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Exactly. The math is easy, but convincing people that becoming a millionaire is a matter of consistent moderate savings is still hard. $800/month is $9.6K per

Exactly. The math is easy, but convincing people that becoming a millionaire is a matter of consistent moderate savings is still hard. $800/month is $9.6K per year. Approximately half of the maximum 401K contribution limit, so it can be tax-advantaged as well. If you can swing the full 401K maximum, you’ll hit the millionaire status even faster. Add some taxable savings and it can be done in a decade without getting too extreme. A married couple doing this together makes it even more achievable. Unless someone has maxed out their career options (unlikely) almost everyone in software could get a $10-20K bump in the coming year through negotiation or changing jobs. Allocate that raise entirely to tax-advantaged savings and stay consistent for a few decades and it will add up to a million dollars. It doesn’t require FAANG compensation or extreme frugality. It just requires consistency over 20-30 years.

bosie 5y ago
Aren’t 401k taxed? Can you write down the math how a police officer can do this easily (get to 1m purchasing power of today’s value in 10 years) please? I cannot figure it out how to even get a quarter of that
- ericmay 5y ago
  I highly recommend Reddit's Personal Finance subreddit and this item called the "Prime Directive". Try old.reddit.com . https://www.reddit.com/r/personalfinance/wiki/commontopics https://www.reddit.com/r/personalfinance/wiki/commontopics 401ks are taxed (either a Roth or Traditional 401k) but are tax advantaged. Please feel free to contact me directly. Happy to help. It'll be difficult to get to $1mm in purchasing power of today's value in 10 years without saving around $50,000/year or getting extremely lucky.
dragonwriter 5y ago
> The math is easy, but convincing people that becoming a millionaire is a matter of consistent moderate savings is still hard. Consistent moderate savings on top tier income, sure. > $800/month is $9.6K per year. Approximately half of the maximum 401K contribution limit, Also, approximately 1/3 of national median household disposable income after taxes and transfers (NB: not essential expenses, just taxes and transfers) in the United States. > A married couple doing this together makes it even more achievable. Yes, you can become a half-millionaire much faster than a millionaire—brilliant observation. > Unless someone has maxed out their career options (unlikely) almost everyone in software could get a $10-20K bump in the coming year through negotiation or changing jobs. “Software” includes a lot of different occupations, but most of the nob-management ones have median compensation around or substantially below $100K; so you are suggesting most people are leaving upward of 10-20% on the table. That's...unlikely. > It just requires consistency over 20-30 years. Asserting that that is easy in software would be more convincing if we were more than 20-30 years from a major industry crash, or had some structural guarantee of it not happening again. Not completely convincing even then, but more convincing...
- ericmay 5y ago
  > Consistent moderate savings on top tier income, sure. Do keep in mind that the context for this thread was software engineers. The median pay makes saving $10,000/year very, very achievable. > “Software” includes a lot of different occupations, but most of the non-management ones have median compensation around or substantially below $100K; so you are suggesting most people are leaving upward of 10-20% on the table. That's...unlikely. Below $100k sure, but closer to $60,000 or so which again makes this amount of savings very achievable. My first job out of college was exactly this amount and I was saving about $1,000/month in a MCOL city. And if you're making that amount and living in a HCOL of city you may need to consider changing your location. You might not like it, but that's reality. > Asserting that that is easy in software would be more convincing if we were more than 20-30 years from a major industry crash, or had some structural guarantee of it not happening again. This is only a problem if you happen to retire right when a market collapse happens. Even then you adjust your withdrawal rate or try to put retirement off a bit. For those saving 20-30 years, those market dips are buying opportunities as the ROI of the market compounds over time. Given what we know, there's no reason to assume things won't just keep chugging along, at least for the purposes of general discussion. You can say that it won't and give great reasons for that, but I think it's fair to state those up-front. If you want to discuss specifics I think that would make sense, but given that the person your responding to and myself were speaking generally about the software engineering profession (sure maybe there's some confusion there but for my part I was speaking about software engineers) so obviously there's some generalizations and built-in assumptions that are pretty common in the finance space.

bosie 5y ago

Aren’t 401k taxed? Can you write down the math how a police officer can do this easily (get to 1m purchasing power of today’s value in 10 years) please? I cannot figure it out how to even get a quarter of that

ericmay 5y ago
I highly recommend Reddit's Personal Finance subreddit and this item called the "Prime Directive". Try old.reddit.com . https://www.reddit.com/r/personalfinance/wiki/commontopics https://www.reddit.com/r/personalfinance/wiki/commontopics 401ks are taxed (either a Roth or Traditional 401k) but are tax advantaged. Please feel free to contact me directly. Happy to help. It'll be difficult to get to $1mm in purchasing power of today's value in 10 years without saving around $50,000/year or getting extremely lucky.

dragonwriter 5y ago

> The math is easy, but convincing people that becoming a millionaire is a matter of consistent moderate savings is still hard. Consistent moderate savings on top tier income, sure. > $800/month is $9.6K per year. Approximately half of the maximum 401K contribution limit, Also, approximately 1/3 of national median household disposable income after taxes and transfers (NB: not essential expenses, just taxes and transfers) in the United States. > A married couple doing this together makes it even more achievable. Yes, you can become a half-millionaire much faster than a millionaire—brilliant observation. > Unless someone has maxed out their career options (unlikely) almost everyone in software could get a $10-20K bump in the coming year through negotiation or changing jobs. “Software” includes a lot of different occupations, but most of the nob-management ones have median compensation around or substantially below $100K; so you are suggesting most people are leaving upward of 10-20% on the table. That's...unlikely. > It just requires consistency over 20-30 years. Asserting that that is easy in software would be more convincing if we were more than 20-30 years from a major industry crash, or had some structural guarantee of it not happening again. Not completely convincing even then, but more convincing...

ericmay 5y ago
> Consistent moderate savings on top tier income, sure. Do keep in mind that the context for this thread was software engineers. The median pay makes saving $10,000/year very, very achievable. > “Software” includes a lot of different occupations, but most of the non-management ones have median compensation around or substantially below $100K; so you are suggesting most people are leaving upward of 10-20% on the table. That's...unlikely. Below $100k sure, but closer to $60,000 or so which again makes this amount of savings very achievable. My first job out of college was exactly this amount and I was saving about $1,000/month in a MCOL city. And if you're making that amount and living in a HCOL of city you may need to consider changing your location. You might not like it, but that's reality. > Asserting that that is easy in software would be more convincing if we were more than 20-30 years from a major industry crash, or had some structural guarantee of it not happening again. This is only a problem if you happen to retire right when a market collapse happens. Even then you adjust your withdrawal rate or try to put retirement off a bit. For those saving 20-30 years, those market dips are buying opportunities as the ROI of the market compounds over time. Given what we know, there's no reason to assume things won't just keep chugging along, at least for the purposes of general discussion. You can say that it won't and give great reasons for that, but I think it's fair to state those up-front. If you want to discuss specifics I think that would make sense, but given that the person your responding to and myself were speaking generally about the software engineering profession (sure maybe there's some confusion there but for my part I was speaking about software engineers) so obviously there's some generalizations and built-in assumptions that are pretty common in the finance space.