American millennials think they will be rich(economist.com)
economist.com
American millennials think they will be rich
https://www.economist.com/graphic-detail/2019/04/22/american-millennials-think-they-will-be-rich
120 comments
Indeed, in the US 12% of the population will find themselves in the top 1% of the income distribution for at least one year.
(https://www.nytimes.com/2014/04/20/opinion/sunday/from-rags-...)
(https://www.nytimes.com/2014/04/20/opinion/sunday/from-rags-...)
> 12% of the population will find themselves in the top 1% of the income distribution for at least one year
That is just wild. I wish they dove deeper into the data here. The top 1% of earning, based on a quick google, is 1.3m/yr. That's a lot! Are there, say, estate windfalls pushing people around to cause some of those blips?
Also, this article fails to separate income from wealth/assets, which seems to be a common pitfall in this kind of conversation. Many of the people with the most wealth are not those with the most income. So while there appears to be lots of income volatility, I would be interested in seeing the same thing for wealth over time.
That is just wild. I wish they dove deeper into the data here. The top 1% of earning, based on a quick google, is 1.3m/yr. That's a lot! Are there, say, estate windfalls pushing people around to cause some of those blips?
Also, this article fails to separate income from wealth/assets, which seems to be a common pitfall in this kind of conversation. Many of the people with the most wealth are not those with the most income. So while there appears to be lots of income volatility, I would be interested in seeing the same thing for wealth over time.
Top 1% if 422k/year. 1.3mil is closer to top 0.1%
Is it wild? I'm guessing this one year is the year they sell their "working" house and downsize into retirement. Many retirees will see a windfall of 1-2 million from going from a paid off property in a city to a house for their retirement in New Mexico. I know some specific cases of similar transitions moving from Boston to Vermont, when you don't need to be located near a job center you can find really cheap real estate.
Wealth typically only lasts 2-3 generations. That might change as people have fewer kids. Takes 2-5 generations to go from poverty to top 1%.
I would give citations but I've forgotten where I heard this.
I would give citations but I've forgotten where I heard this.
Your phrasing is a bit misleading, wealth is very fleeting, but the 2-5 generations to get into the top 1% is not "typical" by definition 1% of people reside in the top 1% - if we were to assume that the cycle of boom and bust is the lower bound in your example (two to fall out, two to get in) then one out of every five generations a family should be in the 1%, yielding that 20% of the population should currently be in the top 1% - using your upper bounds it's a bit less silly but still mathematically unsound _and_ I would strongly challenge that 2-3 generations number. Evidence that I've seen doesn't support wealthy families falling out in 2-3 generations (except borderline wealthy families) and the dynamics of money are changing, the estate tax has been abolished and we simply don't have enough information past 1980 to see if that claim will hold true... and what evidence we have (general information about wealth inequality) is showing a strong trend to continue the concentration of wealth.
GP was talking about wealth, not income. There's some room to argue whether a 12% figure for income represents high economic mobility. There's absolutely no room to argue that the much lower number for wealth is anything but a disgrace.
This old trope again? Being a millionaire isn't even rich in many parts of the US anymore -- just look at Silicon Valley as an example. A million dollars gets you, what exactly in terms of housing there?
Most of the millionaires that exist today are older folks that have paid off their homes, and most of that wealth is in their homes. As the article states at the end, Millenials will inherit much of that wealth as the Boomers die, just in time for articles like this to come out about Gen Z.
Most of the millionaires that exist today are older folks that have paid off their homes, and most of that wealth is in their homes. As the article states at the end, Millenials will inherit much of that wealth as the Boomers die, just in time for articles like this to come out about Gen Z.
I never understood the "housing here is expensive so I'm not rich" argument. $500 only gets you a small hotel room at the Ritz-Carlton; that doesn't mean that $500 isn't a lot of money. It just means you elected to pay a lot for something other people get for less.
[deleted]
It does mean you're not rich[1], what it doesn't mean is that you won't be rich when you retire, at that point you will shift your accumulated wealth to a region with a lower cost of living (in all probability) and then you'll get to enjoy it - but while you need to keep a large portion of your value tied up in a house so you can afford the house you don't have much in terms of liquid assets.
[1] Assuming your labor isn't portable - if your labour is portable (i.e. you can move to rural montana and keep your job or a similarly paying one) then you're making an active choice to pay a high cost of living for the environment you're living in, many people can't remote themselves without cost so to continue to earn at the rates they're earning they need to stay put.
[1] Assuming your labor isn't portable - if your labour is portable (i.e. you can move to rural montana and keep your job or a similarly paying one) then you're making an active choice to pay a high cost of living for the environment you're living in, many people can't remote themselves without cost so to continue to earn at the rates they're earning they need to stay put.
> still a huge amount of turnover at the top levels of wealth
That's so far from being true that it's hard to assume good intent.
That's so far from being true that it's hard to assume good intent.
Having 1 million dollars at one point in your life (probably near retirement), after 30-40 more years of inflation, is probably pretty realistic. That will just be a regular lower middle class retirement, maybe not even enough to pass on to your kids but enough to get by. 2% annual inflation compounded over 35 years means that 1 million in 2054 will be about equivalent to $500k now. Which in most of the country is basically a paid off, middle income house and a few hundred thousand more in savings.
I think $1M would qualify much better than lower middle class retirement. I'd bet a good chunk of the middle class is going to end up retiring on social security.
I wouldn't really call that middle class then, but maybe
Middle class is a very politically charged term, but the way I see it, "median" ought to describe middle class fairly well. I don't know what qualifies as official numbers, but what I've read recently is the median American hits retirement age with a net worth less than $200K. Probably mostly in their house. They probably spent their whole lives getting that thing paid off so they may plausibly survive on what social security pays them, if they're careful.
I suspect most of us on HN are a bit optimistic about the definition of middle class. Maybe we identify socially as middle class. But unless the numbers are lying, a huge chunk of America is in a much tighter financial situation.
I suspect most of us on HN are a bit optimistic about the definition of middle class. Maybe we identify socially as middle class. But unless the numbers are lying, a huge chunk of America is in a much tighter financial situation.
Historically that's not what middle class meant (it usually referred to closer to the top 10% who had to work for a living but were well off) but I agree. To me living on $10-15k/year with enough money to sustainably supplement another $10k/year seems pretty poor, but maybe I'm just too privileged to understand. Close to half of all americans couldn't handle an unexpected $500 expense which seems pretty poor to me too
My understanding is that the common definition of middle class is in between working class and upper class, but that in America the people who most identify as middle class would be called working class anywhere else. Personally I tend to view it more as a mindset than an income range.
> Middle class is a very politically charged term, but the way I see it, "median" ought to describe middle class fairly well
In classical analysis of capitalist economies (starting with, but not limited to, the socialist critics that first identified “capitalism” as a thing) the “middle class” isn't middle in the sense of including the median person, but in being between the capitalist class (that derives support through applying rented labor to capital they control) and the working class (which derives support through labor rents from capitalists), and includes people whose support comes from a mixture of capital and labor, most typically the yeoman farmer or independent tradesman who primarily applies his own labor to his own capital.
In classical analysis of capitalist economies (starting with, but not limited to, the socialist critics that first identified “capitalism” as a thing) the “middle class” isn't middle in the sense of including the median person, but in being between the capitalist class (that derives support through applying rented labor to capital they control) and the working class (which derives support through labor rents from capitalists), and includes people whose support comes from a mixture of capital and labor, most typically the yeoman farmer or independent tradesman who primarily applies his own labor to his own capital.
Assuming social security still exists for millennials.
Social Security won't go away. That would be political suicide. If we are smart we will adjust the financial support for it so there aren't any big hiccups, but ideologically there is a big chunk of the political class hoping to convince all of us voters that SS is doomed no matter what. My guess is we'll just switch over to funding it with more debt, like everything else.
> Then there is mum and dad: even if they don’t become millionaires, millennials will one day inherit from their parents, and that may help redress their relative poverty.
Boomers (in general) have as little saved and are in as much debt as their kids. Mcmansions, healthcare, and luxury cars aren't cheap. I (gen Y) am not counting on any Social Security or inheritance.
Boomers (in general) have as little saved and are in as much debt as their kids. Mcmansions, healthcare, and luxury cars aren't cheap. I (gen Y) am not counting on any Social Security or inheritance.
The term "millionaire" is very dated.
It was first coined in the 1700s and first popularized in American culture as early as the 30s, so really when people envision that "millionaire" from their childhood or from their parents' minds they're really thinking of a decamillionaire in today's dollars.
When you frame it like that, I'm not sure if any millennial thinks that will happen.
It was first coined in the 1700s and first popularized in American culture as early as the 30s, so really when people envision that "millionaire" from their childhood or from their parents' minds they're really thinking of a decamillionaire in today's dollars.
When you frame it like that, I'm not sure if any millennial thinks that will happen.
Well, given compounding interest and inflation, is this so out of the question?
At least I keep hearing I need a net worth > 1 million to retire. If one puts away 10-15k a year for just 30 years, plus interest that would get you there comfortably.
At least I keep hearing I need a net worth > 1 million to retire. If one puts away 10-15k a year for just 30 years, plus interest that would get you there comfortably.
Around 50% of the US working population earns $30,000 or less a year. Good luck saving 10k or 15k a year at that income level.
Tangentially, at the typically suggested 4% yearly withdrawal level you'd need more like $1.5 million to retire at the ~$60k median income level.
Also sort of unrelated I thinks it's interesting that about 50% of people can earn under $30k, but median income is still twice that.
Tangentially, at the typically suggested 4% yearly withdrawal level you'd need more like $1.5 million to retire at the ~$60k median income level.
Also sort of unrelated I thinks it's interesting that about 50% of people can earn under $30k, but median income is still twice that.
Median household income is nearly twice median individual income (approx 31k vs approx 57k). Households frequently have two earners.
A million in 2050 wouldn't take you nearly as far as today.
10k/year contribution inflation adjusted with 2% inflation and 9% return (pre inflation) over 30 years is 1.78mil, or 984k in today's dollars. 15k/year contribution inflation adjusted results in 2.675mil, or 1.477mil in today's dollars.
If we reduce pre-inflation return to 7%, while maintaining 2% inflation target, we get $0.685m and $1m.
The 2% inflation makes it that over 30 years your total contribution is $405k at 10k/year and $608k at 15k/year.
If we reduce pre-inflation return to 7%, while maintaining 2% inflation target, we get $0.685m and $1m.
The 2% inflation makes it that over 30 years your total contribution is $405k at 10k/year and $608k at 15k/year.
>with 2% inflation and 9% return (pre inflation)
9% pre inflation is insane, and 7% is too. If you can do that consistenly, you will be a billionaire hedge fund manager. Ten year treasury bond yields 2.59% per year, anything above it is risky.
Sure, you can stuff 100% of your savings into S&P500, but then you will have to deal with unpredictable 20-40% drawbacks, which take years and years to correct. Last recession S&P500 basically halved.
9% pre inflation is insane, and 7% is too. If you can do that consistenly, you will be a billionaire hedge fund manager. Ten year treasury bond yields 2.59% per year, anything above it is risky.
Sure, you can stuff 100% of your savings into S&P500, but then you will have to deal with unpredictable 20-40% drawbacks, which take years and years to correct. Last recession S&P500 basically halved.
Retirement accounts are not usually risk free, nor should they be invested in risk-free assets. 5-7% inflation adjusted return is typical or worse than most current target date funds.
Average annualized return from s&p over past 90 years is 9.8%. Both 9% and 7% were chosen to be below average to account for some amount of lower risk assets in the portfolio. Even with the "great recession" the peak value from 2008 was recovered by 2011 (for spx). When you retire you should have a few years worth expenses in low risk assets, which will be the source of early withdrawals in case of stock market crashes at retirement.
Average annualized return from s&p over past 90 years is 9.8%. Both 9% and 7% were chosen to be below average to account for some amount of lower risk assets in the portfolio. Even with the "great recession" the peak value from 2008 was recovered by 2011 (for spx). When you retire you should have a few years worth expenses in low risk assets, which will be the source of early withdrawals in case of stock market crashes at retirement.
Thanks for laying it out.
30 years in this box so I can be rich and decrepit. The American dream!
I'm a millionaire, largely because I own a house. If this is the dream life we have made a huge mistake somewhere.
Obviously the basic gist of this isn't a new thing, as said in other comments, Americans (and likely many other country inhabitants) have considered themselves temporarily poor/embarassed millionaires/whatever for decades/centuries.
But part of me wonders whether social media and the internet may have pushed the effect even further. Rich people are seriously overrepresented online, and the rise in social media influencers may make people feel like that's the norm for society nowadays, that everyone has the coolest tech, the most up to date fashion, the fanciest house/apartment, a huge online following and a picture perfect lifestyle. Hell, I even remember articles saying how many kids saw Twitch streaming/creating YouTube videos being their most likely career choice.
Just feels like social media and the internet makes you think that everyone is raking in it and living a dream lifestyle, and that logically you should be destined for the same thing.
But part of me wonders whether social media and the internet may have pushed the effect even further. Rich people are seriously overrepresented online, and the rise in social media influencers may make people feel like that's the norm for society nowadays, that everyone has the coolest tech, the most up to date fashion, the fanciest house/apartment, a huge online following and a picture perfect lifestyle. Hell, I even remember articles saying how many kids saw Twitch streaming/creating YouTube videos being their most likely career choice.
Just feels like social media and the internet makes you think that everyone is raking in it and living a dream lifestyle, and that logically you should be destined for the same thing.
Crazy. Wealth is certainly within reach of most people, but it requires discipline and a long, long-range saving plan.
I suppose many of those surveyed are watching the 'FIRE' folks. I think those people are high-salary people (usually), also combined with very disciplined savings and investment.
It just won't happen for wishers. Only for doers.
I suppose many of those surveyed are watching the 'FIRE' folks. I think those people are high-salary people (usually), also combined with very disciplined savings and investment.
It just won't happen for wishers. Only for doers.
I wish they had done something like 20-25 and 30-35 instead of 20-35 and 25-35.
Of course 20-25 year olds are going to pull the median down. They’re still in college! But yeah 25-35 is still pretty low
Of course 20-25 year olds are going to pull the median down. They’re still in college! But yeah 25-35 is still pretty low
Of course they do. This has been part of the culture for generations. It's an ongoing delusion that fuels the inequality and lack of social services and keeps most people poor while the rich get richer. It's exactly this kind of delusion that the rich spread to keep people from questioning and changing what's currently going on. Americans are known for their stupidity and this is definitely an example of that.
Paywall bypass: https://outline.com/bLtYCK
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> MORE THAN half of American millennials, the generation of people born between 1981 and 1996, believe that they will one day be millionaires; one in five think they will get there by the age of 40.
This, to me, is absolutely insane.
Given that it's from a survey by Ameritrade, is it possible that the survey strongly self selects for fiscally healthy people (proximity to ameritrade is probably a strong signal here), and who understand that you can be a paper millionaire with, say, one really good property and a modest retirement account?
I somewhat hope so, because if this means "half the people who work at chipotle expect to be millionaires" then that's admirably ambitious but a little miscalibrated.
Hell, I've got a decent tech salary and my brother's running a healthy lifestyle business. I wouldn't say with certainty that either of us are going to become millionaires, despite being unusually well positioned to do so.
What happens when these people's dreams collide with reality? Are people content to drift through life saying "any day now, things will turn around and make me rich..."?
Nevermind that being a millionaire isn't that important. I'd take median wealth and top decile meaning over median meaning and top decile wealth any day.
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> MORE THAN half of American millennials, the generation of people born between 1981 and 1996, believe that they will one day be millionaires; one in five think they will get there by the age of 40.
This, to me, is absolutely insane.
Given that it's from a survey by Ameritrade, is it possible that the survey strongly self selects for fiscally healthy people (proximity to ameritrade is probably a strong signal here), and who understand that you can be a paper millionaire with, say, one really good property and a modest retirement account?
I somewhat hope so, because if this means "half the people who work at chipotle expect to be millionaires" then that's admirably ambitious but a little miscalibrated.
Hell, I've got a decent tech salary and my brother's running a healthy lifestyle business. I wouldn't say with certainty that either of us are going to become millionaires, despite being unusually well positioned to do so.
What happens when these people's dreams collide with reality? Are people content to drift through life saying "any day now, things will turn around and make me rich..."?
Nevermind that being a millionaire isn't that important. I'd take median wealth and top decile meaning over median meaning and top decile wealth any day.
There have been numerous other surveys throughout the years including by Gallup [1] that generally all find similar results. The Gallup poll, though, was less precise and simply asked if people expected to become "rich." A directly related little datum that shows up in numerous polls is that approximately 90% of Americans think they have average or above intelligence. Average in this case of course is going to be interpreted as median.
I don't necessarily think it's arrogance so much as delusion. For instance a person paying tens of thousands of dollars for a degree of minimal utility obviously knows that this is a very bad decision deep down, but it's something they want to do - or perhaps they feel like they could not cut it in something like a STEM field. So the rationalizing kicks in. Maybe they'll become a lawyer, an author, or a speaker. They'll make millions! It'll be great! Of course it's just cognitive dissonance and self delusion.
[1] - https://news.gallup.com/poll/7981/Half-Young-People-Expect-S...
I don't necessarily think it's arrogance so much as delusion. For instance a person paying tens of thousands of dollars for a degree of minimal utility obviously knows that this is a very bad decision deep down, but it's something they want to do - or perhaps they feel like they could not cut it in something like a STEM field. So the rationalizing kicks in. Maybe they'll become a lawyer, an author, or a speaker. They'll make millions! It'll be great! Of course it's just cognitive dissonance and self delusion.
[1] - https://news.gallup.com/poll/7981/Half-Young-People-Expect-S...
It should be easy to be a millionaire by 40 in the Tech Sector, particularly if you don't end up with dependents, just save your money and don't live above your means. Almost all tech workers are paid way above the averages for the country, but we live above our means a lot of the time though.
If you look at the last 20 years if you started out as a software engineer around 2000 you probably made a lot less than $100k when you started out but you should be making more than that by the time you're 40, it should average out to around $100k.
So if you average to $100k for 20 years that's $2 million in earnings. Say you averaged 20% taxation you're down to $1.6 million. If you had $100k in student debt, which would have been a ton if you graduated in 2000, you're still at $1.5 million.
There are families which live on way less money than this, if you don't have a family and you're a tech worker you should have been able to save $1 million in that 20 years if you were maxing your 401k and being otherwise financially prudent and not living too much of a consumer lifestyle. The key thing here is if you were saving right from the start your investments have already had 20 years to grow.
I see co-workers buying new cars every 2-3 years and going out to eat every day, paying huge amounts of rent, etc.. buying every new video game that comes out at $50-60/pop, taking international trips all the time.
It's easy to spend money, but if you don't it's also easy to save it.
Even if you do have a family.. you are probably not getting married to someone making minimum wage, now you probably have 2 salaried workers earning more than the average/median, even easier to save.
If you look at the last 20 years if you started out as a software engineer around 2000 you probably made a lot less than $100k when you started out but you should be making more than that by the time you're 40, it should average out to around $100k.
So if you average to $100k for 20 years that's $2 million in earnings. Say you averaged 20% taxation you're down to $1.6 million. If you had $100k in student debt, which would have been a ton if you graduated in 2000, you're still at $1.5 million.
There are families which live on way less money than this, if you don't have a family and you're a tech worker you should have been able to save $1 million in that 20 years if you were maxing your 401k and being otherwise financially prudent and not living too much of a consumer lifestyle. The key thing here is if you were saving right from the start your investments have already had 20 years to grow.
I see co-workers buying new cars every 2-3 years and going out to eat every day, paying huge amounts of rent, etc.. buying every new video game that comes out at $50-60/pop, taking international trips all the time.
It's easy to spend money, but if you don't it's also easy to save it.
Even if you do have a family.. you are probably not getting married to someone making minimum wage, now you probably have 2 salaried workers earning more than the average/median, even easier to save.
Good points. I think if you are living a bachelor life, with a good tech gig paying six figures, yes you can get there by 40. If you max out retirement accts, live a decently modest lifestyle, have no debt. I bet you could hit 1million, if you are working from age 22-40.
I'd suspect some weird selection like that, given that "average millennials are in a crappy economic situation" is a very widespread sentiment (which of course is also probably a biased impression)
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If you make the median tech salary of $300k and live on a fraction of that it doesn’t take that long to save $1m...
Point is there’s no magic to becoming a millionaire if you have minimal expenses and single.
Point is there’s no magic to becoming a millionaire if you have minimal expenses and single.
> median tech salary of $300k
Mean is probably better than median here, right? Because salary isn't quite a normal distribution. The high end is super high. 300k is normal for FAANG, but that class of tech employee is in the top 10% of the wider tech salary pool, at least.
Interesting that you call out being single. I've had the opposite experience – the trick seems to be a salary like that and a spouse that is at least pulling down a normal salary as well. If they're also making engineer money, then you're super set. If I'd have been splitting rent and groceries for the past 10 years, my finances would look a lot better.
That's not an excuse, I could have gotten a roommate with the same effect. Just to say that it seems being single raises expenses because you lose the little collaborative economies of scale.
Mean is probably better than median here, right? Because salary isn't quite a normal distribution. The high end is super high. 300k is normal for FAANG, but that class of tech employee is in the top 10% of the wider tech salary pool, at least.
Interesting that you call out being single. I've had the opposite experience – the trick seems to be a salary like that and a spouse that is at least pulling down a normal salary as well. If they're also making engineer money, then you're super set. If I'd have been splitting rent and groceries for the past 10 years, my finances would look a lot better.
That's not an excuse, I could have gotten a roommate with the same effect. Just to say that it seems being single raises expenses because you lose the little collaborative economies of scale.
I would put DINKs in the same group, yes (double income no kids). Kids are a very big expense, even for high earners, and actually especially in pricey areas like Silicon Valley because housing near good schools commands an even higher premium than average for that area.
Yes, you only need to make $300,000 a year. Not a big deal, really.
It’s a well known median for technical roles at Bay Area tech companies
What percent of millenials are working in the tech sector and earning the median salary? Also, is that the median salary for all tech workers, or only Silicon Valley big company workers?
the median age of a FANG worker is under 30 and median total comp for a technical role in those companies is around $300k all in
Misses they key question: What sliver of the overall millennial population is that, compared to the 53%?
And what percent of millenials work in those jobs?
The majority of them? ICs in software skew young.
No, I'm asking what percentage of all the millenials in the US work in those jobs, not what percent of those jobs have millenials working in them.
You mean the median of 100k? https://www.bls.gov/ooh/computer-and-information-technology/...
Where do you get 300k from?
Where do you get 300k from?
300k is median comp for Bay Area tech companies..
I believe you may be not thinking outside your bubble at the rest of the world. You're actually looking at one single vocation in one single area at one single point in time and assuming that therefore all millenials should have no trouble saving that up, totally ignoring that not even most tech sector workers earn that, and the vast vast majority of millenials are not tech workers?
The opportunity to earn that much is available.
When I went to college only a few years ago the best paying jobs in consulting and banking were largely gated by what school you went to. Now students from “non-prestigious” schools or no formal schooling at all have a good chance at earning that much.
When I went to college only a few years ago the best paying jobs in consulting and banking were largely gated by what school you went to. Now students from “non-prestigious” schools or no formal schooling at all have a good chance at earning that much.
Again, if you move to the right bubble with the right education at the right time. Are you arguing that any millenial that wanted could get that education and move to SV and get a job that paid that much? Does FAANG have unlimited room for developers?
This article is about Americans, not Californians or even more specifically Bay Area tech employees.
Where are you getting your median tech salary of $300k from? That figure seems awfully high to me.
I really don’t think that’s the median anywhere
Even if the odds are against them, people like having the possibility of getting rich.
The odds aren't even that bad, if you read up on how to do it, develop a plan, and stick to it.
Why take that away from people?
The odds aren't even that bad, if you read up on how to do it, develop a plan, and stick to it.
Why take that away from people?
They tend to vote against their own interest because ‘one day’ they’ll have more money and what they’re voting for will benefit them ‘then’.
> They tend to vote against their own interest
It's interesting how so many people seem to believe voters get a ballot with multiple line items on them, one of them being "Raise taxes on the rich". Or if that's not the root belief behind "people voting against their interest", that economics is the prime motivator for all voters.
Some other theories:
https://mediahub.unl.edu/media/8546
https://www.theguardian.com/society/2012/jun/05/why-working-...
It's interesting how so many people seem to believe voters get a ballot with multiple line items on them, one of them being "Raise taxes on the rich". Or if that's not the root belief behind "people voting against their interest", that economics is the prime motivator for all voters.
Some other theories:
https://mediahub.unl.edu/media/8546
https://www.theguardian.com/society/2012/jun/05/why-working-...
I'm not so sure it's against their self interest. Crushing taxes on the wealthy makes a country poor, and that hurts everyone via slow, stagnant economies.
Care to cite that second half? I know raising taxes to an extreme may cause some issues but I thought we currently have some of the lowest taxes on the richest people?
The US has maybe twice the average annual growth rate than Europe, if you compare the S&P500 with EU stock indices.
Sure, but can that be attributed to the lax taxing on the rich? Or are there a slew of other things that could be causing this?
Let me put it another way. If people weren't allowed to accumulate large amounts of wealth, would there still be SpaceX? Why is SpaceX in the US rather than Europe?
Europe is a very fragmented collection of independent countries with massive bureaucracy, lack of intercompatability, and historic division.
Pick a country that has a better long term economy than the US.
Pick a country that has similar geo-historical background... it's hard, US is pretty unique. Closest would be something like Australia but they have too few people.
Looks like neither of us know of any countries whose long term economics outperform the US.
I think what the user above you is trying to say is that there are many factors that go into economic performance. Tax on the wealthy is not the only factor and to say that is the reason for the economic advantage would be a bit of a stretch. Every country is very different in almost too many ways to get a real, true comparison.
Because the more people do this the more the economy tanks. The only reason why capital accumulation works is because most people don't do it.
Or more simply, if the economy grows at 2% any investment that grows faster than that will crash.
Or more simply, if the economy grows at 2% any investment that grows faster than that will crash.
In the summarising the results of the TD Ameritrade survery, there is a "Q" number in the bottom left of each results page, e.g., "Q300".
What does this represent?
What does this represent?
[deleted]
I wouldn't be surprised, if a lot do. Just based on my friend group, a lot of people/couples are doing really really well and could easily hit a million in the next decade+ (and I suspect a few already have) if the stock market doesn't implode.
Did they ask how millennials think to achieve this?
> MORE THAN half of American millennials, the generation of people born between 1981 and 1996, believe that they will one day be millionaires; one in five think they will get there by the age of 40.
I'm 40, I have a good job, and I will one day be a millionaire.
I will never be rich, or the possibility is so impossibly low as to be laughable.
Both of these statements are true, and that is one of the fallacies that the paper is making. It is very likely that a huge number of millenials will be millionaires, given that our current economy is capable of running as-is for another 40-50 years, simply due to pressures from inflation.
I don't think that our economy will run as-is for the next 40-50 years, of course. We will do something about Climate Change, or it will do something about us.
I'm 40, I have a good job, and I will one day be a millionaire.
I will never be rich, or the possibility is so impossibly low as to be laughable.
Both of these statements are true, and that is one of the fallacies that the paper is making. It is very likely that a huge number of millenials will be millionaires, given that our current economy is capable of running as-is for another 40-50 years, simply due to pressures from inflation.
I don't think that our economy will run as-is for the next 40-50 years, of course. We will do something about Climate Change, or it will do something about us.
Definition of rich change base on relations. Growing up I thought 70k was rich. Like beyond so. I would question if they think they would be relatively rich.
Depending on the years you grew up in, 70k was rich.
Inflation and skyrocketing cost of housing and health care made sure that 70k isn't rich anymore, especially if that's a household income for a family.
Inflation and skyrocketing cost of housing and health care made sure that 70k isn't rich anymore, especially if that's a household income for a family.
The sad truth here is that "millionaire" doesn't mean a damned thing these days. In many cities a crappy crack den looking house in a terrible neighborhood costs more than a million dollars.
Not really. Even in bay area there are plenty of places that are better than crack dens for 1mil. But yes, a few places in the world are very expensive.
By a very broad definition of "bay" and "area", as in completely excluding the valley.
Median home price in Daly city is $936k
https://www.zillow.com/daly-city-ca/home-values/
Median home price in San Jose is $1054k https://www.zillow.com/san-jose-ca/home-values/
Median home price in San Bruno is $1089k https://www.zillow.com/san-bruno-ca/home-values/
Yes, Menlo Park/Palo Alto/Mountain View are expensive but they don't fully define Bay Area.
The cities I showed and more are definitely within Bay Area. And their median house is not a "crack shack."
Median home price in San Jose is $1054k https://www.zillow.com/san-jose-ca/home-values/
Median home price in San Bruno is $1089k https://www.zillow.com/san-bruno-ca/home-values/
Yes, Menlo Park/Palo Alto/Mountain View are expensive but they don't fully define Bay Area.
The cities I showed and more are definitely within Bay Area. And their median house is not a "crack shack."
What I mean by "crack shack" is unremarkable home or one in a severe state of disrepair, where the land itself is worth a million dollars.
Those aren't too hard to find when the median home is a million dollars.
Those aren't too hard to find when the median home is a million dollars.
I'm guessing you are a programmer of some sort though, and therefore easily in the top 10% of incomes, so I don't think you can conclude that "it is very likely that a huge number of millenials will be millionaires" from your experience. (Assuming "huge" number means more than 1/5th, and we are talking 2019 dollars)
I don't know why the article is picking out millennials (other than that it's a popular tactic in the news media). You can replace the phrase "American millennials" with "Americans" in the headline and it will hold true.
I'm reminded of something John Oliver said during a segment of Last Week Tonight some years ago about the lottery. It seems that there are only two classes of Americans. The rich and the soon-to-be rich. At least that's what Americans seem to believe.
I'm reminded of something John Oliver said during a segment of Last Week Tonight some years ago about the lottery. It seems that there are only two classes of Americans. The rich and the soon-to-be rich. At least that's what Americans seem to believe.
> I don't know why the article is picking out millennials (other than that it's a popular tactic in the news media).
That's the only reason. The Economist is owned by aristocratic Boomers and written by Gen Xers. They're just salty they were born too late to be the Greatest and too early to go to Mars.
That's the only reason. The Economist is owned by aristocratic Boomers and written by Gen Xers. They're just salty they were born too late to be the Greatest and too early to go to Mars.
agreed about abusing the millenium term. whatever gets clicks...
but is that just another way of saying americans have hopes and dreams?
but is that just another way of saying americans have hopes and dreams?
Narrator: They won't.
This is the reason why american people don't vote for more taxes on the rich, illusion that someday they will be rich too.
working great for the people with money who created this illusion!
working great for the people with money who created this illusion!
Americans do vote for more taxes on the rich: https://stats.oecd.org/index.aspx?DataSetCode=TABLE_I7.
The average top statutory rate (federal + state) is 43.7% for 2018, slightly on the lower end of a cluster ranging from Switzerland (41.7%) to Ireland (48%), including places like Germany, Italy, Spain, and the U.K.--which together have 63% of the EU's population. Taxation of rich people in the U.S. is squarely within the mainstream for developed countries with robust welfare states.
Where the U.S. departs is taxes on everyone else. Compare the tax revenue statistics of the U.S. (https://www.oecd.org/tax/revenue-statistics-united-states.pd...) with those of Spain (https://www.oecd.org/tax/tax-policy/revenue-statistics-spain...). Spain and the U.S. have almost exactly the same top marginal rate (43-44%). Spain takes in a much larger share of GDP (33%) as taxes versus the U.S. (27%). What is the difference?
- Spain gets slightly less taxes from corporations (7% versus 8%)
- Spain gets less taxes from income taxes, which are progressive (21% versus 40%)
- Spain gets way more taxes from social security contributions, which are regressive because in both countries they are subject to a cap (34% versus 24%)
- Spain gets way more from excise taxes, which are regressive (29% versus 17%)
Imagine if the U.S. wholesale adopted Spain's tax system. Total tax revenues would go up by $1.28 trillion per year. But income taxes, paid primarily by the rich, would fall from $2.1 trillion to $1.37 trillion. Excise taxes, paid primarily by the poor and middle class, would go up from $890 billion to $1.89 trillion. Social security taxes, paid primarily by the middle class, would go up from $1.26 trillion to $2.22 trillion.
The average top statutory rate (federal + state) is 43.7% for 2018, slightly on the lower end of a cluster ranging from Switzerland (41.7%) to Ireland (48%), including places like Germany, Italy, Spain, and the U.K.--which together have 63% of the EU's population. Taxation of rich people in the U.S. is squarely within the mainstream for developed countries with robust welfare states.
Where the U.S. departs is taxes on everyone else. Compare the tax revenue statistics of the U.S. (https://www.oecd.org/tax/revenue-statistics-united-states.pd...) with those of Spain (https://www.oecd.org/tax/tax-policy/revenue-statistics-spain...). Spain and the U.S. have almost exactly the same top marginal rate (43-44%). Spain takes in a much larger share of GDP (33%) as taxes versus the U.S. (27%). What is the difference?
- Spain gets slightly less taxes from corporations (7% versus 8%)
- Spain gets less taxes from income taxes, which are progressive (21% versus 40%)
- Spain gets way more taxes from social security contributions, which are regressive because in both countries they are subject to a cap (34% versus 24%)
- Spain gets way more from excise taxes, which are regressive (29% versus 17%)
Imagine if the U.S. wholesale adopted Spain's tax system. Total tax revenues would go up by $1.28 trillion per year. But income taxes, paid primarily by the rich, would fall from $2.1 trillion to $1.37 trillion. Excise taxes, paid primarily by the poor and middle class, would go up from $890 billion to $1.89 trillion. Social security taxes, paid primarily by the middle class, would go up from $1.26 trillion to $2.22 trillion.
>This is the reason why american people don't vote for more taxes on the rich, illusion that someday they will be rich too.
Source?
Source?
There's no source because it's false. First, Americans do vote for more taxes on the rich, by-and-large. And second, those that vote against taxes for the rich are usually basing their votes on incomplete or otherwise factually wrong data.
Nearly all the people in the USA would be much more likely to become millionaires if overall taxes were higher for the rich. Less worrying about healthcare, more ability to take business and personal risks, more baseline tools to build ontop of (like roads, etc). Those that want reduced taxes on the rich would be directly harming their own ability to ever become rich in the first place.
Nearly all the people in the USA would be much more likely to become millionaires if overall taxes were higher for the rich. Less worrying about healthcare, more ability to take business and personal risks, more baseline tools to build ontop of (like roads, etc). Those that want reduced taxes on the rich would be directly harming their own ability to ever become rich in the first place.
Alabama and Mississippi seem to disagree. Even the most modest of tax increases get shouted down.
Some people are so dead-set against new taxes that even a one penny levy per year to do something vital is too much government overreach.
Some people are so dead-set against new taxes that even a one penny levy per year to do something vital is too much government overreach.
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what an absurd thing to say
Why? I've heard this sociological theory plenty of times. I don't know that there's any data for it, but on the other hand, it seems far from the category of garbage one might reasonably dismiss out of hand as "absurd".
Its classist and completely dismissive of the wide variety of opinions people have over how and to what extent government should be funded.
I think there's also a wide division as to what people think their government is for.
e.g. "Should I pay to arrest/convict/incarcerate the person who stole my phone" vs. "Should my cancer be cured without bankrupting me"
#1 seems to get universal traction, as does #2 in pretty much every country who could fund it, apart from the US.
e.g. "Should I pay to arrest/convict/incarcerate the person who stole my phone" vs. "Should my cancer be cured without bankrupting me"
#1 seems to get universal traction, as does #2 in pretty much every country who could fund it, apart from the US.
It is extremely classist. My wife is from rural Iowa. Folks around where she grew up aren't thinking "one day I'll be rich like Donald Trump so I'm going to vote for low taxes."
What an absurd response! The chance that a random person on the street in America is a billionaire is currently 0.00000212036%. It is absurd for anyone to think they'll win that lottery chance (especially since the acquisition of wealth is correlated highly with... already having wealth)
The article is about millionaires not billionaires, in which case the odds are actually around 3.5% (12m out of 327m pop) of US population.
I mean, it's purely rationale to think you'll accumulate a million dollars of assets at some point in your lifetime, but that isn't rich - a large portion of your wealth will be locked into sustaining your living situation. Up here in Vancouver almost everyone (including blue collar peeps) who purchased a home in the 60s or 70s is a multimillionaire, but if they want to continue residing in Vancouver that money is essentially unavailable to them.
I'll clarify a bit, being a millionaire in no way implies that you're rich, inflation is a thing and the vast majority of millennials will be poor.
I'll clarify a bit, being a millionaire in no way implies that you're rich, inflation is a thing and the vast majority of millennials will be poor.
It's absurd. But it's what a lot of people believe. Why else would anyone play the lottery?
A common misconception is "somebody has to win, why not me?"
A common misconception is "somebody has to win, why not me?"
Maybe so, but when commenting here, please try to include information that readers can learn from. Even when the comment you're replying to wasn't substantive.
https://news.ycombinator.com/newsguidelines.html
https://news.ycombinator.com/newsguidelines.html
Steinbeck believed as much:
"I guess the trouble was that we didn't have any self-admitted proletarians. Everyone was a temporarily embarrassed capitalist."
often misquoted as "Socialism never took root in America because the poor see themselves not as an exploited proletariat, but as temporarily embarrassed millionaires."
"I guess the trouble was that we didn't have any self-admitted proletarians. Everyone was a temporarily embarrassed capitalist."
often misquoted as "Socialism never took root in America because the poor see themselves not as an exploited proletariat, but as temporarily embarrassed millionaires."
Is it? Maybe many people realize that the consequences of heavily taxing the rich will fall on themselves as well. For example, those people will have correspondingly less money to invest, and investment produces jobs.
Governments and low-net-worth individuals spend every penny they have, which keeps the economy moving, which creates jobs. The idea that giving all the money to a few individuals to hold will work out better for everyone is very hard to rationalize, although it's understandable they like to repeat that notion.
> which creates jobs
It doesn't create jobs when the money is taxed away from those who invest in the businesses. High taxes correlate with low economic growth.
> giving all the money
People create wealth, it is not given to them.
> to a few individuals to hold
Wealthy people don't hold money. They invest it. Even money sitting in a checking account isn't actually there - the bank loans it out.
It doesn't create jobs when the money is taxed away from those who invest in the businesses. High taxes correlate with low economic growth.
> giving all the money
People create wealth, it is not given to them.
> to a few individuals to hold
Wealthy people don't hold money. They invest it. Even money sitting in a checking account isn't actually there - the bank loans it out.
"Wealthy people don't hold money. They invest it. Even money sitting in a checking account isn't actually there - the bank loans it out."
What does government do with the money? The money is only productive in the billionaires bank account?
"People create wealth, it is not given to them." People take wealth, if Bezos has $150B, he didn't create it out of thin air, he took the money out of lots of mom and pop shops that don't exist anymore. Did he actually created jobs or destroyed jobs?
What does government do with the money? The money is only productive in the billionaires bank account?
"People create wealth, it is not given to them." People take wealth, if Bezos has $150B, he didn't create it out of thin air, he took the money out of lots of mom and pop shops that don't exist anymore. Did he actually created jobs or destroyed jobs?
> What does government do with the money?
Mostly dissipate it. Your argument rests on the notion that government invests money more productively than wealthy people do. This is pretty hard to support, since the wealthy are wealthy because they are very good at productively investing the money.
Bezos did create his wealth, in large part from the efficiency of getting products to customers, which is why customers preferred to shop at Amazon. They get a better deal.
Bezos created jobs - unemployment rates are very low.
Mostly dissipate it. Your argument rests on the notion that government invests money more productively than wealthy people do. This is pretty hard to support, since the wealthy are wealthy because they are very good at productively investing the money.
Bezos did create his wealth, in large part from the efficiency of getting products to customers, which is why customers preferred to shop at Amazon. They get a better deal.
Bezos created jobs - unemployment rates are very low.
"Bezos created jobs - unemployment rates are very low."
I can't argue with this!
I can't argue with this!
And while many don't become fantastically rich, there's still a huge amount of turnover at the top levels of wealth between generations.