6 ms·

There is not necessarily a catch. Pay is not based on cost of living -- it's set by market rates, and the market rate for software engineers in these areas who

by typest 7y ago

There is not necessarily a catch. Pay is not based on cost of living -- it's set by market rates, and the market rate for software engineers in these areas who can do the jobs required at these companies is high. All these companies operate at an immense scale where an engineer, through what is often a simple change, can add significant value to the company. So, yes. For now, these companies are giving college grads enough money to retire by 35 (assuming the college grads are halfway financially savvy). Source: I am a recent college grad at a FAANG.

glglwty 7y ago
A senior position in the doc will probably get you ~2M in savings by 35. How do you retire with that?
- synaesthesisx 7y ago
  Agreed - that’s not enough to retire on that young unless one relocates to a very LCOL area.
- Swizec 7y ago
  Using the 5% drawdown rule, 2M in savings is enough to have a 100k/year income in perpetuity without adding to savings. Idea being that average market returns are 7%. So if you use 5% per year, you will never run out.
  - rhexs 7y ago
    5% is not a safe withdrawal rate for "in perpetuity". 3% is much more realistic if you want to be conservative.
    - Swizec 7y ago
      Yes it's a rule of thumb not the law of thermodynamics. Run your numbers with your own parameters for details.
    - villahousut 7y ago
      That's assuming you want to leave the whole 2 million principal in your will to your children. I don't see why - if you want to retire, you can consume the whole principal while you live.
      - thedufer 7y ago
        You can't plan to spend your last dollar on your deathbed unless you can predict every expense, the market, and the day you'll die, especially over a retirement that long (potentially 50+ years). Planning to leave something behind is really your only chance, unless you're comfortable with a very high chance of bankruptcy along the way.
- 3fe9a03ccd14ca5 7y ago
  Even at a meager 2% interest that’s $40k a year. That’s a comfortable wage in much of the USA, especially if you’ve been camping in an RV for a decade to retire.
  - perl4ever 7y ago
    I don't believe anything I read on HN about the lifestyles of the SV elite, but I think this scenario is comical if it were representative. You get paid well into six figures but have "to camp in an RV for a decade", and then you retire with a $40K income. You could have just gotten a $40K job at some place* that didn't kill your soul! In ten years, you'd be making at least $60K. And if you burned out for whatever reason anyway, you could go on disability. *by place, I mean either employer or city.
- mc3 7y ago
  you'd be in a position to invest too as you go.
- typest 7y ago
  You read through all the advice in these blogs [1][2]. Seriously. If you are invested in low cost index funds, most assume you can safely withdraw 4% a year and not deplete your principal. If you're retiring at 35, you might want a greater safety margin, so let's say 3%. That gives you 60K a year. How do you retire on 60K a year? Obviously take what I'm saying with a grain of salt as I'm a relatively young person and haven't done any of this yet. But...60K is the median household income in the US, so half of families in the US live on less. If you're retired, you can probably save in ways others can't. For instance: * Housing. You don't need to stay in a high cost of living city, so move to a much cheaper area (maybe a college town). * Education. You have much more time, so send your kids to all public education, and use your extra time to educate them further. * Debt. You have a ton of assets. Why hold any debt? * Automobiles. Bike instead, if you're physically able. * Health. Probably the hardest one since insurance in the US is tied to employment. I understand the recommended approach here is to pay out of pocket for a plan, but many have trouble with this. Of course, the standard advice is to use the extra time you have due to retirement to stay as healthy as possible, but I acknowledge this isn't a perfect plan. [1] https://www.mrmoneymustache.com/ https://www.mrmoneymustache.com/ [2] https://www.madfientist.com/ https://www.madfientist.com/
  - tempestn 7y ago
    Good advice. Just one nitpick: The 4% rule, which states you can as a rule of thumb safely withdraw 4% of the starting capital per year in real dollars (IE increase it each year to account for inflation), is intended for a standard retirement period (65+) and does expect the principal to decrease. There's more debate as to what would be a safe withdrawal rate over the long term without depleting principal, but I expect 3% would be a bit on the high side, although not unreasonable if one has a backup like part-time work. Of course, that's assuming you withdraw 3% of the initial amount each year and adjust for inflation. Obviously if you only withdraw 3% of the current amount each year you'll never run out, by definition, but you might end up with shrinking spending money. Still, just a nitpick. I agree with you in principle for sure.
    - villahousut 7y ago
      That's a bit incorrect. Returns from a typical investment portfolio have been over 4% for the last 10-20 years, so that's the amount you can withdraw without depleting any principal. If you're looking to consume your whole principal by the time you die you can go way ahead of 4%, easily double that.
- rhexs 7y ago
  Easily by not living in the Bay Area. People FIRE at 1 million, which I always found a bit silly considering we're in the midst of an amazing market hyperinflated by some rather concerning fiscal policy, but with 2 you can weather a lot of bad years. Family with kids in a big, expensive city? Probably not.
- hdhdhdd 7y ago
  400k- taxes = 270k for joined filing Monthly expenses = 3k mortgage+ 500 property taxes + 2k daycare for one child(or 529) + 1.5k for food and other = 84k Without compounding interest you need 10 years to get 2m, and these salaries are for 5+ or more years of experience. (And you need down payment, etc.). Living in those areas is expensive. If you are making 500k, that's a different story :-)
  - aiiane 7y ago
    people never factor in healthcare into this calculus.
    - hdhdhdd 7y ago
      Yup, I forgot about it. 7-8k max out of pocket (in-network) for family. In some companies there is also some payment for the health plan out of pocket. But the diff here is that on HSA plans the out of pocket comes before taxes.
- stubish 7y ago
  With no or self-sustaining offspring, you can retire on $US2M in savings just about anywhere in the world; not silicon valley and a handful of similar locations. Most of the world, including many places you would consider holiday resorts and amazing places to live, is quite achievable if you stay away from boats, fast cars and gambling. Its how people doing the same job in other cities get by earning half as much.
Waterluvian 7y ago
Interesting, thanks. Now I wonder how many of these jobs are 100% work from home. I'm not sure a salary doubling could take me away from my family and into commuting an hour a day. But I mean, if they're going to pay me to engineer in my pyjamas, sure! =)
- andreilys 7y ago
  Remote work at FANG is possible but usually earned through a niche in-demand skill set or years at the company.
  - hawaiianbrah 7y ago
    Or finding the right team within!
- stubish 7y ago
  None of them are 100% work from home. Work from home pays work-from-home market rates, not high end silicon valley rates. There will be some, but they will have negotiated a switch from office work to remote work after a few years, or have hard to source specialist skills.
  - deleted 7y ago
    [deleted]
- qqwaabb 7y ago
  I effectively have 100% work from home for a FANG. I live in the Midwest and my compensation is the same as engineers working from HQ. I worked from HQ for a few years then told my manager I was gonna quit to move closer to family and we ended up being to arrange this. I fly to HQ a few times a year to have face time with my team. Not sure how long this arrangement will last, but it’s been awesome so far.
burfog 7y ago
Pay is partly based on cost of living, and cost of living helps to set the market rates. You'd have to pay me 10 times more than I get now, with a huge hiring bonus, to make me move to San Francisco. I'm not alone in this thinking. This is why the market rate is high. Part of that is sort of circular, due to the bidding war for housing. Part is that some people just hate the political insanity. Part is that people have family connections elsewhere and they have hobbies that are incompatible with San Francisco.
- shuckles 7y ago
  Let’s say you’re the median American SWE getting paid $80k a year. You’re saying you wouldn’t move to SFBA for less than $800k/yr in total compensation? I find that hard to imagine.
  - burfog 7y ago
    I can see what it costs. Getting $800k/yr means a house of about $1,600,000 should be affordable, but that gets you trash. Getting a "house" that PHYSICALLY TOUCHES the neighbor's house will go for more than that in a semi-tolerable San Francisco neighborhood. That is substandard living conditions.
    - govg 7y ago
      How do you afford housing wherever you make $80k? Unless literally everything comparable costs 10x in SF, there's no logical way you can say 10x is the mark at which SF wages are pegged at.
      - shuckles 7y ago
        In accounting, this is an idea known as operating leverage.
    - shuckles 7y ago
      $1.6m will get you 2,200 square feet of sweet, sweet detached single family living in Pacifica, Berkeley, or Marin. Double an $80k annual income will get you a 640 square foot home with $250/square foot land and construction costs, so not a particularly high end or spacious place.

by typest 7y ago

glglwty 7y ago

A senior position in the doc will probably get you ~2M in savings by 35. How do you retire with that?

synaesthesisx 7y ago
Agreed - that’s not enough to retire on that young unless one relocates to a very LCOL area.
Swizec 7y ago
Using the 5% drawdown rule, 2M in savings is enough to have a 100k/year income in perpetuity without adding to savings. Idea being that average market returns are 7%. So if you use 5% per year, you will never run out.
- rhexs 7y ago
  5% is not a safe withdrawal rate for "in perpetuity". 3% is much more realistic if you want to be conservative.
  - Swizec 7y ago
    Yes it's a rule of thumb not the law of thermodynamics. Run your numbers with your own parameters for details.
  - villahousut 7y ago
    That's assuming you want to leave the whole 2 million principal in your will to your children. I don't see why - if you want to retire, you can consume the whole principal while you live.
    - thedufer 7y ago
      You can't plan to spend your last dollar on your deathbed unless you can predict every expense, the market, and the day you'll die, especially over a retirement that long (potentially 50+ years). Planning to leave something behind is really your only chance, unless you're comfortable with a very high chance of bankruptcy along the way.
3fe9a03ccd14ca5 7y ago
Even at a meager 2% interest that’s $40k a year. That’s a comfortable wage in much of the USA, especially if you’ve been camping in an RV for a decade to retire.
- perl4ever 7y ago
  I don't believe anything I read on HN about the lifestyles of the SV elite, but I think this scenario is comical if it were representative. You get paid well into six figures but have "to camp in an RV for a decade", and then you retire with a $40K income. You could have just gotten a $40K job at some place* that didn't kill your soul! In ten years, you'd be making at least $60K. And if you burned out for whatever reason anyway, you could go on disability. *by place, I mean either employer or city.
mc3 7y ago
you'd be in a position to invest too as you go.
typest 7y ago
You read through all the advice in these blogs [1][2]. Seriously. If you are invested in low cost index funds, most assume you can safely withdraw 4% a year and not deplete your principal. If you're retiring at 35, you might want a greater safety margin, so let's say 3%. That gives you 60K a year. How do you retire on 60K a year? Obviously take what I'm saying with a grain of salt as I'm a relatively young person and haven't done any of this yet. But...60K is the median household income in the US, so half of families in the US live on less. If you're retired, you can probably save in ways others can't. For instance: * Housing. You don't need to stay in a high cost of living city, so move to a much cheaper area (maybe a college town). * Education. You have much more time, so send your kids to all public education, and use your extra time to educate them further. * Debt. You have a ton of assets. Why hold any debt? * Automobiles. Bike instead, if you're physically able. * Health. Probably the hardest one since insurance in the US is tied to employment. I understand the recommended approach here is to pay out of pocket for a plan, but many have trouble with this. Of course, the standard advice is to use the extra time you have due to retirement to stay as healthy as possible, but I acknowledge this isn't a perfect plan. [1] https://www.mrmoneymustache.com/ https://www.mrmoneymustache.com/ [2] https://www.madfientist.com/ https://www.madfientist.com/
- tempestn 7y ago
  Good advice. Just one nitpick: The 4% rule, which states you can as a rule of thumb safely withdraw 4% of the starting capital per year in real dollars (IE increase it each year to account for inflation), is intended for a standard retirement period (65+) and does expect the principal to decrease. There's more debate as to what would be a safe withdrawal rate over the long term without depleting principal, but I expect 3% would be a bit on the high side, although not unreasonable if one has a backup like part-time work. Of course, that's assuming you withdraw 3% of the initial amount each year and adjust for inflation. Obviously if you only withdraw 3% of the current amount each year you'll never run out, by definition, but you might end up with shrinking spending money. Still, just a nitpick. I agree with you in principle for sure.
  - villahousut 7y ago
    That's a bit incorrect. Returns from a typical investment portfolio have been over 4% for the last 10-20 years, so that's the amount you can withdraw without depleting any principal. If you're looking to consume your whole principal by the time you die you can go way ahead of 4%, easily double that.
rhexs 7y ago
Easily by not living in the Bay Area. People FIRE at 1 million, which I always found a bit silly considering we're in the midst of an amazing market hyperinflated by some rather concerning fiscal policy, but with 2 you can weather a lot of bad years. Family with kids in a big, expensive city? Probably not.
hdhdhdd 7y ago
400k- taxes = 270k for joined filing Monthly expenses = 3k mortgage+ 500 property taxes + 2k daycare for one child(or 529) + 1.5k for food and other = 84k Without compounding interest you need 10 years to get 2m, and these salaries are for 5+ or more years of experience. (And you need down payment, etc.). Living in those areas is expensive. If you are making 500k, that's a different story :-)
- aiiane 7y ago
  people never factor in healthcare into this calculus.
  - hdhdhdd 7y ago
    Yup, I forgot about it. 7-8k max out of pocket (in-network) for family. In some companies there is also some payment for the health plan out of pocket. But the diff here is that on HSA plans the out of pocket comes before taxes.
stubish 7y ago
With no or self-sustaining offspring, you can retire on $US2M in savings just about anywhere in the world; not silicon valley and a handful of similar locations. Most of the world, including many places you would consider holiday resorts and amazing places to live, is quite achievable if you stay away from boats, fast cars and gambling. Its how people doing the same job in other cities get by earning half as much.

Waterluvian 7y ago

Interesting, thanks. Now I wonder how many of these jobs are 100% work from home. I'm not sure a salary doubling could take me away from my family and into commuting an hour a day. But I mean, if they're going to pay me to engineer in my pyjamas, sure! =)

andreilys 7y ago
Remote work at FANG is possible but usually earned through a niche in-demand skill set or years at the company.
- hawaiianbrah 7y ago
  Or finding the right team within!
stubish 7y ago
None of them are 100% work from home. Work from home pays work-from-home market rates, not high end silicon valley rates. There will be some, but they will have negotiated a switch from office work to remote work after a few years, or have hard to source specialist skills.
- deleted 7y ago
  [deleted]
qqwaabb 7y ago
I effectively have 100% work from home for a FANG. I live in the Midwest and my compensation is the same as engineers working from HQ. I worked from HQ for a few years then told my manager I was gonna quit to move closer to family and we ended up being to arrange this. I fly to HQ a few times a year to have face time with my team. Not sure how long this arrangement will last, but it’s been awesome so far.

burfog 7y ago

Pay is partly based on cost of living, and cost of living helps to set the market rates. You'd have to pay me 10 times more than I get now, with a huge hiring bonus, to make me move to San Francisco. I'm not alone in this thinking. This is why the market rate is high. Part of that is sort of circular, due to the bidding war for housing. Part is that some people just hate the political insanity. Part is that people have family connections elsewhere and they have hobbies that are incompatible with San Francisco.

shuckles 7y ago
Let’s say you’re the median American SWE getting paid $80k a year. You’re saying you wouldn’t move to SFBA for less than $800k/yr in total compensation? I find that hard to imagine.
- burfog 7y ago
  I can see what it costs. Getting $800k/yr means a house of about $1,600,000 should be affordable, but that gets you trash. Getting a "house" that PHYSICALLY TOUCHES the neighbor's house will go for more than that in a semi-tolerable San Francisco neighborhood. That is substandard living conditions.
  - govg 7y ago
    How do you afford housing wherever you make $80k? Unless literally everything comparable costs 10x in SF, there's no logical way you can say 10x is the mark at which SF wages are pegged at.
    - shuckles 7y ago
      In accounting, this is an idea known as operating leverage.
  - shuckles 7y ago
    $1.6m will get you 2,200 square feet of sweet, sweet detached single family living in Pacifica, Berkeley, or Marin. Double an $80k annual income will get you a 640 square foot home with $250/square foot land and construction costs, so not a particularly high end or spacious place.