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Comment by delfinom | Hacker News Reader

> if you’re making engineer money,

SV & big tech engineer money.

Majority of engineering fields do not make that kind of money to retire at 50. Comfortable compared to the rest of the country, sure.

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I think maybe that was implied, considering the topic of conversation and website we’re on.

That said if you’re making $250k+ a year and not on track to retire by 50, seriously please open a retirement calculator and figure out what you need to do to get there.

Which is a pretty high salary in the US in tech generally.

That said, a lot of people in US tech can probably retire relatively early if they run the numbers and don't have a lot of external expenses.

I wouldn't assume. The readership of HN is quite vast. I've never worked at big tech and don't plan to.

$250k+ a year means ~$12k monthly salary.

A semi decent apartment in SV will cost you ~$3k

Bills(phone, internet, electricity, etc) another $1k.

If you are married, groceries at least $1k.

Even if we assume you don’t do anything else in life, and you are in perfect health best case scenario would be $6k savings a month or $72k a year.

It would take you 10 years to save $720k plus whatever you make from investments.

That’s not enough to even buy you a house in SV. How are you going to retire?

Unless you assume you will get $250k straight out of college and keep up salary raises for 25 years.

Sure, if you don’t have kids, age with no health problems, never enjoy anything in life, you may be able to retire at 50 in Thailand or Philippines.

why would you would be saving for house and renting at same time ?

Because you need to have enough saved for a downpayment?

Well, interest rates are high right now, but you’d be surprised at how little down payment you need for purchasing a house or a condo. If you’re a tech worker with a stable career making that kind of money, most underwriters will just give you the loan.

I think people commonly underestimate how accessible this stuff is

It’s easy to make a 40 year forecast spreadsheet for retirement, including housing costs, property, taxes, maintenance. Include vacation, budget, food, general cost of living.

I left Silicon Valley 5 years ago. Are people getting $1M+ loans with zero down these days?

No? What?

I mentioned Lifestyle creep before but what is with everyone’s fried brains?

A small condo in a nice neighborhood in Santa Clara is below $500k. Yes, that’s a lot, and you certainly can get more bang for your buck if you’re willing to do a little commuting.

Btw a $1m house is accessible if you make $250k yr, although to be honest, I would highly recommend against it

The question I originally responded to was "why would you rent and save for a house at the same time?"

I said "because you need to have a downpayment".

You reply "downpayments aren't that high".

Unless you're getting loans zero down, you literally still need to save to have your downpayment. While you're renting.

So where is my brain fried?

Even on a $500k condo, you're putting 10% down, you still need to have that saved up. Noticeably more, in fact, because I'm sure you'd agree "lemme sink every saved cent I have into my house downpayment" wouldn't be wise.

> So where is my brain fried?

Many places.

First, you can get a zero down loan at that income level. Wouldn’t recommend it but I can tell you haven’t seriously explored home loans if you don’t know this.

Second, if you make $250k a year and you’re struggling to put $10k, or hell, even $50k down… you need to make a budget because damn

> you literally still need to save to have your downpayment. While you're renting.

Just so you know, I did it. I bought a condo a 20 minute train ride from sf, making quite a bit less than 250k.

I did it at $180k a year by moving into a studio in oakland, and that was overkill tbh. Saved $1.5k a month and biennial vacations were to New York and Vegas instead of France and Japan. Such a sacrifice /s. Now imagine how easy it’d be with an extra $70k (about the average annual salary).

The best advice i can make to you, if you really are making above 200k a year, is to make a budget spreadsheet.

So you oblige yourself to an enormous long-term loan at high-interest, burn PMI on it because you have too little equity, secured against an overpriced-for-quality home whose value may already be at peak or plataeu, fixing yourself to one location, while all signs warn that you may be laid off at any time and facing a long period of unemployment.

I knew a lot of people who did almost exactly that ~18 years ago. It didn't go well for them.

And then it turned out that staying flexible as a renter and setting aside cash set me up to buy after a correction instead of before. That part went very well for me.

Be careful with the assumption coded into your "forecast spreadsheet"

Well yes, there are tradeoffs. On the other hand, go ahead and burn 3k a month on rent.

There is no one size fits all solution but i’m surprised at how many people here are inadvertently revealing to me that they haven’t even tried evaluating.

For example, you saying there’s nothing “affordable” when the baseline assumption is an income of $250k? Can tell you haven’t looked at what’s in your price range. Alright, good luck I guess!

not for 10 years you don't

You don't need to save for a downpayment for 10 years? Or are you saying it won't take 10 years to save up for a downpayment?

now if you only read the comment I answered to you might've figured the answer to that on your own!

Touché.

I don't see how we get to "why would you rent and save for a house at the same time?" from "it takes 10 years to save $720K" but whatever.

6k month over the past decade is circa 1.7m today depending on which index fund you chose.

Assuming a 4% draw down (conventionally agreed to be safe) is over 5.5k a month.

The 4% rule is considered safe for a 30 year retirement period. So at 50 you might want to withdraw a little less.

Money has lost about about 10% per year in value for the past 5 years. It used to take like a million dollars to retire, but now it's like double that. In addition, nobody really knows how long they might live or how bad inflation could get. Imagine retiring at 50 only to be wiped out, and maybe still on the hook to pay for your own expenses for another 50 years, plus whoever you have in your life who counts on you.

2 millions to retire? Without owning a house? You must be kidding, unless you plan to live only until 60 or move to the cheapest place in the country. Also keep in mind that most health problems start after 50.

To be fair, if you believe all the usual assumptions, then you can expect to earn 5% on that money. That would turn into $100k annually which is enough to live just about anywhere. Now, if you retire on time, I think this may also be tax free. So it's not that crazy, except for the unknowable inflation part of the puzzle. If inflation is also 5%, then your effective loss is 5% per year, so you'd be down nearly 100% after 20 years. Housing costs are crazy, but if you don't need to work then you can easily move to a cheaper place to save money.

Would you be making $250k ten years ago? Probably not unless you were super high in the corporate ladder.

Rent? Ever heard of equity? If you make 250k you can afford a nice condo. Right away that blows a huge hole in your math.

Also $1k month on bills? Groceries too?

Judging by your inflated costs for everything, and ann idea that a house (versus more modest accommodations) is what the goal is, you’ve got Lifestyle creep. And, things certainly get a lot easier when your spouse also works.

Bro, not everyone has daddy to give them the down payment to buy anything remotely affordable in SV.

Bro, I can tell you haven’t even tried. Talk to a mortgage advisor.

I’ve been trying for the last decade boomer. Housing keeps going up and my salary keeps staying the same. It’s to the point where a 30 year mortgage will take me to 80 years old. Where a down payment would cost me a decade of saving and nothing but saving. No life, no food, no other bills.

I’m not a boomer and the core conditional of this whole thread is that you make $250k a year. If you’re making $250k and you still think what you just said, you are completely incorrect.

Renting can be much better financially than buying.

Edit: all % numbers are per year

Consider the case of condos in cities. If you were to buy outright, you effectively get a return by not paying rent (i.e. paying yourself rent). Rent is usually ~5% of the condo cost. HOA + property taxes is 2-3% so subtract that from the rent return i.e. net return 2-3% (5-2/3%). The rest of the return is appreciation from the underlying real estate prices. I am excluding maintenance costs because they are negligible in condos.

On the other hand, if you rent and put the entire amount (that you would have paid to buy the condo), you get ~10% per year. To break even between the two scenarios, you would need real estate prices to grow 7-8% (2-3% + 8-7% = 10%).

Beyond this, there are psychological reasons to buy vs rent. Buying - ability to customize the space, peace of mind because of perceived stability etc. Renting - flexibility, peace of mind because of no long-term obligations etc.

A mortgage is an interpolation of the two cases at the cost of the interest one pays. It is noteworthy, at least in the US, that for most people, this is the only time they can borrow several hundreds of thousands at relatively low costs.

Do you live in the Bay Area?

2k a month for daycare or nursery school lol

$2k per month for groceries and utilities for a married couple is insanely high, in any part of the country.

We're probably around $1,200 for groceries and related (cleaning stuff, mostly) in our house, but we're a family of five. Yeah I'd say $2k is nuts for just two people, even today.

For a long while we managed to stay around $500-600 but that was before COVID inflation. I dunno how the official inflation rate's as low as it is, we don't buy much that'd be considered "luxury" level (we're not buying caviar, say, and rarely even get stuff like the grass-fed "fancy" butter [actually yellow instead of white, tastes like something rather than just having texture but no flavor] instead of the cheapest available) and I'm pretty sure we buy a lot less meat per person than the US average, but if we fill up a cart now it's like $250-$300. I've hit $150 on small shopping trips where I didn't even fully fill one of the smaller, short carts.

For groceries I budgeted $1k and $1k for phones, internet, water, electricity, gas, garbage, etc.

$2.3k, northern va area, family of 3, not fancy anything. data centers have spiked electricity bills, food is insane of course. this does not include once—a-week dinner out or take out

California actual amounts for 2 people:

$150 phone $200 electricity $200 gas $200 water $80 internet $80 trash

Car insurance? Gas? I’m ridiculously generous when saying you can save $6k per month.

There are a whole lot of people here who work in the tech industry but aren't working in SV. There are even a decent number who aren't in the tech industry at all.

I can back you up on that.

I regularly frequent HN, and even comment from time to time, but I don't work in tech nor do I make bank. I'm a cashier at a gas station. Lol. I'm lucky if I make $16000 a year after taxes.

Tax rates, cost of living differences, etc depending where you are in the world don't always make this a good salary.

Generally outside SV:

- If you are making $250+ it is at least middle management (not tech work) AND

- Only in zones where cost of living is eating this up (e.g. UK/Europe/Australia/etc can get to this equilvalent salary but costs for example for rent, food, tax, etc are much higher).

In most countries SWE is above average pay, but it isn't life changing and it still unfortunately has the boom/bust cycles.

I've met some very good engineers who have built some great large scale solutions who are on less than this salary often in non tech firms being outside of the SV area due to personal reasons (e.g. can't move due to family, too old to do the interview dance SWE has become these days, etc).

... if you're making $250+k/yr as an individual in your 20s, yes. If you've just hit that at age 40+, maybe you're just looking at a comfortable 60-67ish retirement. The US medical system gives you exposure to well into the five figures of risk per year on top of at least high-four-figures in premiums per year (at age 50). Each extra year puts an early retirement without crazy money behind it at serious risk, because your expenses could suddenly and unavoidably shoot up by tens of thousands per year for several years on end.

A majority of software engineers don't make enough money to retire at 50. People who have retired so young tend to be very lucky in both employment and their investments. Most probably stayed unmarried, inherited significant amounts of money, and/or married into even more money. It also helps to be lucky enough to start with a $100k+ job at age 23 and never have any bad luck to set you back. I've met people who check some/all of these boxes, and even they seem to not be retiring at 50.

When you can retire depends on how little you need.

Though, of course, if you're living from investment income you should be aware you're living off the work of other people.

Unless you're churning your own butter and manufacturing your own solar panels, isn't retirement inherently living off other people regardless of income?

Isn’t social security living off the backs of other people too?

Childhood too, no? Maybe it turns out life was the original "pyramid scheme"

Childhood was that new car smell and your parents dreaming of the kind of equity they’ll get only to get frustrated with all the maintenance.

Yes, they both are, it's just less obvious for investment income.

Isn't getting wages in a wealthy country so that you can afford a multiple of work hours from poorly-paid people elsewhere inherently living off other people?

If one makes more as a software developer than a bus driver, it doesn't seem like location was the factor

Isn't the logical extension that everyone lives off other people?

This was basically the point of "you didn't build that" (https://en.wikipedia.org/wiki/You_didn%27t_build_that)

you want to live off another people to some degree. single farmer can feed hundreds - there is no need for everyone to do everything. which of course raises societal fairness and trust issues

It's just slavery with extra steps

This. People act like we’ve gotten $200k+ for more than a decade. Most of us haven’t. It wasn’t until 10 year into my career that I hit $100k so this is boomer math that doesn’t account for inflation of everything.

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