Author Topic: Average household income of FIRE success stories?  (Read 12722 times)

mathlete

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Re: Average household income of FIRE success stories?
« Reply #50 on: August 13, 2019, 03:08:30 PM »
I see a spectrum with two ends being “self made” and the other “not deserving it”. We work hard and are blessed with brains and good instincts, but as a top 10% married to another top 10%, I don’t believe we “deserve” what we earn even though we have worked hard to get here.

What I mean is that while I am incredibly grateful for what we have, don’t get me wrong, I really don’t feel like we are 4x smarter/harder working/more valuable than other people I see in other industries who are also smart and educated and work hard. Our society chooses to monetarily value some professions over others. That isn’t necessarily a reflection of how much good those jobs bring to society.

I have had this tickle in the back of my mind for a little while but doing our tax returns for 2018 really brought the feeling home. It was a high water mark for our household income, but still I felt it was silly high. Oh well. Be grateful and sock away as much of it as we can!

Agree with pretty much all of this.

Within certain cohorts, I think hard work and pay probably have a positive correlation. Like, a colleague who stays until 7:00 PM or later every night may make more money due to working harder. If you look at the entire country (hell, probably the entire world) as a whole though, hard work and pay are probably inversely correlated.

If I were born in 1500s Europe, my scientific brain may have had me branded a heretic against the church. If I were born 100 years from now, my skills may be useless next to my machine-brain counterpart. Since I was born in the late 20th century in America though, I had the opportunity to make a lot of money.

Great reasons to count my blessings, count my dollars, and keep my head down. Not a great reason to fancy myself a guru or a titan of puritan work-ethic.

MrThatsDifferent

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Re: Average household income of FIRE success stories?
« Reply #51 on: August 13, 2019, 03:20:32 PM »
This forum is very heavily skewed to rich people who consider themselves middle class, and many of the FIRE stories are uninspiring because it can be a giant circle jerk of people living above average lifestyles with tremendous incomes to compensate for lack of any real sacrifice.
Ouch

Bullshit! I sacrificed a lot for my high income and worked my ass of to get it and keep working my ass off to keep it. Ever since discovering FIRE Iíve made saving and increasing my income priorities so I can FIRE as quickly as possible and make up for the years when I didnít have the income and/or didnít have strategies or a plan to save and invest. I donít feel guilty about shit. Itís all a journey and no one, unless they win the lottery, has an easy path. If you get there, you earned it.
I don't think he meant that you haven't made sacrifices to get to a place with a high income. I think he meant that most here with high incomes don't have to make sacrifices in terms of lifestyle to get to FIRE. Most don't live in a tiny shared studio apt or with several roommate, they don't have to decide between fixing the roof or investing,  or have to go without a car,.cable tv, nice vacations, new clothes, and a Vitamix blender so that they can save for FI. Most high income earners can live a regular middle class life style AND still save for FIRE. Most of us lower income types could FIRE in a few years just by living like we do/did but had the high salary instead of it taking 20 years and having to go without all those little luxuries.

Well, I want to say most, but Iíll speak for myself here, I may not have to sacrifice some things lifestyle-wise but to have the high income, Iím definitely sacrificing some of my life for work and I would imagine that many high income people are doing the same. I donít know too many high income people who arenít working their asses off for that salary. And not that lower or middle income people donít work their asses of as well. I just know I carry a lot more responsibility than my receptionist. Work doesnít creep into his home life. I want to FIRE so badly and quickly so I can get a full life back without feeling like Iím carrying the weight of the world on my shoulders and work dominating my life. You know what people say when I talk about this, well, thatís why you get paid the big bucks. Thereís no sympathies for us. So yeah, there is sacrifice, just from a different angle.
But you do have the option to retire much earlier than say the enlisted Grunt making $1500/month who's working 24/7 in a dangerous part of the world with no nights, weekends, and holidays off who hasn't seen they're family for months. Or the electrician who is repairing a high wire in a 20 below zero blizzard at midnight on Christmas. Or the first responder who's out rescuing a capsized yacht in a hurricane. Etc. Lots of low income people work a ton and have a different kind of weight on their shoulder. Not being snarky just trying to flow some perspective.

In any case you do have the ability to FIRE much much sooner then a lower income person and lift that weight from your shoulder. There's no trick just live like a low income person regardless.of your income for a few years and save the rest. If a lower income person earns an after tax income of $50k and saves 1/2 that and can manage on $25k a year for living expenses than surely a person making $200k a year can save $175k each year and live the same lifestyle as the $ 25k per year person does. Sure it'll require trade offs (I prefer the word  trade offs to sacrifices) but its doable unless you have extenuating circumstances. If you don't like your high income but soul and life sucking job then live like us "poor" a couple of years and free yourself from the.grind.

Youíre right in many of these points and actually I do live way below my income now, except for housing. Iím definitely not going to live an hour from work and share a space with multiple people to pay the lowest amount possible. But look at MMM, income wise heís making half mil a year but lives off of $25k. Clearly the difference is peace of mind. I can live off less but know that I can always splurge if I want or get out of jams and never have that, I canít afford this feeling of the paycheck to paycheck feeling.

bmjohnson35

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Re: Average household income of FIRE success stories?
« Reply #52 on: August 13, 2019, 03:50:47 PM »

I didn't expect so much controversy over this posting.  I was simply pointing out an observation. 

I started out making just above minimum wage around 30 yrs ago, went back to school part-time while working full time (on my employer's dime), accepted more responsibility and progressed up to where I am today.  I certainly don't feel ashamed about where I am or how I got here, but I do understand that my present salary is higher than average. 

BJ

mathlete

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Re: Average household income of FIRE success stories?
« Reply #53 on: August 13, 2019, 04:20:09 PM »

I didn't expect so much controversy over this posting.  I was simply pointing out an observation. 

I started out making just above minimum wage around 30 yrs ago, went back to school part-time while working full time (on my employer's dime), accepted more responsibility and progressed up to where I am today.  I certainly don't feel ashamed about where I am or how I got here, but I do understand that my present salary is higher than average. 

BJ

I'm not sure where the suggestion that anyone should be ashamed came from. But it seems to come up a lot. As in, "I'm not going to apologize for/be ashamed of my success."

RWTL

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Re: Average household income of FIRE success stories?
« Reply #54 on: August 13, 2019, 05:25:24 PM »


...I started out making just above minimum wage around 30 yrs ago, went back to school part-time while working full time (on my employer's dime), accepted more responsibility and progressed up to where I am today.... 

BJ

I'd buy you a beer.  I respect this so much.

APowers

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Re: Average household income of FIRE success stories?
« Reply #55 on: August 13, 2019, 09:45:56 PM »
If your income is 6 figures and you're surprised at how disproportionately many people are on here with $200k incomes, think how outnumbered those of us with <$30k incomes feel, lol!

ender

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Re: Average household income of FIRE success stories?
« Reply #56 on: August 13, 2019, 10:02:37 PM »
It's important to emphasize that "The Shockingly Simple Math...." concept is applicable to NET INCOME after taxes.  As income increases, the drag of taxes increases at a much faster rate.  A higher gross income (relative to expenses) is not directly proportional to a faster path to FIRE, as those with lower gross incomes.

This is really naive.

If you spend $40k a year, and make:

  • $50k/year
  • $60k/year

who retires faster?

The "income tax is a drag" only matters if your spending stays proportional to your income. Which the overwhelming majority of people do. It's also how most people think about spending. Even on here it's always "savings rate [percentage]" not "spending rate [absolute]."



BicycleB

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Re: Average household income of FIRE success stories?
« Reply #57 on: August 13, 2019, 10:26:05 PM »
Accumulated wealth really starts to shoot upwards once income exceeds the 75th percentile for your age range -



https://www.nytimes.com/interactive/2019/08/12/upshot/are-you-rich-where-does-your-net-worth-rank-wealth.html

@EscapeVelocity2020, thanks for posting this. This is exactly the graph I've been wishing to see for a long time.

elaine amj

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Re: Average household income of FIRE success stories?
« Reply #58 on: August 13, 2019, 10:44:08 PM »
My DH and I made fairly average salaries for most of our lives and I was able to retire at 39.

< 28: DH earned $60k and I stayed home. Decided DH should not seek promotions while the kids were young.

28-30: Earned $25-35k/yr as I started my career. DH kept earning about $60k

30-36: I got a new job and earned $55-60k/year. DH stayed at $60-70k (with raises)

36-39: DH got a big promotion and started earning $90k. I stayed at $60k.

Retired last November at 39.

So we really didn't earn a ton of money until the very end. We were focused and saved a ton throughout our lives together and only inflated our lifestyles a tiny bit when our income started going up.

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Bloop Bloop

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Re: Average household income of FIRE success stories?
« Reply #59 on: August 13, 2019, 11:34:39 PM »
It's important to emphasize that "The Shockingly Simple Math...." concept is applicable to NET INCOME after taxes.  As income increases, the drag of taxes increases at a much faster rate.  A higher gross income (relative to expenses) is not directly proportional to a faster path to FIRE, as those with lower gross incomes.

This is really naive.

If you spend $40k a year, and make:

  • $50k/year
  • $60k/year

who retires faster?

The "income tax is a drag" only matters if your spending stays proportional to your income. Which the overwhelming majority of people do. It's also how most people think about spending. Even on here it's always "savings rate [percentage]" not "spending rate [absolute]."

Where I live, the more land you hold, the higher rate you pay on land tax (ie it is a progressive scale); so just by having more in investment, you necessarily end up with a higher tax bill proportional to your income and assets. So there is no way for your spending rate to be absolute, because as your assets go up, your spending does passively.

Even a linear, non-progressive tax, like council rates, will cause you to have higher spending as your assets go up, independent of your income.

Metalcat

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Re: Average household income of FIRE success stories?
« Reply #60 on: August 15, 2019, 08:24:40 AM »
FIRE literally only means saving more to retire earlier.
That's it. That's all.

Retiring early also isn't some fundamentally virtuous thing where the path there needs to be dissected with respect to worthiness.

Everything in life is a trade off. Everything.
The personal, financial decisions that people make are personal to them. One person living on $X and saving Y% of their $Z income might be making the best and smartest trade offs for their happiness and well being, another might have the exact same figures and be fucking miserable.

One person's wise and admirable decisions is another's self-destructive and utterly unwise folly.

What's admirable and yes, virtuous, is having the wisdom, self knowledge, and discipline to know and do what's right in order to live your best life.

FIRE@50

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Re: Average household income of FIRE success stories?
« Reply #61 on: August 15, 2019, 08:40:44 AM »
My DH and I made fairly average salaries for most of our lives and I was able to retire at 39.

< 28: DH earned $60k and I stayed home. Decided DH should not seek promotions while the kids were young.

28-30: Earned $25-35k/yr as I started my career. DH kept earning about $60k

30-36: I got a new job and earned $55-60k/year. DH stayed at $60-70k (with raises)

36-39: DH got a big promotion and started earning $90k. I stayed at $60k.

Retired last November at 39.

So we really didn't earn a ton of money until the very end. We were focused and saved a ton throughout our lives together and only inflated our lifestyles a tiny bit when our income started going up.

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I'm not trying to single you out, but I think it is important to note that if these were American dollars (I see that you are Canadian) and you lived in America, your household income for the entire time frame that you laid out was above average. I guess this goes back to the NYT article/calculator that recently came out which shows how most people's feelings about their income are not inline with reality.

https://www.thebalance.com/what-is-average-income-in-usa-family-household-history-3306189

Thank you for sharing your numbers. It is really interesting to see how different people get it done.

EscapeVelocity2020

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Re: Average household income of FIRE success stories?
« Reply #62 on: August 15, 2019, 09:25:43 AM »
FIRE literally only means saving more to retire earlier.
That's it. That's all.

Retiring early also isn't some fundamentally virtuous thing where the path there needs to be dissected with respect to worthiness.

Everything in life is a trade off. Everything.
The personal, financial decisions that people make are personal to them. One person living on $X and saving Y% of their $Z income might be making the best and smartest trade offs for their happiness and well being, another might have the exact same figures and be fucking miserable.

One person's wise and admirable decisions is another's self-destructive and utterly unwise folly.

What's admirable and yes, virtuous, is having the wisdom, self knowledge, and discipline to know and do what's right in order to live your best life.

Pretty much sums it up.

I would just add, this trade-off of the "living on $X and saving Y% of their $Z income" changes throughout your life and the quality of life it gives is influenced by circumstances (like if you want to be near family/work/hobbies in a HCOL area, if you want to homestead, if you want kids, if you want to travel, if you want pets, if your health situation changes...). 

So yeah, everyone is going to have a trade-off vs. quality of life that is different, but hopefully you get the tools here to make the best of what you've got and make wise choices.  In general terms though, saving and investing early gives you more options vs. trying to do more saving later in life. 

So as the OP points out, the most efficient way to FIRE is to make a lot of money as early as possible.  Ironically, that's also one of the easier times to have a high saving rate (no kids, no lifestyle inflation, geographic flexibility, etc.).  Then you can hit FI in 10 years and start a blog in your 30's telling everyone how great ER is.


golfreak12

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Re: Average household income of FIRE success stories?
« Reply #63 on: August 15, 2019, 07:59:28 PM »
I started out really late in life and didn't make much money at all until recently.
This is my income according to my social security statement.

1990- $4991
1991- $9038
1992- $7682
1993- $6290
1994- $6286
1995- $5218
1996- $1252
1997- $6392
1998- $6228
1999- $8503
2000- $7891
2001- $11,411
2002- $25,340
2003- $43,xxx
2004- $30,xxx
2005- $32,xxx
2006- $40,xxx
2007- $25,xxx
2008- $56,xxx
2009- $50,xxx
2010- $43,xxx
2011- $49,xxx
2012- $65,xxx
2013- $73,xxx
2014- $111,xxx
2015- $121,xxx
2016- $134,xxx
2017- $131,xxx
2018- $126,xxx
2019- $70,xxx and Wife got a full time job.

I didn't have a full time job until 2002. Even after that the salary was average. Nothing special, just a lot of savings.
I have been raking it in since 2014 though.
I got married in 2011 and had to support my wife going through school and such until this year and she got a $48k job. Going forward, I will probably just hit $100k + wife $48k for $150k/per.
I'm 45 now and our NW just hit $900k. We could easily retire now and move to our home country, Vietnam and live very comfortably. We decided to see where we are at in 5 yrs and decide then. We will probably call it quit if we reach $1.5 mil in 5 yrs.


elaine amj

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Re: Average household income of FIRE success stories?
« Reply #64 on: August 15, 2019, 08:00:38 PM »
My DH and I made fairly average salaries for most of our lives and I was able to retire at 39.

< 28: DH earned $60k and I stayed home. Decided DH should not seek promotions while the kids were young.

28-30: Earned $25-35k/yr as I started my career. DH kept earning about $60k

30-36: I got a new job and earned $55-60k/year. DH stayed at $60-70k (with raises)

36-39: DH got a big promotion and started earning $90k. I stayed at $60k.

Retired last November at 39.

So we really didn't earn a ton of money until the very end. We were focused and saved a ton throughout our lives together and only inflated our lifestyles a tiny bit when our income started going up.

Sent from my VCE-AL00 using Tapatalk
I'm not trying to single you out, but I think it is important to note that if these were American dollars (I see that you are Canadian) and you lived in America, your household income for the entire time frame that you laid out was above average. I guess this goes back to the NYT article/calculator that recently came out which shows how most people's feelings about their income are not inline with reality.

https://www.thebalance.com/what-is-average-income-in-usa-family-household-history-3306189

Thank you for sharing your numbers. It is really interesting to see how different people get it done.
So true and yes, I definitely realize we have made above median salaries for our working lives. It just feels very average when compared to the highly paid engineers and megacorp folks on this site sometimes. Still, we have always felt we live luxurious lifestyles. Although it does feel simple as my parents were highly paid professionals with the fancy house and fancy cars to match.

Still, not super highly paid and it didn't take us all that long even without massive sacrifices or a life of constant denial. We lived very comfortable lives then and continue with the same lifestyle today.

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Cassie

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Re: Average household income of FIRE success stories?
« Reply #65 on: August 15, 2019, 08:10:24 PM »
Elaine, thatís impressive on your incomes. Curious what you spend every year and how many people? If too personal ignore me:))

Kyle Schuant

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Re: Average household income of FIRE success stories?
« Reply #66 on: August 15, 2019, 08:54:34 PM »
The personal, financial decisions that people make are personal to them. One person living on $X and saving Y% of their $Z income might be making the best and smartest trade offs for their happiness and well being, another might have the exact same figures and be fucking miserable.

One person's wise and admirable decisions is another's self-destructive and utterly unwise folly.
Correct. What I would like to see more of is people making deliberate decisions - that is, decisions they deliberated on, thought about, weighed the pros and cons. Another finance guy The Barefoot Investor advises a monthly Financial Date Night where the couple (or the single and a friend) sit down and discuss finances and what they want to achieve.

Many people simply drift. For some, that might mean drifting from your impoverished life into corner drug-dealing, unplanned pregnancies and early death. For others, that might mean drifting from a prestigious private school into a law degree to practice when it bores them, and a very high-spending high-debt high-stress lifestyle with marriage breakup. Nobody should drift, we should take the helm and steer the boat of our lives in the direction we have deliberated and decided on. Some will encounter more storms than others, but everyone who takes the helm will get closer to where they want than those who just drift.

Metalcat

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Re: Average household income of FIRE success stories?
« Reply #67 on: August 16, 2019, 06:51:19 AM »
The personal, financial decisions that people make are personal to them. One person living on $X and saving Y% of their $Z income might be making the best and smartest trade offs for their happiness and well being, another might have the exact same figures and be fucking miserable.

One person's wise and admirable decisions is another's self-destructive and utterly unwise folly.
Correct. What I would like to see more of is people making deliberate decisions - that is, decisions they deliberated on, thought about, weighed the pros and cons. Another finance guy The Barefoot Investor advises a monthly Financial Date Night where the couple (or the single and a friend) sit down and discuss finances and what they want to achieve.

Many people simply drift. For some, that might mean drifting from your impoverished life into corner drug-dealing, unplanned pregnancies and early death. For others, that might mean drifting from a prestigious private school into a law degree to practice when it bores them, and a very high-spending high-debt high-stress lifestyle with marriage breakup. Nobody should drift, we should take the helm and steer the boat of our lives in the direction we have deliberated and decided on. Some will encounter more storms than others, but everyone who takes the helm will get closer to where they want than those who just drift.

I mean...sure...but it's a hell of a lot more nuanced than that.

I've volunteered at enough homeless shelters to know that surviving isn't easy or in any way passive.
I also went to high school with a lot of those elite kids who never felt like they had any choice but to become doctors and lawyers, and saw what it did to them psychologically (and the subsequent suicides, addictions, etc) and I long ago learned not to make assumptions.

People don't tend to "drift" out of passivity, what you perceive as drifting is more like succumbing to enormous pressures that you might not be able to relate to or empathize with.

I get paid to talk to people about finance and even the most seemingly mindless-spendy ones tend to think a lot about their spending, it's not that they're mindless, it's that the reasons behind their spending aren't mentally healthy, so they're not thinking about it in a productive way.
They tend to casually talk about it as if it's mindless, but if you drill down into it, it's a form of self soothing that they actively psychologically quarantine off from rational thought.
It's not passive, it's actually pretty complicated mental gymnastics. Which is typical of pretty much all self-destructive behaviours.

Those of us who spend mindfully aren't above anyone, we're not superior or wiser, we just have a much, much more productive relationship with spending.

I *was* going to say that we have a healthier relationship with money, but then I remembered that A LOT of people here post really troubling accounts of relationships with money based on fear and anxiety, and I decided to rephrase it.

If you see someone "drifting", there's a reason for it. It may not be a sane reason, but there's a reason and it's probably not a simple one to resolve with just "manning up" or "taking the helm".

bluebelle

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Re: Average household income of FIRE success stories?
« Reply #68 on: August 16, 2019, 07:22:45 AM »
Those of us who spend mindfully aren't above anyone, we're not superior or wiser, we just have a much, much more productive relationship with spending.

I *was* going to say that we have a healthier relationship with money, but then I remembered that A LOT of people here post really troubling accounts of relationships with money based on fear and anxiety, and I decided to rephrase it.

If you see someone "drifting", there's a reason for it. It may not be a sane reason, but there's a reason and it's probably not a simple one to resolve with just "manning up" or "taking the helm".
thank you for the reminder to not be too judgey.   I think it's too easy and common to try and rank ourselves against others, just to feel better.

And you're very correct, I see posts on this form that suggest an unhealthy relationship with money.   Folks agonizing over spending for something they want and can afford, but think they need a face-punch for it.

Metalcat

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Re: Average household income of FIRE success stories?
« Reply #69 on: August 16, 2019, 08:49:29 AM »
Those of us who spend mindfully aren't above anyone, we're not superior or wiser, we just have a much, much more productive relationship with spending.

I *was* going to say that we have a healthier relationship with money, but then I remembered that A LOT of people here post really troubling accounts of relationships with money based on fear and anxiety, and I decided to rephrase it.

If you see someone "drifting", there's a reason for it. It may not be a sane reason, but there's a reason and it's probably not a simple one to resolve with just "manning up" or "taking the helm".
thank you for the reminder to not be too judgey.   I think it's too easy and common to try and rank ourselves against others, just to feel better.

And you're very correct, I see posts on this form that suggest an unhealthy relationship with money.   Folks agonizing over spending for something they want and can afford, but think they need a face-punch for it.

Unhealthy relationships with things that trigger dopamine responses are pretty normal.

Most people have a degree of unhealthy relationship with something out there that tickles their brain receptors, whether it's an instinct to overindulge, or a reaction to be overly-restrictive.

Balance is not an easy thing to find or maintain, and it is very easy to judge others whose struggles with balance are significantly different from our own. It can seem absurd if it's nothing like our own particular version of the balancing act.

rantk81

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Re: Average household income of FIRE success stories?
« Reply #70 on: August 16, 2019, 08:56:52 AM »
It's important to emphasize that "The Shockingly Simple Math...." concept is applicable to NET INCOME after taxes.  As income increases, the drag of taxes increases at a much faster rate.  A higher gross income (relative to expenses) is not directly proportional to a faster path to FIRE, as those with lower gross incomes.

This is really naive.

If you spend $40k a year, and make:

  • $50k/year
  • $60k/year

who retires faster?

The "income tax is a drag" only matters if your spending stays proportional to your income.

Disagree 100%.  It is not naive; it is factual.

Consider spending $40k/year.  Single.  Only standard deduction.  No state income tax for ease of comparisons.

Scenario 1: Make $100K/yr gross.
Net after taxes:  Salary(100K) - FICA&Medicare(7650) - FedTax(15,246) = 77,104
Spending: 40,000
Savings: 37,104
Savings Rate of Gross: 37,104 / 100K = 37.1%

Scenario 2: Make $200K/yr gross
Net after taxes: Salary(200K) - FICA&Mediare(11,139) - FedTax(41,411) = 147,450
Spending: 40,000
Savings: 107,450
Savings Rate of Gross: 107,450 / 200K = 53.7%

Even through the gross income in scenario 2 is 100% higher than that in scenario 1, and spending was held constant-dollar-wise, the savings rate between the scenarios was only increased by:  (53.7 - 37.1) / 37.1 = 44.7%


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Re: Average household income of FIRE success stories?
« Reply #71 on: August 16, 2019, 09:10:07 AM »
It's important to emphasize that "The Shockingly Simple Math...." concept is applicable to NET INCOME after taxes.  As income increases, the drag of taxes increases at a much faster rate.  A higher gross income (relative to expenses) is not directly proportional to a faster path to FIRE, as those with lower gross incomes.

This is really naive.

If you spend $40k a year, and make:

  • $50k/year
  • $60k/year

who retires faster?

The "income tax is a drag" only matters if your spending stays proportional to your income.

Disagree 100%.  It is not naive; it is factual.

Consider spending $40k/year.  Single.  Only standard deduction.  No state income tax for ease of comparisons.

Scenario 1: Make $100K/yr gross.
Net after taxes:  Salary(100K) - FICA&Medicare(7650) - FedTax(15,246) = 77,104
Spending: 40,000
Savings: 37,104
Savings Rate of Gross: 37,104 / 100K = 37.1%

Scenario 2: Make $200K/yr gross
Net after taxes: Salary(200K) - FICA&Mediare(11,139) - FedTax(41,411) = 147,450
Spending: 40,000
Savings: 107,450
Savings Rate of Gross: 107,450 / 200K = 53.7%

Even through the gross income in scenario 2 is 100% higher than that in scenario 1, and spending was held constant-dollar-wise, the savings rate between the scenarios was only increased by:  (53.7 - 37.1) / 37.1 = 44.7%

You are definitely correct that net income is what matters for the shockingly simple math. I also think that the end result of tax drag is less than it seems with the above numbers.

In Scenario 1, the savings rate on net income is around 50%, resulting in about 17 years to FI.

In Scenario 2, the savings rate on net income is around 72%, resulting in about 8.5 years to FI.

A 100% increase in income cuts time to FI in half. When looked at that way the drag doesn't seem as crazy.

mathlete

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Re: Average household income of FIRE success stories?
« Reply #72 on: August 16, 2019, 09:16:39 AM »
Disagree 100%.  It is not naive; it is factual.

Consider spending $40k/year.  Single.  Only standard deduction.  No state income tax for ease of comparisons.

Scenario 1: Make $100K/yr gross.
Net after taxes:  Salary(100K) - FICA&Medicare(7650) - FedTax(15,246) = 77,104
Spending: 40,000
Savings: 37,104
Savings Rate of Gross: 37,104 / 100K = 37.1%

Scenario 2: Make $200K/yr gross
Net after taxes: Salary(200K) - FICA&Mediare(11,139) - FedTax(41,411) = 147,450
Spending: 40,000
Savings: 107,450
Savings Rate of Gross: 107,450 / 200K = 53.7%

Even through the gross income in scenario 2 is 100% higher than that in scenario 1, and spending was held constant-dollar-wise, the savings rate between the scenarios was only increased by:  (53.7 - 37.1) / 37.1 = 44.7%

It looks bad if your metric is % of gross income saved. And I do understand why you picked that. You're making a point about gross vs. net, and your point is well taken. Income tax does drag on your savings / gross as you make more money.

But in the same sense that savings / gross takes a hit because of income tax, savings takes a hit on the lower end due to the immutable cost of surviving in the modern world. You could call it an immutable cost to survive tax. If each pays $6K a year for a modest apartment, $100K guy pays a 6% "house tax" while $200K guy pays 3%.

I'd rather be the guy complaining about higher income taxes.
« Last Edit: August 16, 2019, 09:21:26 AM by mathlete »

honeybbq

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Re: Average household income of FIRE success stories?
« Reply #73 on: August 16, 2019, 10:28:54 AM »
I have a relatively high income, but I think if my income was 200k+ I would have a harder time FIREing.  If you are FI and you can keep working and make $20/hr for your time or $100/hr for your time - the $100/hr seems more tempting.  So I think the medium-high salary range is going to have the most FIREees.  High enough to make reaching FI easy, but low enough to not make wasting more of your time worth it.

Golden handcuffs. Story of my life.

(I'll be joining the circle jerk later)

honeybbq

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Re: Average household income of FIRE success stories?
« Reply #74 on: August 16, 2019, 10:31:48 AM »
Accumulated wealth really starts to shoot upwards once income exceeds the 75th percentile for your age range -



https://www.nytimes.com/interactive/2019/08/12/upshot/are-you-rich-where-does-your-net-worth-rank-wealth.html

Where's the 35 to 55 bracket? lol

Milizard

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Re: Average household income of FIRE success stories?
« Reply #75 on: August 16, 2019, 10:44:43 AM »
The personal, financial decisions that people make are personal to them. One person living on $X and saving Y% of their $Z income might be making the best and smartest trade offs for their happiness and well being, another might have the exact same figures and be fucking miserable.

One person's wise and admirable decisions is another's self-destructive and utterly unwise folly.
Correct. What I would like to see more of is people making deliberate decisions - that is, decisions they deliberated on, thought about, weighed the pros and cons. Another finance guy The Barefoot Investor advises a monthly Financial Date Night where the couple (or the single and a friend) sit down and discuss finances and what they want to achieve.

Many people simply drift. For some, that might mean drifting from your impoverished life into corner drug-dealing, unplanned pregnancies and early death. For others, that might mean drifting from a prestigious private school into a law degree to practice when it bores them, and a very high-spending high-debt high-stress lifestyle with marriage breakup. Nobody should drift, we should take the helm and steer the boat of our lives in the direction we have deliberated and decided on. Some will encounter more storms than others, but everyone who takes the helm will get closer to where they want than those who just drift.

I mean...sure...but it's a hell of a lot more nuanced than that.

I've volunteered at enough homeless shelters to know that surviving isn't easy or in any way passive.
I also went to high school with a lot of those elite kids who never felt like they had any choice but to become doctors and lawyers, and saw what it did to them psychologically (and the subsequent suicides, addictions, etc) and I long ago learned not to make assumptions.

People don't tend to "drift" out of passivity, what you perceive as drifting is more like succumbing to enormous pressures that you might not be able to relate to or empathize with.

I get paid to talk to people about finance and even the most seemingly mindless-spendy ones tend to think a lot about their spending, it's not that they're mindless, it's that the reasons behind their spending aren't mentally healthy, so they're not thinking about it in a productive way.
They tend to casually talk about it as if it's mindless, but if you drill down into it, it's a form of self soothing that they actively psychologically quarantine off from rational thought.
It's not passive, it's actually pretty complicated mental gymnastics. Which is typical of pretty much all self-destructive behaviours.

Those of us who spend mindfully aren't above anyone, we're not superior or wiser, we just have a much, much more productive relationship with spending.

I *was* going to say that we have a healthier relationship with money, but then I remembered that A LOT of people here post really troubling accounts of relationships with money based on fear and anxiety, and I decided to rephrase it.

If you see someone "drifting", there's a reason for it. It may not be a sane reason, but there's a reason and it's probably not a simple one to resolve with just "manning up" or "taking the helm".
POTD!

BicycleB

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Re: Average household income of FIRE success stories?
« Reply #76 on: August 16, 2019, 12:34:43 PM »

I've volunteered at enough homeless shelters to know that surviving isn't easy or in any way passive.
I also went to high school with a lot of those elite kids who never felt like they had any choice but to become doctors and lawyers, and saw what it did to them psychologically (and the subsequent suicides, addictions, etc) and I long ago learned not to make assumptions.

People don't tend to "drift" out of passivity, what you perceive as drifting is more like succumbing to enormous pressures that you might not be able to relate to or empathize with.

I get paid to talk to people about finance and even the most seemingly mindless-spendy ones tend to think a lot about their spending, it's not that they're mindless, it's that the reasons behind their spending aren't mentally healthy, so they're not thinking about it in a productive way.
They tend to casually talk about it as if it's mindless, but if you drill down into it, it's a form of self soothing that they actively psychologically quarantine off from rational thought.
It's not passive, it's actually pretty complicated mental gymnastics. Which is typical of pretty much all self-destructive behaviours.

Those of us who spend mindfully aren't above anyone, we're not superior or wiser, we just have a much, much more productive relationship with spending.

I *was* going to say that we have a healthier relationship with money, but then I remembered that A LOT of people here post really troubling accounts of relationships with money based on fear and anxiety, and I decided to rephrase it.

If you see someone "drifting", there's a reason for it. It may not be a sane reason, but there's a reason and it's probably not a simple one to resolve with just "manning up" or "taking the helm".

Very insightful! As in, opened my mind in the sense of helping me understand things I had nooot recognized before. Thx.

Metalcat

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Re: Average household income of FIRE success stories?
« Reply #77 on: August 16, 2019, 12:44:54 PM »
Quote from: BicycleB link=topic=107181.msg2440406#msg2440406 dat

Very insightful! As in, opened my mind in the sense of helping me understand things I had nooot recognized before. Thx.

Neat-o, thanks for the feedback.

I'm having a bit of a day today, reflecting pretty deeply on self destructive behaviour. Gonna go drink cheap wine with my dad in the woods now instead of dumping my existential angst onto the forums ;)

rantk81

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Re: Average household income of FIRE success stories?
« Reply #78 on: August 16, 2019, 01:24:08 PM »
I'd rather be the guy complaining about higher income taxes.
Agreed. That's a good "problem" to have :)

roomtempmayo

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Re: Average household income of FIRE success stories?
« Reply #79 on: August 16, 2019, 01:25:03 PM »
I don't see FIRE skewed toward all high earners.  What I see it skewed toward are high earners who also spent relatively little on credentials to earn a high income.  I think those who spent $200k+ on professional credentialing usually make a fair amount, but aren't in any great hurry to leave their jobs generally.

skip207

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Re: Average household income of FIRE success stories?
« Reply #80 on: August 16, 2019, 01:46:19 PM »
One thing of note, as an observer from the UK on this mostly American forum is that US pay rates always seem much, much higher than the UK.  It seems to me its not uncommon for people to earn >$50k in the USA.   Office workers, teachers, police officers, nurses etc etc.

All these jobs in the UK would be lucky to pull $30k a year working 40 hr weeks. 

 

OurTown

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Re: Average household income of FIRE success stories?
« Reply #81 on: August 16, 2019, 01:54:06 PM »
I don't see FIRE skewed toward all high earners.  What I see it skewed toward are high earners who also spent relatively little on credentials to earn a high income.  I think those who spent $200k+ on professional credentialing usually make a fair amount, but aren't in any great hurry to leave their jobs generally.


I have a friend who just finished dental school.  He is going to outpace me in earnings right out of the starting date; however, he has a butt ton of student loans to repay and he has to take out more loans to buy all the equipment.

MrThatsDifferent

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Re: Average household income of FIRE success stories?
« Reply #82 on: August 16, 2019, 02:34:06 PM »
One thing of note, as an observer from the UK on this mostly American forum is that US pay rates always seem much, much higher than the UK.  It seems to me its not uncommon for people to earn >$50k in the USA.   Office workers, teachers, police officers, nurses etc etc.

All these jobs in the UK would be lucky to pull $30k a year working 40 hr weeks. 

 

On the flip side, Australians earn much more than Americans it seems.

rantk81

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Re: Average household income of FIRE success stories?
« Reply #83 on: August 16, 2019, 05:37:21 PM »
https://www.google.com/search?q=2018+median+household+income+us

Per "household" (which is larger than per "individual") median was $61,372 last year.

https://wallethacks.com/average-median-income-in-america/


Body Surfer

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Re: Average household income of FIRE success stories?
« Reply #84 on: August 17, 2019, 02:36:11 PM »
NYC has beaches too

Kyle Schuant

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Re: Average household income of FIRE success stories?
« Reply #85 on: August 17, 2019, 08:53:15 PM »
I've volunteered at enough homeless shelters to know that surviving isn't easy or in any way passive.
And I've been homeless, and you're right.

Quote
People don't tend to "drift" out of passivity, what you perceive as drifting is more like succumbing to enormous pressures that you might not be able to relate to or empathize with.
Spoken like someone who's never been sailing or seen a tidal wave. When you drift, you are subject to enormous forces in the flow of the sea. And it takes a lot of work to overcome that. That you are "drifting" does not mean the forces are not great; indeed, if there were no forces acting on you, you wouldn't drift, you'd just sit still.

I acknowledged: it ain't easy. But most don't try. They're too busy being overwhelmed by the trivial shit of day-to-day to change their direction. I don't blame them. But I would like to see more people give it a go.

blacktea

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Re: Average household income of FIRE success stories?
« Reply #86 on: August 18, 2019, 09:25:29 PM »
Everyone has their own sacrifice to make in their own journey. I just don't buy the argument that high-earners get spoon fed. This country is full of opportunities. Working hard on math and getting an advanced degree on STEM almost guarantees a high income. Sure, I don't need scarify my life style to save every penny for retirement. What I scarify my life style for is continue learning, working hard and making sure my kids have the discipline working hard for their future. When I look around, majority of my colleagues came from average hard working middle class families, can hardly be qualified as spoon fed.

HBFIRE

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Re: Average household income of FIRE success stories?
« Reply #87 on: August 18, 2019, 09:53:30 PM »

You have that backwards. A few had it spoon-fed, and most have earned it. Studies of millionaires show that the vast majority are self-made.

Exactly this.  Earning a ton of money is a skillset and should be admired.  Increasing income is the fastest way to FI, too much focus is placed on reducing spending in this community.  If your really want to move the needle fast, learn how to earn more.
« Last Edit: August 18, 2019, 09:55:01 PM by HBFIRE »

BlueHouse

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Re: Average household income of FIRE success stories?
« Reply #88 on: August 19, 2019, 11:22:03 AM »
I personally thought high pay was less a function of hard work/longer hours/ demands of the job then replaceability. If your airplane mechanic spent 2 years to become a journey level mechanic but the pilot spent 10 to get all their training - even of they worked the same amount of hours - he will be harder to replace so will be paid much higher.  Regardless of the fact that both could equally kill a plane full of people if they were negligent.

Good point.  Where I live, anyone who has a security clearance is unlikely to take a job that won't hold the clearance, simply because having that clearance makes you much harder to replace, so there's some measure of job security with it.  I just had a former colleague ask me if I wanted to work at their company and her first disclaimer was "you'd lose your clearance.  Are you willing to give that up?"

jj1800

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Re: Average household income of FIRE success stories?
« Reply #89 on: August 19, 2019, 11:25:39 AM »
I don't find my own FIRE story particularly interesting, but a lot of people seem to because of how "out there" it is - summarized, we're a receptionist/freelance editor couple, live in a major city, generally make around 80K, save 65%, travel to five or six countries a year, and have some... unusual hobbies and habits, to say the least. Current projections have us retiring around 35, and possibly building a remote island homestead. We have a blog and I have a MMM journal as well.

I hate you, but I also I love you and I am off to read your entire journal.

Greenback Reproduction Specialist

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Re: Average household income of FIRE success stories?
« Reply #90 on: August 19, 2019, 01:12:56 PM »
Accumulated wealth really starts to shoot upwards once income exceeds the 75th percentile for your age range -



https://www.nytimes.com/interactive/2019/08/12/upshot/are-you-rich-where-does-your-net-worth-rank-wealth.html

Thanks for the link! Very interesting.
« Last Edit: August 19, 2019, 04:02:52 PM by Greenback Reproduction Specialist »

EscapeVelocity2020

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Re: Average household income of FIRE success stories?
« Reply #91 on: August 19, 2019, 09:24:42 PM »
@BicycleB @Greenback Reproduction Specialist - Very welcome!  I know I didn't need to reply, but it is nice when folks on the forum take the time to say thanks

HenryDavid

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Re: Average household income of FIRE success stories?
« Reply #92 on: August 20, 2019, 02:24:33 AM »
Here in Canada we only made it to the national median household income late in my career. Never caught up with the local medianóin an oil town, forget about it.
But no matter. The logic of continuous spending reduction, ever greater savings percentage, investment and maybe real estate income, plus time . . . will get you there.
We started when I was 45ish, no debt though. Done by 57. And like I said, median income at best.

Greenback Reproduction Specialist

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Re: Average household income of FIRE success stories?
« Reply #93 on: August 20, 2019, 08:01:19 AM »
@BicycleB @Greenback Reproduction Specialist - Very welcome!  I know I didn't need to reply, but it is nice when folks on the forum take the time to say thanks

You bet!

24hrs later..... I still cant wrap my head around where the article suggests we are in relation to our age group, sure doesnt feel that way most days. Its really just a grind and makes me wonder if it will ever feel any different. I imagine when we FIRE it might, that could be a real game changer.

roomtempmayo

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Re: Average household income of FIRE success stories?
« Reply #94 on: August 20, 2019, 08:18:26 AM »
If I were born in 1500s Europe, my scientific brain may have had me branded a heretic against the church. If I were born 100 years from now, my skills may be useless next to my machine-brain counterpart. Since I was born in the late 20th century in America though, I had the opportunity to make a lot of money.

Great reasons to count my blessings, count my dollars, and keep my head down. Not a great reason to fancy myself a guru or a titan of puritan work-ethic.

This is a pretty great perspective-check.  Even without turning to history, it's worth noting that today opportunities are still largely geographically limited, and where we all start in life is pure chance.

There are tens of thousands of people on the southern border of the United States right now who understand that geography matters for opportunity, and they're doing everything they possibly can to change their geography.  Odds are, lots of them are way more talented than me.

So why do I see radically different rewards in my life for my efforts?  Well, I was born on the other side of the border, to college-educated parents.  It's only from that accident that all the other good stuff flows.

Metalcat

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Re: Average household income of FIRE success stories?
« Reply #95 on: August 20, 2019, 08:19:45 AM »
@BicycleB @Greenback Reproduction Specialist - Very welcome!  I know I didn't need to reply, but it is nice when folks on the forum take the time to say thanks

You bet!

24hrs later..... I still cant wrap my head around where the article suggests we are in relation to our age group, sure doesnt feel that way most days. Its really just a grind and makes me wonder if it will ever feel any different. I imagine when we FIRE it might, that could be a real game changer.

That's because the goal posts get moved drastically by trying to retire early.
Project your savings rate results if you were to work until 65 and then you will see how rich you are compared to Gen Pop.

mathlete

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Re: Average household income of FIRE success stories?
« Reply #96 on: August 20, 2019, 08:30:02 AM »
This is a pretty great perspective-check.  Even without turning to history, it's worth noting that today opportunities are still largely geographically limited, and where we all start in life is pure chance.

There are tens of thousands of people on the southern border of the United States right now who understand that geography matters for opportunity, and they're doing everything they possibly can to change their geography.  Odds are, lots of them are way more talented than me.

So why do I see radically different rewards in my life for my efforts?  Well, I was born on the other side of the border, to college-educated parents.  It's only from that accident that all the other good stuff flows.

I think about this a lot. Certainly some are more talented than I, though I have the benefit of better education. But I'm 100% positive that most of them are much harder working than I am. We focus on hard work because it's the input that we can (maybe) control. And that's great. But I fear that leads many of us to mistakenly think that hard work is more important than it actually is in the grand scheme of things. If hard work mattered, I'd probably be a median global citizen, and those folks at the border would have my job and my life.

Metalcat

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Re: Average household income of FIRE success stories?
« Reply #97 on: August 20, 2019, 08:40:08 AM »
This is a pretty great perspective-check.  Even without turning to history, it's worth noting that today opportunities are still largely geographically limited, and where we all start in life is pure chance.

There are tens of thousands of people on the southern border of the United States right now who understand that geography matters for opportunity, and they're doing everything they possibly can to change their geography.  Odds are, lots of them are way more talented than me.

So why do I see radically different rewards in my life for my efforts?  Well, I was born on the other side of the border, to college-educated parents.  It's only from that accident that all the other good stuff flows.

I think about this a lot. Certainly some are more talented than I, though I have the benefit of better education. But I'm 100% positive that most of them are much harder working than I am. We focus on hard work because it's the input that we can (maybe) control. And that's great. But I fear that leads many of us to mistakenly think that hard work is more important than it actually is in the grand scheme of things. If hard work mattered, I'd probably be a median global citizen, and those folks at the border would have my job and my life.

My staff work infinitely harder than I do, as do my colleagues, and yet I produce more than they do and make more than they do.
Hard work is far more productive compared to not working hard, sure, but knowing where to put your efforts is far more productive and efficient in terms of outcomes.

My resistance to hard work is actually what makes me so efficient. If it's not easy, enjoyable, and likely to produce an excellent outcome, then why bother doing it.

Greenback Reproduction Specialist

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Re: Average household income of FIRE success stories?
« Reply #98 on: August 20, 2019, 08:49:33 AM »
That's because the goal posts get moved drastically by trying to retire early.
Makes sense : )

Project your savings rate results if you were to work until 65 and then you will see how rich you are compared to Gen Pop.

It is RIDICULOUS what a very high savings rate AND compound interest will do over 30yrs.... Its mind blowing!

mathlete

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Re: Average household income of FIRE success stories?
« Reply #99 on: August 20, 2019, 08:52:40 AM »
Project your savings rate results if you were to work until 65 and then you will see how rich you are compared to Gen Pop.

I think about this sometimes too. I could create generational wealth if I wanted to. Though I currently have no heirs.