How long would it take you to retire w a salary of $200k / year

[Baylor3217]

Assuming you had no assets or debt at the start. 

How would you go about doing it?

[iamlindoro]

One year.  A Million years.

Either might be true, but you can't estimate without knowing what your savings rate would be (How much would you put away per year) and your projected annual retirement costs.  Once you figure out those two pieces of information, it should be pretty easy to get opinions on how people would do it.

[EscapeVelocity2020]

Holy crap, I started with a salary of 42,000 per year in 1997 and I would've been comfortable if I'd retired at 10 years.  At the time, it was a much less 'above average' salary than 200k/yr today, so should be 10 years or less IMHO!  What kind of trollish thread are you trying to start?  I'm guessing you'll hear 3-10 years over and over and over....  so uh, not a very informative question.

[dragoncar]

7 years.  I'd save around 75% of my net income.  This actually might end up being the path I take (plus or minus because my living expenses aren't actually fixed... I could bail to a low COL area right now if needed).

[sheepstache]

Two.

[Khan]

Depends on the cost of living in the area, but even assuming I was not living like the miser I myself do live like, I can't really see myself spending >60k/year by myself.

So, we'll take 140k/year, let's take away some taxes just to be conservative, so multiply it by .8. That gives me a little over 9300$/month to invest.

Plug it into an investing calculator at an extremely conservative 5% interest rate.
http://www.daveramsey.com/article/investing-calculator/lifeandmoney_investing/#/entry_form

In 5 years, that's ~650k(at 7% interest that's 680k).

For myself? couldn't imagine more then 5 years...(garbage math is garbage)

[2527]

4.53, which assumes one leap year.

[nawhite]

Do I have to wear suits to work? Do I have to live in Silicon Valley? Do I have to entertain customers with a nicer car than my 2-door 11-year old civic? Do I have a spouse in this situation?

If my current job decided to start paying me 200k/year for no good reason a couple things would change drastically and my savings rate probably wouldn't be significantly different than what it is while I'm making 115k now. There are a couple reasons.

I would make too much to contribute to an IRA (sure I could do backdoors but thats still only 5.5k/year). I would become a Highly Compensated Employee (HCE) and thus unable to contribute to the 401k plan at my current rate (probably would decrease my 401k contributions by about 5-10k/year).

My taxes would change too. My marginal tax rate would be higher and so I would pay about 40k (vs 15k) in federal taxes and 8.6k (vs 5k) in state taxes and 15k (vs 8.8k) in FICA taxes. So my taxes went from ~28k/year to ~63k/year so my net paycheck went from 87k/year to ~137k/year. If my spending is 40k/year then my savings rate went from 54% to 70% but I can't use tax advantaged accounts.

According to networthify I go from retiring in
14.9 years (https://networthify.com/calculator/earlyretirement?income=87000&initialBalance=0&expenses=40000&annualPct=5&withdrawalRate=4)
to retiring in
8.8 years (https://networthify.com/calculator/earlyretirement?income=137000&initialBalance=0&expenses=40000&annualPct=5&withdrawalRate=4)

So thats something but really not that much different.

[rubybeth]

Uhh, I'm just going to assume I live where I currently live and have the same expenses I do now, I just make $200k annually instead of what DH and I currently make combined. I'll also assume, for this experiment, that I don't have anything saved. We could retire in 5 years.

[ender]

I'd be content working quite some time at my job if they started paying me $200k/year. I like what I do a fair bit and if they wanted to nearly triple my pay, well...

...that being said my expenses wouldn't increase much and I'd probably be able to save $70k-100k a year more each year which would accelerate my ability to FIRE quite significantly :)

I'd have a lot of thinking to do. "One more year" syndrome when you enjoy your job and are compensated at $200k/year is probably a fair bit different than when you don't and hardly make a third of it ;)

[dragoncar]

Do I have to wear suits to work? Do I have to live in Silicon Valley? Do I have to entertain customers with a nicer car than my 2-door 11-year old civic? Do I have a spouse in this situation?

If my current job decided to start paying me 200k/year for no good reason a couple things would change drastically and my savings rate probably wouldn't be significantly different than what it is while I'm making 115k now. There are a couple reasons.

I would make too much to contribute to an IRA (sure I could do backdoors but thats still only 5.5k/year). I would become a Highly Compensated Employee (HCE) and thus unable to contribute to the 401k plan at my current rate (probably would decrease my 401k contributions by about 5-10k/year).

My taxes would change too. My marginal tax rate would be higher and so I would pay about 40k (vs 15k) in federal taxes and 8.6k (vs 5k) in state taxes and 15k (vs 8.8k) in FICA taxes. So my taxes went from ~28k/year to ~63k/year so my net paycheck went from 87k/year to ~137k/year. If my spending is 40k/year then my savings rate went from 54% to 70% but I can't use tax advantaged accounts.

According to networthify I go from retiring in
14.9 years (https://networthify.com/calculator/earlyretirement?income=87000&initialBalance=0&expenses=40000&annualPct=5&withdrawalRate=4)
to retiring in
8.8 years (https://networthify.com/calculator/earlyretirement?income=137000&initialBalance=0&expenses=40000&annualPct=5&withdrawalRate=4)

So thats something but really not that much different.

I don't even...

[foobar]

200k for a married person with no 401(k) and no state taxes is 143k take home. You spend 60k and your at 83k or just under 7k per month.

Lets assume 9% rate of return and no taxes. In 5 years you have  520k dollars or enough to fund a ~20k/yr lifestyle.  Can you live on 20k/yr (i.e. less than half of what MMM is spending given he owns his house)? Sure. I. How long does it take you to get to 1.5 million (i.e. your 60k/yr lifestyle) in todays dollars? Assume inflation is 3%, your looking at about 15 years.  401(k) and taxes on investment income will fudge this number a bit. Drop you income retirement to 40k(just a bit less than MMMs) and your looking at ~9 years to get 1 million dollars (assuming you are investing an extra 20k/yr) in todays dollars.

Obviously things like 401(k)s, taxes, raises, rate of return and so on change the numbers slightly.

MMM description of how he achieved FI is a decent example of how a higher earner couple can do it. Living cheaply is a double win in that you get to invest more money early and you don't need as much.

To make it really fun, how many years would you have to work @500k/yr. Your take home pay is 345 so you are investing 285k/yr or about 5 years for 60k and about 3.5 years for 40k. AT 1 million your take home pay is 636k so you are looking at 2-2.5 years.

Depends on the cost of living in the area, but even assuming I was not living like the miser I myself do live like, I can't really see myself spending >60k/year by myself.

So, we'll take 140k/year, let's take away some taxes just to be conservative, so multiply it by .8. That gives me a little over 9300$/month to invest.

Plug it into an investing calculator at an extremely conservative 5% interest rate.
http://www.daveramsey.com/article/investing-calculator/lifeandmoney_investing/#/entry_form

In 5 years, that's ~650k(at 7% interest that's 680k).

For myself? couldn't imagine more then 5 years...(garbage math is garbage)

[nawhite]

Do I have to wear suits to work? Do I have to live in Silicon Valley? Do I have to entertain customers with a nicer car than my 2-door 11-year old civic? Do I have a spouse in this situation?

If my current job decided to start paying me 200k/year for no good reason a couple things would change drastically and my savings rate probably wouldn't be significantly different than what it is while I'm making 115k now. There are a couple reasons.

I would make too much to contribute to an IRA (sure I could do backdoors but thats still only 5.5k/year). I would become a Highly Compensated Employee (HCE) and thus unable to contribute to the 401k plan at my current rate (probably would decrease my 401k contributions by about 5-10k/year).

My taxes would change too. My marginal tax rate would be higher and so I would pay about 40k (vs 15k) in federal taxes and 8.6k (vs 5k) in state taxes and 15k (vs 8.8k) in FICA taxes. So my taxes went from ~28k/year to ~63k/year so my net paycheck went from 87k/year to ~137k/year. If my spending is 40k/year then my savings rate went from 54% to 70% but I can't use tax advantaged accounts.

According to networthify I go from retiring in
14.9 years (https://networthify.com/calculator/earlyretirement?income=87000&initialBalance=0&expenses=40000&annualPct=5&withdrawalRate=4)
to retiring in
8.8 years (https://networthify.com/calculator/earlyretirement?income=137000&initialBalance=0&expenses=40000&annualPct=5&withdrawalRate=4)

So thats something but really not that much different.

I don't even...

Please try? I try to be nice and open minded when people disagree with what I say :-)

[Cheddar Stacker]

Do I have to wear suits to work? Do I have to live in Silicon Valley? Do I have to entertain customers with a nicer car than my 2-door 11-year old civic? Do I have a spouse in this situation?

If my current job decided to start paying me 200k/year for no good reason a couple things would change drastically and my savings rate probably wouldn't be significantly different than what it is while I'm making 115k now. There are a couple reasons.

I would make too much to contribute to an IRA (sure I could do backdoors but thats still only 5.5k/year). I would become a Highly Compensated Employee (HCE) and thus unable to contribute to the 401k plan at my current rate (probably would decrease my 401k contributions by about 5-10k/year).

My taxes would change too. My marginal tax rate would be higher and so I would pay about 40k (vs 15k) in federal taxes and 8.6k (vs 5k) in state taxes and 15k (vs 8.8k) in FICA taxes. So my taxes went from ~28k/year to ~63k/year so my net paycheck went from 87k/year to ~137k/year. If my spending is 40k/year then my savings rate went from 54% to 70% but I can't use tax advantaged accounts.

According to networthify I go from retiring in
14.9 years (https://networthify.com/calculator/earlyretirement?income=87000&initialBalance=0&expenses=40000&annualPct=5&withdrawalRate=4)
to retiring in
8.8 years (https://networthify.com/calculator/earlyretirement?income=137000&initialBalance=0&expenses=40000&annualPct=5&withdrawalRate=4)

So thats something but really not that much different.

I don't even...

Please try? I try to be nice and open minded when people disagree with what I say :-)

I'll try since Dragoncar didn't. First, the taxes and tax deferred savings vehicle limitations are very good points. The more you earn, the harder it becomes to shelter taxes with the traditional vehicles most employees use. I have personally seen the HCE 401K contribution limitations and it's very frustrating. Obviously your taxes will be much higher, but you can still save in after tax accounts.

The spouse is also a good question as I wondered the same thing. This would make a HUGE difference in my situation.

However, you choose how much to pay for your clothing, your place of residence, your vehicle, and your savings rate. If my income spiked 74% ($115K up to $200K), my savings rate would not go up by 100% of the increase, but at least 40-60% of the increase would go toward savings. So if I was previously saving 50%, I believe I would easily be able to save 65-75% with the increased wages, no matter what the circumstances. There is no way my savings rate would stay flat with a 74% increase in wages. No way.

To answer the OP's question, if I were single, and I knew of MMM principals at the start of this magical $200K/year career, I think I could get it done in around 5 years. It would not be difficult at all to save $110K/year after taxes (200K*30%ish total tax - $30K expenses), and with $550K invested and very low tax rates and expenses in retirement, this would give you $22K/year at a 4% SFR.

[marty998]

about 5, assuming no market crashes in those 5 years.

[Strawberrykiwi75]

I feel that you also have to account for how long you are going to be in retirement to properly answer this question. Personally, I would 'retire' in about 5 years, and then go back to work 2 or 3 days a week in the role below me.

[foobar]

That is like saying there is no difference between a 115k/yr salary and a 200k. After all they are all in the top 15% or so. If you look at it as 6/15 you retiring 40% sooner.

Do I have to wear suits to work? Do I have to live in Silicon Valley? Do I have to entertain customers with a nicer car than my 2-door 11-year old civic? Do I have a spouse in this situation?

If my current job decided to start paying me 200k/year for no good reason a couple things would change drastically and my savings rate probably wouldn't be significantly different than what it is while I'm making 115k now. There are a couple reasons.

I would make too much to contribute to an IRA (sure I could do backdoors but thats still only 5.5k/year). I would become a Highly Compensated Employee (HCE) and thus unable to contribute to the 401k plan at my current rate (probably would decrease my 401k contributions by about 5-10k/year).

My taxes would change too. My marginal tax rate would be higher and so I would pay about 40k (vs 15k) in federal taxes and 8.6k (vs 5k) in state taxes and 15k (vs 8.8k) in FICA taxes. So my taxes went from ~28k/year to ~63k/year so my net paycheck went from 87k/year to ~137k/year. If my spending is 40k/year then my savings rate went from 54% to 70% but I can't use tax advantaged accounts.

According to networthify I go from retiring in
14.9 years (https://networthify.com/calculator/earlyretirement?income=87000&initialBalance=0&expenses=40000&annualPct=5&withdrawalRate=4)
to retiring in
8.8 years (https://networthify.com/calculator/earlyretirement?income=137000&initialBalance=0&expenses=40000&annualPct=5&withdrawalRate=4)

So thats something but really not that much different.

To answer the OP's question, if I were single, and I knew of MMM principals at the start of this magical $200K/year career, I think I could get it done in around 5 years. It would not be difficult at all to save $110K/year after taxes (200K*30%ish total tax - $30K expenses), and with $550K invested and very low tax rates and expenses in retirement, this would give you $22K/year at a 4% SFR.

[Thegoblinchief]

Without debt, my effective savings rate is 75%+ on just $68K gross.

I'd have to run some numbers, but it would be just a few years, tops. Plus, if you're banking salary like that, chances are you're in a field that you can take home a ton of money after "retiring" by consulting or working a few hours a week. Probably enough to pay your living expenses, or close to all of them, that way you don't have to worry about market dips.

[EscapeVelocity2020]

I'd have a lot of thinking to do. "One more year" syndrome when you enjoy your job and are compensated at $200k/year is probably a fair bit different than when you don't and hardly make a third of it ;)

This is much more the point.  If you hate your job, you'll save and get to FI ASAP (or at least downshift to a better job sooner).  If you love your job, you might hang it there until they kick you out or you have to take Social Security (which is 'reduced / deferred' by W-2 income).  The getting paid 200k part is either going to make it easier to save faster, or make you happier to stick around forever.

There really is no answer to your question.  Even if you fully defined the job to us, everyone would have a different answer, so I really don't understand why you are asking.  I'd love to know why, why man, why, are you asking us this??? 

((Sorry, I just needed a break from the comments on MMM's latest post about The Guardian article... ))

[Heart of Tin]

I'll assume $200k is before tax. I'm single filing in Kansas. The only deductions that I will allow myself are the standard deduction and one personal exemption. Federal Taxes use 2014 data. State Taxes use 2013 data. I'll ignore inflation.

Tax Calculation:

Social Security Tax = $7,254
Medicare Tax = $2,900

Federal Taxable Income after standard deduction and one personal exemption = $189,850
Federal Income Tax = $46,508.75
This is above the Alternative Minimum Tax.

Kansas Taxable Income after standard deduction and one personal exemption (using 2013 data) = $194,750
Kansas Income Tax (using 2013 data) = $9,257.75

Annual After Tax Income = $134,079.5

Annual Expenses = $15,000

Monthly Savings = $9,923.30

I'll determine my savings goal by using a 3.5% SWR at $15,000 per year, adding $200k to buy a house outright on the day of retirement, and adding a 10% buffer to that total.

Savings Goal = $691,428.60

Using historic S&P 500 data from 1950 to the end of 2013 and assuming no transaction costs or expense ratios and a 100% equities allocation, I find the following about the years to the savings goal. (NOTE: using this data without adjusting for inflation is problematic since the above numbers are in 2014 dollars, but I don't really feel like adjusting the numbers right now):

Average = 5 years and 6 months

Minimum = 3 years and 8 months
25th percentile = 4 years and 8 months
Median = 5 years and 2 months
75th percentile = 6 years and 3 months
Maximum = 9 years and 7 months

If saving started after 8/1/2009, then the saving goal would not yet be met. These years were not included in analysis.

[EscapeVelocity2020]

Holy crap, I started with a salary of 42,000 per year in 1997 and I would've been comfortable if I'd retired at 10 years.  At the time, it was a much less 'above average' salary than 200k/yr today, so should be 10 years or less IMHO!  What kind of trollish thread are you trying to start?  I'm guessing you'll hear 3-10 years over and over and over....  so uh, not a very informative question.

Thanks Heart of Tin for making my earlier post look much better thought out! Impressive analysis, by the way.

[foobar]

Sorry for the hatch job of editing your post
I don't get this math. Why do you need to save 200k more?  Either 15k is enough to live on or it isn't.  If you want to be living a 25k live (15k+ 200k house) why put it off for 5 years so that you can retire like 6 months sooner......

Annual Expenses = $15,000
...
adding $200k to buy a house outright on the day of retirement, and adding a 10% buffer to that total.

[meadow lark]

Nawhite - I was just surprised when you said 6 years is not that much difference.  I see 6 years as a huge difference in time to retirement. 

[Heart of Tin]

Sorry for the hatch job of editing your post
I don't get this math. Why do you need to save 200k more?  Either 15k is enough to live on or it isn't.  If you want to be living a 25k live (15k+ 200k house) why put it off for 5 years so that you can retire like 6 months sooner......

Personal preference. And flexibility. I want to have the choice to buy a house outright during retirement without jeopardizing my 'stache, and this is the savings goal that would provide me enough security to do that comfortably. I'm not saying that I would immediately buy at retirement but rather that I want to give myself the option to buy at that time. This theoretical life would only cost $15k annually as the money I currently use to rent would be instead put towards property tax, maintenance, larger utility and insurance payments, and all of those other costs that go along with owning. In my local market of Kansas City my current rent should cover those costs for a $175k - $200k house.

[iwasjustwondering]

What if you just started making $200K, but you have to save $200K for college costs before you retire, and have $32K in annual mortgage/tax/insurance costs for your house?

Could I do this math myself?  Probably, but I'm looking for thoughts, as this is my actual situation.  I am actually thinking that I could retire right after my kids finish college, when I'm 52.

[Cheddar Stacker]

What if you just started making $200K, but you have to save $200K for college costs before you retire, and have $32K in annual mortgage/tax/insurance costs for your house?

Could I do this math myself?  Probably, but I'm looking for thoughts, as this is my actual situation.  I am actually thinking that I could retire right after my kids finish college, when I'm 52.

Then just add 4-5 years to what everyone said above, if you can actually save $90-100K/year throughout the entire timeframe you work. I said 5 years above, so make it 10. If you're 42 or younger right now and you can follow this plan, you can retire when you're 52.

[EscapeVelocity2020]

The other piece no-one has discussed is that the income will not stay at 200k, but rise.  If the OP is a young professional, those raises will easily outpace inflation (especially if it stays low).  And if you are making 200k, you probably have a bonus or some form of variable compensation. 

So, after 3 years with a 10% raise, the 200k income will be 266k.  The further out you go, the more this compounding really kicks in, and 10% raises (or more) are not uncommon if you are young or in a profession that pays this well.  In 10 years, he/she will reach a peak where it begins to slow down (if not moved up to a cushy executive office), but income could be 500k+ (200k x 1.1^10)...