4 ms·

I'm one of those coastal elites. Early career, so ballpark around this salary. I have some student loan debt, but my portion of the rent is only $1,000 a month

I'm one of those coastal elites. Early career, so ballpark around this salary. I have some student loan debt, but my portion of the rent is only $1,000 a month plus utilities (I split a place). I spend about $2,500 a month. And I sock away the rest (about $60k annually) into investments. $100k still goes far in a high cost of living, coastal area. However, I drive a used car. I'm a renter, and probably will be for awhile. If I wanted to be a homeowner, a good portion of my retirement savings / investments would be going towards that. If I decided to have kids, which would mean at least a place with additional bedrooms, plus additional health care coverage costs, etc., I could see it getting tight. I might have to compromise my retirement savings goals. I don't have a lot, but I'm also a minimalist. And I realize that, income wise, probably 80% of society has it worse than me. I don't know how households earning around $50k would feel any semblance of having a future financially. Growing my savings/investments is the only way I feel like I'm getting ahead. Having any sort of typical American dream goal (house, kids, etc) would basically nullify my ability to get ahead, with the exception of building some home equity.

Spooky23 9y ago
The difference between you and the 1987 version of you is that you are kneecapped from an earning power perspective. Barring equity compensation that appreciates, you’re likely to grow your income until around 35. Then you plateau. You’re also unlikely to retain companies or career skill set through to retirement. So you’re facing a crisis where you need to transition and maintain salary around age 40, where 1987 you would be entering peak earning years. It’s a particularly vicious cycle as professionals marry late and have kids late, so when you’re scrambling to maintain your 401k to retire, you get hit with a big college bill in your late 40s/early 50s. If you invest unwisely and don’t have a home, you’re choosing to either retire comfortably or not pay for college.
- Y7ZCQtNo39 9y ago
  Your children can always borrow for college. You can't borrow for retirement, so it makes sense to prioritize retirement savings. I agree, though, that the purchasing power is nowhere near 1987 and that the plateau comes earlier. I suppose it's what makes saving earlier and saving more ever pertinent for the younger generation. If I can get to 200k before I plateau, I'd be happy. If I have a working spouse that makes at least 100k, I'd say we could probably keep the American dream alive for us. At least via my 401k, there are few poor options to choose, thankfully. The worst you could probably do is pick a fixed income class (and get no growth) or go too risky with international funds (if you for some reason went 100% international). But the target-date funds and index funds provided (SP500, etc) are diversified and generally considered good investments.
  - pm90 9y ago
    If you're making that good already and working in tech, I doubt it will be hard for you to reach that target income. Keeping up with the latest technology, learning skills and delivering on projects has got me very far in my professional career, and I've worked with Senior Engineers who continue to do engineering and switch jobs (although perhaps less frequently since it means changing a lot of things). I guess what I'm trying to say is: financially, you are likely to be OK, if you manage to have a spouse that will be a good partner and you both stay together while bringing up the kids (and that is a BIG IF). It get VERY dicey if you do split, in which case you have to pay for spousal and child support (I've seen this happen wayy too many times). Which brings me to what has been my most important realization perhaps: be VERY VERY careful when you choose your spouse and how you combine your finances. I'm not saying that you spouse will be bad; but statistically it seems like there is a 50% chance that it won't work out, for whatever reason. This can ruin your finances. So spend some significant time and effort to try to make the right decision there. This is kinda hard when society emphasizes getting married and having kids ASAP.
- nunez 9y ago
  Don’t forget that it was still common to expect to work at one company for most of your working life back in ‘87 and those companies often offered pensions
purplezooey 9y ago
Fuck, I'm 40, did I plateau already?

Spooky23 9y ago

The difference between you and the 1987 version of you is that you are kneecapped from an earning power perspective. Barring equity compensation that appreciates, you’re likely to grow your income until around 35. Then you plateau. You’re also unlikely to retain companies or career skill set through to retirement. So you’re facing a crisis where you need to transition and maintain salary around age 40, where 1987 you would be entering peak earning years. It’s a particularly vicious cycle as professionals marry late and have kids late, so when you’re scrambling to maintain your 401k to retire, you get hit with a big college bill in your late 40s/early 50s. If you invest unwisely and don’t have a home, you’re choosing to either retire comfortably or not pay for college.

Y7ZCQtNo39 9y ago
Your children can always borrow for college. You can't borrow for retirement, so it makes sense to prioritize retirement savings. I agree, though, that the purchasing power is nowhere near 1987 and that the plateau comes earlier. I suppose it's what makes saving earlier and saving more ever pertinent for the younger generation. If I can get to 200k before I plateau, I'd be happy. If I have a working spouse that makes at least 100k, I'd say we could probably keep the American dream alive for us. At least via my 401k, there are few poor options to choose, thankfully. The worst you could probably do is pick a fixed income class (and get no growth) or go too risky with international funds (if you for some reason went 100% international). But the target-date funds and index funds provided (SP500, etc) are diversified and generally considered good investments.
- pm90 9y ago
  If you're making that good already and working in tech, I doubt it will be hard for you to reach that target income. Keeping up with the latest technology, learning skills and delivering on projects has got me very far in my professional career, and I've worked with Senior Engineers who continue to do engineering and switch jobs (although perhaps less frequently since it means changing a lot of things). I guess what I'm trying to say is: financially, you are likely to be OK, if you manage to have a spouse that will be a good partner and you both stay together while bringing up the kids (and that is a BIG IF). It get VERY dicey if you do split, in which case you have to pay for spousal and child support (I've seen this happen wayy too many times). Which brings me to what has been my most important realization perhaps: be VERY VERY careful when you choose your spouse and how you combine your finances. I'm not saying that you spouse will be bad; but statistically it seems like there is a 50% chance that it won't work out, for whatever reason. This can ruin your finances. So spend some significant time and effort to try to make the right decision there. This is kinda hard when society emphasizes getting married and having kids ASAP.
nunez 9y ago
Don’t forget that it was still common to expect to work at one company for most of your working life back in ‘87 and those companies often offered pensions

purplezooey 9y ago

Fuck, I'm 40, did I plateau already?