Psychology of wealth: if you are worth millions, why bother working?

Watching the grilling of Mark Zuckerberg by a US congressional committee, I found myself asking: why does he do it? At 35 and worth $70bn, why not cash in and kick back on a beach on a private island while making the odd donation to charity? It is not just Zuck either. Why does anyone work once they have sufficient money they no longer need to?

It is probably useful here to divide the rich into two groups. The first are people like Amazon founder Jeff Bezos and Facebook chief Zuckerberg: bosses and entrepreneurs. Their motivation is pretty clear. Work is who they are, and there is no end: $1bn is just a stepping stone to $5bn or $10bn. You sell a small start-up to found a big start-up.

“They derive transcendent meaning from capitalism. Without their money, what else would they have?” Antonio García Martínez, author of Chaos Monkeys: Obscene Fortune and Random Failure in Silicon Valley, told The New York Times.

More interesting are the second group: those who are not defined just by their work and wealth, including most “ordinary” millionaires. Many are people who, through inheritance, bonuses, stock options or simply being well paid over the years, have reached the point where they no longer need to show up in the morning.

Technology companies are big generators of these “accidental” millionaires. Through stock options, Microsoft had created between 10,000 and 12,000 millionaires (estimates vary) by the early 2000s. Google and Facebook have also created thousands each. Perhaps the most famous example is artist David Choe, who was paid in Facebook stock to paint murals at the company’s headquarters. The $60,000 block of shares he received were worth some $200m by the time Facebook went public. As he told the radio host Howard Stern in 2014, “I like to gamble”.

But why work if you have $200m or even $20m in the bank? One clue is in the enormous body of research that suggests the link between pay and job satisfaction is weak at best. A review in 2010 led by Timothy Judge, then of the University of Florida, looking at a century of literature found a very low correlation. Numerous other studies show that factors such as interesting work, good leadership and agreeable line managers motivate people.

We need to feel as though we are doing something useful and we have a place in the world

If this is right, the working wealthy should be little different to the rest of us. Conversations with a few friends who have “post-economic” colleagues suggest this is the case. “She’s great to work with,” says one. “The only time you notice her wealth is that when she refers to her house, you have to remember it’s the sort of place a hedge fund manager might live.”

The Microsoft millionaires are interesting. Very few retired, and those who left the company did so to pursue their interests. One wrote self-help books and became a professional poker player; another opened a literary centre. Some founded their own companies. But plenty of others stayed at Microsoft. Presumably they were already doing what they wanted to do, so they just kept on doing it.

The idea of staying on works better in some cases than others. If you are a financier worth, say, $30m, you will be surrounded by people earning six figures. Everyone is wealthy — it is just a question of degree. However, we often see lottery winners who express a desire to continue working only to find it difficult. It must be hard to be one of the guys or girls when you are worth $30m and surrounded by people who are struggling to make ends meet.

There is another question here: what constitutes being so wealthy that you don’t need to work? Moira O’Neill, an FT personal finance columnist, has estimated that for an annual retirement income of £33,000, you need a £1.1m savings pot. To get to six figures you need £3.3m, and many wealthy people will not consider £100,000 a year enormous. So if you are planning to stop work well before retirement age and are worth “only” £5m excluding your home, it may not be enough.

Another working-wealthy scenario is when you earn far less than your spouse. There are plenty of people whose job makes a negligible contribution to the household budget but is nonetheless important to the family’s identity. It is not unusual for one partner’s job to provide the income and the other’s to enhance the personal branding — the hedge fund manager and the artist or the lawyer and the charity worker.

So perhaps the answer to all this is that few of us work entirely or even mainly for money and that the working wealthy are just an extreme example of that. Very early retirement from all forms of work, despite its superficial appeal, is rare. We need to feel as though we are doing something useful and we have a place in the world, even if this means facing a congressional hearing when you could be relaxing on a beach.

Follow Rhymer on Twitter @rhymerrigby