4 ms·

There’s a decent point here, but it’s not insurmountable. If these people lived on $32k net (in today’s dollars) their entire lives, they definitely won’t need

There’s a decent point here, but it’s not insurmountable. If these people lived on $32k net (in today’s dollars) their entire lives, they definitely won’t need $1.5m (in today’s dollars) for retirement. That would generate about $60k (gross) in retirement income. Social security, assuming no future raises (and therefore higher benefits) and a 25% haircut to payout, would cover about $15k. So they’d need $17k in portfolio income, which is a $425k nest egg. Or they could work part time, or get a raise at some point, or delay claiming social security and work longer for a larger benefit. This plan could go wrong. But it also makes a serious of fairly pessimistic assumptions about the person’s entire working career. And it doesn’t require extreme frugality either - the friends I have making <$40k still eat out and go to concerts. There’s this pervasive myth (exemplified by the top-level comment) that moving to a big city is an unmitigated financial disaster that requires an upper-middle class income to defray, and I just don’t think it’s true.

zug_zug 4y ago
yeah I guess that checks out assuming you're committed to never having a family and I guess you won't have much of a safety net. Still to get to a 425 nest-egg starting with nothing in the bank at age 30 requires putting $10k away a year, which is out-of-the-question on $40k in NYC.
- javanissen 4y ago
  To be fair, committing to never having children is not uncommon among people in my age group (mid-twenties). And I agree - it's a shit plan, but there are a set of relatively pessimistic assumptions embedded in the shit plan as well: - No raises throughout the entire career lifetime - No economy of scale through marriage - Significant SS benefits cut - Never earning another cent in earned income after retiring at the full retirement age of 67 - Living for thirty years after retirement (which is the baseline for the 4% rule; average life expectancy at birth in America in 2021 is an atrocious 76.1 years) - No "extreme" frugality measures - relatively frequent eating out and going to concerts/basketball games - Low real returns on any accrued savings Note that none of this - absolutely none of it - is an argument that America should not expand the safety net, or that we shouldn't fix the housing market. I'm just saying that people with average incomes still have options, even in New York City

zug_zug 4y ago

yeah I guess that checks out assuming you're committed to never having a family and I guess you won't have much of a safety net. Still to get to a 425 nest-egg starting with nothing in the bank at age 30 requires putting $10k away a year, which is out-of-the-question on $40k in NYC.

javanissen 4y ago
To be fair, committing to never having children is not uncommon among people in my age group (mid-twenties). And I agree - it's a shit plan, but there are a set of relatively pessimistic assumptions embedded in the shit plan as well: - No raises throughout the entire career lifetime - No economy of scale through marriage - Significant SS benefits cut - Never earning another cent in earned income after retiring at the full retirement age of 67 - Living for thirty years after retirement (which is the baseline for the 4% rule; average life expectancy at birth in America in 2021 is an atrocious 76.1 years) - No "extreme" frugality measures - relatively frequent eating out and going to concerts/basketball games - Low real returns on any accrued savings Note that none of this - absolutely none of it - is an argument that America should not expand the safety net, or that we shouldn't fix the housing market. I'm just saying that people with average incomes still have options, even in New York City