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> In a business that brings in $1 million in revenue, the owner could very likely be in the highest tax bracket and is likely to take home an income in the mid-

by max76 8y ago

> In a business that brings in $1 million in revenue, the owner could very likely be in the highest tax bracket and is likely to take home an income in the mid-six figures. Then again, that is a lot more than the average American makes. It’s enough to allow you to do things like save for retirement, buy the healthcare you need, pay for college for your kids, if you have them, and go on a nice vacation every year. These are things you can do in the low six figures, not mid six figures. They are also things I wish everyone could be able to do. Edit: The Math. Retirement: Maxing a 401k and Roth Ira is $23,000/yr Healthcare: Insurance for a family is about $600/month or $7,200/yr. Let's add another $500/yr in expected expenses and another $1000/yr in emergency savings. Total $8,700/yr Saving for college: $200/month for 21 years (age when child pays last tuition) with 1% interest (pessimistic and safe long term view) will yield north of $50,00k, which is enough for state university tuition. Lets say we are saving for three children. $3,600k/yr. Nice vacation: Nice doesn't have a specific meaning, but it's safe to say $10,000k is nice. Total: $55,300k/yr. Considering how important these things are, it's within the reach of a household with a post tax income of $150,000 assuming average US cost of living. People with mid six figure post tax income can do much more. I really dislike these two paragraphs. It makes it seem like being a very high income household is the only way to provide the basic quality of life.

mgkimsal 8y ago
> Insurance for a family is about $600/month Where the... ?? Oh... you mention '401k', so you're probably employed by someone else. I don't think we've seen $600/month/family insurance policies that someone pays full-cost for in years. 3 years ago I knew people paying $1400-$1800, and for us, just 2, next year is slated to be $1300/month. Oh, and that's just base cost - you have a $10k deductible in there so... realistically budget $20k/year for a family with some regular medical expenses. But yeah, if a separate employer is footing some of the bill, then you might get away with 'only' ~$8k. > It makes it seem like being a very high income household. POST TAX $150k/year is a very high household income in many parts of the US. You're talking > $200k/year income, which is excluding 80% of US households. I guess for sake of argument, that might still be 'low' 6 figures, not 'mid', but many of the jobs that pay that sort of money are going to be in high-tax states, and I suspect you're going to be closer to > $250k. In CA, you'd need to earn $250k for a take home of ~$150k.
- siquick 8y ago
  Just to clarify (non-US citizen here) - you pay $1300 per month for health insurance that covers just 2 people? Is this a maxed out policy that covers pre-existing conditions or is this just 'normal'?
  - mgkimsal 8y ago
    Yep. the ACA ("obamacare") made it so that pretty much everything is "maxed-out" - includes pre-existing conditions, etc. This is buying on the 'open market' - the majority of people have insurance provided by their employer, and often pay nothing or a smaller % of the normal monthly cost. And larger employers seem to get somewhat discounted rates than an individual buying on the open market. Employer-provided health insurance has been one of the biggest problems with health care in the US for decades (in my opinion). Your health is now inextricably tied to your fortune to get a job, to have an employer who's savvy enough to stay in business (and grow), and you remain healthy enough to keep working at said employer. Leave a job for a 'better' one? You might not have insurance at the new place for months, and you either have no insurance, or have to pay for the 'full price' yourself for that time gap (which can end up being easily more than $2k/month for a family policy). US-based HN folks making figures probably don't think of this as much more than an inconvenience, but it's a huge drag on labor mobility. 'Market' is an odd word - in the county I live in, there's usually only one insurance company that sells policies (I think this year and next there's 2, but we've had years where it's just 1). But hey... you know, some AT&T people got a whole $1000 bonus for 15 years of service last December because of the big awesome 'jobs act' and tax cut (right before they were laid off). So hey, we're 'winning' so much in the US right now. #maga EDIT: I just looked at plan estimates for next year. In my state, they've reduced some pricing (the primary way they did that was to cut costs by stoping coverage in a populous area). However, the 'bare bones' policy is a mere $920/month, with a $16000 deductible, meaning a big accident needing a lot of surgery/etc could put someone out of pocket for ... $27k that year. The plan prices are income-based - the less income you earn, the lower the price may be, due to gov subsidies. That fades out as you become a high-earner. The numbers above are for a couple earning the princely sum of $70k USD.
  - max76 8y ago
jaxn 8y ago
Health insurance for a family is 2-3 times that. $50k will not cover many state schools. Especially if prices continue to climb.
- adventured 8y ago
  > $50k will not cover many state schools. That's plainly false. $50k will cover nearly all state schools, in-state. The vast majority of all state schools are less than $12,500 per year for tuition + fees in-state. The exceptions tend to be among the top state schools, like UC Berkely (~$60k) and Virginia (~$70k). The $50k equivalent would still go a very long ways for those. George Institute of Technology is $12,500 per year in-state for tuition + fees. University of Florida is $6k per year. Purdue is $10k per year. The University of Houston is ~$8k per year. Texas A&M is $10k per year. A bunch of the Cal schools are around $7k per year. The same goes for the city schools in NY (CUNY), those are mostly around or under $7k per year. UNC Chapel Hill is $9k per year. UCLA is $13k per year. The University of Michigan is $15k per year. University of Texas at El Paso & San Antonio are around $7k per year. Texas at Austin is $10k per year. Texas Tech is $8k per year. And this is the cost for some of the best state schools. Everybody else is between cheaper and dramatically cheaper. The primary requirement is that you have to go to an in-state school. I'd bet that the in-state median for state schools across the US is a lot closer to $6k per year, rather than $12,000.
  - TruffleLabs 8y ago
    Purdue is $12,000 to $14,000 (depends on major) * https://www.admissions.purdue.edu/costsandfinaid/tuitionfees.php https://www.admissions.purdue.edu/costsandfinaid/tuitionfees... Tuition + Other Estimated Expenses + subject major fees It is important to know the whole cost as most schools have living expenses: Purdue would cost about $23,000 to $26,000 with room&board.
  - jaxn 8y ago
    Books, food, housing, transportation. There is a lot more to "covering" school than just the tuition.
magicnubs 8y ago
> These are things you can do in the low six figures, not mid six figures Did you mean mid-five-figures?
anon4lol 8y ago
> Retirement: Maxing a 401k and Roth Ira is $23,000/yr A SEP will allow you to put way more away than that. Better would be a "back door Roth" and transition from SEP to Roth and pay the income tax out of pocket each year. >Healthcare: Insurance for a family is about $600/month or >$7,200/yr. Let's add another $500/yr in expected expenses > and another $1000/yr in emergency savings. Total $8,700/yr You can get a better deal if you go with a Health Savings Account (HSA) + HDHP. HSA funds, if you don't use them, turn into retirement funds.

by max76 8y ago

mgkimsal 8y ago

> Insurance for a family is about $600/month Where the... ?? Oh... you mention '401k', so you're probably employed by someone else. I don't think we've seen $600/month/family insurance policies that someone pays full-cost for in years. 3 years ago I knew people paying $1400-$1800, and for us, just 2, next year is slated to be $1300/month. Oh, and that's just base cost - you have a $10k deductible in there so... realistically budget $20k/year for a family with some regular medical expenses. But yeah, if a separate employer is footing some of the bill, then you might get away with 'only' ~$8k. > It makes it seem like being a very high income household. POST TAX $150k/year is a very high household income in many parts of the US. You're talking > $200k/year income, which is excluding 80% of US households. I guess for sake of argument, that might still be 'low' 6 figures, not 'mid', but many of the jobs that pay that sort of money are going to be in high-tax states, and I suspect you're going to be closer to > $250k. In CA, you'd need to earn $250k for a take home of ~$150k.

siquick 8y ago
Just to clarify (non-US citizen here) - you pay $1300 per month for health insurance that covers just 2 people? Is this a maxed out policy that covers pre-existing conditions or is this just 'normal'?
- mgkimsal 8y ago
  Yep. the ACA ("obamacare") made it so that pretty much everything is "maxed-out" - includes pre-existing conditions, etc. This is buying on the 'open market' - the majority of people have insurance provided by their employer, and often pay nothing or a smaller % of the normal monthly cost. And larger employers seem to get somewhat discounted rates than an individual buying on the open market. Employer-provided health insurance has been one of the biggest problems with health care in the US for decades (in my opinion). Your health is now inextricably tied to your fortune to get a job, to have an employer who's savvy enough to stay in business (and grow), and you remain healthy enough to keep working at said employer. Leave a job for a 'better' one? You might not have insurance at the new place for months, and you either have no insurance, or have to pay for the 'full price' yourself for that time gap (which can end up being easily more than $2k/month for a family policy). US-based HN folks making figures probably don't think of this as much more than an inconvenience, but it's a huge drag on labor mobility. 'Market' is an odd word - in the county I live in, there's usually only one insurance company that sells policies (I think this year and next there's 2, but we've had years where it's just 1). But hey... you know, some AT&T people got a whole $1000 bonus for 15 years of service last December because of the big awesome 'jobs act' and tax cut (right before they were laid off). So hey, we're 'winning' so much in the US right now. #maga EDIT: I just looked at plan estimates for next year. In my state, they've reduced some pricing (the primary way they did that was to cut costs by stoping coverage in a populous area). However, the 'bare bones' policy is a mere $920/month, with a $16000 deductible, meaning a big accident needing a lot of surgery/etc could put someone out of pocket for ... $27k that year. The plan prices are income-based - the less income you earn, the lower the price may be, due to gov subsidies. That fades out as you become a high-earner. The numbers above are for a couple earning the princely sum of $70k USD.
- max76 8y ago

jaxn 8y ago

Health insurance for a family is 2-3 times that. $50k will not cover many state schools. Especially if prices continue to climb.

adventured 8y ago
> $50k will not cover many state schools. That's plainly false. $50k will cover nearly all state schools, in-state. The vast majority of all state schools are less than $12,500 per year for tuition + fees in-state. The exceptions tend to be among the top state schools, like UC Berkely (~$60k) and Virginia (~$70k). The $50k equivalent would still go a very long ways for those. George Institute of Technology is $12,500 per year in-state for tuition + fees. University of Florida is $6k per year. Purdue is $10k per year. The University of Houston is ~$8k per year. Texas A&M is $10k per year. A bunch of the Cal schools are around $7k per year. The same goes for the city schools in NY (CUNY), those are mostly around or under $7k per year. UNC Chapel Hill is $9k per year. UCLA is $13k per year. The University of Michigan is $15k per year. University of Texas at El Paso & San Antonio are around $7k per year. Texas at Austin is $10k per year. Texas Tech is $8k per year. And this is the cost for some of the best state schools. Everybody else is between cheaper and dramatically cheaper. The primary requirement is that you have to go to an in-state school. I'd bet that the in-state median for state schools across the US is a lot closer to $6k per year, rather than $12,000.
- TruffleLabs 8y ago
  Purdue is $12,000 to $14,000 (depends on major) * https://www.admissions.purdue.edu/costsandfinaid/tuitionfees.php https://www.admissions.purdue.edu/costsandfinaid/tuitionfees... Tuition + Other Estimated Expenses + subject major fees It is important to know the whole cost as most schools have living expenses: Purdue would cost about $23,000 to $26,000 with room&board.
- jaxn 8y ago
  Books, food, housing, transportation. There is a lot more to "covering" school than just the tuition.

magicnubs 8y ago

> These are things you can do in the low six figures, not mid six figures Did you mean mid-five-figures?

anon4lol 8y ago

> Retirement: Maxing a 401k and Roth Ira is $23,000/yr A SEP will allow you to put way more away than that. Better would be a "back door Roth" and transition from SEP to Roth and pay the income tax out of pocket each year. >Healthcare: Insurance for a family is about $600/month or >$7,200/yr. Let's add another $500/yr in expected expenses > and another $1000/yr in emergency savings. Total $8,700/yr You can get a better deal if you go with a Health Savings Account (HSA) + HDHP. HSA funds, if you don't use them, turn into retirement funds.