Hacker News is one of the few forums where being able to lock in a six-figure salary (100k USD) for 60 years isn't viewed as being set for life. The wonders of entrepreneurship and the cost of living in the Bay Area.

This always amazed me too. There will always be greener grass somewhere. I was surprised to find that my mid-west mindset could be so stark in comparison to some of the valleys. For me, two years ago my dream was to do exactly what I'm doing now: writing code at a reputable tech company and learning more every day. That, and I make enough money to do everything else I want if I don't blow it on an overpriced car or <insert status symbol>.

Building a company and walking away with 6 million is life changing. Too many people seem to think selling your company means you should never need to work again. What it means, is that you're freer to continue to pursue the projects you want. Seems like a huge inflection point to me.

None of us want to work for 60 years, particularly not for someone else.

Also, our Bay Area apartments cost $2M.

The parent comment is pointing out that a $6M payout is equivalent to 60 years of 100k salary, for no further work.

6MM is way the fuck more than almost anyone pulls out of their startup, but that aside, his point was you take the 6MM to buy breathing room for your next startup, which "really" swings for the fences.

What kind of money do people pull out of a startup, assuming VC funding? How big a salary are founders allowed to pay themselves?

Possibly true. However, I'd argue that the quantum difference between student debt and a few million in the bank is higher in terms of utility than the one between $5M and billions. Most of your money problems are solved with a few million: you get to work on what you want, can take a year off whenever, etc. You can still die of pancreatic cancer, suffer an ugly divorce, etc.

That's a different post, though.

This discussion seems to be mostly theoretical, so as someone who actually has $7 million, I'll provide my experience. In summary, not life-changing - my life is pretty much like the average engineer. I'm not spending like a rock star - your car, computer, stereo, clothes, etc are probably better than mine. (Although my house is a bit larger than average for Silicon Valley: 5br/3ba in an unfashionable city.) It's not enough money to feel even slightly important or rich in Silicon Valley. I don't feel like the "money problem" is solved; I plan to keep working for the foreseeable future.

I suppose I could move to somewhere like Kansas and retire, and live an upper-middle class life, but I don't see the point in that. (The "official" recommended spending rate of 4% would yield a high but not enormous income. Expecting 6-8% income is crazy talk.) The obvious HN answer is to start a company, but a) I'd be bad at it, b) I wouldn't enjoy it, c) I'd probably end up losing a pile of money, d) large opportunity cost, and e) health care.

Trying to summarize: the people who say a few million doesn't go far in Silicon Valley are right. It eliminates various problems (and I do sympathize with those with financial difficulties), but otherwise hasn't changed much for me. (Or maybe I'm just using it wrong.)

Are you serious? $6m sounds like more than enough to retire on at any point for most people.

assuming losing 30% off the top for taxes, taking 3% of the principle every year for "salary" is $126k. That seems like more than enough for me, too.

I would think the tax rate would be lower, considering that a sale of shares is treated as capital gains. 15%?

true. but that's only for long term. i have no idea what short term tax is, but i know it's also less than 30%.

i was trying to overestimate taxes (so that the reported annual income, if anything, would be less than actual annual income) and use a nice round number so i didn't have to use a calculator.

Long-term is holding the asset for a year or more. Short-term is treated as ordinary income.

true, but what's the interest rate for short term cap gains?

i know it's (15,30), but i can't rememeber if it's just 18% or something more like 25%. and since i am efficient (read: lazy :), i just overestimated to 30% instead of wikipedia-ing.

If you want to live like a 20-something for the rest of your life, sure. Your cost structure changes as you get older and have things like houses, spouses, cars, and children.

Do you have a house or kids? I do. The near-certainty that I could afford college, house payments, and a humane retirement would be an intense motivator for me. I'm not conservative by any means --- I work for a company I cofounded --- but I think it's easy to forget that adults like us live with a pretty fucking high cortisol load.

$6MM invested with a 6% return provides a $360k pa lifestyle just living off the interest. That seems like quite enough for houses, spouses (well—maybe spouse; alimony could eat into that quite a bit), cars, and children.

Zero risk return is way below 6% right now. I'm not sure where you're going to find anything like that.

Berkshire Hathaway is willing to guarantee you a $205,000 annual income from that sum in an annuity, which is not a bad deal at all, but it's not 'never worry about money again', it's just a really nice salary, and would be substantially depleted in the case of any inflation at all.

No need to go zero risk when the investment starts in your 20s. But of course, yes, inflation. But of course, you can draw from principal as well—that's how retirement funds usually work.

I'll put it another way: Maybe it's not 'never worry about money again'—people are prone to worrying, after all—but $6MM is more than the lifetime earnings of the vast majority of Americans.

If you can't make it on more than what nearly everyone else will ever see in their entire lives, that's your problem.

If a guaranteed six-figure passive income is not "never worry about money again", I don't know what is.

You'd have to worry about inflation. It can quickly turn that six-figure income into a low five-figure income in today's dollars.

Suppose someone said that to you in 1975, and you'd put your money into something that didn't adjust for inflation.

You'd be 37 years older and making less than 1/4 of the income, adjusted for inflation.

A mixed portfolio can provide both a solid annual income and a hedge against inflation. $6M well-invested in your 20s means you don't have to worry about money again.

Right now 10-year T-Bills are pulling about 1.65, and inflation is having a nice bounce between 1.7 and 3. Let's even it out at 2 - either way, yes, you're losing money on ultra-low-risk investments. All you can hope for is to reduce the wages of inflation on your balance sheet.

BH annuity is not a bad deal, but losing 2% of your income a year will sound tolerable until about year 5... =)

If you retire mid-twenties on $5M, there's no way you'd make it through 70 on that, if you did nothing else active (read: risky) to increase your income.

Let's assume your investments keep up with inflation but no more, which is very easy to do. Then essentially you are just living off of your principle. 5MM goes a long ways. 75k a year (in today's dollars) will last you 67 years. That's more than most people make. I'd take that.

You want to spend 50 years on vacation?

I said nothing of the sort.

Follow the thread UP, and you'll see it's the core of the conversation - as to whether one can live off of 6MM for the rest of your life. I call "ceasing working and living on the money you made previously" retirement, you can call it what you like.

Earlier in the year, you could get a 12 month CD in Australia for almost 6%.

The inflation rate in Australia was pushing 4% last year. That's a nominal return of 2.X%.

It's a real return of ~2%, it's a nominal return of 6%. "Nominal" in this case means "in name only" - it's the face-value of the return, not the actual value.

Nope, you can do it with $500k in a Colorado suburb for example. This guy is a living example of it, with multiple kids, multiple cars, a house, furniture, etc:

http://www.mrmoneymustache.com/

Most people will never make $6M in their lifetime. The average college graduate will make less than $3M when it is all said and done.

If you can earn more, great. But the chances are exceedingly low to begin with.

Bullshit. I live on roughly $18k a year net. buy a house, maybe doubles or PERHAPS triples my housing allowance. Have a wife and kids and things, in total, probably triple.

I don't think people understand how to not waste money any more.

Does this mean you're not going to be buying the new disposable laptops from Apple? How will you live with yourself?

I'd rather spend my time writing software then repairing my old socks. As a bonus, writing software makes me about 100x what repairing my old socks nets me per hour.

Where do you live? This is HUGELY dependent on geography. $18k a month in NYC, Seattle, SF, etc., is pretty painful. Add two kids, private school (unless you live in a great district), college educations, saving for retirement, summer camp, braces, health care for 4, housing for 4 in a good neighborhood, helping out your retired parents who might not have saved enough, etc., it stacks up pretty fast.

$18k/yr in NYC or SFBA with a mortgage and a family is untenable.

$18k/yr in most major US cities probably implies:

* Subsistence diet

* Dependence on small selection of rental properties

* Extremely poor access to health care

* Dependence on informal "gratis" child care

* Near perfect job attendance

I call these out not to make the boring "gnash our teeth about the lives of the poor" case, but rather the suggest that your ability to care for a family on 18k/yr in a US metro is counterfeit: you can do it until you:

* Are ever hospitalized

* Lose your free child care

* &c ...

... at which point bang you're bankrupt. I think a lot of people who think they are getting by with low incomes are actually playing a kind of sick inverted Martingale betting strategy against life.

Well my point is not that everyone should be able to live off $18k a year. My point is that You don't need $500k a year to live decently. I have a new car, a good apartment and amenities such as cable TV and xbox live. Certainly geography plays a large role in individual costs. But again, I'm not trying to say everyone should live on $18k a year. I'm saying I (a single fellow btw) do, and it's a satisfactory lifestyle complete with all the necessities and a few luxuries.

A modest house in the valley costs something like $500k. With a typical mortgage you can expect to pay about 1% of the total price ($5k). That's more than triple your total expenditures, let alone housing costs.

I assure you, it's quite possible to live an enjoyable life in a place that's much cheaper the valley.

If you have high expectations about the amount and 'quality' of your personal possessions, then sure. I'm sure most every one else can make due on that amount.

I think with wise spending and decent investments I could easily make that amount last my entire life and have quite a bit to give away at the end.