3 ms·

Divided by 40 years it doesn't look like much...

nitwit005 1y ago
$10k a year is a huge amount. The median US salary is $61k. Also realistically, you're likely getting a loan, so you need to factor in interest.
- moralestapia 1y ago
  Not sure why you're downvoted as this is true. (and there's nothing wrong with you expressing this opinion) Not everyone in the US makes 500k TC doing remote work. 400k for a degree is absolute bonkers!
  - Projectiboga 1y ago
    To pay $400k off over even 20 years at 6%, which is below the average student loan rate is just over $2,000 a month and it is mostly not tax free. Our society is messing up with how expensive this has gotten. The bloat is facilities and administrators who earn two and three or more times the tenured professor salary. The guarantors have to be the schools themselves and those execs who take these bloated salaries. And that interest isn't deductable other than a pittance of $2,500 or less in a year. Here is the IRS about this; Student loan interest is interest you paid during the year on a qualified student loan. It includes both required and voluntarily prepaid interest payments. You may deduct the lesser of $2,500 or the amount of interest you actually paid during the year. The deduction is gradually reduced and eventually eliminated by phaseout when your modified adjusted gross income (MAGI) amount reaches the annual limit for your filing status. https://www.irs.gov/taxtopics/tc456 https://www.irs.gov/taxtopics/tc456
- araes 1y ago
  Agree, and the $61,000 part is much of what this article is missing. Its a lot like "weep for those making $300,000/year" when most families are making less than half of that on average (almost a third, $122k if both family members are pulling average). However, taxes tell us they're not even doing that great. If your family is reporting a family income of $122k, you're already at approximately the upper 25% threshold. The $61,000 number hides a really L-shaped distribution skewed heavily toward the $2,500,000+ crowd. Previously calculated 2024 statistics from another post. in the most recent tax filing season data available (2024), there were tax returns of: Top 1% Top 5% Top 10% Top 25% Top 50% Bottom 50% All Taxpayers Number of Returns 1,535,899 7,679,495 15,358,991 38,397,477 76,794,954 76,794,954 153,589,908 Average Income Taxes Paid $653,730 $187,468 $108,251 $50,963 $27,891 $667 $14,279 Adjusted Gross Income (Millions) $3,872,395 $6,182,180 $7,745,525 $10,613,602 $13,191,209 $1,531,038 $14,722,247 If we then break those into the actual groups, and numbers per group, then we find their Average Per Capita Income 1 2-5 6-10 11-25 26-50 51-100 Number of Returns 1,535,899 6,143,596 7,679,496 23,038,486 38,397,477 76,794,954 Income Taxes Paid (Millions) $1,004,063 $435,594 $222,966 $294,234 $185,068 $51,225 Adjusted Gross Income (Millions) $3,872,395 $2,309,785 $1,563,345 $2,868,077 $2,577,607 $1,531,038 Average Tax Rate 25.9% 18.9% 14.3% 10.3% 7.2% 3.3% Average Per Capita Income $2,521,256.28 $375,966.29 $203,573.91 $124,490.69 $67,129.59 $19,936.70
thephyber 1y ago
Just like compounding interest, a VERY small percentage advantage each year snowballs to be a large advantage over a full career. A college degree in the industry you work in also means your job security is MUCH higher than those without a degree.
missedthecue 1y ago
What about just giving your kid $400,000 in index funds when they become an adult? What does that look like after 40 years?
- throwup238 1y ago
  It would be a ton with ~10% annualized returns on the SNP500 since 1985, especially if you reinvest dividends. Someone who lives very frugally can probably just live off the interest off that 400k alone and if they bank unitl a million, they can have a safe buffer and a comfortable lifestyle. If they reinvest all of it for fourty years since 1985 it’d be worth on the order of $10-25 million. It’s actually quite stark how bad it’s gotten. I’d rather just give a kid that money to invest and have them live at home doing whatever work floats their fancy until they can live comfortably on interest alone.

$10k a year is a huge amount. The median US salary is $61k. Also realistically, you're likely getting a loan, so you need to factor in interest.

moralestapia 1y ago
Not sure why you're downvoted as this is true. (and there's nothing wrong with you expressing this opinion) Not everyone in the US makes 500k TC doing remote work. 400k for a degree is absolute bonkers!
- Projectiboga 1y ago
  To pay $400k off over even 20 years at 6%, which is below the average student loan rate is just over $2,000 a month and it is mostly not tax free. Our society is messing up with how expensive this has gotten. The bloat is facilities and administrators who earn two and three or more times the tenured professor salary. The guarantors have to be the schools themselves and those execs who take these bloated salaries. And that interest isn't deductable other than a pittance of $2,500 or less in a year. Here is the IRS about this; Student loan interest is interest you paid during the year on a qualified student loan. It includes both required and voluntarily prepaid interest payments. You may deduct the lesser of $2,500 or the amount of interest you actually paid during the year. The deduction is gradually reduced and eventually eliminated by phaseout when your modified adjusted gross income (MAGI) amount reaches the annual limit for your filing status. https://www.irs.gov/taxtopics/tc456 https://www.irs.gov/taxtopics/tc456
araes 1y ago
Agree, and the $61,000 part is much of what this article is missing. Its a lot like "weep for those making $300,000/year" when most families are making less than half of that on average (almost a third, $122k if both family members are pulling average). However, taxes tell us they're not even doing that great. If your family is reporting a family income of $122k, you're already at approximately the upper 25% threshold. The $61,000 number hides a really L-shaped distribution skewed heavily toward the $2,500,000+ crowd. Previously calculated 2024 statistics from another post. in the most recent tax filing season data available (2024), there were tax returns of: Top 1% Top 5% Top 10% Top 25% Top 50% Bottom 50% All Taxpayers Number of Returns 1,535,899 7,679,495 15,358,991 38,397,477 76,794,954 76,794,954 153,589,908 Average Income Taxes Paid $653,730 $187,468 $108,251 $50,963 $27,891 $667 $14,279 Adjusted Gross Income (Millions) $3,872,395 $6,182,180 $7,745,525 $10,613,602 $13,191,209 $1,531,038 $14,722,247 If we then break those into the actual groups, and numbers per group, then we find their Average Per Capita Income 1 2-5 6-10 11-25 26-50 51-100 Number of Returns 1,535,899 6,143,596 7,679,496 23,038,486 38,397,477 76,794,954 Income Taxes Paid (Millions) $1,004,063 $435,594 $222,966 $294,234 $185,068 $51,225 Adjusted Gross Income (Millions) $3,872,395 $2,309,785 $1,563,345 $2,868,077 $2,577,607 $1,531,038 Average Tax Rate 25.9% 18.9% 14.3% 10.3% 7.2% 3.3% Average Per Capita Income $2,521,256.28 $375,966.29 $203,573.91 $124,490.69 $67,129.59 $19,936.70

thephyber 1y ago

Just like compounding interest, a VERY small percentage advantage each year snowballs to be a large advantage over a full career. A college degree in the industry you work in also means your job security is MUCH higher than those without a degree.

missedthecue 1y ago

What about just giving your kid $400,000 in index funds when they become an adult? What does that look like after 40 years?

throwup238 1y ago
It would be a ton with ~10% annualized returns on the SNP500 since 1985, especially if you reinvest dividends. Someone who lives very frugally can probably just live off the interest off that 400k alone and if they bank unitl a million, they can have a safe buffer and a comfortable lifestyle. If they reinvest all of it for fourty years since 1985 it’d be worth on the order of $10-25 million. It’s actually quite stark how bad it’s gotten. I’d rather just give a kid that money to invest and have them live at home doing whatever work floats their fancy until they can live comfortably on interest alone.