How much do Americans need to earn to feel secure? 233k.

[lifeisshort123]

https://www.cnn.com/2023/07/06/success/how-much-to-feel-rich/index.html

to feel rich 483k.

I suspect those who earn 483k don't feel rich though, in my experience.

someone earning 50k says "If I made 100k I'd feel rich", someone earning 100k says "If I made 200k I'd be rich". someone earning 200k says I'm not rich I don't make 500k... etc.

by the way, article points out median earnings last year were 56k....

[GuitarStv]

What the hell does 'financially secure' mean to these people?  I don't consider earnings to have much to do with financial security at all.  Savings maybe, but not earnings.

[Tasse]

I was noticing the same lack of differentiation between income and savings. We are not FI yet, so I would say we still need to earn at least our annual spending for me to feel secure, but we are close enough to coast so I could feel secure without being able to save much extra. Whereas someone with no savings earning and spending the same amount would seem very insecure to me.

[Laura33]

You're exactly right.

I'd be interested to know the median income of the poll respondents.  From what I've seen, when you ask people what it would take to feel financially secure, they think about what it would take to manage their current lifestyle and a few wants, so you get answers that are somewhat above what they make now, but not orders of magnitude.  OTOH, when you ask people what it would take to feel rich, they pull a number out of a hat that feels huge. 

But of course if you talked to other people who made those salaries (the "secure" and "rich" levels from our first respondent), they'd have higher numbers for both of those figures.  And then if you asked still other people who made the second guy's salary numbers, they'd have even higher numbers than that guy did.  And so it goes until you're talking to Jeff Bezos. 

Which is also why the average American is not likely to ever feel happy or satisfied, because we're always chasing the next level of "stuff," thinking that when we get there, we'll finally relax/be happy/have everything we want.  But when we get there, we discover we're still ourselves, and the extra money didn't magically fix things.  The only solution is to opt out, stop judging ourselves by meaningless stuff, and look elsewhere for meaning and purpose.  But it's really hard to do that when we have a whole culture that is predicated on the eternal treadmill.

Also, I wouldn't feel "financially secure" or "rich" at any salary below the multi-million variety, because my definition of those terms is based on assets, not income.*  I mean, give me a big enough salary and I can put 95-99% of it away and be magically "secure" or "rich" within a year, but I don't think that's what they're talking about.

*Well, I'm FI, so I already am, but for sake of argument.

[Villanelle]

LOLZ.  We make much less (as a household) than 233k, and feel secure, and I wouldn't even argue too much with someone who said we were rich. 

I think it's silly to base "security" on income rather than net worth.  If I won a $10m lottery tomorrow and we quit our jobs, our income would be $0 or nearly so.  Would be not be financially secure? 

I also think this is fueled by and then feeds into those tone deaf stories from people who say they make $500k/yr and "can't afford a house" or a are living hand to mouth at 'only' $350k, etc.  People's perceptions are ridiculously out of touch sometimes.  And also, yes, if you make $350k/yr and spend $350k, or $375k, then you aren't financially secure, but that's pretty clearly on you and your choices.  I supposed you'd still be answering honestly when you said you don't feel financially secure, but for someone like that, they likely wouldn't be financially secure even if they tripled their incomes, because at $700k, they's find a way to spend $725k. 

[JupiterGreen]

What the hell does 'financially secure' mean to these people?  I don't consider earnings to have much to do with financial security at all.  Savings maybe, but not earnings.

From the article:
The reasons cited for not feeling secure today included high inflation (63%); the economic environment (48%); insufficient emergency savings (42%); insufficient retirement savings (41%); rising interest rates (36%); low pay or low career mobility (33%); high debt (26%); and housing affordability (25%).

I would also add healthcare as a source of insecurity (in the US). With that said, 233k/yr is a redunculous amount to "need".

[wageslave23]

I live in a medium cost of living area and I'd guess that my friends and relatives would say $200k combined is about yhe sweet spot where you can afford a newer house in a great school district and go on vacation, and go out to eat and not worry about car payments or medical bills, etc. I'm not saying that much is necessary, we live on about $50k asafamily of 3 comfortably.  But I'd say I have a phD in money and tax management.  I could see how the layperson would need 200k for a family of 4 to not think about budgeting or emergencies.

[wageslave23]

Also reading articles like this makes me feel secure. Knowing how financially illiterate the average person is, I know that I'll never be in financial trouble as long as I'm more knowledgeable than the average person. Kind of like the antelope doesn't need to be faster than a cheetah, just faster than the other antelopes.

[BicycleB]

Also reading articles like this makes me feel secure. Knowing how financially illiterate the average person is, I know that I'll never be in financial trouble as long as I'm more knowledgeable than the average person. Kind of like the antelope doesn't need to be faster than a cheetah, just faster than the other antelopes.

Lol! Great post, @wageslave23

[SuperNintendo Chalmers]

But of course if you talked to other people who made those salaries (the "secure" and "rich" levels from our first respondent), they'd have higher numbers for both of those figures.  And then if you asked still other people who made the second guy's salary numbers, they'd have even higher numbers than that guy did.  And so it goes until you're talking to Jeff Bezos. 

+1.  It made me curious though, so apparently based on a quick Google search which led me to Forbes, Bezos is worth $150B; Musk is #1 at $249B. So I guess Bezos would say, "$150B is nice and all, but I won't really sleep soundly at night until I have the security that someone like an Elon Musk has."  And then what would Elon say?  "$249B is great don't get me wrong, but what if I want to buy another huge company to troll people again?  These are the kinds of things that keep me up at night.  Really, you can't have peace of mind until you hit that $1T baseline...."

[bacchi]

But of course if you talked to other people who made those salaries (the "secure" and "rich" levels from our first respondent), they'd have higher numbers for both of those figures.  And then if you asked still other people who made the second guy's salary numbers, they'd have even higher numbers than that guy did.  And so it goes until you're talking to Jeff Bezos. 

+1.  It made me curious though, so apparently based on a quick Google search which led me to Forbes, Bezos is worth $150B; Musk is #1 at $249B. So I guess Bezos would say, "$150B is nice and all, but I won't really sleep soundly at night until I have the security that someone like an Elon Musk has."  And then what would Elon say?  "$249B is great don't get me wrong, but what if I want to buy another huge company to troll people again?  These are the kinds of things that keep me up at night.  Really, you can't have peace of mind until you hit that $1T baseline...."

Cue the Kurt Vonnegut/Joseph Heller parable.

[RetiredAt63]

That is 300,000 in CAN$.  That is a whopping income.  Like a ridiculous whopping income.

[VanillaGorilla]

That is 300,000 in CAN$.  That is a whopping income.  Like a ridiculous whopping income.

That's really just relative to where you live.

In my neighborhood the cheapest houses will run 800k-900k. At today's rates that's easily $6000 a month just for the mortgage/tax/insurance. 7k a month including utilities and maintenance. On a 200k-ish salary that leaves about 6k a month for everything else, including retirement savings.

If you max out your 401k then you have 4k to live off, which is obviously doable but it's not exactly flush with cash.

The main reason I manage to save 60% of my income is that I bought a house a long time ago when they were cheap and never moved. Dumb luck. There's nothing to be proud of.

[mistymoney]

I can confirm! I'd feel secure earning 233k a year!!

[Ron Scott]

233 is too high and 483 is too low.

[EchoStache]

I know someone who makes $22k/year and feels financially secure.

[Villanelle]

233 is too high and 483 is too low.

You think someone who makes 483k/yr isn't rich?  I suppose one could argue that in the first year or two of making that kind of money, someone might not yet be rich, especially if they went from little or no income to that $483k over night.  But after that?  Making half a million dollars a year isn't rich?!

[Ron Scott]

233 is too high and 483 is too low.

You think someone who makes 483k/yr isn't rich?

I’m not used to thinking about it in terms of annual income, but no.

[Villanelle]

233 is too high and 483 is too low.

You think someone who makes 483k/yr isn't rich?

I’m not used to thinking about it in terms of annual income, but no.

Someone making an income that falls in the 99th percentile (in the US) isn't generally rich?    LINK to income percentile calculator, from 2021

[Cassie]

Being a senior once you have your basic needs met and some extra money for emergencies, travel if you like that, etc there’s not much more that you want.

[cannotWAIT]

I too used to have ridiculous notions of what it would take to "feel" financially secure. Eventually I realized that the key word here is "feel." Once you have enough to meet your basic needs, then it's up to you how secure you feel, because no amount of money is actually 100% safe. I used to be such a scared little mouse about everything and I don't know what happened, but I started viewing myself more in the big picture of world history, not just compared to well-to-do modern Americans, and realized that I'm perfectly fine. I might not die in the lap of luxury, but I will likely have better care than almost everyone else who has ever died. I can start feeling financially secure right now if I want to. It's all in my head.

[Ron Scott]

233 is too high and 483 is too low.

You think someone who makes 483k/yr isn't rich?

I’m not used to thinking about it in terms of annual income, but no.

Someone making an income that falls in the 99th percentile (in the US) isn't generally rich?    LINK to income percentile calculator, from 2021

Absolutely not!

You and I could come up with many scenarios in which a one year slice of earnings like that doesn’t make us rich. For example, take a family of 5 in an expensive city. $100k in rent and utilities on a 3/4 bedroom + $50K for kids education + $220k in (triple) income taxes + $30k on food and clothing + $15k in entertainment (including camp for 1-2 kids and a family vacation) + another $15 on healthcare, car expenses, charitable donations, etc. Now you’re saving $53k a year IF nothing comes up? And you’ve got to maintain that level of earnings year after year? Not feeling rich to me.

Income IMO is not a good surrogate for wealth. (If you told me the retired couple showed $483K gross income on their income tax from their investments we’d have a different story entirely.) New Worth is a better indicator.

[StarBright]

I live in a medium cost of living area and I'd guess that my friends and relatives would say $200k combined is about yhe sweet spot where you can afford a newer house in a great school district and go on vacation, and go out to eat and not worry about car payments or medical bills, etc. I'm not saying that much is necessary, we live on about $50k asafamily of 3 comfortably.  But I'd say I have a phD in money and tax management. I could see how the layperson would need 200k for a family of 4 to not think about budgeting or emergencies.

^ The bolded is what I think when I think "feel secure" - I want to not have to budget.
 
Or as I tell my husband, I want to be able to save for retirement/college, have enough money for taxes and medical bills and have a few luxuries without having to budget for them.

I feel like we could do that for under 200k. But then again, we live in a MCOL area, so I can see how someone in a HCOL would say more than 200k.

[Villanelle]

233 is too high and 483 is too low.

You think someone who makes 483k/yr isn't rich?

I’m not used to thinking about it in terms of annual income, but no.

Someone making an income that falls in the 99th percentile (in the US) isn't generally rich?    LINK to income percentile calculator, from 2021

Absolutely not!

You and I could come up with many scenarios in which a one year slice of earnings like that doesn’t make us rich. For example, take a family of 5 in an expensive city. $100k in rent and utilities on a 3/4 bedroom + $50K for kids education + $220k in (triple) income taxes + $30k on food and clothing + $15k in entertainment (including camp for 1-2 kids and a family vacation) + another $15 on healthcare, car expenses, charitable donations, etc. Now you’re saving $53k a year IF nothing comes up? And you’ve got to maintain that level of earnings year after year? Not feeling rich to me.

Income IMO is not a good surrogate for wealth. (If you told me the retired couple showed $483K gross income on their income tax from their investments we’d have a different story entirely.) New Worth is a better indicator.

As I acknowledged in my earlier post, in the first year or two of that income level, or if you are bringing massive debt into it, or probably a few other situations, 480k might not be "rich", but after that, it is rich, even if it only lasts a few years. 

I do agree that trying to tie income to a measurement as wealth, instead of net worth, is problematic as it misses some nuances.  But I still feel pretty comfortable saying that someone making $483k/yr is almost certainly rich. 

[TyGuy]

233 is too high and 483 is too low.

You think someone who makes 483k/yr isn't rich?

I’m not used to thinking about it in terms of annual income, but no.

Someone making an income that falls in the 99th percentile (in the US) isn't generally rich?    LINK to income percentile calculator, from 2021

Absolutely not!

You and I could come up with many scenarios in which a one year slice of earnings like that doesn’t make us rich. For example, take a family of 5 in an expensive city. $100k in rent and utilities on a 3/4 bedroom + $50K for kids education + $220k in (triple) income taxes + $30k on food and clothing + $15k in entertainment (including camp for 1-2 kids and a family vacation) + another $15 on healthcare, car expenses, charitable donations, etc. Now you’re saving $53k a year IF nothing comes up? And you’ve got to maintain that level of earnings year after year? Not feeling rich to me.

Income IMO is not a good surrogate for wealth. (If you told me the retired couple showed $483K gross income on their income tax from their investments we’d have a different story entirely.) New Worth is a better indicator.

Seems like you should re-evaluate, find yourself some face punches and then punch everyone else who does not see an annual income of 483k as rich. You could afford an EXTREMELY cushy lifestyle with that income.

[ATtiny85]

I live in a medium cost of living area and I'd guess that my friends and relatives would say $200k combined is about yhe sweet spot where you can afford a newer house in a great school district and go on vacation, and go out to eat and not worry about car payments or medical bills, etc. I'm not saying that much is necessary, we live on about $50k asafamily of 3 comfortably.  But I'd say I have a phD in money and tax management. I could see how the layperson would need 200k for a family of 4 to not think about budgeting or emergencies.

^ The bolded is what I think when I think "feel secure" - I want to not have to budget.
 
Or as I tell my husband, I want to be able to save for retirement/college, have enough money for taxes and medical bills and have a few luxuries without having to budget for them.

I feel like we could do that for under 200k. But then again, we live in a MCOL area, so I can see how someone in a HCOL would say more than 200k.

We are over the 233k level (also in MCOL area) and do not budget much. However, we increase our monthly taxable investment at the same rate as income, so things never quite get any more comfortable. I would be upset for a month if (when) something comes up that causes us to have to decrease/suspend that precious VTSAX purchase on the 5th of every month.

[StarBright]

I live in a medium cost of living area and I'd guess that my friends and relatives would say $200k combined is about yhe sweet spot where you can afford a newer house in a great school district and go on vacation, and go out to eat and not worry about car payments or medical bills, etc. I'm not saying that much is necessary, we live on about $50k asafamily of 3 comfortably.  But I'd say I have a phD in money and tax management. I could see how the layperson would need 200k for a family of 4 to not think about budgeting or emergencies.

^ The bolded is what I think when I think "feel secure" - I want to not have to budget.
 
Or as I tell my husband, I want to be able to save for retirement/college, have enough money for taxes and medical bills and have a few luxuries without having to budget for them.

I feel like we could do that for under 200k. But then again, we live in a MCOL area, so I can see how someone in a HCOL would say more than 200k.

We are over the 233k level (also in MCOL area) and do not budget much. However, we increase our monthly taxable investment at the same rate as income, so things never quite get any more comfortable. I would be upset for a month if (when) something comes up that causes us to have to decrease/suspend that precious VTSAX purchase on the 5th of every month.

Having to move money around is exactly what I'm talking about. Having to juggle money doesn't feel secure (even if we really are well off compared to many people.) I long for the day that I don't have to look at our budget every month. I used to get some joy out of gaming it, but now it just makes me tired.

We are significantly under that 233k level for a family of four and we definitely have to pull back on savings when something comes up.
Like just last month we paused most of our savings because our old car was going to cost more to fix than it is worth. So now money is going to purchasing a new vehicle and building back up the E-fund.

We seem to use up our emergency fund about every third year, take two years to build it back up, have extra to throw at savings every third year, and then start the process over again.

I definitely used to think we were high-ish income (and I think we are compared to how I grew up), but I've lately realized that compared to this forum, and even the town I live in, that we are on the lower income side/average incomes.

[JupiterGreen]

I live in a medium cost of living area and I'd guess that my friends and relatives would say $200k combined is about yhe sweet spot where you can afford a newer house in a great school district and go on vacation, and go out to eat and not worry about car payments or medical bills, etc. I'm not saying that much is necessary, we live on about $50k asafamily of 3 comfortably.  But I'd say I have a phD in money and tax management. I could see how the layperson would need 200k for a family of 4 to not think about budgeting or emergencies.

^ The bolded is what I think when I think "feel secure" - I want to not have to budget.
 
Or as I tell my husband, I want to be able to save for retirement/college, have enough money for taxes and medical bills and have a few luxuries without having to budget for them.

I feel like we could do that for under 200k. But then again, we live in a MCOL area, so I can see how someone in a HCOL would say more than 200k.

We are over the 233k level (also in MCOL area) and do not budget much. However, we increase our monthly taxable investment at the same rate as income, so things never quite get any more comfortable. I would be upset for a month if (when) something comes up that causes us to have to decrease/suspend that precious VTSAX purchase on the 5th of every month.

Having to move money around is exactly what I'm talking about. Having to juggle money doesn't feel secure (even if we really are well off compared to many people.) I long for the day that I don't have to look at our budget every month. I used to get some joy out of gaming it, but now it just makes me tired.

We are significantly under that 233k level for a family of four and we definitely have to pull back on savings when something comes up.
Like just last month we paused most of savings because our old car was going to cost more to fix than it is worth. So now money is going to purchasing a new vehicle and building back up the E-fund.

We seem to use up our emergency fund about every third year, take two years to build it back up, have extra to throw at savings every third year, and then start the process over again.

I definitely used to think we were high-ish income (and I think we are compared to how I grew up), but I've lately realized that compared to this forum, and even the town I live in, that we are on the lower income side/average incomes.

I feel this. I don't think we are low income, but our combined salary barely breaks six figures and it seems low compared to people in this forum who make one income that equals our two. I would also like there to come a day when I don't worry so much about budgeting. We are working our way there, but it is a slow process and we won't ever be early retirees, we'll be somewhere in the 50-60yo range when we retire. If we had over 200k coming in, it would speed the process considerably.

[mistymoney]

I live in a medium cost of living area and I'd guess that my friends and relatives would say $200k combined is about yhe sweet spot where you can afford a newer house in a great school district and go on vacation, and go out to eat and not worry about car payments or medical bills, etc. I'm not saying that much is necessary, we live on about $50k asafamily of 3 comfortably.  But I'd say I have a phD in money and tax management. I could see how the layperson would need 200k for a family of 4 to not think about budgeting or emergencies.

^ The bolded is what I think when I think "feel secure" - I want to not have to budget.
 
Or as I tell my husband, I want to be able to save for retirement/college, have enough money for taxes and medical bills and have a few luxuries without having to budget for them.

I feel like we could do that for under 200k. But then again, we live in a MCOL area, so I can see how someone in a HCOL would say more than 200k.

We are over the 233k level (also in MCOL area) and do not budget much. However, we increase our monthly taxable investment at the same rate as income, so things never quite get any more comfortable. I would be upset for a month if (when) something comes up that causes us to have to decrease/suspend that precious VTSAX purchase on the 5th of every month.

Having to move money around is exactly what I'm talking about. Having to juggle money doesn't feel secure (even if we really are well off compared to many people.) I long for the day that I don't have to look at our budget every month. I used to get some joy out of gaming it, but now it just makes me tired.

We are significantly under that 233k level for a family of four and we definitely have to pull back on savings when something comes up.
Like just last month we paused most of savings because our old car was going to cost more to fix than it is worth. So now money is going to purchasing a new vehicle and building back up the E-fund.

We seem to use up our emergency fund about every third year, take two years to build it back up, have extra to throw at savings every third year, and then start the process over again.

I definitely used to think we were high-ish income (and I think we are compared to how I grew up), but I've lately realized that compared to this forum, and even the town I live in, that we are on the lower income side/average incomes.

this really resonates with me. things are sooooo much better for me than they used to be financial - solely due to increased earnings affer two distinct boost over the past 5 years - and in my head it sounds like a lot of money! and in my head it seems like I should just be rolling in extra money every month without effort.....because I really do not buy much besides food on a month to month basis.....but even making supposedly to me 'big bucks' -  I have to be careful or I'll get in trouble.

And as you note - the large irregular expenses come up from time to time and wreak havoc.

[kanga1622]

I live in a medium cost of living area and I'd guess that my friends and relatives would say $200k combined is about yhe sweet spot where you can afford a newer house in a great school district and go on vacation, and go out to eat and not worry about car payments or medical bills, etc. I'm not saying that much is necessary, we live on about $50k asafamily of 3 comfortably.  But I'd say I have a phD in money and tax management. I could see how the layperson would need 200k for a family of 4 to not think about budgeting or emergencies.

^ The bolded is what I think when I think "feel secure" - I want to not have to budget.
 
Or as I tell my husband, I want to be able to save for retirement/college, have enough money for taxes and medical bills and have a few luxuries without having to budget for them.

I feel like we could do that for under 200k. But then again, we live in a MCOL area, so I can see how someone in a HCOL would say more than 200k.

We are over the 233k level (also in MCOL area) and do not budget much. However, we increase our monthly taxable investment at the same rate as income, so things never quite get any more comfortable. I would be upset for a month if (when) something comes up that causes us to have to decrease/suspend that precious VTSAX purchase on the 5th of every month.

Having to move money around is exactly what I'm talking about. Having to juggle money doesn't feel secure (even if we really are well off compared to many people.) I long for the day that I don't have to look at our budget every month. I used to get some joy out of gaming it, but now it just makes me tired.

We are significantly under that 233k level for a family of four and we definitely have to pull back on savings when something comes up.
Like just last month we paused most of savings because our old car was going to cost more to fix than it is worth. So now money is going to purchasing a new vehicle and building back up the E-fund.

We seem to use up our emergency fund about every third year, take two years to build it back up, have extra to throw at savings every third year, and then start the process over again.

I definitely used to think we were high-ish income (and I think we are compared to how I grew up), but I've lately realized that compared to this forum, and even the town I live in, that we are on the lower income side/average incomes.

I feel this. I don't think we are low income, but our combined salary barely breaks six figures and it seems low compared to people in this forum who make one income that equals our two. I would also like there to come a day when I don't worry so much about budgeting. We are working our way there, but it is a slow process and we won't ever be early retirees, we'll be somewhere in the 50-60yo range when we retire. If we had over 200k coming in, it would speed the process considerably.

Oh I feel this! We are a family of 4 with a taxable income of less than $70,000 with 2 full time jobs and hubby's side gig (very low time commitment). We will never retire early but I appreciate so many of the ideas here on how to be frugal, use our income to better our long-term outlook, and keep us motivated for retirement savings. Realistically we are in a MUCH better position than most families in our region in our income bracket but I still keep a very close eye on our budget because we don't have the kind of income to just float along without a solid plan and knowing our savings will take a hit when we need a new car in a couple years.

[ATtiny85]

 We will never retire early but ...

...we will retire secure and happy.

Sounds like you have a great attitude, and that's awesome.

[Nicholas Carter]

If this is the same study I listened to on the 538 podcast, they got these numbers by literally asking the questions "Are you financially secure?" "Are your rich" and "How much money did you make last year". And at the income level where 50% of the respondents responded in the affirmative is the number they assigned to "How much money does a person need to feel ____?"

[GilesMM]

A single earner in a HCOL are could be paying 30% effective tax rate so $233k becomes $163k.  If you save 30% of net income, that leaves about $100k.  Median home price in one HCOL, the Bay Area is current $1.3 million. If you go cheap and get one for $1 million you put 20% down, borrow $800k at around $5K/month that is $60k/year leaving you $40K or $3.3k/month for utilities, transportation, food, goods, vacation, school stuff, etc.  Ouch.

[Tasse]

A single earner in a HCOL are could be paying 30% effective tax rate so $233k becomes $163k.  If you save 30% of net income, that leaves about $100k.  Median home price in one HCOL, the Bay Area is current $1.3 million. If you go cheap and get one for $1 million you put 20% down, borrow $800k at around $5K/month that is $60k/year leaving you $40K or $3.3k/month for utilities, transportation, food, goods, vacation, school stuff, etc.  Ouch.

...oh, so more than we spend for two people after subtracting housing? Plus owning a house in a HCOL area and a 30% savings rate (~$50k per year)? And I think almost $15k got lost in rounding errors (70% of $163k = $114k). This hypothetical person seems to be doing fine despite their decision to live in the most expensive part of the country.

Sorry this came out snarky. I'm rarely convinced by "this big number isn't ACTUALLY that much money!!" calculations.

[nereo]

A single earner in a HCOL are could be paying 30% effective tax rate so $233k becomes $163k.  If you save 30% of net income, that leaves about $100k.  Median home price in one HCOL, the Bay Area is current $1.3 million. If you go cheap and get one for $1 million you put 20% down, borrow $800k at around $5K/month that is $60k/year leaving you $40K or $3.3k/month for utilities, transportation, food, goods, vacation, school stuff, etc.  Ouch.

...oh, so more than we spend for two people after subtracting housing? Plus owning a house in a HCOL area and a 30% savings rate (~$50k per year)? And I think almost $15k got lost in rounding errors (70% of $163k = $114k). This hypothetical person seems to be doing fine despite their decision to live in the most expensive part of the country.

Sorry this came out snarky. I'm rarely convinced by "this big number isn't ACTUALLY that much money!!" calculations.

Sam Dogen made a similar absurd claim when he tried to show that a $200k salary “wasn’t enough” to live on in the SF Bay Area. IIRC his mock budget was actually in the black with substantial money being saved plus thousands monthly on dining, travel, hobbies etc.

Let’s first acknowledge that saving 30% of take-home* pay is squirreling away about a thousand bucks every week. That’s an envious level for about three-quarters of US workers.  Adding to that - they would be building ~$12k in equity the first few years at current rates and double that a dozen years in.

Factoring in the sunset of the mortgage and this family hits FIRE in about 20 years staying put, and about 12 years if they feel like moving someplace where home prices are under $400k.  It’s pretty tone-deaf to look at such a situation and conclude “ouch”.

[Cranky]

I feel like the key here is that we have really increased our expectations for what it means to be secure/comfortable/middle class…

[Laura33]

A single earner in a HCOL are could be paying 30% effective tax rate so $233k becomes $163k.  If you save 30% of net income, that leaves about $100k.  Median home price in one HCOL, the Bay Area is current $1.3 million. If you go cheap and get one for $1 million you put 20% down, borrow $800k at around $5K/month that is $60k/year leaving you $40K or $3.3k/month for utilities, transportation, food, goods, vacation, school stuff, etc.  Ouch.

...oh, so more than we spend for two people after subtracting housing? Plus owning a house in a HCOL area and a 30% savings rate (~$50k per year)? And I think almost $15k got lost in rounding errors (70% of $163k = $114k). This hypothetical person seems to be doing fine despite their decision to live in the most expensive part of the country.

Sorry this came out snarky. I'm rarely convinced by "this big number isn't ACTUALLY that much money!!" calculations.

Sam Dogen made a similar absurd claim when he tried to show that a $200k salary “wasn’t enough” to live on in the SF Bay Area. IIRC his mock budget was actually in the black with substantial money being saved plus thousands monthly on dining, travel, hobbies etc.

Let’s first acknowledge that saving 30% of take-home* pay is squirreling away about a thousand bucks every week. That’s an envious level for about three-quarters of US workers.  Adding to that - they would be building ~$12k in equity the first few years at current rates and double that a dozen years in.

Factoring in the sunset of the mortgage and this family hits FIRE in about 20 years staying put, and about 12 years if they feel like moving someplace where home prices are under $400k.  It’s pretty tone-deaf to look at such a situation and conclude “ouch”.

Remember, the question was all about what it takes people to feel secure, not whether they are secure.  The Venn diagram covering these two is not even close to complete overlap.  I guarantee you that the guy who "scrimped" to buy the $1M condo and is driving a used Camry feels very insecure, because he's surrounded by people living in $1.5M condos and driving new Teslas.  And he also can't see that they're not saving $30K/yr, either, but blowing every cent and living on credit.  Of course, if you add on a $3K/mo. daycare bill, he really is spending more than he makes.

ITA that I don't have a lot of patience for people who claim not to be able to "afford" to live on a salary like that.  But I can absolutely have a little empathy for the feelings of insecurity and frustration that come along with the VHCOL area. 

I just then point them to MMM to help them understand that they have choices and aren't nearly as stuck as they think they are.  ;-)

[GilesMM]

A single earner in a HCOL are could be paying 30% effective tax rate so $233k becomes $163k.  If you save 30% of net income, that leaves about $100k.  Median home price in one HCOL, the Bay Area is current $1.3 million. If you go cheap and get one for $1 million you put 20% down, borrow $800k at around $5K/month that is $60k/year leaving you $40K or $3.3k/month for utilities, transportation, food, goods, vacation, school stuff, etc.  Ouch.

...oh, so more than we spend for two people after subtracting housing? Plus owning a house in a HCOL area and a 30% savings rate (~$50k per year)? And I think almost $15k got lost in rounding errors (70% of $163k = $114k). This hypothetical person seems to be doing fine despite their decision to live in the most expensive part of the country.

Sorry this came out snarky. I'm rarely convinced by "this big number isn't ACTUALLY that much money!!" calculations.

Sam Dogen made a similar absurd claim when he tried to show that a $200k salary “wasn’t enough” to live on in the SF Bay Area. IIRC his mock budget was actually in the black with substantial money being saved plus thousands monthly on dining, travel, hobbies etc.

Let’s first acknowledge that saving 30% of take-home* pay is squirreling away about a thousand bucks every week. That’s an envious level for about three-quarters of US workers.  Adding to that - they would be building ~$12k in equity the first few years at current rates and double that a dozen years in.

Factoring in the sunset of the mortgage and this family hits FIRE in about 20 years staying put, and about 12 years if they feel like moving someplace where home prices are under $400k.  It’s pretty tone-deaf to look at such a situation and conclude “ouch”.

Retiring early is not ouch, necessarily, but living in a HCOL on a bit over $3k/mo disposable income certainly is.

[wageslave23]

A single earner in a HCOL are could be paying 30% effective tax rate so $233k becomes $163k.  If you save 30% of net income, that leaves about $100k.  Median home price in one HCOL, the Bay Area is current $1.3 million. If you go cheap and get one for $1 million you put 20% down, borrow $800k at around $5K/month that is $60k/year leaving you $40K or $3.3k/month for utilities, transportation, food, goods, vacation, school stuff, etc.  Ouch.

...oh, so more than we spend for two people after subtracting housing? Plus owning a house in a HCOL area and a 30% savings rate (~$50k per year)? And I think almost $15k got lost in rounding errors (70% of $163k = $114k). This hypothetical person seems to be doing fine despite their decision to live in the most expensive part of the country.

Sorry this came out snarky. I'm rarely convinced by "this big number isn't ACTUALLY that much money!!" calculations.

Sam Dogen made a similar absurd claim when he tried to show that a $200k salary “wasn’t enough” to live on in the SF Bay Area. IIRC his mock budget was actually in the black with substantial money being saved plus thousands monthly on dining, travel, hobbies etc.

Let’s first acknowledge that saving 30% of take-home* pay is squirreling away about a thousand bucks every week. That’s an envious level for about three-quarters of US workers.  Adding to that - they would be building ~$12k in equity the first few years at current rates and double that a dozen years in.

Factoring in the sunset of the mortgage and this family hits FIRE in about 20 years staying put, and about 12 years if they feel like moving someplace where home prices are under $400k.  It’s pretty tone-deaf to look at such a situation and conclude “ouch”.

Retiring early is not ouch, necessarily, but living in a HCOL on a bit over $3k/mo disposable income certainly is.

I'll add some average expenses for a family of 4 in that income range. Health insurance for the rest of the family - $1000/mo. Average car payment $700/mo x 2 = $1400/mo. Groceries - $1000 mo.  Childcare $2000/mo. So yeah I could see how $233k would be comfortable.  The survey question wasn't what is necessary.  Sometimes the people on this forum who have optimized everything and have money to spare to be able to pay cash for everything are tone deaf towards those who have to commute to work, live near a big city where the higher paying jobs are, both spouses work and have kids, and don't spend hours each week reading MMM and thinking about spreadsheets.

[GuitarStv]

I'll add some average expenses for a family of 4 in that income range. Health insurance for the rest of the family - $1000/mo.

This isn't an average expense in most of the developed world.

[wageslave23]

I'll add some average expenses for a family of 4 in that income range. Health insurance for the rest of the family - $1000/mo.

This isn't an average expense in most of the developed world.

Ok, but how is that relevant to the discussion about the survey?

[Cassie]

A single earner in a HCOL are could be paying 30% effective tax rate so $233k becomes $163k.  If you save 30% of net income, that leaves about $100k.  Median home price in one HCOL, the Bay Area is current $1.3 million. If you go cheap and get one for $1 million you put 20% down, borrow $800k at around $5K/month that is $60k/year leaving you $40K or $3.3k/month for utilities, transportation, food, goods, vacation, school stuff, etc.  Ouch.

...oh, so more than we spend for two people after subtracting housing? Plus owning a house in a HCOL area and a 30% savings rate (~$50k per year)? And I think almost $15k got lost in rounding errors (70% of $163k = $114k). This hypothetical person seems to be doing fine despite their decision to live in the most expensive part of the country.

Sorry this came out snarky. I'm rarely convinced by "this big number isn't ACTUALLY that much money!!" calculations.

Sam Dogen made a similar absurd claim when he tried to show that a $200k salary “wasn’t enough” to live on in the SF Bay Area. IIRC his mock budget was actually in the black with substantial money being saved plus thousands monthly on dining, travel, hobbies etc.

Let’s first acknowledge that saving 30% of take-home* pay is squirreling away about a thousand bucks every week. That’s an envious level for about three-quarters of US workers.  Adding to that - they would be building ~$12k in equity the first few years at current rates and double that a dozen years in.

Factoring in the sunset of the mortgage and this family hits FIRE in about 20 years staying put, and about 12 years if they feel like moving someplace where home prices are under $400k.  It’s pretty tone-deaf to look at such a situation and conclude “ouch”.

Retiring early is not ouch, necessarily, but living in a HCOL on a bit over $3k/mo disposable income certainly is.

I'll add some average expenses for a family of 4 in that income range. Health insurance for the rest of the family - $1000/mo. Average car payment $700/mo x 2 = $1400/mo. Groceries - $1000 mo.  Childcare $2000/mo. So yeah I could see how $233k would be comfortable.  The survey question wasn't what is necessary.  Sometimes the people on this forum who have optimized everything and have money to spare to be able to pay cash for everything are tone deaf towards those who have to commute to work, live near a big city where the higher paying jobs are, both spouses work and have kids, and don't spend hours each week reading MMM and thinking about spreadsheets.

No family needs to drive two new cars with a combined car payment of 1400/month. That’s absolutely ridiculous!!

[wageslave23]

A single earner in a HCOL are could be paying 30% effective tax rate so $233k becomes $163k.  If you save 30% of net income, that leaves about $100k.  Median home price in one HCOL, the Bay Area is current $1.3 million. If you go cheap and get one for $1 million you put 20% down, borrow $800k at around $5K/month that is $60k/year leaving you $40K or $3.3k/month for utilities, transportation, food, goods, vacation, school stuff, etc.  Ouch.

...oh, so more than we spend for two people after subtracting housing? Plus owning a house in a HCOL area and a 30% savings rate (~$50k per year)? And I think almost $15k got lost in rounding errors (70% of $163k = $114k). This hypothetical person seems to be doing fine despite their decision to live in the most expensive part of the country.

Sorry this came out snarky. I'm rarely convinced by "this big number isn't ACTUALLY that much money!!" calculations.

Sam Dogen made a similar absurd claim when he tried to show that a $200k salary “wasn’t enough” to live on in the SF Bay Area. IIRC his mock budget was actually in the black with substantial money being saved plus thousands monthly on dining, travel, hobbies etc.

Let’s first acknowledge that saving 30% of take-home* pay is squirreling away about a thousand bucks every week. That’s an envious level for about three-quarters of US workers.  Adding to that - they would be building ~$12k in equity the first few years at current rates and double that a dozen years in.

Factoring in the sunset of the mortgage and this family hits FIRE in about 20 years staying put, and about 12 years if they feel like moving someplace where home prices are under $400k.  It’s pretty tone-deaf to look at such a situation and conclude “ouch”.

Retiring early is not ouch, necessarily, but living in a HCOL on a bit over $3k/mo disposable income certainly is.

I'll add some average expenses for a family of 4 in that income range. Health insurance for the rest of the family - $1000/mo. Average car payment $700/mo x 2 = $1400/mo. Groceries - $1000 mo.  Childcare $2000/mo. So yeah I could see how $233k would be comfortable.  The survey question wasn't what is necessary.  Sometimes the people on this forum who have optimized everything and have money to spare to be able to pay cash for everything are tone deaf towards those who have to commute to work, live near a big city where the higher paying jobs are, both spouses work and have kids, and don't spend hours each week reading MMM and thinking about spreadsheets.

No family needs to drive two new cars with a combined car payment of 1400/month. That’s absolutely ridiculous!!

Again, we aren't talking about need. The survey question was "comfortable". Like what temperature are you comfortable at in your home? 72. Would I be fine at 65-80 degress absolutely. But that's not the question.

For point of reference,  my renters make $140k for a family of three. One spouse staying at home. They STRUGGLE to pay the rent each month, pay hundreds in late fees frequently, get utility shut off notices a couple times a year, call me near tears because they are just trying to "make ends meet". Now are they smart with their money? No. But they aren't living a lavish lifestyle, the home is cheaper than average and it's in a medium cost of living area. If I asked him how much he'd need to make to feel comfortable, I guarantee his answer would be $200k+.  This is the average American.  Not too bright, but well meaning. Not really a point in arguing about this though. The survey question was subjective and people gave their answer. It's like asking what people's favorite color is and then saying their answer is wrong. It is what it is.

[bacchi]

Again, we aren't talking about need. The survey question was "comfortable". Like what temperature are you comfortable at in your home? 72. Would I be fine at 65-80 degress absolutely. But that's not the question.

For point of reference,  my renters make $140k for a family of three. One spouse staying at home. They STRUGGLE to pay the rent each month, pay hundreds in late fees frequently, get utility shut off notices a couple times a year, call me near tears because they are just trying to "make ends meet". Now are they smart with their money? No. But they aren't living a lavish lifestyle, the home is cheaper than average and it's in a medium cost of living area. If I asked him how much he'd need to make to feel comfortable, I guarantee his answer would be $200k+.  This is the average American.  Not too bright, but well meaning. Not really a point in arguing about this though. The survey question was subjective and people gave their answer. It's like asking what people's favorite color is and then saying their answer is wrong. It is what it is.

It's a meaningless survey, then, except that it shows us that people don't know how to budget and are subject to hedonism.

[rantk81]

W-2 Income is pretty close to that level.  Do I feel "rich"?  Probably not.  Do I feel content? Yeah.

Despite having that "high" of a "salary" from a job, a surprisingly small amount actually hits my checking account every pay-day.

I have the federal and state tax withholding set pretty high on my pay checks, because I need to account for tax on other income (like dividends from taxable investments, which are re-invested.)  Then there is maxing out 401k, HSA, stock purchase plan, limited FSA, etc taken out of the pay check.

[StarBright]

Again, we aren't talking about need. The survey question was "comfortable". Like what temperature are you comfortable at in your home? 72. Would I be fine at 65-80 degress absolutely. But that's not the question.

For point of reference,  my renters make $140k for a family of three. One spouse staying at home. They STRUGGLE to pay the rent each month, pay hundreds in late fees frequently, get utility shut off notices a couple times a year, call me near tears because they are just trying to "make ends meet". Now are they smart with their money? No. But they aren't living a lavish lifestyle, the home is cheaper than average and it's in a medium cost of living area. If I asked him how much he'd need to make to feel comfortable, I guarantee his answer would be $200k+.  This is the average American.  Not too bright, but well meaning. Not really a point in arguing about this though. The survey question was subjective and people gave their answer. It's like asking what people's favorite color is and then saying their answer is wrong. It is what it is.

It's a meaningless survey, then, except that it shows us that people don't know how to budget and are subject to hedonism.

I mean, if you consider daycare, health insurance, and two cars hedonism, then sure :)

[GuitarStv]

Again, we aren't talking about need. The survey question was "comfortable". Like what temperature are you comfortable at in your home? 72. Would I be fine at 65-80 degress absolutely. But that's not the question.

For point of reference,  my renters make $140k for a family of three. One spouse staying at home. They STRUGGLE to pay the rent each month, pay hundreds in late fees frequently, get utility shut off notices a couple times a year, call me near tears because they are just trying to "make ends meet". Now are they smart with their money? No. But they aren't living a lavish lifestyle, the home is cheaper than average and it's in a medium cost of living area. If I asked him how much he'd need to make to feel comfortable, I guarantee his answer would be $200k+.  This is the average American.  Not too bright, but well meaning. Not really a point in arguing about this though. The survey question was subjective and people gave their answer. It's like asking what people's favorite color is and then saying their answer is wrong. It is what it is.

It's a meaningless survey, then, except that it shows us that people don't know how to budget and are subject to hedonism.

I mean, if you consider daycare, health insurance, and two cars hedonism, then sure :)

One car is hedonism.  Two is ridiculous over the top extravagance.  Next you'll be telling me you have a vomitorium in your house so you can throw up food already eaten in order to enjoy more food.  :P

[StarBright]

Again, we aren't talking about need. The survey question was "comfortable". Like what temperature are you comfortable at in your home? 72. Would I be fine at 65-80 degress absolutely. But that's not the question.

For point of reference,  my renters make $140k for a family of three. One spouse staying at home. They STRUGGLE to pay the rent each month, pay hundreds in late fees frequently, get utility shut off notices a couple times a year, call me near tears because they are just trying to "make ends meet". Now are they smart with their money? No. But they aren't living a lavish lifestyle, the home is cheaper than average and it's in a medium cost of living area. If I asked him how much he'd need to make to feel comfortable, I guarantee his answer would be $200k+.  This is the average American.  Not too bright, but well meaning. Not really a point in arguing about this though. The survey question was subjective and people gave their answer. It's like asking what people's favorite color is and then saying their answer is wrong. It is what it is.

It's a meaningless survey, then, except that it shows us that people don't know how to budget and are subject to hedonism.

I mean, if you consider daycare, health insurance, and two cars hedonism, then sure :)

One car is hedonism.  Two is ridiculous over the top extravagance.  Next you'll be telling me you have a vomitorium in your house so you can throw up food already eaten in order to enjoy more food.  :P

Not only do I have a vomitorium addition scheduled for the spring, but I'm also planning on purchasing mattresses and a bed to sleep on!

[GuitarStv]

Again, we aren't talking about need. The survey question was "comfortable". Like what temperature are you comfortable at in your home? 72. Would I be fine at 65-80 degress absolutely. But that's not the question.

For point of reference,  my renters make $140k for a family of three. One spouse staying at home. They STRUGGLE to pay the rent each month, pay hundreds in late fees frequently, get utility shut off notices a couple times a year, call me near tears because they are just trying to "make ends meet". Now are they smart with their money? No. But they aren't living a lavish lifestyle, the home is cheaper than average and it's in a medium cost of living area. If I asked him how much he'd need to make to feel comfortable, I guarantee his answer would be $200k+.  This is the average American.  Not too bright, but well meaning. Not really a point in arguing about this though. The survey question was subjective and people gave their answer. It's like asking what people's favorite color is and then saying their answer is wrong. It is what it is.

It's a meaningless survey, then, except that it shows us that people don't know how to budget and are subject to hedonism.

I mean, if you consider daycare, health insurance, and two cars hedonism, then sure :)

One car is hedonism.  Two is ridiculous over the top extravagance.  Next you'll be telling me you have a vomitorium in your house so you can throw up food already eaten in order to enjoy more food.  :P

Not only do I have a vomitorium addition scheduled for the spring, but I'm also planning on purchasing mattresses and a bed to sleep on!

You monster!

[EliteZags]

A single earner in a HCOL are could be paying 30% effective tax rate so $233k becomes $163k.  If you save 30% of net income, that leaves about $100k.  Median home price in one HCOL, the Bay Area is current $1.3 million. If you go cheap and get one for $1 million you put 20% down, borrow $800k at around $5K/month that is $60k/year leaving you $40K or $3.3k/month for utilities, transportation, food, goods, vacation, school stuff, etc.  Ouch.

...oh, so more than we spend for two people after subtracting housing? Plus owning a house in a HCOL area and a 30% savings rate (~$50k per year)? And I think almost $15k got lost in rounding errors (70% of $163k = $114k). This hypothetical person seems to be doing fine despite their decision to live in the most expensive part of the country.

Sorry this came out snarky. I'm rarely convinced by "this big number isn't ACTUALLY that much money!!" calculations.

well here's my more reasonable scenario as a single ~$150K base earner in Newport Beach, CA
(not included here is a pretty significant annual bonus that goes straight into investments and backdoor Roth)
-after taxes and maxing 401K/HSA, take home is ~$7K/month
-rent/utilities: ~$2500 (sharing beach house with a friend, but this would be close to avg for a 1BR inland OC)
-gas/insurance/maint: $300
-CC spending: try to keep below $1500 (this is with rarely eating out, minimal spend at bars, economical entertainment hacking, frugal shopping)
-that leaves ~$2-3K a month going into taxable investing, on pace to hit 7 figures before 40 and hopefully FIRE a few years later, sooner if company(startup med device) is acquired with decent stock payout

so essentially I don't feel like I can spend quite comfortably/mindlessly and still be able to contribute enough to fast track FI, but in an environment where my friends are frequently dropping $1K/wk on fun, I technically could do that too but have no desire to have to work a couple decades more to be able to be living that lifestyle 
but also if I just wasn't quite as economically efficient (no debt, paid off used car, low spend everything at max discount/cash back etc) an average pedestrian could easily blow the entire monthly take home without too much extravagance, esp with any kind of mortgage

but at $233K with an extra ~$4K monthly take home I could pretty much double my taxable investing and spending and feel pretty comfortably 'rich', though I'd like to think I'd put most of that into investing