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There is not necessarily a catch. Pay is not based on cost of living -- it's set by market rates, and the market rate for software engineers in these areas who can do the jobs required at these companies is high. All these companies operate at an immense scale where an engineer, through what is often a simple change, can add significant value to the company.

So, yes. For now, these companies are giving college grads enough money to retire by 35 (assuming the college grads are halfway financially savvy).

Source: I am a recent college grad at a FAANG.

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Pay is partly based on cost of living, and cost of living helps to set the market rates.

You'd have to pay me 10 times more than I get now, with a huge hiring bonus, to make me move to San Francisco. I'm not alone in this thinking. This is why the market rate is high.

Part of that is sort of circular, due to the bidding war for housing. Part is that some people just hate the political insanity. Part is that people have family connections elsewhere and they have hobbies that are incompatible with San Francisco.

Let’s say you’re the median American SWE getting paid $80k a year. You’re saying you wouldn’t move to SFBA for less than $800k/yr in total compensation? I find that hard to imagine.

I can see what it costs. Getting $800k/yr means a house of about $1,600,000 should be affordable, but that gets you trash. Getting a "house" that PHYSICALLY TOUCHES the neighbor's house will go for more than that in a semi-tolerable San Francisco neighborhood. That is substandard living conditions.

How do you afford housing wherever you make $80k? Unless literally everything comparable costs 10x in SF, there's no logical way you can say 10x is the mark at which SF wages are pegged at.

In accounting, this is an idea known as operating leverage.

$1.6m will get you 2,200 square feet of sweet, sweet detached single family living in Pacifica, Berkeley, or Marin. Double an $80k annual income will get you a 640 square foot home with $250/square foot land and construction costs, so not a particularly high end or spacious place.

Briefly looking at redfin shows that my 500kish house would be 3.5 millionish in Mountain View. Similar in SF but it's a lot harder to find a directly comparable house. That's a 14k monthly difference in the mortgage. Equivalent to 240k annually after taking taxes into account.

Using that number means I'm roughly at par with a FAANG salary given my level. But it's not like the FAANG engineer is setting fire to that 240k. Depending on where you are in your amortization schedule 20-80ish % of your payment goes to principle. And my 500k house is probably going to be worth 800k in 10 years while the bay area house would be 4.5-5 million. When you take that into account I'm probably at 70% of an equivalent FAANG position.

The more important thing to look at here is risk. FAANG salaries and bay area real estate prices are out of whack with the fundamentals. If you get in and out without the bubble bursting you're sitting pretty. If it bursts or even has a 10% correction the FAANG engineer is way behind.

One can rent a perfectly decent home in Cupertino with 3 bedrooms and 3 bathrooms for under $4,500 [1]. Price to rent ratios are very high for most SFH properties, so renting is often the right move. This will allow families to send their kids to public schools ranked among the best private schools in the nation for free, without any charter or magnet lotteries. I don't think rent for any comparable home in, say, Austin is more than $2,000/mo cheaper, or $40,000 before tax. That's a much narrower gap to justify than most of the hyperbole in this thread and especially narrow if both partners are working: job opportunities in the Bay Area are strong for almost all kinds of professions.

[1] https://sfbay.craigslist.org/sby/apa/d/cupertino-3-bedroom-3...

God forbid you live in a townhouse. How do people survive in such poverty??

A senior position in the doc will probably get you ~2M in savings by 35. How do you retire with that?

Agreed - that’s not enough to retire on that young unless one relocates to a very LCOL area.

Using the 5% drawdown rule, 2M in savings is enough to have a 100k/year income in perpetuity without adding to savings.

Idea being that average market returns are 7%. So if you use 5% per year, you will never run out.

5% is not a safe withdrawal rate for "in perpetuity". 3% is much more realistic if you want to be conservative.

Yes it's a rule of thumb not the law of thermodynamics. Run your numbers with your own parameters for details.

That's assuming you want to leave the whole 2 million principal in your will to your children. I don't see why - if you want to retire, you can consume the whole principal while you live.

You can't plan to spend your last dollar on your deathbed unless you can predict every expense, the market, and the day you'll die, especially over a retirement that long (potentially 50+ years). Planning to leave something behind is really your only chance, unless you're comfortable with a very high chance of bankruptcy along the way.

Even at a meager 2% interest that’s $40k a year. That’s a comfortable wage in much of the USA, especially if you’ve been camping in an RV for a decade to retire.

I don't believe anything I read on HN about the lifestyles of the SV elite, but I think this scenario is comical if it were representative.

You get paid well into six figures but have "to camp in an RV for a decade", and then you retire with a $40K income. You could have just gotten a $40K job at some place* that didn't kill your soul! In ten years, you'd be making at least $60K. And if you burned out for whatever reason anyway, you could go on disability.

*by place, I mean either employer or city.

you'd be in a position to invest too as you go.

You read through all the advice in these blogs [1][2]. Seriously.

If you are invested in low cost index funds, most assume you can safely withdraw 4% a year and not deplete your principal. If you're retiring at 35, you might want a greater safety margin, so let's say 3%. That gives you 60K a year.

How do you retire on 60K a year? Obviously take what I'm saying with a grain of salt as I'm a relatively young person and haven't done any of this yet. But...60K is the median household income in the US, so half of families in the US live on less. If you're retired, you can probably save in ways others can't. For instance:

* Housing. You don't need to stay in a high cost of living city, so move to a much cheaper area (maybe a college town).

* Education. You have much more time, so send your kids to all public education, and use your extra time to educate them further.

* Debt. You have a ton of assets. Why hold any debt?

* Automobiles. Bike instead, if you're physically able.

* Health. Probably the hardest one since insurance in the US is tied to employment. I understand the recommended approach here is to pay out of pocket for a plan, but many have trouble with this. Of course, the standard advice is to use the extra time you have due to retirement to stay as healthy as possible, but I acknowledge this isn't a perfect plan.

[1] https://www.mrmoneymustache.com/ [2] https://www.madfientist.com/

Good advice. Just one nitpick: The 4% rule, which states you can as a rule of thumb safely withdraw 4% of the starting capital per year in real dollars (IE increase it each year to account for inflation), is intended for a standard retirement period (65+) and does expect the principal to decrease.

There's more debate as to what would be a safe withdrawal rate over the long term without depleting principal, but I expect 3% would be a bit on the high side, although not unreasonable if one has a backup like part-time work.

Of course, that's assuming you withdraw 3% of the initial amount each year and adjust for inflation. Obviously if you only withdraw 3% of the current amount each year you'll never run out, by definition, but you might end up with shrinking spending money.

Still, just a nitpick. I agree with you in principle for sure.

That's a bit incorrect. Returns from a typical investment portfolio have been over 4% for the last 10-20 years, so that's the amount you can withdraw without depleting any principal. If you're looking to consume your whole principal by the time you die you can go way ahead of 4%, easily double that.

> Returns from a typical investment portfolio have been over 4% for the last 10-20 years, so that's the amount you can withdraw without depleting any principal.

Past results do not guarantee future performance. People in the FIRE community generally look at market performance since the final decades of the XIX century. For many, even these numbers do not guarantee anything, as the growth during these days reflected USA entering its golden age. Who knows if it will last through XXI century.

> even these numbers do not guarantee anything

at this point a reasonable response is "there are no guarantees". If the 4% rule was back-tested through the great depression and generally came out fine, it's probably in the right ballpark.

As another FIRE blogger puts it, "3% or less is a near sure bet as anything in this life can be"

https://jlcollinsnh.com/2012/12/07/stocks-part-xiii-withdraw...

We've basically been in a continuous bull market over the past 11 years; it's not a representative sample. Nor is any period of 10-20 years nearly long enough to tell you much about long term stock market returns. Plus, valuations (ie P/E or P/B) are significantly inflated currently compared to the past. Since valuations can't inflate forever, future market gains over the long term are expected to be lower than past.

In addition, we're talking about a real withdrawal rate; a 4% real rate of withdrawal will be approximately a 6% nominal rate assuming inflation sticks around 2%. It's very unlikely you're going to maintain that from a balanced portfolio over the long term without depleting principle at all. Might be possible with an all-stock portfolio if you get lucky, but significant chance of failure if you get a poor sequence of returns.

Easily by not living in the Bay Area. People FIRE at 1 million, which I always found a bit silly considering we're in the midst of an amazing market hyperinflated by some rather concerning fiscal policy, but with 2 you can weather a lot of bad years.

Family with kids in a big, expensive city? Probably not.

400k- taxes = 270k for joined filing

Monthly expenses = 3k mortgage+ 500 property taxes + 2k daycare for one child(or 529) + 1.5k for food and other = 84k

Without compounding interest you need 10 years to get 2m, and these salaries are for 5+ or more years of experience. (And you need down payment, etc.).

Living in those areas is expensive.

If you are making 500k, that's a different story :-)

people never factor in healthcare into this calculus.

Yup, I forgot about it. 7-8k max out of pocket (in-network) for family. In some companies there is also some payment for the health plan out of pocket. But the diff here is that on HSA plans the out of pocket comes before taxes.

With no or self-sustaining offspring, you can retire on $US2M in savings just about anywhere in the world; not silicon valley and a handful of similar locations. Most of the world, including many places you would consider holiday resorts and amazing places to live, is quite achievable if you stay away from boats, fast cars and gambling. Its how people doing the same job in other cities get by earning half as much.

Interesting, thanks.

Now I wonder how many of these jobs are 100% work from home. I'm not sure a salary doubling could take me away from my family and into commuting an hour a day. But I mean, if they're going to pay me to engineer in my pyjamas, sure! =)

Remote work at FANG is possible but usually earned through a niche in-demand skill set or years at the company.

Or finding the right team within!

None of them are 100% work from home. Work from home pays work-from-home market rates, not high end silicon valley rates. There will be some, but they will have negotiated a switch from office work to remote work after a few years, or have hard to source specialist skills.

I effectively have 100% work from home for a FANG. I live in the Midwest and my compensation is the same as engineers working from HQ. I worked from HQ for a few years then told my manager I was gonna quit to move closer to family and we ended up being to arrange this. I fly to HQ a few times a year to have face time with my team. Not sure how long this arrangement will last, but it’s been awesome so far.

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