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4 people who earn six figures and still feel broke

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I'm curious. How much do most people think needs to be saved in order to retire? I'd say about 2 million is pretty safe, to retire at age 55.
 
shadow9d9 said:
I'm curious. How much do most people think needs to be saved in order to retire? I'd say about 2 million is pretty safe, to retire at age 55.
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If you can get 3% interest, that would net you $60,000 per year, which would be great. Even better if you could add some chunk of that back to your savings, but if you can retire at 55, you're going to want to live it up while you can.
 
shadow9d9 said:
I'm curious. How much do most people think needs to be saved in order to retire? I'd say about 2 million is pretty safe, to retire at age 55.
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What kind of lifestyle do you want?

I think I could live on $35k/year net. Life would revolve around internet + TV. For a conservative 6% yield, that's $500k. I'd be effed over time by inflation though.

About $1M would be about ok. That's $50k-ish a year net if it's mainly cap gains and low tax dividends. Lot of internet + TV, but maybe a trip a year, and just enough to lessen the effect of inflation.
 
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given that the situation described in the OP is a single-earner just barely making 6 figures with a wife who doesn't work and a child, it makes sense.

I've got a friend who makes about $60k and supports a wife/kid on that, but they live very, very frugally -- one car, no vacations outside of traveling to visit out of state family, etc. there's no way they're saving money to buy a house at this point.

not planning on a kid simplifies my own situation... my boyfriend and I are starting to seriously talk about moving in together, and I figure we find a cheap apartment that will allow each of us to save at least $200/month, which we'll save for a down payment... $4,800/year (plus extra from overtime, holiday bonus, etc) and we'll have enough for a nice downpayment after 4 years of cheap living without having to do anything like taking money from retirement savings.
 
shadow9d9 said:
I'm curious. How much do most people think needs to be saved in order to retire? I'd say about 2 million is pretty safe, to retire at age 55.
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1mil would be plenty if invested right. 1mil hard cash, that is, not 1 mil minus taxes etc...

If I was to live like I make 50k (25k cash give or take) it would take 40 years to deplete that 1mil if it's just sitting in a zero interest bank account. In reality I'd invest a chunk of it and see a financial advisor to see what my best and safest options are.

I make 60-70k right now and live very comfortably. House, car, lots of toys, and no debt. Well I occasionally have money on the credit line but I try to keep that clear. I spent a lot of money in 2013 so I was starting to accumulate credit. Had nearly 3k on the credit line, but I wiped all of that recently when my company shares came in, and that spending is mostly done for the time being. (basement/server room renos) This year I want to save up more, perhaps even make a couple extra mortgage payments.

Basically if I was to let go of certain luxuries like buying lot of server stuff and downgrading my web hosting package to a really cheap VPS I could live on 50k if I had to. Could also get rid of TV service and cell, and stick with the basic internet package with landline. Maybe even sell the car (insurance and gas is at least $300/mo). When you start looking at everything you pay monthly for there are probably lot of things you can downsize or get rid of if you are willing to make sacrifices.
 
GTaudiophile said:
Georgia Tech + HOPE Scholarship + Co-Op employee at Delta Air Lines = no debt and $$$ in the bank after 4 years.

It's possible.

(This was back in 2002.)
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Similar thing for me, and I started in 2004. My out of pocket cost for BS and MS combined was $30k (this included living on-campus for 3 semesters). And that was mostly paid with Co-op, part-time, and a full-time job (while I was doing my MS).

As far as making six-figures, that really depend on where you live and what your career path is like. I'm currently working in the SF Bay area and clearing six-figures, but I'm basically living like I'm still in college (room-mates). Sure, we splurge bit on alcohol and eating out (usually 1-2 times / weekend). I've started to shop for cloths at Macy's & Gap (rather than Kohl's). But, none of us really feel like "we've made it". The biggest change is mainly being able to max out our retirement contributions.

It's all about relative wealth and your environment. BMWs are more common than Civics in my commute. People pay CASH for houses that cost $1 million. It's insane. My plan is to save up as much as I can (while still having bits of fun) for few years, and move to a much cheaper city. There's no way I can settle roots here comfortably.
 
Red Squirrel said:
1mil would be plenty if invested right. 1mil hard cash, that is, not 1 mil minus taxes etc...

If I was to live like I make 50k (25k cash give or take) it would take 40 years to deplete that 1mil if it's just sitting in a zero interest bank account. In reality I'd invest a chunk of it and see a financial advisor to see what my best and safest options are.

I make 60-70k right now and live very comfortably. House, car, lots of toys, and no debt. Well I occasionally have money on the credit line but I try to keep that clear. I spent a lot of money in 2013 so I was starting to accumulate credit. Had nearly 3k on the credit line, but I wiped all of that recently when my company shares came in, and that spending is mostly done for the time being. (basement/server room renos) This year I want to save up more, perhaps even make a couple extra mortgage payments.

Basically if I was to let go of certain luxuries like buying lot of server stuff and downgrading my web hosting package to a really cheap VPS I could live on 50k if I had to. Could also get rid of TV service and cell, and stick with the basic internet package with landline. Maybe even sell the car (insurance and gas is at least $300/mo). When you start looking at everything you pay monthly for there are probably lot of things you can downsize or get rid of if you are willing to make sacrifices.
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The only problem is that in my scenario, I assumed that the money would be in a retirement account, so you'd have to take taxes into account when withdrawing. 1 million in the bank, on the other hand, would not require taxes be paid when withdrawing. Assuming a 30% tax rate, you'd need 1.5 million in retirement to have the equivalent of 1 million in a bank.
 
GTaudiophile said:
Georgia Tech + HOPE Scholarship + Co-Op employee at Delta Air Lines = no debt and $$$ in the bank after 4 years.

It's possible.

(This was back in 2002.)
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It's definitely possible but not very possible now. Unless you're a top student and received a full ride scholarship, there's no way to avoid debt without help from parents.

I went to a public state school, had assistance from the government every year(I'm paying my ass up in taxes now, mind you), had part-time jobs, had paid internships, and I still accumulated 22k in student loans.

Luckily, I paid it all off in about a year.
 
Chaotic42 said:
If you can get 3% interest, that would net you $60,000 per year, which would be great. Even better if you could add some chunk of that back to your savings, but if you can retire at 55, you're going to want to live it up while you can.
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QFT. Most would want to live better in retirement than while working, otherwise what's the point?
 
Take a million and buy 10 100k condos. Rent them out. You have a steady income around 10k a month and the principal investment is appreciating.
 
Markbnj said:
Well, I make six figures, and my wife is a nurse and with her income added in we make a solid six figures... and we feel broke a lot of the time. Trying to maintain the lifestyle we both grew up with - couple of kids, middle class home in a suburb, nice yard, couple of cars, couple of pets - has become a very expensive proposition in the northeast. We chose the town we live in twelve years ago for the excellent schools, but we often feel like we made a mistake. If we had chosen a town with a lower median income then perhaps our children would have noticed how much they have, rather than constantly being confronted with people who have a lot more. I don't know. What I do know is that the middle class is getting squeezed to the breaking point in America.
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6 figures in the north east ! = 6 figures in other parts of the US (majority). I think that needs to be stated more often.

I make the equivalent of 6 figures in terms of living in silicon valley 😛 Which in all honesty, I could probably get a transfer and adjusted pay if I really wanted to.
 
Squeetard said:
Take a million and buy 10 100k condos. Rent them out. You have a steady income around 10k a month and the principal investment is appreciating.
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Unfortunately it's not as simple as that. Almost sounds like a troll post, but not sure.

Around 10 years ago many thought this was their holy grail to financial freedom.

Many are holding $1MM in condos worth even as low as $100k.

I have a buddy that just wanted a place to live. Property was really upscale, tons of ammenities, tons of shopping/night lift within walking distance, promised a <90% vacancy rate, no investment properties, blah blah blah.

He paid like $250k and is stuck in a nearly empty building (there are floors with only one person and some with no one on them), a COA that can't make ends meet for repairs and a property that can't sell at even 1/5 the price he paid if he could even afford to let it go.
 
Chaotic42 said:
If you can get 3% interest, that would net you $60,000 per year, which would be great. Even better if you could add some chunk of that back to your savings, but if you can retire at 55, you're going to want to live it up while you can.
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Where can you get 3% interest that would be liquid though?
 
alkemyst said:
Unfortunately it's not as simple as that. Almost sounds like a troll post, but not sure.

Around 10 years ago many thought this was their holy grail to financial freedom.

Many are holding $1MM in condos worth even as low as $100k.

I have a buddy that just wanted a place to live. Property was really upscale, tons of ammenities, tons of shopping/night lift within walking distance, promised a <90% vacancy rate, no investment properties, blah blah blah.

He paid like $250k and is stuck in a nearly empty building (there are floors with only one person and some with no one on them), a COA that can't make ends meet for repairs and a property that can't sell at even 1/5 the price he paid if he could even afford to let it go.
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He got screwed yep. My Buddy is a basic slum lord. Has 34 low rent condos and apartments. Does well at it. It's all in what you buy. Keep in mind the rent does not go up and down with the market. He still getting the same in rent and the value will always come back. He has a vacancy rate of less than 10%. No it's not easy, but real estate is still the best investment currently and of all time.
Edit: And less and less people can afford to buy, making the rental market more and more attractive. He turned them all over to a property mangement firm a few years ago now he is really retired. They take 10%, but he does nothing now.

TheSlamma said:
Where can you get 3% interest that would be liquid though?
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Investments that pay dividends?
 
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Squeetard said:
He got screwed yep. My Buddy is a basic slum lord. Has 34 low rent condos and apartments. Does well at it. It's all in what you buy. Keep in mind the rent does not go up and down with the market. He still getting the same in rent and the value will always come back. He has a vacancy rate of less than 10%. No it's not easy, but real estate is still the best investment currently and of all time.
Edit: And less and less people can afford to buy, making the rental market more and more attractive. He turned them all over to a property mangement firm a few years ago now he is really retired. They take 10%, but he does nothing now.


Investments that pay dividends?
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If less and less people can afford to buy, then what makes you think more and more people can afford to rent?
 
shadow9d9 said:
The only problem is that in my scenario, I assumed that the money would be in a retirement account, so you'd have to take taxes into account when withdrawing. 1 million in the bank, on the other hand, would not require taxes be paid when withdrawing. Assuming a 30% tax rate, you'd need 1.5 million in retirement to have the equivalent of 1 million in a bank.
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To pay 30% overall in federal taxes on your retirement distributions, you'd have to be taking out about $450K EVERY YEAR (single...higher if MFJ). At a 3% withdrawal rate, that's $15M in the retirement account, or $10.5M in an after-tax bank account. A bit higher than your numbers, and I didn't even consider any deductions or exemptions.
 
jagec said:
To pay 30% overall in federal taxes on your retirement distributions, you'd have to be taking out about $450K EVERY YEAR (single...higher if MFJ). At a 3% withdrawal rate, that's $15M in the retirement account, or $10.5M in an after-tax bank account. A bit higher than your numbers, and I didn't even consider any deductions or exemptions.
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I haven't bothered checking, but, are state taxes taken out as well?
 
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