Why Don't the 1 Percent Feel Rich?

[Mt9982]

You try living on $350,000 a year when you have to pay taxes, the mortgage on the house in a tony zip code, the nanny who knows how to cook ethnic cuisine, the private school tuition from pre-K on, the appropriately exclusive vacation, and max out your retirement and college savings accounts.

Deal.

Problem is that if you spend less than 4k on a two bedroom in manhattan you realize you may not have a dishwasher, right?  No way in hell you'll have a washer dryer. 


Provide me with 350,000$ a year, and I will attempt to live on it.

Keep in mind you'll have 180k after tax in New York.  If you have two kids in private school in New York (40k a year) you're now down to 100k.  A decent two bedroom will run you 5k a month so 60k a year.   Now you have 40k left.  Dining out?  A car?  Parking is at least 500 a month.  Vacation? 

See you aren't rich.

Why do you need a car in NY(C, I assume)?

I've mentioned it before, but this is classic rich person "I want all my money after I spend it on nice things!".

Your example family has made choices. They've chosen to live in one of the most expensive cities in the world. They've chosen to send their kids to private school.

I know housing prices in places like NYC and San Francisco have reached the stratosphere, but people need to stop expecting the big city lifestyle they see on TV. The city itself is what you're paying for, so you might have to cut back on other things.

Families like this are more than welcome to move to the midwest where nice family homes are 150K, public schools are good, and parking is abundant. If they can earn 350K in NY I'm sure they can earn 150K here, unless they're managing hedge funds.

I'm pretty sure that was meant as satire.

[Paul der Krake]

The other thing is that most of the top 1% hasn't seen a particularly large increase in wealth in the past 50 years or so:
http://equitablegrowth.org/2014/03/29/2434/evening-must-read-emmanuel-saez-and-gabriel-zucman-measuring-american-wealth-inequality-at-the-top
It's mostly, rather, the real oligarchs in the top .1% and higher that have seen their wealth rocket ever-higher. And if you're in the top 1%, you might well live and work in NYC or coastal California, and see the very rich bid up high-end status symbols like luxury real estate and feel like you're being left behind. My income apparently puts me in the 97th percentile of single Americans, but living in NYC and seeing the truly rich cavort and seeing real estate prices rocket ever-upward, it takes a lot of effort to maintain that perspective.

From my experience living in NYC for 8 years, here's what I suggest -- ride the subway from one of the outer boroughs (say, Brooklyn) early in the morning.  Like 5am - 6am early, and look around.  What you will see is a shitload of manual laborers of all stripes making their 1-hour+ commute into the City for their low-paying jobs.  You will feel rich, believe me.  I found that in NYC it's easy to see the wealth, because it stands out.  But if you truly look at your fellow New Yorkers with an eye toward seeing who is lower on the rungs than you, you'll find many, many more of them than the wealthy.  It takes a LOT of worker bees to keep the queens in their high places.

This is a very accurate description of many many large cities in the western world. Just because we don't see these people on a daily basis doesn't mean they aren't there. You see them when you wake up at 4am to catch a 6am flight, opening corner stores or cleaning facilities when the more fortunate of us are still sound asleep in our beds.

[greaper007]

My dad is going to retire in  years with more than 5 million in assets separate from his home.    He likes to tell me that he's not rich like a movie star or a sports figure...    And he's not a big spender.   Up until about five years ago he drove a Camry, he upgraded to a Lexus but he'll probably drive it for 10 years.  He's just made what most people would call lots of money for long enough that he doesn't remember what it feels like not to make lots of money.

I think people's perspective just get skewed because they're surrounded by lots of people that are like them, or worse, people with even more money.     

[MooseOutFront]

Between my customers and my friends it certainly feels like I'm much poorer than my surroundings.  But, otoh, if we didn't save 50%+ of our income then we would be able to choose 3 of the below 4 things and other people would think we were rich too:

Nice country club
2 luxury car leases
Home in a top neighborhood
Top private school in town

I tend to think these people I'm around make just a bit more than us but that they spend pretty much all of it. 

[Rpesek6904]

My income apparently puts me in the 97th percentile of single Americans, but living in NYC and seeing the truly rich cavort and seeing real estate prices rocket ever-upward, it takes a lot of effort to maintain that perspective.

If you don't count yourself among the "truly rich" then I recommend rethinking your perspective; a better descriptor for the people you're talking about might be "relatively richer". You're in the 97th income percentile of one of the richest countries in the world.

I'm somewhere around the 15th-20th income percentile in the UK (by choice). But my girlfriend is Polish, and she (correctly, although not literally) facepunches me when I occasionally describe some people as "not rich, really". Minimum wage in Poland is about 30% of what it is here, and Poland is a first-world country. By the UK's standards I am poor, but I think I am very well off; I struggle to describe myself as rich, but if there is an objective test of richness, I surely meet it.

I am so, so glad I married someone from a poor country, though that was hardly the reason at the time. I asked my husband how he'd feel about having a baby while living in a studio and he looked at me like I was nuts and pointed out his entire family shared a BED until he was 10. He just has much lower material expectations.

Amen. My wife is from serious Mexican poverty and has the same perspective. It is one of many, many things I love about her.