Not sure if they are talking about my buddy who still makes 80k/yr in his 30s as an engineer because his company keeps dangling 'you could go to Japan for a few weeks' for the last 7 years. Or they are talking about the current economic conditions.
At the same time, don't let a company string you along
I think your statement isn't strong enough. Choosing lower compensation in exchange for work that aligns with your value system is an entirely rational thing to do.
I'm not saying there's anything wrong with that. But, in my experience, that's not representative of most people.
A) rarely have a clear view of their values insofar as it aligns to what they do for a career or job. Maybe about X social issue, but rarely about themselves.
B) careers and corporate brainwashing greatly distorts peoples internal view of themselves and their relationship to their work
C) values change continuously throughout life. The people who seem to hold most tightly to a narrow range over a long time tend to be the least introspected.
It really depends on your lifestyle and location. Tech salaries are not the norm for most people.
There are trade offs of course—instead of 4 kids you might have 2. Your spouse might have to work part time or full time. Instead of a big house with a backyard you might go for a smaller place or somewhere farther out in the country. Instead of distant vacations, you might road-trip. 80k really is quite workable if your expectations and budgeting is solid.
> Instead of 4 kids you might have 2
Ok.
> Your spouse might have to work part time or full time
This isn't "just fine". There is significant overlap in child success and a stay at home parent. There should be no case where a job at the caliber of ENGINEER cannot support a family to provide such an environment.
> Instead of a big house with a backyard you might go for a smaller place or somewhere farther out in the country.
You don't even get this at 80,000 if you want to live within 50 miles of any metro with jobs. Engineering jobs even more so. Going back to your statement before you now have a contradiction:
1. Have a spouse work
2. Have someone to drop your kids off at school because you live in the sticks
I don't think you have actually experienced trying to do exactly what you proposed. Inflation and free money has created an environment hostile to having anyone but the state raise your children. I got a house extremely cheap in a middle-cost-of-living area (~50% markup over price prior to GFC, low 200s). If I was making 80,000 a year I wouldn't be able to afford this modest starter home. That's bullshit. There is no question. Starter homes haven't been cheap enough to afford on a single 80,000 salary in my area for 25 years.
You can afford a modest starter home on 80k a year if you're not carrying any debt, lenders cap DTI around 40%, or $2600/month, although your finances would be tight, and you wouldn't be able to live in a state with excessive taxes like California.
2023:
- Median US Home Price is $436,000
- Average interest rate: ~6%
- Monthly payment on $348k (20% down) @ 6% = $2,086/month
If we waited to save up 20% we still wouldn’t have bought a house because it would have taken several more years and then the home prices jacked up 40% during the pandemic. Instead our home went up in value by that much instead.
For your example house they’d have to have saved up $70,000 ahead of time. For people that rent and aren’t in tech that’s not too feasible, especially considering they may have that much in student loans also.
I know a couple that managed to do it but they lived (as a married couple) with their parents for several years instead of renting so they could save up for it.
Like a negative correlation?
I can't imagine a stay at home parent is better than paying for school/socialization.
It also shapes expectations over what we think we will be expected to pay for personally, and what those costs are likely to escalate to be by the time we must pay for them.
Give me $80k/yr and my quality of life locked in on that (healthcare/retirement included of course!) and I'd sign the paperwork tomorrow.
The issue is that there is no way the costs are going to be reasonable enough if I get "unlucky" to say that is anywhere near enough money. The difference gets put into savings, not spent.
My family who have never seen what things cost (e.g. subsidized medical insurance, etc.) are perfectly content and happy making far less, and state that it's simply lifestyle inflation for others. I think it's more ignorance is bliss, and they always know (and utilize) the fact they have family doing much better than them to call if times get truly tough.
When you're the only backstop you have for yourself, and likely many others counting on you, that $80k sounds like pretty much nothing running a few not-ideal life scenarios.
tldr; $80k certainly gives a very reasonable lifestyle, but as soon as the music stops it turns into pain city really fast. It's less needing more money to have a nice lifestyle, and more middle class economic insecurity.
Then you don't live in one of the lowest COL areas. In my US state, the median income is $50k/yr and most people manage to house and feed multiple kids.
Plus it is LCOL area, implying that there probably will not be many alternative $80k jobs if the one I had went away.
Now their job market may not be hot but layoffs also rarely happen because these are industries that value stability (diversified multinationals but based in a LCOL location). Many folks in my former company have worked there for 30 years. Plus today, there’s the remote market. I think the scenarios your are imagining don’t apply as universally as one might think.
Our perspectives are often shaped by our immediate experiences. I have a data point that deviates from the experiences of most people on this site (that I suspect much of non-tech America shares)
Although, I would never be able to sleep at night if I was counting on depending on an employer for 30 years, not only to keep me employed, but to keep paying me competitive wages when they know I have no other options.
My biggest concern is price of quality goods and services like repairmen and elder care workers and whatnot greatly increasing by the time I am old (2050s) due to demographic changes. I foresee more and more old people bidding for the labor of fewer and fewer young people. And the government chipping away at the purchasing power of the dollar to address this (since that is the easiest and maybe only thing they can do).
I decided that lifestyle wasn’t for me but it really does work for a lot of people.
$20k for federal/local takes. $80k-$20k-$10k is $50k. Max out HSA and 401k is ~$25k or more. $25k left, or roughly $2k/month left for mortgage/rent, food, utilities, car(s), vacations, etc.
Of course, you can not max 401k and HSA, but my opinion would be that is insufficient savings.
Joint tax rate for 80k is 12% federal, so half what you’ve listed for federal. Lcol is likely Tennessee or zero/low state taxes so less than 8k for sure.
Even if huge overestimates on taxes are correct, 2k/mo is achievable. <1k/mo for mortgage and $600 for food if you’re stringent, $400/mo for other expenses. All extremely dependent on being in a very low cost of living area, but 80k is ridiculously higher than a lot of people who live at $14k or 28k/ year if one or two people work at minimum wage.
It’s extremely unlikely they’re maxing 401k as well, most people I know who making 100+ don’t do that. So more realistically 80k, minus 12k for taxes, maybe 5k for health, maybe 5k for 401k, leaves you with 58k.
NJ has a nice pdf showing premiums and age rating factors, we can roughly estimate from there (lets use Horizon BCBSNJ Omnia Silver HSA as an example since BCBS is nationwide).
https://www.state.nj.us/dobi/division_insurance/ihcseh/ihcra...
https://www.horizonblue.com/qhp/files/2023/2023%20SMG%20OMNI...
$325 per month per child, ~$500 per month per parent - $20k in premiums for a silver HSA plan in NJ, but this is has a $7k deductible and $14k out of pocket maximum. If an employer wanted to bring those deductible and oop max down, the premium would have to go up quite a bit.
So even in a lower cost of living state, I would estimate at least $25k/year in premiums for a half decent plan for 2 adults and 2 kids.
You are right that $20k in taxes might be high, but I was figuring income tax and 1% to 2% property taxes and maybe even tolls/vehicle registration/etc to be safe.
>It’s extremely unlikely they’re maxing 401k as well, most people I know who making 100+ don’t do that. So more realistically 80k, minus 12k for taxes, maybe 5k for health, maybe 5k for 401k, leaves you with 58k.
Yes, I assume 90% of Americans are not saving per my comfort levels.
As an immigrant I’ve always lived so close to the edge financially that I feel I don’t have the same expectations of most native born folks of what retirement looks like (I don’t plan to retire, but if I’m forced to I’m planning for 70s not 65). To me it just means I have to be hustling all the time. I don’t feel I’m hard done by or financially insecure though. I’ve lived with very little (I was technically below the poverty line in undergrad — I really stretched my dollar) and now I’m relatively comfortable but it’s all the same.
If I did not have kids, my comfort level would be a lot lower. But I feel like I decided to bring them into the world, and so I owe it to them to bed financially secure enough to provide them healthcare and my time.
I’m in Texas and was lucky to get a mortgage of $2383 a month!
$2000 a month is NOT achievable.
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