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Comment by bjornsing | Hacker News Reader

Sounds great, if you can retire at 50. In the EU you can’t (or at least not in Sweden where I am), so you have to think about how sustainable this approach is past 50… and to me it doesn’t really feel sustainable.

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I feel like as a software engineer, in most of the western world, if you actually save money (and invest!), and don't make stupid financial decisions, you can probably retire by 50.

If you've been doing it for most of your career, certainly. But a lot of people start their careers later or make dumb decisions with money for a chunk of the time, those things can totally push retirement well past 50.

For sure! I was merely saying that it's not a unicorn, it _can_ actually be achieved with high probability and lots of effort, as opposed to being flat out impossible for the minimum wage workers, for example.

If you're pulling a 6 figure salary then sure.

If you've been earning on a typical career - say £25k/yr starting in your mid 20s, £35k-£45k through your 30s, perhaps getting upto £60k by the time you're into your 40s, you won't have saved enough to pull even £20k a year for a few decades.

https://uk.indeed.com/company/Precision-Microdrives/jobs/Sof...

https://uk.indeed.com/rc/clk?jk=62dc4988a0e4f36b&fccid=0de01...

That second job (£70K senior) isn't bad. It's remote, so you could easily live somewhere dirt cheap and be better off than someone in London on £100K+ (the difference in take home pay is only £1450/mo, which could easily be the difference between a 2 bed at £2K/mo in London vs £550/mo in, say, Durham... also buying property outside London would be way more doable)

Imagine that (£70k senior), but instead of somewhere else in the UK, it's somewhere in Europe.

In Munich, Germany (one of the priciest cities in Germany), the overall average rental price is €700 for a one-bed apartment[0]. Compared that to London, a one-bedroom apartment rent is going to cost you over £1000! €1178.48 euros![1]

In Eastern Europe, you can have a very good quality of life for even cheaper. The only problem is the language barrier.

I live in Sofia, Bulgaria, and pay €340 euros for a 2-bedroom flat in a pretty nice area of the city. A coffee costs around 2 лв (about €1), average pint around 3.80 лв (about €2). With a London software engineering salary, I save a drastic amount of money compared to London, and can usually afford to go to more restaurants, bars and outdoor activities (Love that I can ski just 20 mins away in the mountains!)

I assume it would be similar for people who can work remotely for a San Francisco company but live in a different state?

[0] https://www.expatrio.com/living-germany/costs-living-germany...

[1] https://www.london.gov.uk/what-we-do/housing-and-land/improv...

Ahem. €700 in Munich gets you a room in shared accommodation. €1200 would still be a pretty good deal.

That's pretty similar to London, I wasn't aware Munich had got so expensive!

Oh yeah! I work for a Swedish company and live in South America. Just for some perspective, I make quite a few times _more_ than the president where I live. Albeit this all comes at a cost of some things like lacking tech advancements and lots of corruption and things just not working as well as they do in EU, but overall, can save a ton of money all while not sacrificing life quality and being able to go out and do fun stuff without having to think about money much.

Companies in the US realized that up until a year ago, they didn't have to pay SF salaries to people who aren't in SF, because most cities don't have so many tech jobs laying around that you have to literally flag recruiters' as spam.

Post-covid, where many companies are allowing remote work, it's not at all so clear cut for them. You don't need to leave your hometown and move to a booming tech industry anymore, so paying people who live outside the bay as if they have no other options is resulting in a lot of the big tech companies' hiring pipelines drying up. Hopefully they figure it out

problem is that salary growth in last 5 years has been crazy

A senior engineer with 10 years exp 5 years ago made £35. Now someone out of a 6 month bootcamp can ask for that.

That doesn't even get into all the other roles that have popped up liker product / delivery which dilute engineer contributions and narrow their skillset - which someone in their 40's has.

I've noticed this too. It's rather alarming, but I certainly haven't minded milking it.

The remote has only come in in the last couple of years thanks to covid, and yes going forward if wages stay high. That's upto 70k, and note that it "depends on location". If you live in Durham you'll be on the 50k end.

Chances are by the time you're experienced enough to be pulling in that, you'll also be looking at wanting a family home rather than a small flat, which is going to be costing you more like £1k a month outside of London.

youre generally not supposed to make that much in socialist-ish countries, thats why youre taxed into oblivion after a certain point.

High marginal tax rates in the UK are mainly hit at low wages (when you come off universal credit and get taxed at 75p on the pound, when you're repaying your student loan when you get an extra 9p/pound, when you have two kids and the loan at 50k when you get hit by 69p (about to be 72p)

Once you're at say 200k, your marginal rate (as you'll have repaid your loan in the first couple of years) is 45%

Someone on $500k in CA will pay $210k in taxes. Someone on $500k (£375k) in the UK will pay $220k (£165k). That's not a massive difference.

Sources https://listentotaxman.com/375000

https://smartasset.com/taxes/california-tax-calculator

> thats why youre taxed into oblivion after a certain point.

Fun Fact: The nordic countries have a fairly flat tax rate (flatter than the U.S.) as well a 25% VAT and a low (20%) corporate tax rate. Most people don't realize this and would howl about regressivity if the U.S. introduced a 25% sales tax and lowered the top bracket to anyone earning more than $59K - which is Sweden's top bracket this year. So "beyond a certain point" for Sweden means "beyond $60K/year income".

You are right about the corporate tax, but for regular employees Sweden is one of the worst places to be in terms of taxes. Roughly half of the cost to the employer has to be paid in taxes (first withholding tax, then income tax). And then VAT, gas tax, alcohol tax, etc etc.

Yes, I agree that the tax burden is heavy in Sweden. I'm pointing out that with a 25% VAT and a top bracket of $60K, that burden is not nearly as progressive as, say, the U.S., where brackets go from 10% for $10K to 37% for 523K (after deductions). Whereas in Sweden, you pay 32% at $1800 and then 52% at $60K and you stay at 52% (again, after deductions).

Just so that we are clear, the 52% income tax is after 30% has already been paid in withholding tax.

Yes!

I think you underestimate the difference in pay across the western world.

It's definitely not feasible for most Software Engineers in Europe without extreme sacrifice, and fairly low expectations wrt to standard of living in retirement.

Retiring at 50 is extremely risky in terms of sequence risk[0], so you'd want a low withdrawal rate on your pot. You're also likely to want a higher income initially while you're still young enough to enjoy it.

So let's say your target is €2M for a €60K/yr income until you die, after a 25 year career. That gives you a couple years of fucking around after college / some bad years / gaps.

To achieve that over a 25 year, investing in to a smooth 7%/yr bull market, you're going to need to invest €2,500/mo. That's something along the lines of €50K/yr of gross income (assuming 40% tax).

Most software engineers in Europe probably don't even make €50K/yr... and we haven't even taken in to account taxes on gains, raising kids, buying property, or just enjoying life throughout your career!

[0] https://www.investopedia.com/terms/s/sequence-risk.asp

Sequence risk matters the most in the first decade. So long as you have a backup plan where you can restart working, even at reduced rates, then you can protect yourself against sequence risk. Older and in an economic downturn means that finding work could be difficult, so one would probably need to keep the backup plan “warm”: for example continuing to do a day or two of consulting work or a non-technical role, preferably in an industry that is counter-cyclical.

The bond tent [0] is an elegant option to deal with sequence risk. It does mean though that you'll need to save a bit more to offset the years your money is out-of-market and not making those 7% returns.

[0] https://www.kitces.com/blog/managing-portfolio-size-effect-w...

> So let's say your target is €2M for a €60K/yr income until you die

> Most software engineers in Europe probably don't even make €50K/yr

These two statements do not mix well together, if someone doesn't make 50k/yr it's unrealistic to expect to retire with 60k/year.

Let's see more realistic numbers. You make 50k/yr, getting 35k after taxes. COL is around 25k, but that varies wildly; with a partner and each one's COL is lower, but with kids and it's higher. Of those 25k/yr, 15k are for rent. You save 830/month, which gives you 630k after 25y, or 25k/yr at a safe 4% withdrawal rate (gross, so not enough).

But also let's say instead of paying rent you get a mortgage at that price, so when you own the place that is reduced drastically. Suddenly you find yourself with a COL of 12-15k/yr net, making 25k/yr gross from what you've saved previously.

Sure it's tight, but these numbers are without extreme sacrifice that you mention. Get lucky and make 60-70k/yr, or find a cheaper place, or inherit something (a lot more common in EU that USA I'd think), and it now seems possible.

Yes, I realise those two statements are in conflict. However, it's still possible for someone earning €200K to not be able to afford to give up €50K a year of gross income to reach the 25 year target I described. High tax, high CoL, a non-working partner and kids can level your chances.

And some costs are just fixed for everyone, so there's a lower limit to consider

The bottom line really is the balance between CoL and earnings rather than absolute earnings.

To achieve a given fraction, R, of your career salary in retirement you need to give up a fraction, S, now. My claim is that most people won't be willing to give up S to achieve the R they feel they need for early retirement (at say 50).

Personally I feel that unless you're 20-25 and have hit it out of the park with a great career starting salary you may as well forget about it and look to retire later... maybe start investing for your kids instead. Give them the 20 year headstart they can't give themselves. Investing for a decade or two longer is the magic sauce

Sure, and I know someone who got like 80k inheritance and he bought a jet ski and a car, crashed the car and sold the jet ski within a year.

Not all developers can retire within 25, but what I'm trying to say is that a significant fraction of EU developers can, if they learn and are smart about their money, either retire very lavishly at the normal retirement age or retire 10-20 years earlier with a bit of luck/extra effort.

It's more reasonable to expect them to make 35-45K pre taxes, 20-25k after taxes. With a COL of a working class person around 17.5-20k.

Most people in software, or any tech field, are barely middle class let alone retiring aged 50.

Don't just live for the future. Life happens now, not at retirement. In my experience talking to people who has retired, many are bored and are struggling with purpose. Sure, there are certainly many exceptions. I just mean, don't forget to live right now, this is it, it happens now.

And then the student loan payment hits.

Graduated in 2004 (right after the dotcom crash) with $70K in debt, mostly private loans. I didn't get that usurious gorilla off my back until 2014. In hindsight I was dramatically underpaid the first 5 years, but still.

I made that financial decision at 18. First in my family to graduate college. Nobody knew better to tell me not to do that.

A lot of other people are in the same boat.

I know it's a little off topic but why is this? Do you mean this is the case due to salaries or is there some other reason?

Not OP, but salaries (esp post-tax) in Sweden are “low” compared to e.g the US.

If you make 1M SEK/year (~100k USD) you are in the very very very top of IC’s in Sweden, and your salary post-tax is roughly 68k USD.

Of course you can save a good chunk. Save roughly half, and still have the median post-tax salary.

(And you can save in a less taxed private retirement scheme which can be drawn from at age 55, but at the same time there are implications of not working at the end of your career for the government sponsored pension)

If you invest 50% of your take-home pay, you can roughly expect to retire in 16-17 years:

https://www.mrmoneymustache.com/2012/01/13/the-shockingly-si...

It’s a double whammy: lower salaries and higher taxes.

The whole society is really structured for people to keep working until 65 or so. E.g. taxes are really progressive, so saving in a high income year and living off that money in another year (with no taxable income) is super expensive. There are tax exceptions for retirement savings but you can’t access that money until 60 or so. Also, the state pays your base pension, but you can’t access that money until 63 or something.

When you say "you can't", I assume you mean retire officially? I imagine that having a few million euros in the bank (or in different assets) would mean that work is optional.

You don't just get a few million through work. Salaries aren't high enough to save that aggressively.

I make like $320k, my wife makes $70k. Our rent in the bay is $2800/mo and we spend about $4000/mo on other expenses.

I just moved to the bay from the enterprise world, so my net worth is 400k. At this rate, assuming very conservative raises and 6% on all investments -- including already reserved stock units -- I'll be worth $2.2m in five years (age 40). $7.5m by 50.

And that's just assuming I hit $400k-ish in the next few years and stay there for the rest of my life, and my wife gets no significant raises. If I get higher, which is entirely possible, I'll make even more. Or maybe at some point I'll try for a startup and go for the really big money. Maybe not.

Of course, many of those assumptions could not work out. But the kind of exponential advantage of saving a large fraction of your paycheck eventually overcomes any disadvantages. Worst case scenario is tech goes bust and US stock market turns into Japan's in the 80s, but in that case I'll still be better off than most because I have a lot of savings and I'm not addicted to the paycheck.

I think the plan will be to do this for a few more years and consult part time. Full retirement would be too boring.

Ooof, you realize how few people are in that position salary wise right?

The context of the subthread was not being able to do it in EU/Sweden, where $320k/year incomes are less common.

If you were in Sweden you’d be making $120k and your wife $50k. Your marginal tax rate would be about 70%. You’d have a net worth of say $200k, but that would be tied up in your apartment/house.

A net worth of $2.2m is pretty much unheard of here. The only people I know with that kind of money are founders who successfully exited their startups.

Sort of tangential to the point that you're trying to make, but if I were in Sweden I'd probably be okay working longer because I could actually travel outside of 1-week segments once a year like I have to do in the US.

In the US you should be at 4 weeks or more of vacation per year by the time you have 20 years in, plus a couple more weeks of paid holiday. No engineer gets one week per year, even their first year two is typical and it builds.

The above isn't universal. Quality of life is one thing companies compete on so the only companies that give you one week are start ups (where it is understood you are taking a risk in hopes of big payoff from your options), and game companies where the dream job gets people accept abuse.

I'm really happy about this with my current company. They now start with 4 weeks, and after 5 years you get 5 weeks.

This is the most out of touch thing I’ve read on HN in a while. When did we start talking about whether couples bringing in $400k/year could retire at age 50. You are clearly an outlier, even when compared to software engineers in the states, let alone Europe.

I know it's an outlier because a few years ago I was making $85k in Houston as recently as 2019. I studied whiteboarding and moved. Now I'm a FAANG engineer.

Careful predicting the rest of your life based on 2 years of the best success you’ve ever experienced. Something similar happened to me 5 years ago and I’m operating on the assumption the crazy pay can disappear at any time. If you luck into a way to suddenly retire in 5 years, always assume there’s someone standing behind you willing to do it for less. Many money faucets eventually turn off.

The beauty of saving that much is I don't depend on it.

I have yet to save as much as I theoretically should be able to. Good luck, sincerely.

Edit: and you still have yet to demonstrate that your income will last for the next 5 years, let alone 15. Don’t count your chickens yet.

At present trajectory this is a reasonable outcome, in the case of a major correction saving your money will also mean you benefited from the bubble.

There used to be stories from the .com bubble of people who only knew a little html getting six figures. On being told this around ‘08 everyone would nod and think that it was ridiculous - after all fresh college grad backend engineers could be hired for just 30k at the time on the low end in the US.

Flash forward to today and we’d think a front end engineer or designer with technical knowledge for those rates would be a steal even after adjusting for inflation.

I don’t doubt techs impact, or that the big tech should be the most valuable companies in the world. But I would be surprised if software engineer became the highest paid profession on a permanent basis, which with current salary progressions is a given without a correction.

6% historically has been easy. Going forward it wont be as easy, think 3-4% is more likely.

Plus sounds like you dont have kids, they are very expensive in both money and time. Have you seen how much childcare is?

My friends who spent their 20s at FAANG would disagree with you.

In the EU?

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