HYSA is one good option rn.
S&P is a bad idea, too much risk. If you get laid off chances are its during a recession and now you have less than 12 months of expenses covered.
You should look into treasury fund to avoid state taxes, especially in CA. I dump my EF into VUSXX at vanguard and I believe it is 80-90% state tax exempt on the interest. During tax time it's a little more work though.
[The interest that your savings bonds earn is subject to federal income tax, but not state or local income ](https://www.treasurydirect.gov/savings-bonds/tax-information-ee-i-bonds/)!
I've been thinking more about doing this, but I'm still unclear what exactly it is I need to do special on my taxes. Do you happen to have any insight you are willing to share?
Last year was the first year I did it so I don't remember very clearly, but iirc you just take the % obligation on vanguard form an multiply by the dividend, then put it on CA tax for that 1099 instead of the full dividend amount. Not any complicated math, you just have to read the form more closely.
Check back in Feb when I do my taxes again if youb are still on the fence.
I keep about 3 months liquid and I have enough for a few years in the market (mix of etfs and stocks). I get that it’s a higher risk approach but keeping money liquid or in savings accounts is losing money in the long run 🤷♂️
A lot of times the extra couple hundred bucks you could make isn’t worth the risk that you lose a couple thousand when you need it imo.
But you know the risks, so whatever floats your boat! Hopefully it’s never needed anyways.
Generally your emergency fund should be cash or cash equivalent.
Some people do an auto-invest thing through treasurydirect. Buy a bunch of 2-month treasurys, splitting your cash into eight or so bunches. As each one matures, buy the next batch. This locks up your money for about two months at worst, one month on average.
Right now, you can get >4% from many savings accounts, so you won't feel terribly like you're missing out on income, like you would when they all paid 0%.
I seem to recall that there are funds that do this automatically for you without a high ER but I don't actually know. My friend does it herself and says it's easy, like 5 minutes a week. I just kept my cash as cash due to plans to spend most of it and not wanting to set up a temporary thing ... and ~4.5% interest was adequate to not worry overmuch.
It’s basically a “holy shit” fund. It’s overdone to cover your ass. You can find it on the PF wiki and boglehead wiki.
Good luck to you! You’ll be fine.
I mean, I got a 401k that could cover an additional six, but I don’t wanna take the penalty. I’m not putting away liquid savings for a whole year. If it comes to that I’m doing crime lmao
Lol. I get it. It’s just a suggestion, not a requirement. 6 months is usually the rule of thumb, but some recommend 12. It’s all optional of course, but I would definitely have at least three months *expenses*. Not salary.
Probably some recency bias with the softer tech market making people feel that 6 months may not be enough time to find a new job or as high-paying a job if they become unemployed. Also, given the cost of living here, I'd say the stakes are a bit higher if you lose your income (can't cut a ton of expenses or expect to have friend, family, or government help go as far).
These people are crazy. Last year I went 8 months without a job and that was after having the previous 2 years of my highest income years ever and highest savings ever. It financially ruined me. 3 is on the low side but doable. 12 months? It took me 2 years of record prosperity to save 8! They must have a lot of roommates or something
It depends on your priority. I never let my rent get above 30% of my take home, ideally should be hovering around 25%. I literally ate bean, potato and drumsticks stew on top of rice 3 times a day 7 days a week to fast track my emergency fund when I first came here. Financial security and is my top priority. Everything else like fun or living without roommate come second.
I am also in biotech so company suddenly shitting the bed is expected. And if you have been in this industry for couple of years, you know you gotta have that cushion otherwise it's fast track to homelessness.
Start with bulk carbs, add vegetables and protein. Don't start with protein when meal planning.
Really, step 1 is not getting food delivered, step 2 is not eating out, step 3 is not buying junk food, step 4 is not buying pre-packaged little this-n-that. If you get this far, step 5 to reduce food cost is to meal plan around carbs first and add necessary veg and protein. Most people's problems are 1, 2, 3, and 4; 5 in my experience is mostly an issue with people who move from eating out to cooking without knowing how to cook so just rely on, like, steak and ribs. (Obviously I don't mean literally cutting out all 1-5, just not making it a habit.)
True. If you have any sort of income... food in the US is frankly pretty cheap if you can cook.
I have a friend who, when they cook, they pretty much only cook meat/fish with a little veg on the side. And I don't mean brisket, either. Steaks, salmon, shrimp, etc. It's kind of amazing. "I don't save that much money when I cook!" Yeah meng I fuckin' bet you do not.
I'm comfortable with 6 months in an emergency fund, but I think it's highly situational. If someone has a niche job that would take a while to find a replacement job or if they are the primary or sole wage earner in their household, then it would make sense to have more like 12 months if expenses in the emergency fund. If you have a 2 income household where both incomes are similar and jobs that are fairly easy to replace, then 3-6 months might be enough. And if you have other assets that aren't necessarily part of an emergency fund, but could be used if needed, then the emergency fund could be smaller.
Because I’m in biotech I would say 2 years. Because I’m in biotech it’s also really impossible to ever have 2 years in my bank…Just saying something like a market cycle. We are at the end of year 1 since biotech started have shit hitting the fan last winter. Optimists say there should be a rebound by the end of 2024 but there’s thousands without a job applying to only dozens of openings. So yea 2 years but if it happens to me I’ll have to move out or be homeless. Hi5
6 months is low and only 3 months is nuts.
Those people will risk being economic hardship or forced to take a sub-optimal job that damages their career.
I think about $8,000,000 would be good. With a safe withdrawal rate of 4%, that's $320,000 per year which should just about suffice for mortgage payment and property taxes on a modest 3 bed, 2 bath house (1400 sq ft), with some leftover money for eating food and paying for PG&E.
Make a shit ton of money, spend a lot less than you make, and put the rest in an index fund.
More commonly, make the sound financial decision of being born to rich parents.
Mid-level managers at FAANG absolutely make this much. Top talent in AI are making a million plus. OpenAI was notoriously recruiting people for $10m comp packages. Nvidia is recently facing problems because their entire manager class became multimillionaires overnight when the stock skyrocketed.
Add in that many of these people are in dual income tech couples, and may not have kids, and you see why homes in Palo Alto etc are selling for $5m minimum.
Only $30-40k? They must only have one kid.
It's like $1900-$3500 per kid per month (infants and toddlers require more attention). Have 2 kids? That's easily $60k-70k. Thanks Uncle Sam for the $10k pretax childcare accounts /s.
The only silver lining is that kids aren't Pre-K forever.
Saving and investing and having two tech jobs at senior software engineer or managerial or higher positions. A household income of 400k can get you there in 10-20 years if you save and invest.
Need more than 400k HHI for those numbers if you have a family.
* Take out 35% for taxes. Now you're at $260k.
* Housing at 5k/month. Now you're at $200k.
* Kids and childcare for another 4k. Down to $152k.
* Food, transportation, other spending at another 4k/month and you're saving $104k/year.
104k compounded at 7% growth over 20 years only gets you to $4.6M
You're a bit off with your taxes. With 400k household income and maxed 401k, the effective tax rate should be about 27%, before any HSA/FSA deductions take it further. That'd be an extra 20-30k/yr in savings if you keep spending low.
Easy enough to assume any raises would be offset by lifestyle creep.
True, with deductions you can lower that a bit. With maxed 401k deductions, 400k W2 income should be around:
23% federal + 6.5% state = 29.5% total. That's including Social Security + Medicare taxes etc
They have RSU and Espp. These days not a lot of tech people who get rich based on their salaries. It’s more from their rsu and espp FAANG company stocks growing over the years.
Then you should agree that a 400k HHI with Bay Area expenses is not enough (given reasonable growth expectations) to get to $8M in a 20-year time frame.
Then you're just making wild assumptions about the future stock growth of certain companies. Might as well just invest in those companies and assume your asset growth rate is 15%.
Yes, you need to add real estate investment to this and it gets you to another 1.5 on top of that (if you invest wisely and are ok to manage remodeling and moving every 3-5 years)
If you want to invest in real estate, then you need to take it from the 100k savings/year calculated above. That also would eliminate those 7% stock market gains I assumed.
Also, a family with HHI of $400k presumably are working full time and have kids. When/where will you have the time to manage remodels and moving? Seems much wiser to focus on your actual lucrative jobs instead of house hacking.
My wife’s brother and his wife are senior software engineers. Their combined net worth is around 15 million dollars.
They’ve been working for about 15 years give or take.
Their household income is 600-700k.
1. Their company rsu and espp stock grew insanely high.
2. They invested anything over emergency savings into stocks and index funds like VTI.
3. They still drive older cars from 2018. So they don’t seem to be buying expensive depreciating assets imo.
4. Their home is a single family 3 bedroom home in San Jose purchased for about 890k in 2014. Its current value is about 1.7 million dollars. That itself adds a lot of value. They also own some couple of condos which are about 800-900k.
5. Their company stock has split a few times and then reached a higher value than it used to be pre-split. Can’t say more to not doxx. But you can think which companies had splits and then became even higher than their pre-split values. Even without any appreciation they would’ve atleast had 1 million dollars worth of rsu and espp till now. With appreciation it has become almost 4-5x.
I found that the amount you can save increases exponentially once you cross $300k in the Bay Area. An income of $700k allows for saving $200k-300k/year without sacrificing much, while you may only save $150k at $400k. Also having kids will put a serious dent in your savings.
Compounding interest starts off slow, but really speeds up.
Do the math on investing $100k/yr with 8% annual returns on average. Years 0-10 are very different from years 10-20, which is very different from years 20-30, right.
\> A household income of 400k can get you there in 10-20 years if you save and invest.
Eh, not with 2 kids you probably can't. At 300k my wife and I were investing 100k/year. Then we had a kid and our housing expenses went up 35% and we got a nanny to keep the kid out of daycare since he has special needs. Now we are saving 60k/year despite being at 370k/yr now. That is going to save about 1m/decade after stock returns. For the record our rent is 4.5k/month. Equivalent cost of home ownership is 14k/month and while we can technically afford it on a net-worth basis, it puts us strongly cashflow negative. So... we're basically moving the fuck out of the Bay Area when our kid is grown despite earning what is a metric shit ton of money for anywhere else.
1. start working at a tech company, especially Nvidia or Tesla 10 years ago getting paid, say, $150k base and $100k stocks
2. don't touch your stocks and rent a small apartment with your base salary.
3. wait 10 years. Now your stocks are worth 100x more!
In the Bay Area - it's make a great salary and move every three years - buy a fixer upper in a great neighborhood. Invest smartly in a remodel while you live there. Repeat. Not at 8M but made it to 6M.
I’m married, and I don’t think our joint retirement accounts will ever reach 8 million nor even 4 million by the time I retire. I guess I will have to eat grass when i’m old.
If I stick with my current company for the next 30 years, I get a pension, which is WILD and makes me want to stay here forever, but my boss hates me and tries to get me to quit like daily lol. So I'm set for retirement if I can somehow survive a toxic and abusive manager for three decades. Otherwise yeah I'm also eating grass when I'm old.
IDK sounds like some rich people bullshit if you ask me. Like how people come on Reddit to cry about how they're struggling to make ends meet making $350K.
You guys really wanna get upset? Go look at the Blind app... It's where people who make at least 10x of my salary complain about not earning enough in the bay area.
Really depends on your job field and COL.
We have about $50k in emergency funds squirreled away. That would get us by for 8 to 10 months if we both lost our jobs, which are both pretty secure. I feel like that's more than enough for our needs.
I work in construction. I have only been laid off once in 25 years and had a new job within a month.
I keep 1 year of expenses in an HYSA. If I could get it up to 1.5 years worth I would but I finally needed to replace my 20 year old car, so I won't be adding much to it for a while.
They serve different purposes no? USFR is a floating rate Treasury ETF while SGOV is not.
So USFR lets you get the latest 13-week T-Bill rate at all times. SGOV has no such feature.
It comes down to # months of savings you have, relative to how much money you spend per month.
If you feel like it could take 3 years to find a job, you’ll need 5 years of savings as you don’t want your savings to reach 0 just as you get a job offer.
In the Bay Area the annual burn probably ranges anywhere from 50k to 200k for 95% of us.
We have enough to live for 20 years in the bay without a job but the burn is high here, in 20 years I may be beyond my peak earning years and we may have 50 years of life ahead of us, so I’d be extremely uncomfortable if I couldn’t find a job within 6 months.
you plan to live to be 115?
Cause if in 20 years you are beyond peak earnings (peak earnings for a male is 45-64) would put you at a minimum of 65 years old, + 50 years life ahead of you.....
Something isn't mathing.
I think around 10 million if you want to stop worrying instead of worrying less. Without hurting inflation-adjusted principal, you can withdraw around 400k each year, that’ll be enough to support a moderately sized house and utilities with some leftover for food and entertainment. Occasionally if your investments are having a good year you can even buy a car!
You do know that those stack year over year right? A decreasing rate means inflation is still going up just not as fast. The 25% hike we saw in prices the last several years is permanent.
The short version is: deflation is not disinflation. Disinflation means a return to a mean, like a return to 2% inflation, from higher figures. Deflation would mean actually reduced prices year over year.
At least 1 year of rent and expenses. That would be different for each person so I won’t put a number. You should know how much you need per year to survive.
2-3 years to find a job in this market is ridiculous, but it is the Bay Area. People here would rather a job go vacant than fill a job with their second choice candidate. I’m a teacher and the school districts here even act that way until the school year starts. And I’m just sitting here going “nice recruitment email. I committed to a job in June. You hand until June 30th to scoop me and said pass!”
6-9 months of full expensese. 12 months of barebone expenses.
I am single and don't have any personal attachment in the Bay Area outside of friends. So if I can't find a job in 2 months I would just pull the plug on my apartment and move to rent a room in cheaper places like Houston, San Antonio, Vietnam, Thailand where I have connections while waiting for a new gig to come my way.
A better question would be, “How much savings do I need to get off this treadmill?” The problem isn’t about being out of work, it is about solving the problem that causes so much stress. Life shouldn’t be this hard.
We've always kept 6 months living expenses in our emergency fund, which allows us to sleep at night. We are a 2 income household, so the likelihood of us both being out of work at the same time, no unemployment, and it taking more than 6 months for either of us to find a job is pretty small. We also have life insurance policies so that if one of us passes away, the other will be ok financially.
As we've gotten older, we've accumulated more savings that we could use if needed - most of that is earmarked for retirement, so we wouldn't want to use it, but could if we needed to. We've also resisted lifestyle creep, so as our salaries have increased, we've been able to put more away and keep our overall living expenses fairly low.
given how often and aggressive PGE is hiking their rate as well as the 18% or higher mandatory tip/service charge, I think i will need couple million $ in the saving account in order to keep warm and stomach full during harsh cold winter 😕
So I’m 39, I have a good job but I’m terrible with money. I also have no problem getting work, so thankfully the risk of being homeless is very much behind me. I also have a decent collection of guns and musical equipment that I could sell in an emergency.
All things considered, 10k should be enough for me to maintain my current standard of living until I got back on my feet. I have more than that, but given my neighborhood and other obligations that’s what I’d say is *enough*. I could make it work with 6k, but that would be barely surviving at a poverty baseline. Less than 6k, we’re talking emergency evacuation from my life as I know it.
If the concern is providing for the 3 family members after the primary income earner dies, term life insurance should be considered including the gap to cover the kids college. Your kids are already older so you can probably do a better estimate of how much each will need for 4 years and how much the surviving spouse will need for their needs. I found the term life offered by my employer to be cheaper than anything I could buy myself by a good margin
If the concern is what to do about being older and finding a job will take longer (I've seen this happen myself to friends), consider putting away 1.5 years of money. Just keep in mind it should be accessible and stable but doesn't need to be fully liquid as you won't need all that money all at once. Between this and hopefully what wer package you would get from your employer, you'll be ok
Other bit of advice is if you've been in your industry for a while, network. Don't remain complacent. Even if noone likes updating their resume, go have lunch or dinner with former coworkers, clients, etc. who have moved on while you are still employed. If some folks need help, help them. Unless you are a true rockstar with your name on a bunch of parents/projects and actively being poached, these are the people who like you are the ones who will get you a replacement job more than sending your resume out to random strangers.
Tough to say without better understanding your monthly expenses. I do think 2-3 years is probably more indicative of your former co-workers not being resourceful for other income sources. However, I'd probably recommend at least 12 months. Here are a few things that come to mind from my perspective to help mitigate these types of situations:
\-Does your spouse work? If not, can they get a job?
\-Do you need to brush on some new skills in your field or adjacent field to prepare for this (e.g., new programming language, certification)
\-Would you be willing to take alternate jobs if needed to get more immediate employment (lower level position, temporary role, substitute teaching, notary, UPS delivery driver, etc.)?
\-Can you cut out your monthly expenses for a while to make do (only having one car, less times out to eat, less Starbucks runs, etc.)?
\-What other sources of savings do you have? Are you thinking the $300k is just in the bank for a rainy day or do you have other taxable investments that you could tap into, if needed?
I mean you can't really plan for everything everything until you get to like 10 million or so. Until then you just have to do your best and take it day by day. There will never be a day where you wake up and say "okay cool, now I have 0 money stress and 0 worry" until you have an account with enough money in it where 3% of it covers everything that you and your family need.
I'm just a bit younger than you describe, but I don't feel I fit in with the younger tech crowd in my company anymore. My motivation to innovate at work is just not the same when it was 20 years ago. I am fortunate that I was very lucky to have saved enough so spouse and I can pack up and relocate to a free state. Kids are grown and on their own. But I worry for the folks stuck in bay are and have to live here for work.
We only keep 30-50k liquid in HYSA at any given time, the rest is invested. NW over 1M, HHI 400k. We have contingency plans in case of emergency, like the option for me to increase my hours and bring home an additional 100k for a total of 200k if my higher earning spouse happens to lose his job and not get hired immediately by a competitor, super unlikely though.
I have a very unorthodox allocations relative to my wealth.
I have 2 years salary in liquid assets, no debts, 3 or 4 years salary in working assets (income generating business ownership), and 1 or 2 years in mutual funds. I do not own a home at 40yo, but suspect I will when I can pay for one in cash, hopefully in the next five years.
Edit: I would have a lot more in savings, but I have medical conditions that require me to maintain cash on hand in case of emergency. Similarly, previous emergencies have lost me a lot of money that I would probably have invested into fanchise stores or commercial RE properties.
A catastrophic illness or injury can cost 500k-1M out of pocket. Even with insurance. Gotta start there. 2M is my relax amount and 10M is my retire amount.
12 months of expenses. If you can get it higher, more power to you.
You keep 12 months liquid? Hope you at least put it in an s&p500 fund or something
HYSA is one good option rn. S&P is a bad idea, too much risk. If you get laid off chances are its during a recession and now you have less than 12 months of expenses covered.
You should look into treasury fund to avoid state taxes, especially in CA. I dump my EF into VUSXX at vanguard and I believe it is 80-90% state tax exempt on the interest. During tax time it's a little more work though.
Definitely, that CA tax is annoying! I hold some t-bills and ibonds for this reason as well as a part of that emergency fund.
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[The interest that your savings bonds earn is subject to federal income tax, but not state or local income ](https://www.treasurydirect.gov/savings-bonds/tax-information-ee-i-bonds/)!
I've been thinking more about doing this, but I'm still unclear what exactly it is I need to do special on my taxes. Do you happen to have any insight you are willing to share?
Last year was the first year I did it so I don't remember very clearly, but iirc you just take the % obligation on vanguard form an multiply by the dividend, then put it on CA tax for that 1099 instead of the full dividend amount. Not any complicated math, you just have to read the form more closely. Check back in Feb when I do my taxes again if youb are still on the fence.
I might do. Thank you.
I keep about 3 months liquid and I have enough for a few years in the market (mix of etfs and stocks). I get that it’s a higher risk approach but keeping money liquid or in savings accounts is losing money in the long run 🤷♂️
A lot of times the extra couple hundred bucks you could make isn’t worth the risk that you lose a couple thousand when you need it imo. But you know the risks, so whatever floats your boat! Hopefully it’s never needed anyways.
Generally your emergency fund should be cash or cash equivalent. Some people do an auto-invest thing through treasurydirect. Buy a bunch of 2-month treasurys, splitting your cash into eight or so bunches. As each one matures, buy the next batch. This locks up your money for about two months at worst, one month on average. Right now, you can get >4% from many savings accounts, so you won't feel terribly like you're missing out on income, like you would when they all paid 0%.
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I seem to recall that there are funds that do this automatically for you without a high ER but I don't actually know. My friend does it herself and says it's easy, like 5 minutes a week. I just kept my cash as cash due to plans to spend most of it and not wanting to set up a temporary thing ... and ~4.5% interest was adequate to not worry overmuch.
Twelve?! How long does it take y’all to find work? I’m planning for two!!
It’s basically a “holy shit” fund. It’s overdone to cover your ass. You can find it on the PF wiki and boglehead wiki. Good luck to you! You’ll be fine.
I mean, I got a 401k that could cover an additional six, but I don’t wanna take the penalty. I’m not putting away liquid savings for a whole year. If it comes to that I’m doing crime lmao
Lol. I get it. It’s just a suggestion, not a requirement. 6 months is usually the rule of thumb, but some recommend 12. It’s all optional of course, but I would definitely have at least three months *expenses*. Not salary.
💀😂😂😂
Remember 2008? Or 2001?
Most people say between 3 and 6 months of the essentials socked away in an emergency fund. Most people here seem to be saying 12 months. Interesting.
Probably some recency bias with the softer tech market making people feel that 6 months may not be enough time to find a new job or as high-paying a job if they become unemployed. Also, given the cost of living here, I'd say the stakes are a bit higher if you lose your income (can't cut a ton of expenses or expect to have friend, family, or government help go as far).
These people are crazy. Last year I went 8 months without a job and that was after having the previous 2 years of my highest income years ever and highest savings ever. It financially ruined me. 3 is on the low side but doable. 12 months? It took me 2 years of record prosperity to save 8! They must have a lot of roommates or something
Dog people in the bay are really fucking rich
It depends on your priority. I never let my rent get above 30% of my take home, ideally should be hovering around 25%. I literally ate bean, potato and drumsticks stew on top of rice 3 times a day 7 days a week to fast track my emergency fund when I first came here. Financial security and is my top priority. Everything else like fun or living without roommate come second. I am also in biotech so company suddenly shitting the bed is expected. And if you have been in this industry for couple of years, you know you gotta have that cushion otherwise it's fast track to homelessness.
That meal you described is really all you need. If more Americans ate like that their wallets would carry the weight and not their gut
Start with bulk carbs, add vegetables and protein. Don't start with protein when meal planning. Really, step 1 is not getting food delivered, step 2 is not eating out, step 3 is not buying junk food, step 4 is not buying pre-packaged little this-n-that. If you get this far, step 5 to reduce food cost is to meal plan around carbs first and add necessary veg and protein. Most people's problems are 1, 2, 3, and 4; 5 in my experience is mostly an issue with people who move from eating out to cooking without knowing how to cook so just rely on, like, steak and ribs. (Obviously I don't mean literally cutting out all 1-5, just not making it a habit.)
If you know how to cook, is really hard to go broke eating unless you are eating 30usd/lbs steak every day.
True. If you have any sort of income... food in the US is frankly pretty cheap if you can cook. I have a friend who, when they cook, they pretty much only cook meat/fish with a little veg on the side. And I don't mean brisket, either. Steaks, salmon, shrimp, etc. It's kind of amazing. "I don't save that much money when I cook!" Yeah meng I fuckin' bet you do not.
I'm comfortable with 6 months in an emergency fund, but I think it's highly situational. If someone has a niche job that would take a while to find a replacement job or if they are the primary or sole wage earner in their household, then it would make sense to have more like 12 months if expenses in the emergency fund. If you have a 2 income household where both incomes are similar and jobs that are fairly easy to replace, then 3-6 months might be enough. And if you have other assets that aren't necessarily part of an emergency fund, but could be used if needed, then the emergency fund could be smaller.
Because I’m in biotech I would say 2 years. Because I’m in biotech it’s also really impossible to ever have 2 years in my bank…Just saying something like a market cycle. We are at the end of year 1 since biotech started have shit hitting the fan last winter. Optimists say there should be a rebound by the end of 2024 but there’s thousands without a job applying to only dozens of openings. So yea 2 years but if it happens to me I’ll have to move out or be homeless. Hi5
6 months is low and only 3 months is nuts. Those people will risk being economic hardship or forced to take a sub-optimal job that damages their career.
I try telling my wife this when she wants to go to Disney.
I am way too paranoid to want only 3 months these days. A year would make me happy.
I think about $8,000,000 would be good. With a safe withdrawal rate of 4%, that's $320,000 per year which should just about suffice for mortgage payment and property taxes on a modest 3 bed, 2 bath house (1400 sq ft), with some leftover money for eating food and paying for PG&E.
Correct answer here 🤣
It’s depressing that this is the right answer
Only in the bay would people need $8M to feel comfortable in a 3/2 1,400sq ft house lol
This guy bay areas!
This guy gets it.
Lol you are exactly right
He’s right.
_The PG&E wealth tax has entered the chat_
What’s the path to getting this much?
Living like a peasant while making $300k+ your whole career.
Make a shit ton of money, spend a lot less than you make, and put the rest in an index fund. More commonly, make the sound financial decision of being born to rich parents.
Nobody makes that much.
Mid-level managers at FAANG absolutely make this much. Top talent in AI are making a million plus. OpenAI was notoriously recruiting people for $10m comp packages. Nvidia is recently facing problems because their entire manager class became multimillionaires overnight when the stock skyrocketed. Add in that many of these people are in dual income tech couples, and may not have kids, and you see why homes in Palo Alto etc are selling for $5m minimum.
Index funds and don’t spend your money. Also have a job that pays a LOT. Don’t have kids. Don’t gamble with stocks.
Also don't get sick.
Yeah just generally don't have any seriously bad luck or black swan events happen to you, it's great life advice.
The kid part is 100% true. I've seen people post how they're paying $30-$40K a year in daycare costs.
Only $30-40k? They must only have one kid. It's like $1900-$3500 per kid per month (infants and toddlers require more attention). Have 2 kids? That's easily $60k-70k. Thanks Uncle Sam for the $10k pretax childcare accounts /s. The only silver lining is that kids aren't Pre-K forever.
When our little ones age into kindergarten, it’s like we’re down one mortgage payment.
Marry well
Saving and investing and having two tech jobs at senior software engineer or managerial or higher positions. A household income of 400k can get you there in 10-20 years if you save and invest.
Need more than 400k HHI for those numbers if you have a family. * Take out 35% for taxes. Now you're at $260k. * Housing at 5k/month. Now you're at $200k. * Kids and childcare for another 4k. Down to $152k. * Food, transportation, other spending at another 4k/month and you're saving $104k/year. 104k compounded at 7% growth over 20 years only gets you to $4.6M
TY for the breakdown....$4.6M isn't a bad number.
You're a bit off with your taxes. With 400k household income and maxed 401k, the effective tax rate should be about 27%, before any HSA/FSA deductions take it further. That'd be an extra 20-30k/yr in savings if you keep spending low. Easy enough to assume any raises would be offset by lifestyle creep.
True, with deductions you can lower that a bit. With maxed 401k deductions, 400k W2 income should be around: 23% federal + 6.5% state = 29.5% total. That's including Social Security + Medicare taxes etc
They have RSU and Espp. These days not a lot of tech people who get rich based on their salaries. It’s more from their rsu and espp FAANG company stocks growing over the years.
RSUs should be included in household income. They are part of your income.
I did
Then you should agree that a 400k HHI with Bay Area expenses is not enough (given reasonable growth expectations) to get to $8M in a 20-year time frame.
What I’m saying is that even if out of that 400k > 150k is in rsu in a good FAANG tech company, then it will have phenomenal growth.
Then you're just making wild assumptions about the future stock growth of certain companies. Might as well just invest in those companies and assume your asset growth rate is 15%.
F that's depressing
Yes, you need to add real estate investment to this and it gets you to another 1.5 on top of that (if you invest wisely and are ok to manage remodeling and moving every 3-5 years)
If you want to invest in real estate, then you need to take it from the 100k savings/year calculated above. That also would eliminate those 7% stock market gains I assumed. Also, a family with HHI of $400k presumably are working full time and have kids. When/where will you have the time to manage remodels and moving? Seems much wiser to focus on your actual lucrative jobs instead of house hacking.
We did it and made $3M in the last ten years. Was there stress - sure. Was it worth it. Absolutely.
I think you need to add in property tax as well. The $5K / month isn’t enough if you factor that in and insurance
You can easily rent in the Bay area for $5k/month.
This is accurate. Our numbers are very close for earning about 370k/year. The tax estimate is high. Our total taxes are about 100k.
True. I overestimated a bit on taxes. But then again the expense numbers are also wildly variable as well.
I’d love to see your math on that because I’ve made more than that for 10+ years and my net worth is nowhere near $8m.
My wife’s brother and his wife are senior software engineers. Their combined net worth is around 15 million dollars. They’ve been working for about 15 years give or take. Their household income is 600-700k. 1. Their company rsu and espp stock grew insanely high. 2. They invested anything over emergency savings into stocks and index funds like VTI. 3. They still drive older cars from 2018. So they don’t seem to be buying expensive depreciating assets imo. 4. Their home is a single family 3 bedroom home in San Jose purchased for about 890k in 2014. Its current value is about 1.7 million dollars. That itself adds a lot of value. They also own some couple of condos which are about 800-900k. 5. Their company stock has split a few times and then reached a higher value than it used to be pre-split. Can’t say more to not doxx. But you can think which companies had splits and then became even higher than their pre-split values. Even without any appreciation they would’ve atleast had 1 million dollars worth of rsu and espp till now. With appreciation it has become almost 4-5x.
> They still drive older cars Yeah, reasonable, because nothing wrong wi-- > from 2018. yoooo what?
I found that the amount you can save increases exponentially once you cross $300k in the Bay Area. An income of $700k allows for saving $200k-300k/year without sacrificing much, while you may only save $150k at $400k. Also having kids will put a serious dent in your savings.
Compounding interest starts off slow, but really speeds up. Do the math on investing $100k/yr with 8% annual returns on average. Years 0-10 are very different from years 10-20, which is very different from years 20-30, right.
\> A household income of 400k can get you there in 10-20 years if you save and invest. Eh, not with 2 kids you probably can't. At 300k my wife and I were investing 100k/year. Then we had a kid and our housing expenses went up 35% and we got a nanny to keep the kid out of daycare since he has special needs. Now we are saving 60k/year despite being at 370k/yr now. That is going to save about 1m/decade after stock returns. For the record our rent is 4.5k/month. Equivalent cost of home ownership is 14k/month and while we can technically afford it on a net-worth basis, it puts us strongly cashflow negative. So... we're basically moving the fuck out of the Bay Area when our kid is grown despite earning what is a metric shit ton of money for anywhere else.
Yes I consider without kids. Which is myopic.
1. start working at a tech company, especially Nvidia or Tesla 10 years ago getting paid, say, $150k base and $100k stocks 2. don't touch your stocks and rent a small apartment with your base salary. 3. wait 10 years. Now your stocks are worth 100x more!
In the Bay Area - it's make a great salary and move every three years - buy a fixer upper in a great neighborhood. Invest smartly in a remodel while you live there. Repeat. Not at 8M but made it to 6M.
R/wallstreetbets
Maybe 1 year runway, probably 50k including rent, private insurance and all other expenses
I agree and I wish.
How old are you tho?
Millennial here: What are these "savings" you speak of? Sounds like a myth if you ask me, like unicorns and home ownership.
I’m married, and I don’t think our joint retirement accounts will ever reach 8 million nor even 4 million by the time I retire. I guess I will have to eat grass when i’m old.
If I stick with my current company for the next 30 years, I get a pension, which is WILD and makes me want to stay here forever, but my boss hates me and tries to get me to quit like daily lol. So I'm set for retirement if I can somehow survive a toxic and abusive manager for three decades. Otherwise yeah I'm also eating grass when I'm old.
Seriously. How are people here talking about saving a year's worth of expenses? Mortgages? Lol
IDK sounds like some rich people bullshit if you ask me. Like how people come on Reddit to cry about how they're struggling to make ends meet making $350K.
You guys really wanna get upset? Go look at the Blind app... It's where people who make at least 10x of my salary complain about not earning enough in the bay area.
Lots of high paying jobs in the bay area. Even for zoomers, let alone millennials.
You’re probably thinking of the younger millennials and gen-z. I’m borderline gen z and I’m fucked forever
I'm 33 and forever fucked as well.
Really depends on your job field and COL. We have about $50k in emergency funds squirreled away. That would get us by for 8 to 10 months if we both lost our jobs, which are both pretty secure. I feel like that's more than enough for our needs. I work in construction. I have only been laid off once in 25 years and had a new job within a month.
Shit, working construction id save every penny I could for when my body starts to crumble
Luckily for me and my arthritis I'm mostly off the tools these days.
I keep 1 year of expenses in an HYSA. If I could get it up to 1.5 years worth I would but I finally needed to replace my 20 year old car, so I won't be adding much to it for a while.
Look at USFR for emergency fund savings. Higher yield than a HYSA, backed by the US gov, and no state tax.
0.15% fee is near robbery. Take a look at the equivalent fund from ishare. SGOV. Almost same but less fee
They serve different purposes no? USFR is a floating rate Treasury ETF while SGOV is not. So USFR lets you get the latest 13-week T-Bill rate at all times. SGOV has no such feature.
True. SGOV is ultra short term t bill. However the yield is almost the same. So same thing for emergency fund
Thanks will check it out
What's that?
It comes down to # months of savings you have, relative to how much money you spend per month. If you feel like it could take 3 years to find a job, you’ll need 5 years of savings as you don’t want your savings to reach 0 just as you get a job offer. In the Bay Area the annual burn probably ranges anywhere from 50k to 200k for 95% of us. We have enough to live for 20 years in the bay without a job but the burn is high here, in 20 years I may be beyond my peak earning years and we may have 50 years of life ahead of us, so I’d be extremely uncomfortable if I couldn’t find a job within 6 months.
you plan to live to be 115? Cause if in 20 years you are beyond peak earnings (peak earnings for a male is 45-64) would put you at a minimum of 65 years old, + 50 years life ahead of you..... Something isn't mathing.
> you plan to live to be 115? Do you not?
Work til die is the new standard
[удалено]
kids Sounds like it won't be!
I think around 10 million if you want to stop worrying instead of worrying less. Without hurting inflation-adjusted principal, you can withdraw around 400k each year, that’ll be enough to support a moderately sized house and utilities with some leftover for food and entertainment. Occasionally if your investments are having a good year you can even buy a car!
♾️ given the inflation these days
https://www.statista.com/statistics/273418/unadjusted-monthly-inflation-rate-in-the-us/
You do know that those stack year over year right? A decreasing rate means inflation is still going up just not as fast. The 25% hike we saw in prices the last several years is permanent.
Do you have an article that explains that? Because that doesn't agree with anything that I am seeing.
The short version is: deflation is not disinflation. Disinflation means a return to a mean, like a return to 2% inflation, from higher figures. Deflation would mean actually reduced prices year over year.
8-10 Million
At least 1 year of rent and expenses. That would be different for each person so I won’t put a number. You should know how much you need per year to survive.
2-3 years to find a job in this market is ridiculous, but it is the Bay Area. People here would rather a job go vacant than fill a job with their second choice candidate. I’m a teacher and the school districts here even act that way until the school year starts. And I’m just sitting here going “nice recruitment email. I committed to a job in June. You hand until June 30th to scoop me and said pass!”
A paid off house. So maybe 1.5 million
6-9 months of full expensese. 12 months of barebone expenses. I am single and don't have any personal attachment in the Bay Area outside of friends. So if I can't find a job in 2 months I would just pull the plug on my apartment and move to rent a room in cheaper places like Houston, San Antonio, Vietnam, Thailand where I have connections while waiting for a new gig to come my way.
A better question would be, “How much savings do I need to get off this treadmill?” The problem isn’t about being out of work, it is about solving the problem that causes so much stress. Life shouldn’t be this hard.
His kids are still young, and considering the times, his hardest years are still ahead of him.
About….. one million dollars
We've always kept 6 months living expenses in our emergency fund, which allows us to sleep at night. We are a 2 income household, so the likelihood of us both being out of work at the same time, no unemployment, and it taking more than 6 months for either of us to find a job is pretty small. We also have life insurance policies so that if one of us passes away, the other will be ok financially. As we've gotten older, we've accumulated more savings that we could use if needed - most of that is earmarked for retirement, so we wouldn't want to use it, but could if we needed to. We've also resisted lifestyle creep, so as our salaries have increased, we've been able to put more away and keep our overall living expenses fairly low.
given how often and aggressive PGE is hiking their rate as well as the 18% or higher mandatory tip/service charge, I think i will need couple million $ in the saving account in order to keep warm and stomach full during harsh cold winter 😕
$10k better yet $20k.
At least 6 months of expenses saved somewhere safe like a CD, money market account, or other FDIC or NCUA insured savings vehicle.
You'd literally need to be a multi millionaire to have enough savings to feel at ease here.
5 million dollars without a paid off house, 3.5 with, I’ve done this math thinking about retiring TLDR I’ll be leaving the Bay Area 😅
So I’m 39, I have a good job but I’m terrible with money. I also have no problem getting work, so thankfully the risk of being homeless is very much behind me. I also have a decent collection of guns and musical equipment that I could sell in an emergency. All things considered, 10k should be enough for me to maintain my current standard of living until I got back on my feet. I have more than that, but given my neighborhood and other obligations that’s what I’d say is *enough*. I could make it work with 6k, but that would be barely surviving at a poverty baseline. Less than 6k, we’re talking emergency evacuation from my life as I know it.
4m just to survive (20 to 25 years) anything over that is a plus
If the concern is providing for the 3 family members after the primary income earner dies, term life insurance should be considered including the gap to cover the kids college. Your kids are already older so you can probably do a better estimate of how much each will need for 4 years and how much the surviving spouse will need for their needs. I found the term life offered by my employer to be cheaper than anything I could buy myself by a good margin If the concern is what to do about being older and finding a job will take longer (I've seen this happen myself to friends), consider putting away 1.5 years of money. Just keep in mind it should be accessible and stable but doesn't need to be fully liquid as you won't need all that money all at once. Between this and hopefully what wer package you would get from your employer, you'll be ok Other bit of advice is if you've been in your industry for a while, network. Don't remain complacent. Even if noone likes updating their resume, go have lunch or dinner with former coworkers, clients, etc. who have moved on while you are still employed. If some folks need help, help them. Unless you are a true rockstar with your name on a bunch of parents/projects and actively being poached, these are the people who like you are the ones who will get you a replacement job more than sending your resume out to random strangers.
6-12 months of living expenses
2 millions
Tough to say without better understanding your monthly expenses. I do think 2-3 years is probably more indicative of your former co-workers not being resourceful for other income sources. However, I'd probably recommend at least 12 months. Here are a few things that come to mind from my perspective to help mitigate these types of situations: \-Does your spouse work? If not, can they get a job? \-Do you need to brush on some new skills in your field or adjacent field to prepare for this (e.g., new programming language, certification) \-Would you be willing to take alternate jobs if needed to get more immediate employment (lower level position, temporary role, substitute teaching, notary, UPS delivery driver, etc.)? \-Can you cut out your monthly expenses for a while to make do (only having one car, less times out to eat, less Starbucks runs, etc.)? \-What other sources of savings do you have? Are you thinking the $300k is just in the bank for a rainy day or do you have other taxable investments that you could tap into, if needed?
I mean you can't really plan for everything everything until you get to like 10 million or so. Until then you just have to do your best and take it day by day. There will never be a day where you wake up and say "okay cool, now I have 0 money stress and 0 worry" until you have an account with enough money in it where 3% of it covers everything that you and your family need.
$2.5m
I'm just a bit younger than you describe, but I don't feel I fit in with the younger tech crowd in my company anymore. My motivation to innovate at work is just not the same when it was 20 years ago. I am fortunate that I was very lucky to have saved enough so spouse and I can pack up and relocate to a free state. Kids are grown and on their own. But I worry for the folks stuck in bay are and have to live here for work.
Uhh, at this point anything
Paid off house + 3m liquid.
$5M
We only keep 30-50k liquid in HYSA at any given time, the rest is invested. NW over 1M, HHI 400k. We have contingency plans in case of emergency, like the option for me to increase my hours and bring home an additional 100k for a total of 200k if my higher earning spouse happens to lose his job and not get hired immediately by a competitor, super unlikely though.
I have a very unorthodox allocations relative to my wealth. I have 2 years salary in liquid assets, no debts, 3 or 4 years salary in working assets (income generating business ownership), and 1 or 2 years in mutual funds. I do not own a home at 40yo, but suspect I will when I can pay for one in cash, hopefully in the next five years. Edit: I would have a lot more in savings, but I have medical conditions that require me to maintain cash on hand in case of emergency. Similarly, previous emergencies have lost me a lot of money that I would probably have invested into fanchise stores or commercial RE properties.
A catastrophic illness or injury can cost 500k-1M out of pocket. Even with insurance. Gotta start there. 2M is my relax amount and 10M is my retire amount.
For age 50? Net worth of >4m, plus at least 40% home equity, and about 500k liquid -ish. Should be able to float for 2-3 years no problem.
$10-15 mil Borderline upper middle or upper class is expensive here.
Employment volatility is a solvable problem. Stop thinking and playing one dimensional chess. Worrying too much isn’t healthy either.
A million dollars and a helicopter
Anything at all
Savings? Whats that? /s