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No family? Also if we were talking about the US (which the article was) then you have to factor in healthcare, average of $200 a month for the insurance IF it's sponsored (mostly covered) by their employer. If the grocery worker is living in any major city then rent is bare minimum of $600 a month for the privilege of living with at least 2 other flatmates or around $1000 for a pretty small apartment. So this person's already out half their monthly income. Let's say transportation costs are low and that this person only takes the bus to get everywhere, that's an extra $100 a month (assuming lack of adequate transportation doesn't also ending up costing them their job due to frequent late starts). Now this person also has to pay at least some utilities depending on where they're living so a rough estimate would be around $120 a month for that. Now we look at food, average grocery costs per person in the US is $220 a month. This person also needs clothing obviously, if they go on the super low side they could get by on ~$100 a month over all. If this is it for their spartan life style, meaning no cell phone, no internet, no eating out, no leisure activities that cost money, no hobbies, no children, no trips to the doctor (where medical deductibles kick in), no car, no netflix etc. This person has potentially $460 a month to save.

That's 100% best case scenario living a lifestyle that basically consists of going to work, going home, eating food, sleeping on the floor of their apartment (we didn't budget for furnishings but w/e it's better for the back) using the public library and walks around the park for sole avenues of entertainment. ALSO: THERE'S NO KIDS IN THIS SCENARIO. Some of those estimates I lowballed also (like food as that's average cost of groceries for people who also get calories from eating out at restaurants) so this is really not a realistic estimate here.

In reality though there's plenty of hidden costs that this person will incur and even assuming they do manage to stay kidsless they'll be lucky to put away $100 a month giving them a best case scenario of $250k in savings by 55. Not terrible for them, but not enough to retire on in the US when you think of medical expenses incurred later on in life.

And don't forget about almighty inflation.

The interest is based on average OMXSGI adjusted for inflation.

Well as I said those numbers are based on Sweden but I lived like that at those costs (actually 20% lower than that for a couple of years) and that savings level or higher for many years.

It wasn't glamorous but I managed to afford a small apartment, I kept my food budget at an average at $100 a month including a restaurant visit or two by good planning I could keep most meals under $1, I would take the buss out to wholesale food retailers and buy semi bulk, I went to the cinema every now and then, I had internet, smartphone (with some data), computers, furnitures, I went out drinking every now and then, I only bought high quality clothes on sale and no cheap wear and toss from H&M, I traveled to other countries once or twice a year for vacation and visited family across the country every now and then (would go when prices were low or buy cheap tickets 10 minutes before the train departs with leftover seats). I had a good (and frugal) quality of life in the countries second biggest city of the country and didn’t experience any significant difference in happiness from living on twice that now. Main difference is that I travel more (less flexible and more expensive) and eat dinners at Michelin restaurants every now and then.

Thats a terrible best case. With a beater car you can deliver pizza and make $1500 a month in most metropolitan areas. Put aside a small emergency fund. Pay off debts, smallest to largest to build psychological momentum. Once debts are paid, start saving for home if you want. And put 15% in a retirement plan. People go to college paying their way while doing this. They live frugally now and benefit later. They major in lucrative subjects. And they earn good money after (and sometimes before) graduating with minimal debt. It can be done.

It wasn't supposed to be best or worst cases, it was just supposed to show that living under your means do matter and that someone with a fraction of the disposable income of a high earner can still earn more in the long run by saving regularly, obviously a high salaried person with the same mindset will earn even more but that's beside the point. The point was that cash flow management do matter.

I could have made a case with a even higher earner living even more lavish, racking up credit card debt and payday loans, buying stuff on installment ending up even worse with debt interest eating up much of the cash flow, here I simply compared someone living under their means with a higher salaried person living at their means (never beyond).

I think you’re both right. The combination of multiplying income while also saving more and more of that income is the key to jumping wealth levels.

It’s certainly possible to live a comfortable life on the cashiers plan but if the executive spent just half of their career living like the cashier then he would quickly pass up the cashier on the wealth ladder.

My guess is that it would be almost impossible to save 1K/month if your take home pay is only $2K/month. There are minimum requirements for food, shelter, transportation, etc.

A pre-tax yearly salary living wage to cover the minimum in the US would be $45K - $68K depending on location. Let's look at a low end, low cost of living state. $45K pre-tax translates to about $3K per month take home pay. Which means that if you had $3K per month take home, you would just be covering the basics for a family. If you are trying to get by on $2K per month, you're already making some difficult trade-offs to survive.

So, I don't think it's realistic to say someone with $2K per month take home pay can save $1K per month.

What is the monthly budget of the average student? I would certainly guess under $2k.

That's my thought, but maybe students in the US struggle to keep a $2k budget?

I really doubt it. $2k was my monthly budget after I graduated and got a job. I wasn't really making any attempt to control my spending. I bought nice alcohol and ordered dinner and/or bought lunch every day. most US students are trying to spend a lot less. if they work 10-20 hrs a week they're probably not even making $1k before taxes.

$3K net after taxes monthly is certainly high income in Sweden (almost second bracket of extra high income state tax). Most engineers here make around $3k pretax out of school. Your living wage example would be high income middle class in Sweden.

I ran the numbers quickly for $ 68k/year you'd be in the top 3% earners all ages in the entire country enough to put you well beyond the public pension roof, on the edge to put you into the highest ultra high earner tax bracket (70k).

So I guess a poor person in the US would be part of the ultra rich in Sweden and I'd be poor beyond salvation in your country, living on ~1.5k/mo while bootstrapping my company.

I think the problem is in America the frugal clerk makes 3000/month, a white collar professional makes 8000/month and a high level executive makes 14000/month after taxes. And I wonder if I'm being too stingy with our executive here...

You made a pretty massive leap from white collar professional to high level executive. What about mid-level executives, specialized independent contractors, tradesmen, and the rest? You also discount the risk premium of the high level executive position, where often your income is zero or negative some of the years you are an executive.

Way too stingy. Engineers here make $14,000 - $33,000 / month, average is closer to the bottom of that though. Those engineers have executives too.

Where is "here?" The average engineer salary (even if you say software dev only) in the US is absolutely not $170k/yr, it's closer to half that.[0] And $400k/yr is dentist-level money. I'm not saying nobody makes that, lots of devs (in absolute terms) do, but it's about as helpful as saying "businesspeople make $40M-$40B a year" when the vast majority of them make $65k/yr as a middle manager.

[0] https://www.google.com/search?q=median+software+engineer+sal...

Being frugal and saving everything for 30 healthier years of your life to be able to spend money only when your body seriously starts to fail you.

I’m not sure why people see that an attractive way of spending their life.

>> a cashier ending up as a multi millionear set for life at 55

Except that the most interesting part of life is over

As someone at that age, I think this is completely incorrect, not to mention ageism. Dismissing the last 30% of your life as un-interesting is something I'd expect from someone without much life experience.

You take it out of the context and then accuse me of pushing ageism, well done!

The context is that we compare a life where

i) you save one third of your income and then start to flash money when you are 55, and

ii) you spend one third (or less) of your income on things that matter like finding significant other, having a family, making trips with your friends and family.

You cannot avoid spending 1/3 of your income without it affecting your life style. In extreme case, one can end up becoming a millionaire no one gives a fuck about.

>You cannot avoid spending 1/3 of your income without it affecting your life style.

Yet people live super-fulfilling lives with families making $50k annually. Find a job clearing $75k and you'll be golden.

You don't provide any context in your attempt at a wry comment, and then you compound it by not only reinforcing the ageism, but adding in classism as well.

You're defining the cashier by their job/role, as well as how they spend their money on saving for retirement. Textbook classism.

My anecdotal reply would be that I've made it to this golden age, I've earned far less than the average, saved more than the average, and still have a wonderful, interesting life ahead of me. I've married, raised a family, and had memorable trips with them.

Your last sentence is really indicative of how you view wealth and money; for many, becoming a millionaire is about stability and being able to provide for your loved ones, not to become someone that people "give a fuck about."

>> You're defining the cashier by their job/role, as well as how they spend their money on saving for retirement. Textbook classism.

I didn't talk about cashier nor I defined any role. What are you talking about?

It looks like you was struggling the whole life and counted every dollar (see "I've earned far less than the average, saved more than the average"), do you manage to "to provide for your loved ones"? People rarely change, greedo.

> I've married, raised a family, and had memorable trips with them.

I think this part is their point. Even you are looking backwards at what you have done, instead of future plans, implying the younger years are the more interesting ones.

I think they're just rebutting the claim that they must not have done anything interesting/meaningful if they were able to save so much.

No, that would be a stupid argument. The argument is that by saving almost all your after-basic-expenses income you postpone too many things which would be just much less interesting or cool when you are over 55. For example, traveling when you are in your 60ies and 20ies are two different things. In the latter case the cool things that you find/learn can positively impact your entire life. If you are in you 60ies it is much harder to be impacted by external things and change your habits/preferences even if you want it.

sorry, I did not mean to make your argument into a caricature.

I'm still not sure I agree though. I know this sounds lame, but I think creating a stable life with people you really care about is worth a lot more than the memories of traveling all over the world in your youth. my parents lived well below their means for most of my childhood, and they now have a stable retirement with plenty of money to go on whatever trips they want. sometimes they take me with them. as far as I can tell, they are very happy to be able to do this now with their family rather than having the memories of doing it in their twenties.

something else kind of shitty to think about: the real return on a diversified portfolio over forty years is somewhere between 15x and 20x (unless something major changes in the world). $5k spent traveling at 25 could be $100k less when you're 65. depending how much you made later, this could be a meaningful amount you won't have to leave to your children or help them with their goals.

>> a stable life with people you really care about is worth a lot more than the memories of traveling all over the world in your youth

A straw man argument. A) I said "for example". B) I didn't mean "fuck all, I am traveling", my primary message that when you saving all your after-ramen income you are missing things you will not be able to make in your 55+.

>> rather than having the memories of doing it in their twenties

Don't take it personal but how one can compare to something they didn't have? Quite possible that after investing in themselves instead of stocks they would have an even better time right now.

>> something else kind of shitty to think about: the real return on a diversified portfolio over forty years is somewhere between 15x and 20x

something else kind of shitty to think about: stocks grow with the same rate as the total amount of US dollars so in some sense your investments don't grow at all if we talk about the total pie.

> Except that the most interesting part of life is over

What makes life beyond 55 uninteresting?

less interesting

Or may be what he means is that enjoying the experiences with the money in hand (leisure, travel) might not be as good as that in the youth, typically assuming health issues due to ageing.

I think that depends on who you ask. People in their 20s still think people in their 50s are old.

In my world 50 isn't that old in this day and age. Most people I know at an age around 50 are healthy, active and enjoy life often even more then people in their 30s with young kids and everything else around that.

Professional (Fussell's Upper-Middle) class or higher? That's wildly different from the more Middle-and-under sorts of 50-year-olds I'm familiar with. That's the decade when they tend to start to look tired all the time (more so, I mean—that kind of "oh they're finally permanently broken" tired) and start having health issues & surgeries that seriously damage quality-of-life.

Life expectancy is somewhere roughly in the 70s-to-80s. So it's not entirely surprising that if you tell someone "statistically, I have as much remaining time to live as you've been alive" they're going to think you're old.

Now if you actually step back and move the early part of life where you can't do much you can see it's much closer to middle-age than it is to death.

Interesting. I could tell that to myself, but I don't feel old.

Heart surgeries, joint replacements, kidney failure. Stuff like that. Good for you if you don't end up with those issues... But they are common for a reason. Take a look at your parents/uncle's/aunts and you will have an idea of what your 60s will be like. I'm watching my father and all his siblings have different issues in their 60s and I have suddenly realized that lifestyle can't beat genetics. I haven't quite figured out what to do with this new realization yet.

One of the (few) things that I took away from Tim Ferris' 4 hour work week was his concept of "mini retirements" [1] where every few years you "retire" and do something for an extended period of time before coming back into the workforce.

There are absolutely things that you can do when you are younger that you cannot (or are much more difficult) when you are older. It doesn't make then necessarily any more or less "interesting", however - that's completely up to you to decide.

[1] https://www.getrichslowly.org/how-to-take-a-mini-retirement-...

> grocery store cashier who makes $2000 USD/month after taxes

Not "close" to most European/western countries. You may be really disconnected from normal people revenues.

> assuming average yearly yield with reinvested dividends at 8.5%

That's a big assumption.

> At this level travling/vacation expenses isn't a problem for the cashier

Inflation over 30 years then 20 more years of retirement may change this.

He's specifically talking about the Swedish perspective where the income distribution is much flatter.

In the UK it'd be more like $1K for the cashier and $10K for the exec rather than 2 and 5.

From their post about the $2k salary after taxes:

> but they are close to most European/western countries

>> Not "close" to most European/western countries. You may be really disconnected from normal people revenues.

He was specific - Sweden. Just divide all numbers by some factor if you prefer.

does a swedish exec really make just $5000/month post tax? that's not much more than I net at my first software gig out of college (and not in SF or NYC).

According to wikipedia, average salary in Sweden is $2700 post tax ($3500 pre tax)

Sounds a bit high but could be right considering that median is usually a fair bit lower since the extremes being up the average quite a bit. However checking this years tax tables put our monthly $3500 pre-tax salary at $2600 take home (but this varies a bit from city to city).

Where I live (the Netherlands) that means bout 10.000 pre-tax. And that is quite a lot, it is like a group manager (i.e. 50 people to manage) in a medium to large size company. Executive level is probably more. But not a lot.

Same in Sweden, about 10k pre tax to take home 5k. I looked up median salaries for CEOs in Sweden last year which was $7600 pre-tax where only service and the industrial sector is over that, industrial is the highest with $9150 pre-tax, that is at the CEO level, putting your take home salary with tax bracket 34 at about 5k/month, so it's probably a bit high for a high level executive at a mid-sized company.

Where is the incentive then? The difference in skill, responsibility, stress, workplace demands, etc between a cashier and a CEO are nuts. How do people do that for a few grand every month?

The incentive is in living in a country where you have 0 bills to pay when you get cancer. Where homeless people always have a place to sleep, where you generally will get help when you need it and where you can finish university debt free (and your children as well). Both the cashier and the CEO wouldn't be happy in each others jobs anyway. In such a country you don't need as much as in the US for the same standard of living as well. That said, CEOs of large companies also make millions here in the Netherlands (think dutch companies as Unilever, DSM, Philips).

Well I can't speak for everyone but as a small business owner in a highly specialised business with global public companies as customers, I could financially take out more than twice that as pre-tax salary from my company but my takehome would only increase with about $3k so I hardly see any point in taking out more salary. The salary I actually take out is much closer to that of the cashier and I skipped even taking out any salary for Q1 and most of Q2 of this year since I didn't really need the money. I'd much rather reinvest the money into my company so I can expand and employ more people. I also have a goal of providing a better workplace in general, for instance I'd really like to offer 30 hour work weeks and two months paid time off per year, it's not something I can afford at this point in time but I certainly think it would be possible in the future. From my point of view it's more important to be able to build a sustainable business which can offer jobs that provide a high quality of life as well as both professional and personal fulfillment for all employees. And I do think that capitalism is the only way to produce enough quality throughput to achieve that.

Thanks for doing this. I think that what is practiced in the US a lot is the fast food of capitalism. Utterly unhealthy and aimed at short term satisfaction. As the differences between rich and poor grown they will find themselves in society that's not fun to live in anymore. Capitalism is a thing of beauty but it is sick when money buys political power, risky shuffling with money make you more than producing something of value and young people enter the job market with a debt that will take decades to repay.