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Depending on age $500k savings isn't THAT unreasonable. For example, if you worked at FAANG-level companies for a decade and held your lifestyle to a reasonable

Depending on age $500k savings isn't THAT unreasonable. For example, if you worked at FAANG-level companies for a decade and held your lifestyle to a reasonable level this should be doable without hardship. These people are privileged to earn at such a high level, but not shockingly so considering the high cost of living. Even at the "rich person" $300k+/yr income level (common Bay Area BigCo wage for experienced engineers), considering that taxes take about half your gross and rents are high, it still requires discipline to accumulate that magnitude of savings; saving 1/3 of take-home pay over a decade is well-above the average savings rate. If $500k in savings sounds like a lot to you, I would suggest you have a personal check-in on your retirement planning. I was pretty shocked when I first figured out how much I would actually need in retirement and it helped me really get serious about saving in a way that I hadn't before. To support a $100k income in retirement with 0.04 withdrawal rate I will need a nest-egg of $2.5M. I nearly fainted the first time I heard that. I had been feeling good about myself since I was maxing my 401k, but hitting targets for real financial security requires saving far beyond that. Somebody bootstrapping is taking a large fraction of their savings and making a big bet on themselves that it will get them to their financial targets faster. I don't have the stomach for that risk but admire those who do.

izacus 8y ago
A small percent (<1 %) of even IT population works at FAANG companies, so I'm not quite sure if your argument shows what you want it to prove.
- jurassic 8y ago
  I was trying to show that while this is not a common scenario it is attainable and probably has been achieved by thousands if not tens of thousands of engineers over the last decade (many of whom read this website). It does not require inherited wealth or participation in past startup liquidity events.
keiferski 8y ago
Average lifetime income for Americans: - High school graduates (88% of the population, per 2015 Census numbers): $900,000 - Associate’s degree (42.3%): $1.1 million - Bachelor’s degree or higher (32.5% with bachelor’s, 12% with advanced degrees): $1.8 million https://www.cheatsheet.com/money-career/how-much-average-american-earn-their-lifetime.html/ https://www.cheatsheet.com/money-career/how-much-average-ame...
RobertRoberts 8y ago
I think that if you have that much money you are in the top 1% of the world. (_maybe_ 2%) I don't know a single person with that kind of cash. The most wealthy people I know (they live in $500k+ home, their neighbours have million dollar homes) in rich area of Chicago and makes a combined $400k (estimated) in income between him and his wife, don't have even close to that in the bank. (what they do have they have to budget to save up, though they live really well despite this...) I really think Silicon Valley is disconnected from the rest of the world's realities.
- dgacmu 8y ago
  Go read "The millionaire next door" -- it's eye-opening, particularly about the relative importance of saving and keeping a cap on expenses. Saving $500k should be trivial on the $400k annual income you describe. Dual income, put $46k per year into tax advantaged retirement accounts (401k + backdoor Roth). Wait 8 years including interest. Done. Edit: Found a PDF online: https://www.pdfdrive.com/the-millionaire-next-door-book-manteshpdf-davidbeitlercom-d15297184.html https://www.pdfdrive.com/the-millionaire-next-door-book-mant... (and verified that it actually downloads).
  - RobertRoberts 8y ago
    They pay over 12k a year in property taxes alone. They pay tons of local and state taxes, etc... Yes of course they could do more and be smarter with their money, but it's really expensive to live where they are at, but it's also why they make so much as well. I've read plenty of books on getting rich, and all it takes is a couple disasters or huge expenses (adopting kids, legal fees, tax audits, etc...) and all those money making plans are worthless. They don't solve real life problems, they only work for those with charmed lives. I think you are surrounded by rich people and don't realize the vast majority of people live pay-check to pay-check or worse.
    - dgacmu 8y ago
      I'm not talking about normal people. I'm talking about the couple you described that makes slightly more money than I and my wife and yet has less than half the savings I do. Edited to add: And I'm surrounded by academics more than anything else. To quote the millionaire next door (page 136): > Isn't it interesting that a disproportionately high number of used-car shoppers come from the ranks of teachers and professors? > How did Dr. Bill, an engineering professor who never had a total household income of more than $80,000 become a millionaire? [...] His success in accumulating wealth is based on living well below his means. The professor is a classic example of a used vehicle-prone shopper. [...] You'd be surprised how well that description fits me and many of my colleagues. So in a sense, yes, I'm surrounded by rich people, but they're rich because they're comparatively frugal, not because we all earn bay area tech salaries (trust me, we don't -- I grouse enough about this that I wrote a blog post about it a few years ago: https://da-data.blogspot.com/2016/12/finances-for-recent-cs-phds-headed-to.html https://da-data.blogspot.com/2016/12/finances-for-recent-cs-... )
alexchamberlain 8y ago
I'm a little confused about your comment, as the $500k appears to originate from people talking about liquid assets, which your pension (at least in the UK) is _not_.
- jurassic 8y ago
  In the US, contributions to 401k retirement plans are not liquid or available for penalty-free use. But the tax-advantaged contributions are capped ($18.5k last year) and people with significant savings often have other money in unrestricted brokerage accounts, savings accounts, CDs, etc.
zrobotics 8y ago
Are you sure that you aren't setting the bar unreasonably high? 100k income in retirement is quite a lot, I don't think anyone really needs to plan for that much. Don't get me wrong, it's definitely better to have a larger amount saved, but 100k/yr is more than most people make during their working years. It's great if you can hit those targets, but I don't think the bar actually needs to be set that high.
saberience 8y ago
I’ve seen some fairly out of touch HN comments before but this one really takes the cake. You have zero idea how ridiculous you sound, talking as though 300k salaries and 2.5M in savings is something normal. Most Americans don’t have 50k in savings, never mind millions.

izacus 8y ago

A small percent (<1 %) of even IT population works at FAANG companies, so I'm not quite sure if your argument shows what you want it to prove.

jurassic 8y ago
I was trying to show that while this is not a common scenario it is attainable and probably has been achieved by thousands if not tens of thousands of engineers over the last decade (many of whom read this website). It does not require inherited wealth or participation in past startup liquidity events.

keiferski 8y ago

Average lifetime income for Americans: - High school graduates (88% of the population, per 2015 Census numbers): $900,000 - Associate’s degree (42.3%): $1.1 million - Bachelor’s degree or higher (32.5% with bachelor’s, 12% with advanced degrees): $1.8 million https://www.cheatsheet.com/money-career/how-much-average-american-earn-their-lifetime.html/ https://www.cheatsheet.com/money-career/how-much-average-ame...

RobertRoberts 8y ago

I think that if you have that much money you are in the top 1% of the world. (_maybe_ 2%) I don't know a single person with that kind of cash. The most wealthy people I know (they live in $500k+ home, their neighbours have million dollar homes) in rich area of Chicago and makes a combined $400k (estimated) in income between him and his wife, don't have even close to that in the bank. (what they do have they have to budget to save up, though they live really well despite this...) I really think Silicon Valley is disconnected from the rest of the world's realities.

dgacmu 8y ago
Go read "The millionaire next door" -- it's eye-opening, particularly about the relative importance of saving and keeping a cap on expenses. Saving $500k should be trivial on the $400k annual income you describe. Dual income, put $46k per year into tax advantaged retirement accounts (401k + backdoor Roth). Wait 8 years including interest. Done. Edit: Found a PDF online: https://www.pdfdrive.com/the-millionaire-next-door-book-manteshpdf-davidbeitlercom-d15297184.html https://www.pdfdrive.com/the-millionaire-next-door-book-mant... (and verified that it actually downloads).
- RobertRoberts 8y ago
  They pay over 12k a year in property taxes alone. They pay tons of local and state taxes, etc... Yes of course they could do more and be smarter with their money, but it's really expensive to live where they are at, but it's also why they make so much as well. I've read plenty of books on getting rich, and all it takes is a couple disasters or huge expenses (adopting kids, legal fees, tax audits, etc...) and all those money making plans are worthless. They don't solve real life problems, they only work for those with charmed lives. I think you are surrounded by rich people and don't realize the vast majority of people live pay-check to pay-check or worse.
  - dgacmu 8y ago
    I'm not talking about normal people. I'm talking about the couple you described that makes slightly more money than I and my wife and yet has less than half the savings I do. Edited to add: And I'm surrounded by academics more than anything else. To quote the millionaire next door (page 136): > Isn't it interesting that a disproportionately high number of used-car shoppers come from the ranks of teachers and professors? > How did Dr. Bill, an engineering professor who never had a total household income of more than $80,000 become a millionaire? [...] His success in accumulating wealth is based on living well below his means. The professor is a classic example of a used vehicle-prone shopper. [...] You'd be surprised how well that description fits me and many of my colleagues. So in a sense, yes, I'm surrounded by rich people, but they're rich because they're comparatively frugal, not because we all earn bay area tech salaries (trust me, we don't -- I grouse enough about this that I wrote a blog post about it a few years ago: https://da-data.blogspot.com/2016/12/finances-for-recent-cs-phds-headed-to.html https://da-data.blogspot.com/2016/12/finances-for-recent-cs-... )

alexchamberlain 8y ago

I'm a little confused about your comment, as the $500k appears to originate from people talking about liquid assets, which your pension (at least in the UK) is _not_.

jurassic 8y ago
In the US, contributions to 401k retirement plans are not liquid or available for penalty-free use. But the tax-advantaged contributions are capped ($18.5k last year) and people with significant savings often have other money in unrestricted brokerage accounts, savings accounts, CDs, etc.

zrobotics 8y ago

Are you sure that you aren't setting the bar unreasonably high? 100k income in retirement is quite a lot, I don't think anyone really needs to plan for that much. Don't get me wrong, it's definitely better to have a larger amount saved, but 100k/yr is more than most people make during their working years. It's great if you can hit those targets, but I don't think the bar actually needs to be set that high.

saberience 8y ago

I’ve seen some fairly out of touch HN comments before but this one really takes the cake. You have zero idea how ridiculous you sound, talking as though 300k salaries and 2.5M in savings is something normal. Most Americans don’t have 50k in savings, never mind millions.