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Comment by _skel | Hacker News Reader

> It takes about 2 years to save up $100K on a typical Bay Area engineer's salary, if you're fiscally prudent.

I'm not sure what you think an average salary is. If you think an average engineer can save $50k cash per year out of his/her net income, you're way above the average I had in mind.

Let's assume an average salary of $120k per year gross. That's about $6k per month net for a single person who takes the standard deduction, assuming no 401k contributions. That's a net income of $72k per year. If that engineer saves $50k, that leaves only $12k for everything else. Saving $100k in two years on that salary, which I think is pretty close to the average, is just not doable.

EDIT: Should have been $22k left over, not $12k. Still not enough to live on considering the cost of rent.

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When talking about saving, if you're working somewhere established, you also need to take into account bonuses and RSUs or whatever longer-term retention plans are in place. The size of these boggled my mind coming from the middle of the country as much as the base salary numbers. You should never plan on living off of them, but if you can toss 15k or more (and I've seen much more than that) into your savings just from non-base-salary comp, you're pretty nicely ahead of the game.

Whether or not the established places will toss so much money around if the hiring competition from startups dries up if there's a crunch there, well, that's probably a legitimate question, but I'm not sure that job losses of that size would only hit the Bay Area.

Yes it's expensive, but also yes there really are quite a lot of jobs that pay more than well enough to make up for it.

> assuming no 401k contributions.

Why? Fully contributing to a 401k (assuming no company match) would put your "take home" at ~$79,200 instead of $72k following your tax rate (which I assume is roughly correct).

> That's a net income of $72k per year. If that engineer saves $50k, that leaves only $12k for everything else

$72k - $50k = $22k, not $12k.

So with no 401k, you'd have to live on $22k to save $50k/year. When contributing to a 401k, you'd have $29k to live on, which sounds pretty do-able. Add in the fact that you would probably invest these savings, and you can hit $100k after 2 years by saving a bit under $50k each year.

Saving $100k in 2 years is not as outlandish as you make it seem.

How exactly do you figure increasing your take-home pay by contributing to a 401k? Did you forget to subtract the money that's actually going to the 401k instead of your pocket? Even at 90% tax rate, all you are doing is sparing that 90% on the money you are contributing. In other words, you are only actually paying $10 for every $100 you put in, because that other $90 would have gone to the tax man anyway. But you are still losing $10 of your take-home pay.

> How exactly do you figure increasing your take-home pay by contributing to a 401k?

I guess it depends what you mean by "take-home". The original premise was "saving 100k in 2 years". I hope we can agree that saving money in a 401k is saving money, regardless of whether we agree it's "take-home".

I assumed we were talking about money for a home down payment, which would not normally go into a 401k. Getting it out would require a 401k loan, and a 401k loan for a six-figure amount is almost always a terrible idea. The only other way to get it out would be to take an unqualified distribution and get hit with a significant fine.

Most 401k loans become due in full if you leave your job. That traps you in your job until you pay it back, because if you had enough cash to pay the loan outright, you would not have needed the loan in the first place. Unless you have an unusually good severance agreement with your employer that would enable you to pay back the loan if you leave your job or get fired, taking out a 401k loan is a bad idea.

401k loans are limited to $50k.

Take-home is typically understood as the amount written on the check. As in, that's the amount you take home with you when you cash the check.

> $72k - $50k = $22k, not $12k.

Oops.

But that's still less than most people's annual rent, so it's still not enough to live on. It doesn't change my argument.

The article showed a BLS median salary of about $150K/year for San Jose, and TripleByte's data had it at about $140K/year for SF.

I disagree that $22K net is not enough to live on. It is if you go the multiple roommate/1+ hour commute (i.e. East Bay)/never go out lifestyle. It's not a ton of fun, but it's doable.

After maxing out 401k you get about $10k net a month @ $200k. Not including bonus and stock. $10k a month is a lot anywhere unless you have kids.

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