longer your safe-withdrawal amount. A couple such years and you may be back to work. 30+ years is a long time…

[edit edit] also damn under $10k max out of pocket on a family plan at the bronze level for $17k? I gotta get out of my shithole state. That’s better than our Gold plans (also our plans tend not to cover like 2/3 of area providers, which may include 100% of area specialists for certain situations)

[kudokatz]

> You also can’t withdraw at as high a “safe rate” as people planning for an ordinary retirement at ~65 do

Solvable, including consideration of valuations via CAPE PE 10. Based on past data, the safe withdrawal rate (SWR) happens to be around 3.25-3.5% of assets to extend to a 60-year time horizon [1]

> at constant 2% inflation (ha!) you need a very safe source of consistent (not average!) 6% returns to retire with 80,000/yr income on $2m, without eating into principal.

For most of this research, "failure" constitutes running out of money. Preserving the initial portfolio value in inflation-adjusted terms can also be solved for. It takes the SWR closer to 2.8-3% for 60-year horizon with high equity valuation corrections.

> You’ll be exposed to tens of thousands in risk per year on top of (low) tens of thousands in premiums per year for a family Exchange plan.

Better to cap expenses and be ready to pay for it than live in fear. Save, invest, and move on with life.

> $2m isn’t “retire at 35” (… or 45) money. It might be “take a big gamble and maybe get lucky… for a while” money. Or semi-retire money.

Depends on how much money you need to spend every year to be happy. Sounds like you need a lot of it. For many, $2m would be fine, even with a very long time horizon. And if any problems crop up, there would be a 15-20 year warning during which a small income boost could top things up.

----

Things don't always have to be so gloomy.

[1] https://earlyretirementnow.com/2017/09/13/the-ultimate-guide...

[toast0]

My budget includes the premiums and the individual out of pocket max. If that's not good enough, what number am I supposed to be looking at? My with a spouse budget is just 2x the individual budget, family out of pockets are usually around 2x individual in my neck of the woods, so that doesn't make a big difference; if there's kids, then it would, but the modelling there gets tricky because you've got to figure out what age you're kicking them off the plan (assuming they don't have a debilitating condition that leaves them dependent on you for their whole life... that falls outside my plan).

> You also can’t withdraw at as high a “safe rate” as people planning for an ordinary retirement at ~65 do, because your fund needs to last a lot longer despite inflation and such. $2m isn’t “retire at 35” (… or 45) money. It might be “take a big gamble and maybe get lucky… for a while” money. Or semi-retire money.

The $2 M is the budged accumulation only to pay for premiums and out of pocket until you hit Medicare; and that's assuming a spouse. Budgeting that based on perpetual withdrawl rate gives yet another buffer, because it only has to last until Medicare eligibility age. Yeah, there's unknowns, but whatever. I'm not saying $2 M is enough to accumulate for early retirement. It could be, but a lot of people want to spend more money than that. $2 M doesn't generate that much income, so you'll likely qualify for health plan subsidies, which would help a bit too.

Edit: I used zipcode 98110, birthday for illustration 01/01/1960. Going into the less expensive side of my state, zipcode 99336; there's no blue cross out there, but the most expensive bronze plan for that birthdate is $14,000 / year with the same $9200 out of pocket max. And yeah, limited networks suck ... I'm not going to shop for hypotheticals there --- I'm pretty sure if there's no reasonable in network doctors, you can fight your insurance to get covered at a reasonable doctor, regardless of the insurance and state, and if you're early retired, you'll have time for it.

[lupire]

Some people think that if you can't spend a million dollars a year on healthcare for 50 years, you are poor. In a sense they are right, because nothing is more valuable than life, but if you lower your expectations beyond the tippy top 0.1%, and take up a nice hobby like skydiving or motorcycling, you can get by with a lot less.

[tomhoward]

In the context of this article we're talking about the difference between the kind of rich you become from founding a hugely successful ("unicorn?") tech company, vs working hard for a salary for years and saving hard. It's more a qualitative thing than a specific number of dollars saved from a salary.

I'm well aware that the definition of rich can be very different in other contexts. I'm talking about the context of this article.

[cmrdporcupine]

Threshold for wealthy enough to "never work again" is actually very high if you have a mortgage and a couple kids you want to put through school, and are thinking about living past 75. Even here in Canada where healthcare is not really a cost, retirement and nursing homes constitute a huge expense that could go on for years in your last phase.

I'm sitting on the accumulated wealth of 25 rather up-and-downish years in this industry, 10 years at Google, an almost paid-off mortgage, and a decent lump sum I got from when Google bought my employer, I turn 50 this year, and there's no way I can retire. Not without selling my home and moving somewhere a lot cheaper (hard to find here).

Maybe I've made some bad financial choices (not that many), but mostly it's that compensation packages in our industry are set just high enough to keep people on the upper side of comfortable middle class.

If you don't own capital -- haven't invested in rental properties or starting your own business --getting out of the job market isn't really a thing before 65 for most people even in our very well compensated industry.

If I were single or it were just me and my wife, sure.

I've been through tldroptions, and looked at enough options agreement given out by startups in the last few years, to know that as an IC engineer... even if you are lucky enough to be part of the very few startups that have a liquidity event... you're likely gonna get $300k, $400k USD tops.

Unless you're 25 and can shove that in the bank without touching it at all... that's not the life changing event some people think it is. Once the gov't takes their share, it's enough for a house downpayment or a very nice car, and you're certainly not going mortgage free with it.

[rgmerk]

Hmmm. I don't know exactly what your personal financial circumstances are...but from what I understand salaries and benefits to be at Google, you're getting paid plenty, and it should be possible to save at least some of that. Do it for ten years, put it in a nice boring low-cost index fund, and watch the investment returns roll in, and you're looking at a pretty big nest egg by normal people standards.

[cmrdporcupine]

Part of the complication is the insane housing price inflation that has happened in Canada, combined with the relatively lower compensation rates of SWEs here. Also I don't work at Google anymore.

Still, I'm in a 500x better position than most.

[kudokatz]

expected time to retirement is MUCH, MUCH higher at FAANG if you can save 50%+ of take-home pay after taxes.

[cmrdporcupine]

Even very early these days won't get you much. Just a bit of a lump sum you could apply to your 401k/RRSP or whatever and inch you ahead by 5-10 years on retirement. If you got it early enough in your life (20s, 30s) that it can gain interest. VCs and founders are writing stock option agreements these days with very low ownership stakes for even very early employees.

Back in the early y2ks, and late 90s, yes, you could get rich and be up and out if you were lucky and played your cards right. Those days are done.

[ojbyrne]

That whole extended ZIRP thing wasn’t great for interest on savings.

[munificent]

I live in Seattle. There are plenty of early Microsoft hires around here who are "fuck you money" rich.

[lupire]

What is "rich"?

There are tens of not hundreds of thousands of people who could retire comfortably after working at Google, Facebook, Apple, MSFT for a decade during their growth years. How many startup founders can do that?

Sure, becoming a billionaire is a different story but who cares?

[sahila]

While agreed the chances are still low, if you joined Tesla or Nvidia in the last 10 years and especially before 2020, you very well and likely are rich if you're still working at either and kept all your stock.

Hell if you joined Facebook last year and got in when the stock was around 100, your initial equity grant just 5x.

[screye]

You could have been investing in Nvidia the whole time.

Decision inertia means that employees often don't sell vested stock, and end up being lucky. Similarly, external investors aren't willing to put 30-50% of their networth into one bet and therefore miss out on the kind of luck that can set them up for life.

There is nothing that a lowly engineer at Tesla or Nvidia knows, that can't be found out by an external investor. They are operating in the same information landscape, but different outcomes when they give into decision inertia.

It's not about joining Tesla or Nvidia early. It's about betting on them.

[logifail]

> It's not about joining Tesla or Nvidia early. It's about betting on them.

It's also possible to bet on Tesla/Nvidia and lose. Badly.

[screye]

Exactly. every Nvidia/Tesla employee who became a millionaire recently CHOSE to hold onto their stocks after the vesting period.

That was a bet.

If they hadn't made the bet and sold stocks as soon as they vested, then the returns wouldn't have been as incredible.

[tomhoward]

I edited the parenthesised part of the first sentence from "and very lucky" to "and/or very lucky" to make allowances for your objection. And sure, you can always point out exceptions.

The real point is that it's misguided to try and compare percentages of tech company employees with percentages of founders; they're very different things.

Of course, out of all the founders of all the companies, a relatively tiny percentage will be vastly rich. And out of all the employees of all the tech companies, most will be quite wealthy and comfortable, and a small percentage will be vastly rich.

But that doesn't tell you anything about what is the most reliable path for any given individual to get vastly rich; it entirely depends on whether you're the kind of person you are how well you can learn how to build successful products and companies.

[candiodari]

Tesla has a VERY bad reputation on that front, as does SpaceX.

[adrianN]

A SF engineer pulling something like 300k can definitely retire before the age of 60.

[ojbyrne]

Many of them might be on their second or third layoff by 50.