

How Rich Is Rich? - simonreed
http://finance.yahoo.com/focus-retirement/article/110295/how-rich-is-rich?mod=fidelity-buildingwealth&cat=fidelity_2010_building_wealth

======
wallflower
True wealth is how long you can maintain your preferred lifestyle without
working. By scaling back, you become wealthier.

~~~
dkarl
Only if you can manage to "prefer" your new, scaled-back lifestyle.

~~~
sliverstorm
I think 'manage' is not quite the right word. I am sure there are plenty of
people out there who _could_ be happier while spending less- the ones who are
spending in search of happiness.

------
tsotha
>Over time, the shape of your nest egg would resemble a bell curve, growing in
the early years, and then declining as inflation required you to withdraw more
money to maintain a lifestyle equivalent to $300,000 in 2010. The $12 million
would finally dwindle to $934 when you turned 100.

My bank is offering savings accounts that pay, like, .01% these days, so it's
not so much a bell curve as just the right half of a bell curve. You can get a
bit more interest from investments, but your risk goes up too. It would suck
to be 50 after 15 years of not working and find you don't have any money.
Would you even remember how to tie a tie?

Anyway, the big wild card is health care. Nobody will insure you as an
individual if you have a health problem, and the bills you can rack up at the
hospital are almost open-ended. I went in for just a couple days last year and
they billed my insurance $26k.

It's not at all clear to me the changes the Democrats made last year will
survive the next. I'd want at least 4-5 million in the bank just to feel
secure on medical.

~~~
Bricejm
Over the last 30 years mortgage rates have decreased and with that savings
rates (the less it costs to lend money, the less you pay to purchase money).
An emphasis was placed on creating wealth in home equity and the stock market
vs. saving from your job/paycheck, and living off interest in retirement.
Unfortunately it's hard to turn things around (deflation causes depressions)
and we have to accept that it's going to take time. Our generation will never
see the increase in home prices the way our parents and their parents
experienced. The same goes with the stock market. We're overextended and it
will take time for things to even out. Being rich is having the amount of
money that allows you to live the life you wish to lead. It's going to be more
difficult for our generation to reach that point, but you can never go wrong
with saving and preparing for retirement.

~~~
jaxn
Not to mention the health care bill that the Boomers will generate. One way or
another I think our generation will end up footing the bill for the extended
lifespans of the Baby Boomers.

------
abp
Now all that living without working stuff is not quite right, i think. What if
you don't work at all. Sure you can work not, and be non productive. But what
does that mean for your life?

I want to work and i want to learn constanly. I don't want to be rich. If i
would be i don't want to life on the money by myself. I just want to life and
money is by far not everything.

What the hell is wrong with the persons that brand their lifes to "getting
rich is everything"? I think that is actually what anoys me most with startup
culture today. Its all about success, high exits, getting rich. Make as much
money as you can in a short time.

But what for? What did you really gain from that? A burnout? A million? A few
millions? And then you probably end like a austrian millionare and donate all
your richness, before you really retire, just to life again and don't have to
worry about all that richness.

~~~
philk
The point of money is that it enables to choose what you want to work on.

Look at Elon Musk. If he didn't have all his PayPal money he wouldn't have
been able to found Tesla or SpaceX

~~~
abp
Sure, but how many people that have money, put their money into something
useful, actually?

~~~
jaxn
I don't think it is about putting money in as much as it is about putting time
in.

So to shift your question a little, how many people that have money put their
time into something useful? I think this number is quite high. Whether it be
building new ventures or doing volunteer / philanthropic work. Once you don't
have to "make a living" you get to decide what is important to you and live
accordingly.

------
joystickers
This article talks about two different things. First, it talks about how much
money one would need to live comfortably in different parts of the country.
Second, it talks about retirement.

I have a question about the latter. Does anyone else notice that the
retirement articles are always written by the same old school business
journalists, in this case CNN Money?

I think this article illustrates a major difference between our generation
(I'm 24) and previous generations. The retirement conversation always revolves
around living off of a nest egg investment that will hopefully be enough to
survive on later in life.

Let's change the discussion to be about earning income regardless of
employment status. Anyone banking (no pun intended) on a 401k to sustain
himself in 40+ years is nuts imo.

~~~
jaxn
Why is that nuts? A 401k is hardly a pension. Once the money is in it is your
money. If you were to start putting 10% of your income into your 401k or IRA
now, you would be able to live off it in 40+ years easy.

Yes, I think passive income is great. Most of my income is passive and I plan
to keep growing that part of my life, but that doesn't mean it is a fool's
errand to have a retirement account.

~~~
joystickers
10% is a considerable chunk. This is especially true for someone straight out
of college who doesn't have a high income to begin with. You could argue that
his/her expenses are lower than someone with a family, but the counter to that
again is the income. Someone with a family isn't making a starting salary
anymore.

Another problem I have with the 401k is that "most" people leave it in the
hands of fund managers who we're told know what they're doing. I'm one of
those that leaves it to a fund manager as well. The biggest argument for the
401k is that the market will perform X% by the time you retire based on
historical data. This assumes that trend will continue and that you don't
unexpectedly lose a chunk of it as many retirees did in 2008.

Another problem I have with the 401k is that it's incredibly illiquid. If you
take money out before you retire you're strictly penalized.

I'm not saying don't invest in the 401k. I invest in it, but only enough to
get my employer's full match. If someone is offering you free money, you take
it. I'm suggesting that it's better to take control of your own finances and
earn enough passive income to live on. The 401k money should be a bonus, not
the salary.

------
petercooper
_Indeed, few experts think a million is enough to quit your day job._

I hear the startup crowd screaming "Wha!" $1m is more than enough of a safety
blanket to quit your "day job" and work on your own ideas for even a decade or
more. This article clearly assumes being rich involves "not working", yet all
of the rich people I know personally are perhaps the hardest workers I know.

~~~
gamble
The truest measure of wealth is the degree to which working becomes a choice.
It's a continuum - a little wealth gives you short-term freedom like choosing
to start a business, whereas $10m+ gives you the option of doing whatever you
like for the rest of your life without worrying about an income.

I suspect most people have things they like to do if they suddenly came into a
large fortune, but continuing at their day job is rarely one of them.
Actually, with people who win the lottery you often see the opposite - they
don't need to work, but they feel pressured to do _something_ and often end up
losing spectacular amounts of money in foolish business ventures.

------
hess
I spent a few month in rural Nepal (think $10/month for rent). An ipod,
digital camera and a few grand in the back account was enough to be considered
uber-rich. It's all perspective.

Sidenote: Now im back in the startup game and im just as greedy as every else

~~~
bsk
An IAMA on reddit would be very interesting. Plus you'll get some publicity
for your startup.

------
happybuy
Key quote from the article: "Kaye cautions not to confuse wealth with income.
Some people can make a million a year, but be spending a million and a half.
They are not rich, said Kaye."

~~~
russellallen
Of course they're not rich. What a silly thought. They're poor people with
penthouses, Mercedes, caviar and champagne. Umm...

------
thewordpainter
I think it's hilarious that people are aspiring to 'retire' at 35 --> they
must have picked the wrong occupation to begin with!

i can't imagine a day when i won't want to work on something that i'm
passionate about --> will i ever really retire?

------
danbmil99
Har har, $3800/month for a NYC apt that makes you feel rich? Try $6500++

~~~
philk
They also include another additional twelve grand in spending money each
month.

I'm probably showing my stinginess here but I'd be vaguely baffled by how to
get through that amount of spending money each month.

~~~
tsotha
I think you could do it pretty easily in NYC if you started riding limos
around, buying designer clothing, and going to tony restaurants.

------
lionhearted
Is this...

> according to Steven Kaye, president of Watchung, N.J.-based wealth
> management firm American Economic Planning Group. He based that number on
> real-life figures his clients tell him they need.

...an example of this? -

<http://www.paulgraham.com/submarine.html>

