The Millionaire Next Door and civil servants

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
User avatar
davidkw
Posts: 778
Joined: Sun Feb 25, 2007 6:39 pm
Location: Sterling, VA

The Millionaire Next Door and civil servants

Post by davidkw » Sat May 19, 2018 8:22 am

After The Millionaire Next Door book was written in 1996, Thomas Stanley wrote The Millionaire Mind in 2000.

In it he has
It is less about investing in the stock market and much more about investing in ourselves, our careers, our professional practices, our private businesses and so forth.
P. 12
Many millionaires have told me that their financial success is a direct function of owning a specialized business in a geo-area that contains little or no competition.
P. 192
Very few millionaires are civil servants, and they have a completely different orientation. They want to be compensated on the basis of performance.
P. 383

During the 1990s, most of the federal retirees had the CSRS retirement system that did not have a matching TSP (the government version of the 401K) but received a pension of 2% for every year of working for the federal government. With that pension, be better off than many of the millionaires.

Now with the FERS federal retirement (employees who started working after 1983), with the 5% matching dollar for dollar and the ultra low index funds, I catch the Federal News Radio, and often it is brought up how many federal employees are reaching $1,000,000 in their TSP. OK this is before taxes. If federal employees are doing well saving with the TSP, a good chance they have savings outside of their retirement too. The FERS retirees also get a pension of 1% for every year of service. (That is the average of the high three years) and get social security too, CSRS retirees do not get that.

It seems Thomas Stanley does not think of federal employees as doing well financially.
David | | From Jack Brennan's "Straight Talk on Investing", page 23 "Living below your means is the ultimate financial strategy"

Silk McCue
Posts: 1083
Joined: Thu Feb 25, 2016 7:11 pm

Re: The Millionaire Next Door and civil servants

Post by Silk McCue » Sat May 19, 2018 8:42 am

"It seems Thomas Stanley does not think of federal employees as doing well financially."

The book wasn't about how to get a job with a pension and live happily ever after.

I expect the definition of a Millionaire in these books was not based upon the future value of a pension payout when it was written but rather assets owned. $1M in 1996 (when the book was written) adjusted by CPI would be $1.6M today BTW. A million bucks just isn't what it used to be.


Cheers

User avatar
willthrill81
Posts: 5021
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: The Millionaire Next Door and civil servants

Post by willthrill81 » Sat May 19, 2018 8:57 am

davidkw wrote:
Sat May 19, 2018 8:22 am
It seems Thomas Stanley does not think of federal employees as doing well financially.
Stanley passed away tragically in a car accident in 2015.

The way that he went about sampling millionaires for his studies was very flawed in terms of getting a representative sample of millionaires. He used geodemography, a budding technique at the time, to find areas where a high concentration of millionaires were likely. While this was certainly an efficient means of finding millionaires, it did not result in the inclusion of many 'flavors' of millionaires (e.g. the civil servant who saved diligently for decades). In particularly, those who slowly saved and invested their way to millionaire status on below average incomes were less likely to be included in Stanley's sample, which obviously skewed the results.

For instance, in his 2000 book, he found that 19% of all millionaires were either physicians or attorneys. Most do not believe that these two occupations represent nearly 1/5 of all millionaires in the U.S., likely a significantly smaller proportion.
Silk McCue wrote:
Sat May 19, 2018 8:42 am
I expect the definition of a Millionaire in these books was not based upon the future value of a pension payout when it was written but rather assets owned. $1M in 1996 (when the book was written) adjusted by CPI would be $1.6M today BTW. A million bucks just isn't what it used to be.
No, he didn't try to calculate the net present value of a pension payout, Social Security, or other income streams that are not asset based.

While I understand why he did this, I must say as time goes on that I believe this perspective to be robustly false. If I have multiple guaranteed income streams, especially if they're adjusted for inflation, that are at least sufficient to cover my desired spending, then why should I care about having a high net worth? I wouldn't.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

foxfirev5
Posts: 245
Joined: Sun Jun 29, 2008 7:19 am

Re: The Millionaire Next Door and civil servants

Post by foxfirev5 » Sun May 20, 2018 4:38 pm

I would ask myself, why do you care?

User avatar
zaboomafoozarg
Posts: 1943
Joined: Sun Jun 12, 2011 12:34 pm

Re: The Millionaire Next Door and civil servants

Post by zaboomafoozarg » Sun May 20, 2018 6:39 pm

Pensions don't usually get assigned a current value like 401ks. But a pension that pays an inflation-adjusted $35k per year in a 20 year retirement will have paid out over $1M.

User avatar
Nestegg_User
Posts: 978
Joined: Wed Aug 05, 2009 1:26 pm

Re: The Millionaire Next Door and civil servants

Post by Nestegg_User » Sun May 20, 2018 7:11 pm

....but today’s FERS employees (those recently hired) are paying almost 5%/yr of salary to get a pension of 1%*(high three)*yrs of service to get it {so they are paying a significant amount towards it} (that has an effect on ability to save additional outside of 401k/Thrift, ie fewer are fully matching much less saving significant amounts in taxable unless they are higher grades or have spouse working a good job as well)

[that and most “professional” series are significantly (20-25%) underpaid relative to private sector; so some of the matching could be considered to be trying to offset that.
(lower series are more equivalent (and a few are higher))]

note that in the past, some professional series in the private sector ALSO got pensions (wholly paid by employer), such as engineers, scientists, etc ; this is quite rare today

User avatar
Sandtrap
Posts: 5098
Joined: Sat Nov 26, 2016 6:32 pm
Location: Hawaii😀 Northern AZ.😳 Retired.

Re: The Millionaire Next Door and civil servants

Post by Sandtrap » Sun May 20, 2018 9:08 pm

Perhaps the "Millionaire Next Door" series continues to be popular because of the allure of the spirit of entrepreneurship.
Yes, certainly, many with pensions are "millionaires", but then again, so many pensioners (not bogleheads) truly understand the actual value of their pensions. For many, there's no need to go beyond the fact that the monthly check comes in for life and it's a good one. Or, perhaps, there are Civil Servants who have made a career of it regardless of specific skillset/profession. Who knows.

Regardless, the "Millionaire Next Door" reads as a collection of modern Horatio Alger stories. Financial pioneers are more entertaining than reading about the arduous well predicted path of a pensioner. They inspire. . and sell more books.

Whatever the authorial motivation, the book is a good one and continues to inspire, which is what it does best.

aloha
j

User avatar
willthrill81
Posts: 5021
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: The Millionaire Next Door and civil servants

Post by willthrill81 » Sun May 20, 2018 9:44 pm

Sandtrap wrote:
Sun May 20, 2018 9:08 pm
Perhaps the "Millionaire Next Door" series continues to be popular because of the allure of the spirit of entrepreneurship.
I have always found it very interesting that many of the millionaires Stanley studied believe that there was a definite element of 'being in the right place at the right time' in their success. While many of them were entrepreneurs, many of them were not encouraging their children to follow their path and were instead directing them toward 'professional' careers (e.g. accounting, law, medicine, etc.). The upside potential of these careers is probably less than that of the highly successful entrepreneur, but there's likely a lot less downside risk as well.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

kjvmartin
Posts: 1186
Joined: Wed Jan 21, 2015 8:57 am

Re: The Millionaire Next Door and civil servants

Post by kjvmartin » Sun May 20, 2018 10:04 pm

willthrill81 wrote:
Sun May 20, 2018 9:44 pm
Sandtrap wrote:
Sun May 20, 2018 9:08 pm
Perhaps the "Millionaire Next Door" series continues to be popular because of the allure of the spirit of entrepreneurship.
I have always found it very interesting that many of the millionaires Stanley studied believe that there was a definite element of 'being in the right place at the right time' in their success. While many of them were entrepreneurs, many of them were not encouraging their children to follow their path and were instead directing them toward 'professional' careers (e.g. accounting, law, medicine, etc.). The upside potential of these careers is probably less than that of the highly successful entrepreneur, but there's likely a lot less downside risk as well.
An older friend tried very hard to get me into his lucrative, somewhat risky, cyclical, intense, non degreed line of work. He has been a top sales performer there for years at the 200-250k. They hired me with no sales experience. I was in need of a job at the time, but something the exact opposite of those adjectives (civil service non pension) became available and I chose that for a guarantee of ~35% of his current yearly commission. I took the safer bet in my chosen line of work.

The biggest reason - none of his several children of working age work for that company, and he could have easily gotten them in the door at any time. They are either in or are pursuing other careers.

User avatar
Sandtrap
Posts: 5098
Joined: Sat Nov 26, 2016 6:32 pm
Location: Hawaii😀 Northern AZ.😳 Retired.

Re: The Millionaire Next Door and civil servants

Post by Sandtrap » Sun May 20, 2018 11:15 pm

willthrill81 wrote:
Sun May 20, 2018 9:44 pm
Sandtrap wrote:
Sun May 20, 2018 9:08 pm
Perhaps the "Millionaire Next Door" series continues to be popular because of the allure of the spirit of entrepreneurship.
I have always found it very interesting that many of the millionaires Stanley studied believe that there was a definite element of 'being in the right place at the right time' in their success. While many of them were entrepreneurs, many of them were not encouraging their children to follow their path and were instead directing them toward 'professional' careers (e.g. accounting, law, medicine, etc.). The upside potential of these careers is probably less than that of the highly successful entrepreneur, but there's likely a lot less downside risk as well.
So true. I come from a family of folks that would fit into Stanley's book quite well. But, all of them, including myself, encouraged their children toward higher professional education instead of working 24/7 toward an uncertain result. Thus, a plethora of MD's, Attorney's, etc.
j

User avatar
VictoriaF
Posts: 18390
Joined: Tue Feb 27, 2007 7:27 am
Location: Black Swan Lake

Re: The Millionaire Next Door and civil servants

Post by VictoriaF » Mon May 21, 2018 1:50 pm

Sandtrap wrote:
Sun May 20, 2018 11:15 pm
willthrill81 wrote:
Sun May 20, 2018 9:44 pm
Sandtrap wrote:
Sun May 20, 2018 9:08 pm
Perhaps the "Millionaire Next Door" series continues to be popular because of the allure of the spirit of entrepreneurship.
I have always found it very interesting that many of the millionaires Stanley studied believe that there was a definite element of 'being in the right place at the right time' in their success. While many of them were entrepreneurs, many of them were not encouraging their children to follow their path and were instead directing them toward 'professional' careers (e.g. accounting, law, medicine, etc.). The upside potential of these careers is probably less than that of the highly successful entrepreneur, but there's likely a lot less downside risk as well.
So true. I come from a family of folks that would fit into Stanley's book quite well. But, all of them, including myself, encouraged their children toward higher professional education instead of working 24/7 toward an uncertain result. Thus, a plethora of MD's, Attorney's, etc.
j
I strongly disliked "Millionaire Next Door" when I read it many years ago. I should have stopped reading it, but after seeing numerous positive reviews I was trying to find something useful in it. The main reason for my annoyance was the glorification of rote jobs and simple businesses and derision of intellectual work of academics and professionals. That was before I became a Federal employee. This thread gives me another reason for the aversion to the book.

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

Jags4186
Posts: 2256
Joined: Wed Jun 18, 2014 7:12 pm

Re: The Millionaire Next Door and civil servants

Post by Jags4186 » Mon May 21, 2018 2:05 pm

davidkw wrote:
Sat May 19, 2018 8:22 am
After The Millionaire Next Door book was written in 1996, Thomas Stanley wrote The Millionaire Mind in 2000.

In it he has
It is less about investing in the stock market and much more about investing in ourselves, our careers, our professional practices, our private businesses and so forth.
P. 12
Many millionaires have told me that their financial success is a direct function of owning a specialized business in a geo-area that contains little or no competition.
P. 192
Very few millionaires are civil servants, and they have a completely different orientation. They want to be compensated on the basis of performance.
P. 383

During the 1990s, most of the federal retirees had the CSRS retirement system that did not have a matching TSP (the government version of the 401K) but received a pension of 2% for every year of working for the federal government. With that pension, be better off than many of the millionaires.

Now with the FERS federal retirement (employees who started working after 1983), with the 5% matching dollar for dollar and the ultra low index funds, I catch the Federal News Radio, and often it is brought up how many federal employees are reaching $1,000,000 in their TSP. OK this is before taxes. If federal employees are doing well saving with the TSP, a good chance they have savings outside of their retirement too. The FERS retirees also get a pension of 1% for every year of service. (That is the average of the high three years) and get social security too, CSRS retirees do not get that.

It seems Thomas Stanley does not think of federal employees as doing well financially.
It’s been a while since I’ve read MND cover to cover, but my recollection was the book focused on the types of employment and the spending habits of millionaires. Had Stanley discovered that corner candy shop owners were millionaires, he would have focused on the benefits of being a candy shop owner. If Stanley had discovered that people who received Economic Outpatient Care were doing significantly better overall than those who did not receive it, he would have wrote that assisting adult children financially overall builds wealth.

I can’t speak for his later books, but it seems to me that he drew conclusions based on his research. His research showed that the Prodigious Accumulators of Wealth were not civil service workers. In fact, I would suspect most people with significant pensions have saved significantly less than those with equal incomes and no pension. It doesn’t mean they are worse off financially, but they did not *need* to accumulate as many assets in order to retire. Even myself, if I had a civil service job that I knew if I stuck it out for 30 years would pay me 50%+ of my final income, I would probably save less.

deltaneutral83
Posts: 804
Joined: Tue Mar 07, 2017 4:25 pm

Re: The Millionaire Next Door and civil servants

Post by deltaneutral83 » Mon May 21, 2018 2:30 pm

VictoriaF wrote:
Mon May 21, 2018 1:50 pm
Sandtrap wrote:
Sun May 20, 2018 11:15 pm
willthrill81 wrote:
Sun May 20, 2018 9:44 pm
Sandtrap wrote:
Sun May 20, 2018 9:08 pm
Perhaps the "Millionaire Next Door" series continues to be popular because of the allure of the spirit of entrepreneurship.
I have always found it very interesting that many of the millionaires Stanley studied believe that there was a definite element of 'being in the right place at the right time' in their success. While many of them were entrepreneurs, many of them were not encouraging their children to follow their path and were instead directing them toward 'professional' careers (e.g. accounting, law, medicine, etc.). The upside potential of these careers is probably less than that of the highly successful entrepreneur, but there's likely a lot less downside risk as well.
So true. I come from a family of folks that would fit into Stanley's book quite well. But, all of them, including myself, encouraged their children toward higher professional education instead of working 24/7 toward an uncertain result. Thus, a plethora of MD's, Attorney's, etc.
j
I strongly disliked "Millionaire Next Door" when I read it many years ago. I should have stopped reading it, but after seeing numerous positive reviews I was trying to find something useful in it. The main reason for my annoyance was the glorification of rote jobs and simple businesses and derision of intellectual work of academics and professionals. That was before I became a Federal employee. This thread gives me another reason for the aversion to the book.

Victoria
I guess I see it as risk/reward. If someone creates wealth and plans to leave it to the next and successive generations, it makes sense from a risk/reward scenario for the younger generations not to use the golden goose to chase entrepreneurial endeavors. Even if they don't use the golden goose to be an entrepreneur, they simply do not have the fire to push forward in tough times knowing they have the lifeboat very close by. I've noticed a lot of successful small business stories start with "I never would have been successful unless my back was up against the wall with no choice and I was also lucky in the right place/right time."

GCD
Posts: 526
Joined: Tue Sep 26, 2017 7:11 pm

Re: The Millionaire Next Door and civil servants

Post by GCD » Mon May 21, 2018 3:17 pm

IIRC one of the problems MND notes for small business owners is extracting themselves from the business. It is so hard for them that they retire later or not at all. That extra work life no doubt gives them higher net worth. I had my own tree removal company, technically a sole proprietorship, for several years before and during college and grad school. That business was worth what I could get for the chainsaws and trucks and that was it. Without me, the business itself wasn't much. In full transparency, it wasn't much of a company. But I suspect for the small business owner who has poured his heart into the business, much of the value of that business lies in them, not the physical assets of the company. That makes it hard to retire and may be part of the reason why they urge their children to go into professional lines of work.

As a retired civil servant, I agree that knowing you have a pension coming reduces the fire you have to save. But it doesn't eliminate it. The people who aren't millionaires on a civil service salary weren't going to be millionaires in any other line of work. It is actually pretty easy to become a millionaire as a civil servant because you know what your income is going to be for the next couple decades and that makes planning very easy. Takes a lot of the guesswork out. And just plodding along like a good MND you eventually end up with millions.

User avatar
DanMahowny
Posts: 422
Joined: Sun Aug 06, 2017 8:25 pm

Re: The Millionaire Next Door and civil servants

Post by DanMahowny » Mon May 21, 2018 3:29 pm

I loved The Millionaire Next Door. Highly unlikely that I'd be a millionaire if I didn't read that book.

A few years after reading (many many times), I wrote Dr Stanley seeking guidance on a home purchase decision. A few weeks later he called me and we spoke for nearly an hour. And continued to speak occasionally since.

I was crushed to hear of his death a few days after the accident.

I fully understand the critics of his book, but it sure inspired me.
Funding secured

tigermilk
Posts: 516
Joined: Thu Aug 15, 2013 9:32 am

Re: The Millionaire Next Door and civil servants

Post by tigermilk » Mon May 21, 2018 3:56 pm

Can only speak for myself - CS (FERS, turn 49 this year) and knocking on the 2-comma door in my TSP. Already past that in total. I'd have an even larger balance if not for the constraining rules early in my career that limited contributions to a % of income rather than a $ amount. It should not be that hard to hit the milestone, yet the fact that less than 0.3% have says something. Many of my coworkers are rather naive when it comes to investing, no different than the rest of the population.

User avatar
Sandtrap
Posts: 5098
Joined: Sat Nov 26, 2016 6:32 pm
Location: Hawaii😀 Northern AZ.😳 Retired.

Re: The Millionaire Next Door and civil servants

Post by Sandtrap » Mon May 21, 2018 8:38 pm

VictoriaF wrote:
Mon May 21, 2018 1:50 pm
Sandtrap wrote:
Sun May 20, 2018 11:15 pm
willthrill81 wrote:
Sun May 20, 2018 9:44 pm
Sandtrap wrote:
Sun May 20, 2018 9:08 pm
Perhaps the "Millionaire Next Door" series continues to be popular because of the allure of the spirit of entrepreneurship.
I have always found it very interesting that many of the millionaires Stanley studied believe that there was a definite element of 'being in the right place at the right time' in their success. While many of them were entrepreneurs, many of them were not encouraging their children to follow their path and were instead directing them toward 'professional' careers (e.g. accounting, law, medicine, etc.). The upside potential of these careers is probably less than that of the highly successful entrepreneur, but there's likely a lot less downside risk as well.
So true. I come from a family of folks that would fit into Stanley's book quite well. But, all of them, including myself, encouraged their children toward higher professional education instead of working 24/7 toward an uncertain result. Thus, a plethora of MD's, Attorney's, etc.
j
I strongly disliked "Millionaire Next Door" when I read it many years ago. I should have stopped reading it, but after seeing numerous positive reviews I was trying to find something useful in it. The main reason for my annoyance was the glorification of rote jobs and simple businesses and derision of intellectual work of academics and professionals. That was before I became a Federal employee. This thread gives me another reason for the aversion to the book.

Victoria
Well said and all astute points.
I agree, and think the book is narrowly focused and within that, there is an appeal to some.
I majored in economics/finance and yet still found the book entertaining and inspiring . . . . within its context.
aloha
j :D

User avatar
AstroJohn
Posts: 79
Joined: Mon May 24, 2010 4:22 pm
Location: Virginia

Re: The Millionaire Next Door and civil servants

Post by AstroJohn » Mon May 21, 2018 8:50 pm

Retired Civil Servant here and well into the two comma club as are many of the scientists and engineers I worked with during my career. I rather enjoyed the book when it first came out, probably because it reenforced my ongoing urge to live below my means and invest the rest wisely. That being said, I could not connect with most of the people highlighted in the book and can't say that any of my friends and neighbors are like them. But many of them are also in the two comma club. :happy

User avatar
TimeRunner
Posts: 1336
Joined: Sat Dec 29, 2012 9:23 pm

Re: The Millionaire Next Door and civil servants

Post by TimeRunner » Mon May 21, 2018 10:02 pm

Another retired (FERS) two-comma club Fed here. As Victoria hinted, "Spenders gonna spend, savers gonna save" regardless of Fed or other gov or private sector employment.
“The Party told you to reject the evidence of your eyes and ears. It was their final, most essential command.” - George Orwell, 1984

golfCaddy
Posts: 646
Joined: Wed Jan 10, 2018 10:02 pm

Re: The Millionaire Next Door and civil servants

Post by golfCaddy » Mon May 21, 2018 10:32 pm

If you adjust $1M in 1996 for wage growth in the top quintile, an equivalent amount today would be close to $2M.

User avatar
willthrill81
Posts: 5021
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: The Millionaire Next Door and civil servants

Post by willthrill81 » Mon May 21, 2018 11:34 pm

AstroJohn wrote:
Mon May 21, 2018 8:50 pm
Retired Civil Servant here and well into the two comma club as are many of the scientists and engineers I worked with during my career. I rather enjoyed the book when it first came out, probably because it reenforced my ongoing urge to live below my means and invest the rest wisely. That being said, I could not connect with most of the people highlighted in the book and can't say that any of my friends and neighbors are like them. But many of them are also in the two comma club. :happy
That reinforces my earlier point: Stanley's sample of millionaires was not a representative sample of all American millionaires. There were significantly more entrepreneurs in his sample than is believed to exist among all millionaires, for instance.

Within that regard, I don't think that he adequately addressed the fact that for every entrepreneur who became a millionaire, there are many others who never got close.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

DavidW
Posts: 75
Joined: Wed Jan 24, 2018 4:14 pm

Re: The Millionaire Next Door and civil servants

Post by DavidW » Tue May 22, 2018 1:04 am

GCD wrote:
Mon May 21, 2018 3:17 pm
IIRC one of the problems MND notes for small business owners is extracting themselves from the business. It is so hard for them that they retire later or not at all. That extra work life no doubt gives them higher net worth. I had my own tree removal company, technically a sole proprietorship, for several years before and during college and grad school. That business was worth what I could get for the chainsaws and trucks and that was it. Without me, the business itself wasn't much. In full transparency, it wasn't much of a company. But I suspect for the small business owner who has poured his heart into the business, much of the value of that business lies in them, not the physical assets of the company. That makes it hard to retire and may be part of the reason why they urge their children to go into professional lines of work.

As a retired civil servant, I agree that knowing you have a pension coming reduces the fire you have to save. But it doesn't eliminate it. The people who aren't millionaires on a civil service salary weren't going to be millionaires in any other line of work. It is actually pretty easy to become a millionaire as a civil servant because you know what your income is going to be for the next couple decades and that makes planning very easy. Takes a lot of the guesswork out. And just plodding along like a good MND you eventually end up with millions.
I became a civil servant half way through my career and quickly learned that many of my colleagues solely rely on their pension and SS. Rarely do they have 401K. Most are very aware of the various investment options and benefits plan. Most don't take advantage of the FSA program for healthcare and dependent care...

I asked one of the FA that came and pitched the 401k program and he told me that most account balances are less than $30K. This might vary depending on the type of classification and salary structure of the department.

Paycheck to paycheck living is very common...

GCD
Posts: 526
Joined: Tue Sep 26, 2017 7:11 pm

Re: The Millionaire Next Door and civil servants

Post by GCD » Tue May 22, 2018 1:26 am

The stats are all over the place regarding how many new businesses fail each year and how many fail by year ten. Lots of studies seem to have been done and without parsing the data too much it seems safe to say there is a very high failure rate. Yet, we have the MND small business owner. The same is going to be true of every field I suspect. It's certainly possible to become a millionaire on a civil servant salary (just refer to the threads about secretaries and janitors bequeathing huge sums), but probably no more or less common than entrepreneurial millionaires when compared against the enormous number of new businesses that fail.

Most of the commentary on this is bound to be anecdotal anyway. I'm not sure how you would come up with a pool of people to study that wasn't self-selected anyway. With all the privacy laws regarding banking and taxes it seems pretty challenging to get a random selection of millionaires.

CurlyDave
Posts: 647
Joined: Thu Jul 28, 2016 11:37 am

Re: The Millionaire Next Door and civil servants

Post by CurlyDave » Tue May 22, 2018 2:31 am

TimeRunner wrote:
Mon May 21, 2018 10:02 pm
Another retired (FERS) two-comma club Fed here. As Victoria hinted, "Spenders gonna spend, savers gonna save" regardless of Fed or other gov or private sector employment.
Absolutely right. OTOH people with entrepreneurial drive self-select into the private sector. The standard deviation of net worth seems much higher in the private sector.

MrPotatoHead
Posts: 429
Joined: Sat Oct 14, 2017 10:41 pm

Re: The Millionaire Next Door and civil servants

Post by MrPotatoHead » Tue May 22, 2018 2:41 am

I am not sure what the central thesis of this thread is, but I'll make the following comments:

01) I think the public sector contains many millionaires, in fact almost all of them in my state are pension millionaires and many, many are pension and healthcare multi-millionaires.

02) I greatly enjoyed the book. I know when it came out and had radio press a lot of people in my neighborhood started looking at their neighbors a bit differently. Turned out there were quite a few in our very modest neighborhood. The book was interesting to me; I never viewed it as statistically accurate, more of a study in behavior of inherited wealth vs first generation wealth. I thought the classification (UAQ PAW etc) were very interesting.

IlliniDave
Posts: 2283
Joined: Fri May 17, 2013 7:09 am

Re: The Millionaire Next Door and civil servants

Post by IlliniDave » Tue May 22, 2018 5:36 am

Stanley did point out that teachers were among the more prodigious accumulators of wealth in his study, many of whom are essentially public employees. One can google the net worth statistics of congress members to see that few of them are UAWs. The richest counties in the US are disproportionately clustered around DC.

I don't recall MND really being particularly down on civil service, I think it might have been a "for instance" that among his pool of subjects the individuals who both took riskier career paths (and succeeded) while maintaining modest lifestyles tended to end up better off financially than people who took less risky paths and had relatively less conscious moderation of lifestyle. In boglehead terms one might say that among two people with reasonably comparable income, the person who saves 30% or more of their income and invests mainly in stocks will likely do better in the long haul than the person who saves 10% of their income and only invests in short-term bonds or CDs.

A bigger takeaway from the book for me was the pitfall of getting into a high salary occupation and falling into the trap of wearing it on your sleeve, so to speak--that margin between income and spending on lifestyle was necessary to accumulate wealth. High income (often used interchangeably with wealth in everyday discourse) alone wasn't enough. In other words, accumulation of wealth has a substantial behavioral aspect to it that didn't always correlate with the ability to earn a lot of money.

I only read MND, not his subsequent book(s).
Don't do something. Just stand there!

SagaciousTraveler
Posts: 101
Joined: Thu May 03, 2018 6:05 am

Re: The Millionaire Next Door and civil servants

Post by SagaciousTraveler » Tue May 22, 2018 6:32 am

MrPotatoHead wrote:
Tue May 22, 2018 2:41 am
01) I think the public sector contains many millionaires, in fact almost all of them in my state are pension millionaires and many, many are pension and healthcare multi-millionaires.
This is an important aspect here. The fact that FERS retirees can continue healthcare (certain restrictions) into retirement, paying the same premium (plus yearly inflation) is often overlooked.

User avatar
munemaker
Posts: 3264
Joined: Sat Jan 18, 2014 6:14 pm

Re: The Millionaire Next Door and civil servants

Post by munemaker » Tue May 22, 2018 7:14 am

SagaciousTraveler wrote:
Tue May 22, 2018 6:32 am
MrPotatoHead wrote:
Tue May 22, 2018 2:41 am
01) I think the public sector contains many millionaires, in fact almost all of them in my state are pension millionaires and many, many are pension and healthcare multi-millionaires.
This is an important aspect here. The fact that FERS retirees can continue healthcare (certain restrictions) into retirement, paying the same premium (plus yearly inflation) is often overlooked.
In PA and NJ, most of the teachers currently retiring have pensions worth over $1M. Probably lots of other states too.

nova1968
Posts: 217
Joined: Wed May 18, 2016 12:00 pm

Re: The Millionaire Next Door and civil servants

Post by nova1968 » Tue May 22, 2018 7:31 am

There actually are several thousand millionaires that are civil Servants.

https://federalnewsradio.com/mike-cause ... tion-boom/


So where do you stand in the race to a million dollar-plus nest egg? At the end of last year, 2.8 million TSP participants had $50,000 or less in their accounts.
•1,458,820 had accounts valued at between $50,000 and $249,000
•453,353 had accounts ranging between $250,000 and $499,000
•148,271 had between $500,000 and $749,000
•54,735 had accounts worth between $750,000 and $999,000
•23,962 had $1 million or more

User avatar
bertilak
Posts: 5998
Joined: Tue Aug 02, 2011 5:23 pm
Location: East of the Pecos, West of the Mississippi

Re: The Millionaire Next Door and civil servants

Post by bertilak » Tue May 22, 2018 7:39 am

Silk McCue wrote:
Sat May 19, 2018 8:42 am
A million bucks just isn't what it used to be.
But, a million here, a million there, and pretty soon you're talking real money.
Last edited by bertilak on Tue May 22, 2018 7:42 am, edited 2 times in total.
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker, the Cowboy Poet

Grt2bOutdoors
Posts: 18842
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: The Millionaire Next Door and civil servants

Post by Grt2bOutdoors » Tue May 22, 2018 7:41 am

nova1968 wrote:
Tue May 22, 2018 7:31 am
There actually are several thousand millionaires that are civil Servants.

https://federalnewsradio.com/mike-cause ... tion-boom/


So where do you stand in the race to a million dollar-plus nest egg? At the end of last year, 2.8 million TSP participants had $50,000 or less in their accounts.
•1,458,820 had accounts valued at between $50,000 and $249,000
•453,353 had accounts ranging between $250,000 and $499,000
•148,271 had between $500,000 and $749,000
•54,735 had accounts worth between $750,000 and $999,000
•23,962 had $1 million or more
So, roughly 8% of the above population had between $500K and more in their accounts. Not much different from the top percentages of the general population.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Grt2bOutdoors
Posts: 18842
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: The Millionaire Next Door and civil servants

Post by Grt2bOutdoors » Tue May 22, 2018 7:45 am

munemaker wrote:
Tue May 22, 2018 7:14 am
SagaciousTraveler wrote:
Tue May 22, 2018 6:32 am
MrPotatoHead wrote:
Tue May 22, 2018 2:41 am
01) I think the public sector contains many millionaires, in fact almost all of them in my state are pension millionaires and many, many are pension and healthcare multi-millionaires.
This is an important aspect here. The fact that FERS retirees can continue healthcare (certain restrictions) into retirement, paying the same premium (plus yearly inflation) is often overlooked.
In PA and NJ, most of the teachers currently retiring have pensions worth over $1M. Probably lots of other states too.
Are you so sure about NJ? I'd venture to say that they have pensions of X and a receivable of Y, when you are deceased you aren't entitled to a lump-sum payment or a future stream of payments to one's heirs other than a legally recognized spouse. Actually, probably most think anyone depending on a pension from NJ as a big receivable and a pension when the bird is in hand.
Last edited by Grt2bOutdoors on Tue May 22, 2018 8:31 am, edited 1 time in total.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Grt2bOutdoors
Posts: 18842
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: The Millionaire Next Door and civil servants

Post by Grt2bOutdoors » Tue May 22, 2018 7:47 am

GCD wrote:
Tue May 22, 2018 1:26 am
The stats are all over the place regarding how many new businesses fail each year and how many fail by year ten. Lots of studies seem to have been done and without parsing the data too much it seems safe to say there is a very high failure rate. Yet, we have the MND small business owner. The same is going to be true of every field I suspect. It's certainly possible to become a millionaire on a civil servant salary (just refer to the threads about secretaries and janitors bequeathing huge sums), but probably no more or less common than entrepreneurial millionaires when compared against the enormous number of new businesses that fail.

Most of the commentary on this is bound to be anecdotal anyway. I'm not sure how you would come up with a pool of people to study that wasn't self-selected anyway. With all the privacy laws regarding banking and taxes it seems pretty challenging to get a random selection of millionaires.
The secretaries and janitors did not work for government, they worked for private sector. Private sector where they may have been privy to certain data or not.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

deltaneutral83
Posts: 804
Joined: Tue Mar 07, 2017 4:25 pm

Re: The Millionaire Next Door and civil servants

Post by deltaneutral83 » Tue May 22, 2018 7:54 am

nova1968 wrote:
Tue May 22, 2018 7:31 am
There actually are several thousand millionaires that are civil Servants.

https://federalnewsradio.com/mike-cause ... tion-boom/


So where do you stand in the race to a million dollar-plus nest egg? At the end of last year, 2.8 million TSP participants had $50,000 or less in their accounts.
•1,458,820 had accounts valued at between $50,000 and $249,000
•453,353 had accounts ranging between $250,000 and $499,000
•148,271 had between $500,000 and $749,000
•54,735 had accounts worth between $750,000 and $999,000
•23,962 had $1 million or more
A millionaire in 1996 vs today is vastly different. The book probably needs to be referred to as the "Millionaire x2." Million in 1996 is about $1.6M today. That number likely gets halved for more than $1.6M which would take it down to 12k out of 1.4M or less than 1%.

User avatar
AstroJohn
Posts: 79
Joined: Mon May 24, 2010 4:22 pm
Location: Virginia

Re: The Millionaire Next Door and civil servants

Post by AstroJohn » Tue May 22, 2018 8:00 am

Civil servants, teachers, and similar professions belong to the portion of the population that has a fairly tightly clustered range of possible income levels. They amassed wealth by saving and investing wisely. Entrepreneurs belong to a different portion of the population that includes, for example, writers. The range of possible income levels for that population is far wider. For the vast majority of that group, incomes and wealth are low to modest. MND mostly highlighted the outliers--those who did very well. People like Steve Jobs are also in that category. Many of the biggest winners in that group should be thought of as black swans.

nova1968
Posts: 217
Joined: Wed May 18, 2016 12:00 pm

Re: The Millionaire Next Door and civil servants

Post by nova1968 » Tue May 22, 2018 8:26 am

deltaneutral83 wrote:
Tue May 22, 2018 7:54 am
nova1968 wrote:
Tue May 22, 2018 7:31 am
There actually are several thousand millionaires that are civil Servants.

https://federalnewsradio.com/mike-cause ... tion-boom/


So where do you stand in the race to a million dollar-plus nest egg? At the end of last year, 2.8 million TSP participants had $50,000 or less in their accounts.
•1,458,820 had accounts valued at between $50,000 and $249,000
•453,353 had accounts ranging between $250,000 and $499,000
•148,271 had between $500,000 and $749,000
•54,735 had accounts worth between $750,000 and $999,000
•23,962 had $1 million or more
A millionaire in 1996 vs today is vastly different. The book probably needs to be referred to as the "Millionaire x2." Million in 1996 is about $1.6M today. That number likely gets halved for more than $1.6M which would take it down to 12k out of 1.4M or less than 1%.
As a result of substantial gains in the markets in the last couple of years the number of TSP millionaires has increased significantly, I checked the posted data in 2014 and the number of TSP millionaires was around 3000. A very small percentage considering there are 6 million Government employees. Very few TSP holders are familiar with the BH Philosophy emphasized on this website. Many of them retreat to the G Fund when the market takes a dip. I believe contributing the max 18,500 and 5500 to the catch up past age 50, Maxing out on annual IRA and HSA contributions, having a proper allocation and staying the course can make a Government employee a millionaire as they get close to retirement.

deltaneutral83
Posts: 804
Joined: Tue Mar 07, 2017 4:25 pm

Re: The Millionaire Next Door and civil servants

Post by deltaneutral83 » Tue May 22, 2018 8:50 am

nova1968 wrote:
Tue May 22, 2018 8:26 am

As a result of substantial gains in the markets in the last couple of years the number of TSP millionaires has increased significantly, I checked the posted data in 2014 and the number of TSP millionaires was around 3000. A very small percentage considering there are 6 million Government employees. Very few TSP holders are familiar with the BH Philosophy emphasized on this website. Many of them retreat to the G Fund when the market takes a dip. I believe contributing the max 18,500 and 5500 to the catch up past age 50, Maxing out on annual IRA and HSA contributions, having a proper allocation and staying the course can make a Government employee a millionaire as they get close to retirement.
Anybody who maxes out retirement accounts for even 15 years with anything above 60/40 and even starting at age 35 would fly past a million by the time they are 60 unless Armageddon happens.

Grt2bOutdoors
Posts: 18842
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: The Millionaire Next Door and civil servants

Post by Grt2bOutdoors » Tue May 22, 2018 8:56 am

deltaneutral83 wrote:
Tue May 22, 2018 8:50 am
nova1968 wrote:
Tue May 22, 2018 8:26 am

As a result of substantial gains in the markets in the last couple of years the number of TSP millionaires has increased significantly, I checked the posted data in 2014 and the number of TSP millionaires was around 3000. A very small percentage considering there are 6 million Government employees. Very few TSP holders are familiar with the BH Philosophy emphasized on this website. Many of them retreat to the G Fund when the market takes a dip. I believe contributing the max 18,500 and 5500 to the catch up past age 50, Maxing out on annual IRA and HSA contributions, having a proper allocation and staying the course can make a Government employee a millionaire as they get close to retirement.
Anybody who maxes out retirement accounts for even 15 years with anything above 60/40 and even starting at age 35 would fly past a million by the time they are 60 unless Armageddon happens.
Your lips to.......
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

User avatar
Sandtrap
Posts: 5098
Joined: Sat Nov 26, 2016 6:32 pm
Location: Hawaii😀 Northern AZ.😳 Retired.

Re: The Millionaire Next Door and civil servants

Post by Sandtrap » Tue May 22, 2018 9:42 am

TimeRunner wrote:
Mon May 21, 2018 10:02 pm
Another retired (FERS) two-comma club Fed here. As Victoria hinted, "Spenders gonna spend, savers gonna save" regardless of Fed or other gov or private sector employment.
That is so true.
I know MD's who have earned 7 figures annually but retired with far less than a friend of mine who is a retired firemen and spouse who retired from the post office. "Bogle Basics" are there to help everyone across the board regardless of how their money is earned. To focus on anything else is . . .
j

User avatar
munemaker
Posts: 3264
Joined: Sat Jan 18, 2014 6:14 pm

Re: The Millionaire Next Door and civil servants

Post by munemaker » Tue May 22, 2018 9:44 am

Grt2bOutdoors wrote:
Tue May 22, 2018 7:45 am
munemaker wrote:
Tue May 22, 2018 7:14 am
SagaciousTraveler wrote:
Tue May 22, 2018 6:32 am
MrPotatoHead wrote:
Tue May 22, 2018 2:41 am
01) I think the public sector contains many millionaires, in fact almost all of them in my state are pension millionaires and many, many are pension and healthcare multi-millionaires.
This is an important aspect here. The fact that FERS retirees can continue healthcare (certain restrictions) into retirement, paying the same premium (plus yearly inflation) is often overlooked.
In PA and NJ, most of the teachers currently retiring have pensions worth over $1M. Probably lots of other states too.
Are you so sure about NJ? I'd venture to say that they have pensions of X and a receivable of Y, when you are deceased you aren't entitled to a lump-sum payment or a future stream of payments to one's heirs other than a legally recognized spouse. Actually, probably most think anyone depending on a pension from NJ as a big receivable and a pension when the bird is in hand.
Just because your heirs (other than a spouse) cannot inherit a pension does not diminish its value.

Not quite following you on receivables. Could you please clarify? Maybe you are pointing out NJ pensions are severely underfunded. PA's too, to a degree, but not like NJ, Illinois and some others. Will be interesting to see how this eventually gets resolved or more likely patched and kicked down the road.

User avatar
Sandtrap
Posts: 5098
Joined: Sat Nov 26, 2016 6:32 pm
Location: Hawaii😀 Northern AZ.😳 Retired.

Re: The Millionaire Next Door and civil servants

Post by Sandtrap » Tue May 22, 2018 9:46 am

AstroJohn wrote:
Tue May 22, 2018 8:00 am
Civil servants, teachers, and similar professions belong to the portion of the population that has a fairly tightly clustered range of possible income levels. They amassed wealth by saving and investing wisely. Entrepreneurs belong to a different portion of the population that includes, for example, writers. The range of possible income levels for that population is far wider. For the vast majority of that group, incomes and wealth are low to modest. MND mostly highlighted the outliers--those who did very well. People like Steve Jobs are also in that category. Many of the biggest winners in that group should be thought of as black swans.
"Black Swans". . . that's a good one.
Wonder what percentage of Bogleheadville are "black swans". . . . and does the percentage mirror the population at large?
I suspect there is a higher percentage of "Black Swans" in Bogleheadville, but still, as you say, a very very small lonely group.
j

Grt2bOutdoors
Posts: 18842
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: The Millionaire Next Door and civil servants

Post by Grt2bOutdoors » Tue May 22, 2018 9:51 am

munemaker wrote:
Tue May 22, 2018 9:44 am
Grt2bOutdoors wrote:
Tue May 22, 2018 7:45 am
munemaker wrote:
Tue May 22, 2018 7:14 am
SagaciousTraveler wrote:
Tue May 22, 2018 6:32 am
MrPotatoHead wrote:
Tue May 22, 2018 2:41 am
01) I think the public sector contains many millionaires, in fact almost all of them in my state are pension millionaires and many, many are pension and healthcare multi-millionaires.
This is an important aspect here. The fact that FERS retirees can continue healthcare (certain restrictions) into retirement, paying the same premium (plus yearly inflation) is often overlooked.
In PA and NJ, most of the teachers currently retiring have pensions worth over $1M. Probably lots of other states too.
Are you so sure about NJ? I'd venture to say that they have pensions of X and a receivable of Y, when you are deceased you aren't entitled to a lump-sum payment or a future stream of payments to one's heirs other than a legally recognized spouse. Actually, probably most think anyone depending on a pension from NJ as a big receivable and a pension when the bird is in hand.
Just because your heirs (other than a spouse) cannot inherit a pension does not diminish its value.

Not quite following you on receivables. Could you please clarify? Maybe you are pointing out NJ pensions are severely underfunded. PA's too, to a degree, but not like NJ, Illinois and some others. Will be interesting to see how this eventually gets resolved or more likely patched and kicked down the road.
Exactly, a pension needs to be collected much like a receivable.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

GCD
Posts: 526
Joined: Tue Sep 26, 2017 7:11 pm

Re: The Millionaire Next Door and civil servants

Post by GCD » Tue May 22, 2018 9:57 am

MrPotatoHead wrote:
Tue May 22, 2018 2:41 am
I am not sure what the central thesis of this thread is, but I'll make the following comments:

01) I think the public sector contains many millionaires, in fact almost all of them in my state are pension millionaires and many, many are pension and healthcare multi-millionaires.
What do you mean by this? How are you considering someone a healthcare millionaire? Is it by the reduced premiums they pay or is it by the reduced out of pocket expenses they have for healthcare in retirement? How does this ever end up being worth a million dollars to the average retiree?

And as a general point of clarification, not just for you but for all the people talking about "pension" millionaires, are you calculating this as the lifetime income stream from the pension is a million dollars or is it that an annuity that would create a similar income stream would cost a million dollars to purchase?

User avatar
djpeteski
Posts: 577
Joined: Fri Mar 31, 2017 9:07 am

Re: The Millionaire Next Door and civil servants

Post by djpeteski » Tue May 22, 2018 10:05 am

To date, this is the first criticism of The Millionaire Next Door and Stop Acting Rich that I have seen or heard.

Some of the criticism that I read here, is decent, but it ignores the fundamental truths of these books. Namely: those that actually have money, tend not to look like they do; and, those that look rick are probably broke.

It really doesn't take much to generate wealth in this country, so yea civil servants can do so. Heck investing the average cost of a pack of cigs per day from 18 to 65 will get you about 2 million if that is the only investing you did. Do the same thing for an average car payment and you end up with like 12 million.

Civil servants are like anyone else. There are those that are broke, and those that can be very well off. It is all a matter of behavior.

User avatar
munemaker
Posts: 3264
Joined: Sat Jan 18, 2014 6:14 pm

Re: The Millionaire Next Door and civil servants

Post by munemaker » Tue May 22, 2018 10:46 am

djpeteski wrote:
Tue May 22, 2018 10:05 am
Civil servants are like anyone else.
Not exactly. They have large defined benefit pensions that are becoming less and less common in the private sector.

MnD
Posts: 3576
Joined: Mon Jan 14, 2008 12:41 pm

Re: The Millionaire Next Door and civil servants

Post by MnD » Tue May 22, 2018 12:02 pm

munemaker wrote:
Tue May 22, 2018 10:46 am
djpeteski wrote:
Tue May 22, 2018 10:05 am
Civil servants are like anyone else.
Not exactly. They have large defined benefit pensions that are becoming less and less common in the private sector.
Feds hired 1984 and later have a pension that is around 30% of salary assuming they had a long continuous career in federal service of 3 decades.
In my agency we have a lot of people with PhD's and non-federal past employers, so 30% is on the high end for many that didn't start with the feds until well into their 30's or later. Also mostly 2-income households, so the overall household income replacement might be closer to 10-20%.

That's not trivial and nothing to complain about certainly, but its not "large" compared to what I've seen with some state/local govt pension benefits and for the "old" pre-1984 federal retirement system.

TSP balances (similiar to a 401-K plan) for those approaching retirement range from trivial amounts to 7 figures depending on how much the employee contributed and how aggressively they invested. In the early years (plan started 1987), the plan limited contributions to 10% of pay and had significant restrictions on how much could be invested outside the most conservative government securities (G) fund.
Last edited by MnD on Tue May 22, 2018 12:32 pm, edited 1 time in total.

delamer
Posts: 5478
Joined: Tue Feb 08, 2011 6:13 pm

Re: The Millionaire Next Door and civil servants

Post by delamer » Tue May 22, 2018 12:28 pm

VictoriaF wrote:
Mon May 21, 2018 1:50 pm
Sandtrap wrote:
Sun May 20, 2018 11:15 pm
willthrill81 wrote:
Sun May 20, 2018 9:44 pm
Sandtrap wrote:
Sun May 20, 2018 9:08 pm
Perhaps the "Millionaire Next Door" series continues to be popular because of the allure of the spirit of entrepreneurship.
I have always found it very interesting that many of the millionaires Stanley studied believe that there was a definite element of 'being in the right place at the right time' in their success. While many of them were entrepreneurs, many of them were not encouraging their children to follow their path and were instead directing them toward 'professional' careers (e.g. accounting, law, medicine, etc.). The upside potential of these careers is probably less than that of the highly successful entrepreneur, but there's likely a lot less downside risk as well.
So true. I come from a family of folks that would fit into Stanley's book quite well. But, all of them, including myself, encouraged their children toward higher professional education instead of working 24/7 toward an uncertain result. Thus, a plethora of MD's, Attorney's, etc.
j
I strongly disliked "Millionaire Next Door" when I read it many years ago. I should have stopped reading it, but after seeing numerous positive reviews I was trying to find something useful in it. The main reason for my annoyance was the glorification of rote jobs and simple businesses and derision of intellectual work of academics and professionals. That was before I became a Federal employee. This thread gives me another reason for the aversion to the book.

Victoria
I did not see the derision of intellectual work in the book. In fact one of my take-aways was that many people who started and managed successful but “dull” businesses ended up with children in high status, high education professions like medicine, law, academia, etc. And the parents were very proud to have afforded their children the opportunity to work in those professions.

As others have said, the overriding point was that financial wealth and the trappings of affluence are not the same thing. And that most people, regardless of their income/profession, can become financially secure.

My problem with the TSP millionaires data has always been the underlying assumption that the TSP balances account for all of the owners’ liquid assets. I have a TSP account that is well below the millionaire level, but it only makes up about 1/5 of our family’s investments. So I wouldn’t evaluate the financial wealth of federal employees based on TSP balances alone.

randomguy
Posts: 6001
Joined: Wed Sep 17, 2014 9:00 am

Re: The Millionaire Next Door and civil servants

Post by randomguy » Tue May 22, 2018 5:45 pm

djpeteski wrote:
Tue May 22, 2018 10:05 am

Some of the criticism that I read here, is decent, but it ignores the fundamental truths of these books. Namely: those that actually have money, tend not to look like they do; and, those that look rick are probably broke.
That isn't remotely a fundamental truth. It is a fairy tale that appeals to a lot of people.

MnD
Posts: 3576
Joined: Mon Jan 14, 2008 12:41 pm

Re: The Millionaire Next Door and civil servants

Post by MnD » Tue May 22, 2018 6:26 pm

randomguy wrote:
Tue May 22, 2018 5:45 pm
djpeteski wrote:
Tue May 22, 2018 10:05 am

Some of the criticism that I read here, is decent, but it ignores the fundamental truths of these books. Namely: those that actually have money, tend not to look like they do; and, those that look rick are probably broke.
That isn't remotely a fundamental truth. It is a fairy tale that appeals to a lot of people.
I'm livin the fairy tale! Wear Kohl's shirts and Wrangler jeans to work and off-work clothes are in the same ballpark.
Owned/driven 3 compact/midsize pickups in my lifetime - 77 Datsun, 89 Mazda, 05 Toyota.
Mountain bike I ride ~250 days a year is 1993 I think. Still living in the 1951 starter home we bought in out late 20's almost 27 years ago for $100K. Decent SF and the lot size especially puts new homes to shame - so why move? Big spender items including buying my work lunch most days ($8-$10) and we have a fair number of streaming TV subscriptions that replaced cable. Multi-million financial net worth plus vested in a civil service pension with net present value around $1M. No debt of any kind.

randomguy
Posts: 6001
Joined: Wed Sep 17, 2014 9:00 am

Re: The Millionaire Next Door and civil servants

Post by randomguy » Tue May 22, 2018 7:00 pm

MnD wrote:
Tue May 22, 2018 6:26 pm
randomguy wrote:
Tue May 22, 2018 5:45 pm
djpeteski wrote:
Tue May 22, 2018 10:05 am

Some of the criticism that I read here, is decent, but it ignores the fundamental truths of these books. Namely: those that actually have money, tend not to look like they do; and, those that look rick are probably broke.
That isn't remotely a fundamental truth. It is a fairy tale that appeals to a lot of people.
I'm livin the fairy tale! Wear Kohl's shirts and Wrangler jeans to work and off-work clothes are in the same ballpark.
Owned/driven 3 compact/midsize pickups in my lifetime - 77 Datsun, 89 Mazda, 05 Toyota.
Mountain bike I ride ~250 days a year is 1993 I think. Still living in the 1951 starter home we bought in out late 20's almost 27 years ago for $100K. Decent SF and the lot size especially puts new homes to shame - so why move? Big spender items including buying my work lunch most days ($8-$10) and we have a fair number of streaming TV subscriptions that replaced cable. Multi-million financial net worth plus vested in a civil service pension with net present value around $1M. No debt of any kind.
Tell you what. We will survey the net worth of 10000 1989 mazda owners and the net worth of 10000 2018 911 owners. How much money would you bet on the 1989 Mazda owners having a higher average net worth? :) People that look rich tend to be rich. There are exceptions at both ends. But those are the exceptions not the rule.

Post Reply