
It takes a net worth of millions to be comfortable in Silicon Valley - antimora
https://www.businessinsider.com/net-worth-to-be-wealthy-silicon-valley-2019-4
======
exolymph
> Helen Dietz, a certified financial planner and the director of wealth
> management for Aspiriant, told Mercury News that a family may need an annual
> income of up to $1 million — so, a much larger net worth — if their
> financial priorities include sending their kids to a top school, living in a
> larger home, buying a new car, and saving for retirement. That number only
> increases when goals such as travel or funding a future inheritance are
> accounted for.

Consuming luxury goods requires excess funds. Groundbreaking.

~~~
mamon
Only in the US things like giving your kids proper education and saving for
nice retirement are considered luxury goods. In Europe they are treated almost
as human rights :)

~~~
lotsofpulp
Proper education and attendance at an institution that shows you can compete
and/or belong with the top x% are different things. The latter is what the
article is referring to.

~~~
anyfoo
No, it's not. Why is "being able to compete and/or belong with the top x%" in
any way dependent on money? Europe has world-class universities which are
essentially free. You get into them by proving qualification, not wealth.

~~~
AnimalMuppet
The original quote was attendance at a "top" school, not just a decent one.

> You get into them by proving qualification, not wealth.

I think the context indicates that we're talking about kids who couldn't get
in by proving qualification, so their only way in is wealth. You want your
kids to attend Harvard, not because they're smart enough but because you can
pay full price tuition? Well, it's going to cost rather a lot.

~~~
anyfoo
> The original quote was attendance at a "top" school, not just a decent one.

I realize that.

> You want your kids to attend Harvard, not because they're smart enough but
> because you can pay full price tuition? Well, it's going to cost rather a
> lot.

Why is that even an option? The point was that there is no tuition in Europe
(at least in the countries I know). If your kid is unqualified, it is
unqualified, you don't get to override that just because you have money.

~~~
AnimalMuppet
Why is that even an option? Because Harvard likes money. (And Harvard is a
private institution, not run by the government.)

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cimmanom
All these "you need to make a gazillion bucks to live a middle class life in
SV" articles fall prey to the same fallacy.

Comfortable !== Luxury

Yes, SV is one of the most expensive places in the country (maybe the world)
to live. But if you're willing to live even a 20th percentile lifestyle
instead of a 2nd percentile lifestyle, you don't need 2nd percentile money,
even there.

~~~
wskinner
I think most readers will correctly interpret your comment. But it should be
"80th percentile", "98th percentile". 98th percentile means 98% of
observations are below that level.

~~~
cimmanom
OK, good point. I was kind of thinking of "the 1%". Debating whether to edit
and fix, but leaning towards leaving it.

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FreedomToCreate
Is this supposed to be satire. Quote "Many people assume they will be able to
keep working indefinitely until they are 90 or 100 years old but in real life
that rarely happens," I don't think there is a human being in the bay area who
wants to or expects that they will have to work into there 90s.

Additionally what lifestyle are they aiming for. The Bay area is made up of
millions of people. Maybe 5% of that are millionaires. The rest of us are
living here on sub 200K a year family incomes and making it work and its
mostly comfortable. I think this article is basically saying if you want to
live the upper middle class lifestyle you now need to be a millionaire. Even
in the rest of America only a small percentage of people live the upper middle
class lifestyle. Who is buying a new car every year, going on multiple
vacations and savings extra money for inheritance. I'm sorry but the average
person saves through home equity, goes on one vacation if they are fortunate
to do so a year, and tries to maintain a car for several years if possible.

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skybrian
I'm guessing part of this is inappropriate expectations for living space. How
much would you say it takes to be "comfortable" in Manhattan if you moved
there expecting it to be like the suburbs?

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chrisBob
There are lots of definitions of comfortable. It seems like this article uses
"Similar financial resources to your neighbors'", so the number sound right to
me.

I went to grad school with someone who grew up as a subsistence farmer in
Nepal. He has a _much_ different idea of comfort/luxury than I do, but still
likes to buy big TVs, etc. because thats what you do here.

My definition of comfortable is being able to afford 6 acres within a 12
minute commute from work. That really limits the jobs/locations that would be
comfortable for me.

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rarrrrr
A home in Palo Alto costs 3.5 megabucks, but without Prop 13, property taxes
are around 85 kilobucks/year. Over 30 years, assuming 2.5% inflation, that's
another 3.8 megabucks just to stay in said house. And add basic cost-of-
living, say 40 kilobucks/year, adjusted for inflation over 30 years would be
1.8 megabucks. Throw in an extra million for miscellany (3.5 + 3.8 + 1.8 +
1.0), a net balance sheet (after maturation of investments) should target
around _10.1 megabucks_ to stay in Palo Alto if not splurging. It's possible
to move elsewhere in the US and only need around (0.5 + 1.8 + 1.0) _3.3
megabucks._ (Assumes buying a house for cash right now.)

    
    
         > def over_time(years, inflation, amount)
         >   years.times.inject(0) { |acc,y| acc + (inflation ** y) * amount }
         > end
        => :over_time
         > over_time(30, 1.025, 85_000.0)
        => 3731729.7688780855
         > over_time(30, 1.025, 40_000.0)
        => 1756108.1265308638
         >
    

EDIT 0: Refactored using _inject()_

EDIT 1: An engineer salary of 200k inflation adjusted over 40 years is _13.5
megabucks._

    
    
         > over_time(65-25, 1.025, 200_000.0)
        => 13480510.707119755

------
vichu
If you actually dive down into the study by Charles Schwab that this article
is taking their numbers from, it doesn't look unreasonable at all. $1.1
million dollars is the figure stated to be financially comfortable in San
Francisco and the exact same number that was polled for New York City. It is
approximately double the $540,000 average response from Charlotte, North
Carolina. It's also definitely worth noting that this is _net worth_. If you
have paid equity into a home, have other savings, own a car etc. you'll likely
be hitting this number living in the Bay Area - this would easily fall into my
personal definition of _financially comfortable_. I would go on to say that
this number is likely only double that of somewhere like Charlotte because of
real estate costs.

As for the quotes from financial planners... In my experience, they have no
idea about the finances of a normal American and deal exclusively with
farfetched wealthy individuals. One of my friends in Seattle making $200,000+
was told he could never afford to retire on such a meagre salary by one of
these financial planners (note: he was referred to this financial planner by
their father who happens to be quite wealthy).

~~~
human20190310
"$1.1 million dollars is the figure stated... you'll likely be hitting this
number living in the Bay Area"

This is only true for certain values of "you", unless we all start paying $40
for a couple of donuts.

~~~
vichu
I'm unsure as to what counterpoint you are trying to make. If you were
implying that I thought anyone could manage to be financially comfortable in
the Bay Area, that is patently false. To respond your apparent reading of my
comment, the "you" that you appear to be referring to is an example of a
person who is financially comfortable in the Bay Area and why that would
amount to a net worth of approximately $1.1 million.

~~~
human20190310
I understood your original point to mean that the $1.1M figure is not
unreasonable, because it is correct.

My counterpoint is that it is unreasonable in spite of being correct, because
that number represents how much a family starting from zero needs to make to
reach financial "comfort" in the area.

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bargl
Define comfortable?

I drive a shitty 2001 Saturn. I change the brakes myself. I work on my house
myself. I just spent the last weekend digging a 35ft long 4 in wide ditch to
replace my main water line.

I am comfortable.

Important note: I live in Seattle not SV.

~~~
falcolas
If you lived in SV, and had a house with a garage and lawn, you've likely
spent multiple millions of dollars for that house (and probably spending more
on lobbying to keep that house with a lawn from being re-zoned into dense
housing).

~~~
bargl
I bought a house that requires a remodel. I'm doing it myself. I agree with
you, but you don't need a turnkey house either.

~~~
whatshisface
In SV you would have spent millions for the land itself.

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wsdfsayy
I have a net worth of $1m and I still live with 2 roommates and watch every
dollar spent...

~~~
FreedomToCreate
Why? How old are you?

~~~
wsdfsayy
I live in SF?

I'm 30.

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tjkrusinski
I live in Redwood City, don't make millions but am comfortable.

~~~
flashgordon
When did you buy your property if you don't mind me asking?

~~~
pkaye
Not the OP but if someone bought 10 years ago, they would have bought at
50-65% less than the current prices. I have neighbors with low end jobs who
bought in the 80s-90s in the $100k range.

~~~
flashgordon
Totally. One of the things that people seem to forget is if you bought a house
for 50% less just a few years ago, you have a _insanely significant_ amount
more for your retirement. This is not including the bump in property taxes
that hurt quite a bit too!

