Lifetime earnings

[mistymoney]

Have you kept track of your lifetime earnings?

I did not. and about 10 years ago shredded all my older than 7 years tax returns, so the info is lost. Lost in time. Lost in space. The world may never know.....

My best approximation is my taxable earnings on my SS statement. What does this include/exclude? and are they the same exclusion excepting no income limit on the medicare?

One exclusion I know for example when I was in grad school I got a stipend for TA/RA work that is not included here. Anything else?

for those who have kept track - how is this information useful to you? Any surprises on feeling or interpretation?

For me - even with my imperfect numbers - I'm looking at my life time earnings in comparison with net worth, and liquid assets. It's a useful guage I think. I know some people who saved at lot/saved early on have a worth that exceeds their raw earnings. That is so awesome! Not the case for me, unfortunately. But I may make it there someday!

Anything else you use lifetime earnings for?

[use2betrix]

I don’t know what it does - provides comfort for those that have done well, and disappointment for those that haven’t lol.

Hitting $1MM in savings/investments at 33 feels great, until looking at my lifetime gross.. I don’t let it bother it me though.

[mistymoney]

I don’t know what it does - provides comfort for those that have done well, and disappointment for those that haven’t lol.

Hitting $1MM in savings/investments at 33 feels great, until looking at my lifetime gross.. I don’t let it bother it me though.

if you have the mil at 33, I'm sure you'll surpase the lifetime gross at some point!

[lifeisshort123]

I have never tracked it.  It would probably honestly depress me to see how many of my dollars are going to other things than building wealth (taxes, lifestyle, etc.).

[MDM]

My best approximation is my taxable earnings on my SS statement. What does this include/exclude? and are they the same exclusion excepting no income limit on the medicare?

The Payroll deductions wiki lists common things subtracted from gross pay to get your Medicare wages (box 5 on your W-2).  For most, W-2 box 3 will be the same unless the SS maximum wage is reached.

[Missy B]

Have you kept track of your lifetime earnings?

I did not. and about 10 years ago shredded all my older than 7 years tax returns, so the info is lost. Lost in time. Lost in space. The world may never know.....

My best approximation is my taxable earnings on my SS statement. What does this include/exclude? and are they the same exclusion excepting no income limit on the medicare?

One exclusion I know for example when I was in grad school I got a stipend for TA/RA work that is not included here. Anything else?

for those who have kept track - how is this information useful to you? Any surprises on feeling or interpretation?

For me - even with my imperfect numbers - I'm looking at my life time earnings in comparison with net worth, and liquid assets. It's a useful guage I think. I know some people who saved at lot/saved early on have a worth that exceeds their raw earnings. That is so awesome! Not the case for me, unfortunately. But I may make it there someday!

Anything else you use lifetime earnings for?

I went through an old box of returns today, kept summaries from the old years and am shredding the rest. I may never really need the info, but once its shredded it can't be recaptured.

[Dicey]

Doing this calculation is a central pillar of Your Money or Your Life (YMoYL). I thought it was pointless way back when the book was originally published, and I still do. What's to be gained, especially if you've always lived a reasonably mustachian lifestyle? Nor enough to do all that digging, IMO. It's easy enough to grok the concepts without knowing exactly how much you earned in your lifetime, down to the last dollar.

If you really want to scratch that itch, the numbers on the SSA website should serve you well.

[uniwelder]

I remember this topic coming up on this forum maybe a year ago. I’ll try searching for it. The question was lifetime earnings to net worth, using SS history for the earnings portion. SS history from the government website was accurate enough for me, though it misses my teen years when I worked part time for cash.

From what I remember of the thread, people with high net worth generally mentioned a lot of housing appreciation. Also, I think they were older and had more time for investments to grow. So, do I think the ratio is useful or meaningful? Not when comparing yourself to others on this forum, but compared to the typical person, maybe.

I just found the concept interesting because I had never put thought into it before. Also how much money I made when I was young, looking at inflation adjusted dollars.

[2sk22]

I used the annual Medicare Earnings number from the SS website to compute this a few years ago soon after I retired. This works because medicare is computed on your full income.

Also, since I worked for nearly 30 years, I was curious to see how much the money I earned early in my career is worth in current dollars. So I put the earnings numbers into a spreadsheet and then used the BLS inflation adjustment tool to see how much I earned in current dollars. It was an eye opener!

In nominal terms, my salary over the years increased continuously but but corrected for inflation, it looks lumpy. My salary rose steeply in the 1990s and hit a peak in 1999. Then my salary roughly plateaued for a decade until about 2010 when it it took off again. When I think about it, I recall that our money anxieties were high during the decade of 2000 to 2010 with two young children, a mortgage and jobs that seemed less stable. I used to compute our net worth just once a year and it barely seemed to budge.

[ixtap]

I do not find this to be a useful metric. I can see it being a matter of curiosity, but it wouldn't change any future decisions.

[mistymoney]

I used the annual Medicare Earnings number from the SS website to compute this a few years ago soon after I retired. This works because medicare is computed on your full income.

Also, since I worked for nearly 30 years, I was curious to see how much the money I earned early in my career is worth in current dollars. So I put the earnings numbers into a spreadsheet and then used the BLS inflation adjustment tool to see how much I earned in current dollars. It was an eye opener!

In nominal terms, my salary over the years increased continuously but but corrected for inflation, it looks lumpy. My salary rose steeply in the 1990s and hit a peak in 1999. Then my salary roughly plateaued for a decade until about 2010 when it it took off again. When I think about it, I recall that our money anxieties were high during the decade of 2000 to 2010 with two young children, a mortgage and jobs that seemed less stable. I used to compute our net worth just once a year and it barely seemed to budge.

well....crap. Just when I was feeling semi-good about where I was at! After adjusting for inflation I'm about -1 million!

[mistymoney]

My best approximation is my taxable earnings on my SS statement. What does this include/exclude? and are they the same exclusion excepting no income limit on the medicare?

The Payroll deductions wiki lists common things subtracted from gross pay to get your Medicare wages (box 5 on your W-2).  For most, W-2 box 3 will be the same unless the SS maximum wage is reached.

Thanks, I guess I can use what I got then with more confidence. I didn't know if anything was excluded, but makes sense it is not.

[mistymoney]

I remember this topic coming up on this forum maybe a year ago. I’ll try searching for it. The question was lifetime earnings to net worth, using SS history for the earnings portion. SS history from the government website was accurate enough for me, though it misses my teen years when I worked part time for cash.

From what I remember of the thread, people with high net worth generally mentioned a lot of housing appreciation. Also, I think they were older and had more time for investments to grow. So, do I think the ratio is useful or meaningful? Not when comparing yourself to others on this forum, but compared to the typical person, maybe.

I just found the concept interesting because I had never put thought into it before. Also how much money I made when I was young, looking at inflation adjusted dollars.

DS and DD are just starting out with their 401ks and roths, so I thought it was a fun metric to introduce to them to. If they wanted they could track that over their lives. And I did mention that investing heavily and investing early gave one a good chancce at ending up with more money than was ever made. I think that is an attractive prospect, especially while both are young and carefree - no dependents, no mortgage, etc. This is the time to lay a foundation that will grow for them.

DS responded well, then said he was maybe going to try day trading too....peeps making money on the internet. I told him to put a small amount aside to play with and when it's gone - its gone, dont' get a gambling addiction!

[lifeisshort123]

I think many people are obsessed with “the next big thing” instead of stable returns.  I hope he avoids that risk.

The other big thing is, a penny saved is a penny working for you…. It took me way too long to really learn that.  I always sort of understood it, but it took me way longer to truly live it.

[RunningintoFI]

So I'm an odd-ball that actually tracked lifetime earnings ever since my first "adult" paycheck.  I track everything from 401k contribution, net taxes, tax rate, gross paycheck and so on throughout the years for each paycheck.  Takes me 15 seconds every two weeks to enter the data so it's not a major time suck and it helps me remember to check that I actually was paid! 

Is it useful?  Not usually.  Is it interesting - very much so.

The most utility I have gotten from it is quickly being able to determine how much I have contributed to my tax advantaged accounts when changing companies in any given year so I know what I can set my new company contributions at to not go over the limits.  Very useful when you have changed companies 4 times in 2 years and accounts are all over the place. 

The interesting thing is when you compare paychecks over a longer time horizon (i.e. decade) in a career and see that your current tax payment is what your original gross check was when starting out.  I also find it entertaining to compare across different states and companies - I've had several positions for nearly the same starting salary but the final paycheck is vastly different due to the tax rate and benefits package of the company.  Tax rates are usually pretty obvious but it is underrated how much of a difference that health insurance payment can make on the final paycheck until you compare it directly. 

[lifeisshort123]

So I'm an odd-ball that actually tracked lifetime earnings ever since my first "adult" paycheck.  I track everything from 401k contribution, net taxes, tax rate, gross paycheck and so on throughout the years for each paycheck.  Takes me 15 seconds every two weeks to enter the data so it's not a major time suck and it helps me remember to check that I actually was paid! 

Is it useful?  Not usually.  Is it interesting - very much so.

The most utility I have gotten from it is quickly being able to determine how much I have contributed to my tax advantaged accounts when changing companies in any given year so I know what I can set my new company contributions at to not go over the limits.  Very useful when you have changed companies 4 times in 2 years and accounts are all over the place. 

The interesting thing is when you compare paychecks over a longer time horizon (i.e. decade) in a career and see that your current tax payment is what your original gross check was when starting out.  I also find it entertaining to compare across different states and companies - I've had several positions for nearly the same starting salary but the final paycheck is vastly different due to the tax rate and benefits package of the company.  Tax rates are usually pretty obvious but it is underrated how much of a difference that health insurance payment can make on the final paycheck until you compare it directly.

Ugh… that is so true…. Early in my career i was in a job that I absolutely hated, but had completely paid for medical benefits - with a $250 deductible and $500 max out of pocket annual limit, coupled with an excellent pension. I am glad I left the position, but leaving that was quite a disappointment.

[Askel]

So one of the benefits of pretty much working for the same employer since I was 18 (27 years this fall, ouch) is I have easy access to this data. 

It's mostly just amusing, but having a good handle on your net worth to earnings ratio is kinda handy (network is right about 50% of lifetime earnings).  Was also kinda neat to note certain milestones- like crossing $1,000,000 in lifetime earnings.  BNL "If I had a $1000000" got a lot of rotation in my playlist that week. 

[mistymoney]

Is nothing substracted from social security earnings?

I'm looking at my numbers and they just don't seem right. I don't think I have anything to say what I think they should be instead!- just that they should not go down over the years while I was at the same employer as I never had a paycut, and got raises every year.

does it substract fed or state taxes or health insurance or anything?

[MDM]

does it subtract....

Don't know what "it" is in this context, but does the Payroll deductions article help?

[mistymoney]

does it subtract....

Don't know what "it" is in this context, but does the Payroll deductions article help?

thank you! I think this indicates that health care ins and flex spending are dedcuted from soc sec wages, and that w/could explain it!

[teen persuasion]

The employee portion of health insurance is subtracted, and HSA contributions done thru payroll contributions.

We've also seen some additions to FICA income, mostly the premiums on GTL over a value of > $50k.  It usually added just a tiny bit, but was enough to throw things off. 

I think DH's employer gave $50 gift cards at Xmas, and included that in taxable income plus grossed things up to cover the taxes.  Was not expecting that, good thing I had a bit of room in the AGI I was targeting for financial aid purposes, and didn't go over a cliff.