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Comment by sakopov | Hacker News Reader

In my opinion the high cost of living kills everything else on that list. I'd much rather have a comfortable living, travel the world and be optimistic that i will have no problems buying a nice house for me and my spouse/family if i need to/should i want to. I don't really see this possible based on what i hear from a couple of friends living and working there. Both consumed by their tech jobs, some cool things to do every once in a while when they're not slaving away for a startup. I guess people have different priorities. All this stuff is great until you're in mid 50s and you realize your less-than-comfortable living is leaving you with a less-than-comfortable retirement.

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The same goes w/ NYC. I have been here for a while now and have met so many young girls following Sex in the City dream, which invariably turned out badly.

Many people fail to realize that show was not intended to be educational.

Should we redirect them to Girls?

Someone actually did the math behind Carrie Bradshaw: http://thoughtcatalog.com/2011/carrie-bradshaws-budget-in-re...

Agreed. I just moved here from Tucson, and there's virtually no way I'd be here if not for the fact that I'm living with a medical resident in an apartment subsidized by her hospital.

Given a choice among SF, NYC, and Seattle, and I'd choose Seattle: It has much of what makes the first two desirable, but at 60% of the cost.

BTW, to the extent that you want to make cities like SF and NYC more affordable, favor the removal of building height limitations and setbacks. The real problem in such cities is with supply, as Matt Yglesias writes in The Rent is Too Damn High and Ryan Avent writes in The Gated City. SF and NYC aren't expensive because of some natural law; they're expensive because of man-made laws, which can be changed. Don't yield to torpor!

Having moved from SF to Seattle, I just want to say that Seattle is terrible, and you should warn everybody you know to stay away.

;)

Haha. Why do you think so? Lets get a beer and I'll show you why it isn't totally awful. Some gems for sure.

(He's joking, it's wonderful. This is the decades-old Seattle joke, "It's so miserable here, please stay away.")

(Don't tell them that! They'll keep moving here and then it'll be as expensive as NY and SF!)

/sheepishly walking away

Serious question -- did you have trouble adjusting to the lack of sunshine?

I've lived in Bellevue, WA, then Worcester, MA, then Seattle, WA, then Tucson, AZ, then New York, NY, and I've never had a problem with sun or its lack. Different people react differently, however, and I still a) went running most days, and b) really like the cultural / lifestyle aspects of living in cities.

I prefer the Seattle experience of relatively temperate weather, year-round, to the Tucson experience of insane heat for about five months of the year. Obviously nowhere else in the U.S. is going to rival the weather experience of the CA coast.

> Obviously nowhere else in the U.S. is going to rival the weather experience of the CA coast.

Did you not read the article? :-) Seriously, summers in the city (of San Francisco) can be miserable, at least insofar as your definition of summer includes wearing fewer clothes and dining outdoors. In general the coast of California north of say, Seal Beach, is not an enjoyable place to be after sunset, anywhere. Even in LA it's usually about 60 at the beach in July at night. I've never understood the massive gap between marketing and reality when it comes to the weather in coastal California, despite having spent half my life here.

Medellín, Colombia is the place I have been that comes closest to achieving what California peddles.

The west coast of Europe has a big advantage over that of the USA: the Gulf stream.

It's nice to have an ocean-sized "hot water bottle", running at about 15C in winter.

(Also: http://www.snopes.com/quotes/twain.asp )

July is the start of summer and it takes another month for the cold ocean currents from the north to warm up, keeping Santa Monica cool. An hour inland and it could be 110f. LA has maybe 300 sunny days a year, while Medellin is nowhere near the beach... like 1000km away.

Going to the beach today in January, woohoo!

> the Tucson experience of insane heat for about five months of the year.

I've got to object to this. Yeah, June and July (and to a lesser extent August) are pretty intense, but I'd hardly characterize the rest of the summer heat as "insane".

> I still a) went running most days,

I suppose this could be an issue. Especially during the summer rainy season (usually July-early September) it's still pretty hot and the humidity means it doesn't much cool off at night, which makes strenuous outdoor activity harder even if you do it at the coolest part of the day.

>I've got to object to this.

Maybe four months of insane heat: mid-May to Mid-September are ridiculous. I can't even ride a bike without sweating like a mule after a mile.

I came from the Southeast, and I haven't exactly. I get crabby, but the beauty of seeing Rainier and all the ecotourism and density makes up for everything. Plus, before I moved I didn't get much of a chance to enjoy the beaches and outdoor areas because I was too busy being stuck in traffic and sprawl.

I still miss bay area weather. Aside from lack of sun, I just really don't like constant rain. I wouldn't say that it has been difficult to adjust, it's just far less pleasant in that regard.

I've been contemplating moving to Seattle. After experiencing both SF (for a short while) and Seattle, i think Seattle offers similar quality of living for far less. So i really hope it's as terrible as you describe it :)

We tend to hype the rain problem to keep the Californians away.

NYC is a big place and its not all the same. One could, for example, live in Brooklyn, pay a more reasonable rent and be surrounded by interesting people all with access to great food and bars. I suppose you could stretch that a bit further to Queens as well. Manhattan itself is quickly changing into a business district. You go there to work, grab dinner or hit the theater, then leave.

This is by far the best way to live comfortably in NYC. People forget how diverse the city is. Everyone thinks that you just have to be in Manhattan. Yes if you are working for a startup in NYC it will be located in Manhattan (Etsy is an exception), but there's no real good reason to live there. It is a fantastic place to work and dine, that is for certain, but in terms of living it is overcrowded, overpriced, and quite noisy.

In Brooklyn or Queens you can have plenty of room for much cheaper than Manhattan/SF/Seattle. There are one bedrooms in Astoria that start around $1200 and with a roommate you can easily be paying less than a grand each for a BIG place in a great part of the City. Almost all of the creative and intellectual activity in NYC comes from Brooklyn/Queens, whether its the rise of new and interesting publications (N+1, for example), art houses being opened, exhibitions being held, wild house shows or rooftoop parties and so on and so forth. It has a great vibe that I have yet to get from any other city.

I remember being on a rooftop in Greenpoint with some friends, having a nighttime barbecue, and they had a marvelous view of Manhattan. I mentioned that it would be nice to live there and my friend just laughed, saying "The city looks so beautiful now. Why would you want to ruin it by living there?"

What parts of Brooklyn? Isn't it hard to get to work in midtown if you live in Brooklyn? The "nice" parts of Brooklyn always seem just as expensive as Manhattan when I check.

Try Bushwick. It's on the L train. And some parts of Jersey are a faster commute to midtown Manhattan than north Manhattan is.

The nice part about Midtown is that it's connected to everything - every subway line except the G and the L go through it, so if you live anywhere along a subway line (again, not the G or L), you can get to Midtown.

What you say is true though, the "nice" parts of Brooklyn are as expensive as, if not more expensive than Manhattan. Manhattan's cost of living, relative to NYC in general, is plateauing, while Brooklyn is shooting upwards. Rent on the Upper East Side is downright affordable now, and even not-super-cool neighborhoods like Chelsea have stabilized.

Compare with Park Slope, where the price ceiling is nowhere to be found, or Williamsburg which is definitely more expensive than all but the most desirable areas of Manhattan. Dumbo too.

But, good news is, there are lots of gentrifying-but-not-quite-done-yet neighborhoods in Brooklyn. Bushwick and Prospect Heights come to mind, though I'm sure there are others I'm not remembering.

This always reminds me how much neighborhoods can change. I still remember my friends in Bushwick who wouldn't let me ride the subway home (I lived in Flatbush). This was after her dad's bodega had been held up for the third time in a month.

To think of that neighborhood as going upscale is almost unimaginable.

The parts of Brooklyn that are closer to the waterfront have become quite expensive, I agree. They are not on par with Manhattan when you compare the actual size of the space, but they are getting closer. They should still be high on the list of living places, because Brooklyn has more of a community feel to it than Manhattan does. Rather than going further back into BK, I would suggest looking into Queens, esp Astoria. This will also offer you easy access to Midtown. Same with Long Island City.

To the list I should add Jersey City. It's rapidly changing and has multiple train (PATH) stops that quickly get you in to the city (well, not now with Sandy repairs, but normally). It remains far more affordable than Manhattan. The fact that the NYTimes in the past month has wandered in to JC twice to review restaurants is a sign of the changes taking place. And along it's waterfront it has some pretty stunning views.

Everyone forgets Chicago. In the US, it's the most important financial center outside of Manhattan and is the third place city in number of Michelin starred restaurants (fewer than SF; Seattle has none). Boeing moved their corporate HQ there from Seattle because of its financial prominence. It has a world class university in U. Chicago and excellent bus/rail transit across the metro area. But the Chicago area is seriously undervalued as "flyover country" for most people from the coasts.

from my experience there, it's simply too far from other places (vs Boston/NYC/DC area or) and weather is a lot harsher

it's a 2 hour flight.

What's Chicago known for these days? When I think of Seattle, I think of music (grunge was big, and today there's still a lot of it), Amazon, Microsoft, tech stuff, and arts. When I think of SF I think of free-spirits, the 60s, and startups. When I think of New York I think of movies, finance, artists (especially writers), publishing, and fashion.

When I think of Chicago, I think of. . . corruption? Commodities markets?

I'm not saying this to be snarky or a coastal asshole or whatever. I'm saying it because I genuinely don't have much of an impression of Chicago from the popular culture, or from books, or from sites like HN.

Architecture to name one of many.

Some of the best American architects built many buildings, apartments, and skyscrapers in Chicago. The Chicago skyline is a wondrous thing. It can't be compared.

As a place to live, in my opinion the biggest thing that Chicago has over other cities I've spent significant time in is green space. The city's motto is Urbs in Horto, and it shows. Virtually the entire lake shore is one big park, outside of downtown most the area along the river is also park land, there are forest preserves within city limits, and other significantly-sized parks and playgrounds are scattered all across the city. I suspect that it be quite hard to find a spot in the city that isn't within walking distance of at least one public baseball diamond or soccer field. Even non-park areas are greener, on account of more (and bigger) trees lining the residential streets.

Architecture would be another nice feature; the city has definitely benefited from being the home of many of the USA's most influential architects.

In summer the city's absolutely rotten with street festivals, which is also pretty fantastic.

So no, nothing that would be particularly notable to a non-resident. But you can't spend an afternoon outside reading a book under a social media startup or an up-and-coming fashion designer.

I can't imagine any city in the US being greener than Seattle. It is called the emerald city for a reason! Of course, it helps that most of the trees in Seattle are conifers that don't lose their needles in the winter.

Winters are absolutely brutal in the midwest, I would take rain over having to wear a heavy jacket.

Lived in the Midwest for well over a decade. Drove 48 hours straight to GTFO of there with extreme prejudice at the earliest opportunity. There's a few top tier universities, some big transnationals like Monsanto, Boeing, Nestle - you know what great if that's your thing. Personally I didn't ever think "big money" was the best reason for living in the midwest while I was there for so long, but I digress.

My caustic opinion is if you're not a farmer or self-sufficient type who is thrilled with the opportunity to live outside of a big city, then try for a city on the coast, like San Francisco. Big midwestern cities just aren't "all that" relative to their coastal counterparts. In the midwest you get:

- Higher crime rates and corruption

- Miserable, MISERABLE prolonged winters

- Salted roads --> depresses the value of any enthusiast (Porsche/BMW/Ferrari) type cars you might have on resale

- Rampant backwards conservatism

- Uncomfortably hot and humid summers

- Tornados and severe weather

- A severe lack of places to go and things to see

After living there for so long, I have a really tough time understanding why you would want to stay there if the opportunity to leave arrived, unless you're involved with a major university or are a farmer / homesteader type person living in the country. Bottom line, if you could magically swap San Francisco with Chicago, social network and assets included at no cost for a day I bet 100% of my money a bunch of Chicagoans would reconsider their whereabouts, and most SFers would be PISSED.

Also. And this is important: weed is legal or effectively legal for most of the west coast. This may not be a big deal to you but it's just amazingly energizing to live in an area with sane people who are not brainwashed as opposed to backwards conservatives so prevalent in the midwest. People are healthier and more active here, and I feel many are a bit more open minded. You can call it a negative that the startup scene is unavoidable, but really, isn't fluorishing innovation what you'd expect to see in any super happening big city? If you don't want to see innovation, maybe city life isn't for you, maybe dairy farming is for you.

just my 2c :0 plz dont hate me

Still going, probably experiencing a revival: https://en.wikipedia.org/wiki/Chicago_house

World's biggest food fair: https://en.wikipedia.org/wiki/Taste_of_Chicago

If you don't like house: https://en.wikipedia.org/wiki/Chicago_hip_hop

For the amateur economist :) https://en.wikipedia.org/wiki/Chicago_school_%28economics%29

Michelin only provides "red guides" for 3 US cities: New York, San Francisco, and Chicago. (http://www.michelintravel.com/guides-cat/north-america-red-g...)

It's not possible for any other city in the US to get a starred restaurant, no matter the quality of the food.

For me, SF and NYC have a huge advantage over Chicago and that is mild winters. New York gets cold, but not that cold and you can wait inside for the subway.

I spent two years in Minneapolis insisting I could take it, but the simple fact is that long, bitterly cold winters mean you end up inactive, indoors, cooped up at home more often than not. At least I did. It felt like wasted time, and Chicago is only marginally better.

It would take more than affordable rent and good restaurants to lure me back to a place with so many sub-20F days.

I lived in Chicago for 6 years; being cooped up inside meant more time sipping hot beverages in front of my computer, which may be called sedentary but certainly not 'lost time' for a programmer.

Ah, that's a difference between you and me. I need outdoor time to recharge, so that when I am back in front of my computer, I'm productive.

> Boeing moved their corporate HQ there from Seattle because of its financial prominence.

I don't think the financial prominence had much influence on the decision. They needed a location that was centrally located to minimize travel:

http://hbr.org/2001/10/inside-boeings-big-move/ar/1

NYC is different because you can live an urban lifestyle without living in Manhattan at significantly lower cost. You can do this by living in Brookyln or Queens or even Jersey. When the urban thing gets old, there are plenty of detached single family neighborhoods in the city, early 20th century inner suburbs, or you can flee to the suburbs.

I've only been to California a couple of times to visit, but it seemed to me that everything is "newer" than your typical east coast city, and there's an immediate transition from urban environment to 1960+ suburbia.

I'm fast approaching 50 and I moved here last year. I wouldn't consider living anywhere else. Even though I owned a condo in Florida and was paying about 1/4 as much on my mortgage as I now do for rent, it was completely dead there. I'd rather live where there's actually something to do.

Be sure you're counting both sides of that. If you can get work in a lucrative field, higher cost of living is offset by higher income, and you actually get ahead on aggregate since some expenses are the same nationwide.

But you will pay higher income taxes even though your buying power is the same as someone earning much less in Alabama.

Not for nationally/internationally priced products it won't. Being able to save 20% of $2k/m isn't as good as being able to save 5% of $20k/m.

Cost of living is higher, but salaries in tech are much, much higher.

In a ranking of (avg wage - avg housing cost), San Francisco came out as 4th best, and this is amongst ALL occupations not just tech:

http://www.theatlanticcities.com/housing/2011/12/us-cities-w...

I still don't get why folks don't consider living in places just outside of SF that are much more affordable. Places such as South San Francisco, Daly City, Brisbane, Oakland, etc. The proximity to the city is very close (5-10 mins).

It depends what your definition of SF is. If you are talking relative to the incredibly expensive north-eastern part of San Francisco, I agree. But Daly City, etc. aren't that much cheaper than the Sunset/Richmond/Excelsior, especially when you consider that a car will become much more necessary.

That said, SF is more of a place to live if you don't have children (and if you have children, you better be rich). Those with kids tend to live in the suburbs.

Anybody know what the North Bay is like? Is it very expensive?

Beautiful and actually, in some cases, substantially cheaper... depending on how north we're talking about. I'd prefer it to Oakland -- but I'm ok with suburbs.

What about transportation?

The curse of the north bay is the lack of trains. BART runs to the east bay, but not the north.

The ferry is basically worthless if you don't actually live in San Rafael. It's a nice ride, but very slow, and not cheap.

Personally, I quite like the bus system: if you don't mind taking the bus, Golden Gate Transit is great. The commute from somewhere like Novato is still long (1hr) but you can use the time to sleep or listen to audio books. Be sure to check the schedules of the express routes you care about: they end kind of early (~6, 7pm) and the non-express routes that run longer take easily twice as long.

Driving is a different story. There are three things to consider: 1) leave early, like 5ish, especially if you're north of marin 2) if you work in the financial district, the time to drive from the edge of SF to parking is substantial and 3) you can park in the financial district itself, but this will cost you around $25/day.

I suppose there's a fourth thing to consider re: driving which is that your drive home is almost guaranteed to be painful if you have to go beyond San Rafael and are not car pooling.

Motorbikes / scooters seem like they'd work well. Much cheaper metering, a lot of unmetered space available, and traffic isn't a problem.

How about San Leandro? I see some condos there for under $200k and it seems to be convenient for BART.

Yeah, I noticed some low housing prices in San Leandro too last summer, is this a safe place to live? Anyone?

5-10 minutes without traffic, 5-10 hours with traffic.

bart.

After midnight on weekends? When people like to go out?

Or on a week day, when the parking lots are beyond full?

None of those places are, in practice, 5-10 minutes from a place you want to be. You can see that in the BART schedules: http://www.bart.gov/schedules/bylineresults.aspx?route=7&...

And that doesn't include walking or waiting time.

Driving might seem like a plausible option, but that's generally worse. Oakland City Center to Embarcadero is 25 minutes by car, not counting parking. Daly City to the Mission is 20 minutes. And that's not counting parking, which is never easy in SF.

People do live in those places. But it's definitely living in another city.

May I ask where you are getting the driving numbers?

I live/work in soma and as long as I avoid commute traffic, Daly City really is only ~10 minutes away. A coworker lives in Brisbane and his commute averages 11 minutes. I frequently visit parts of Oakland far further from City Center (say Mills College area), and it is just under 20 minutes.

If you lack a car, well, the numbers look terrible as well in San Francisco. This is most obvious when you note that you can bike from most A to most B faster than Muni can take you. As another example, downtown Oakland is closer to Embarcadero or even Union Square by BART than Inner Sunset is by Muni Metro.

All times were from Google Maps and BART schedules. Google Maps currently lists Daly City to Moscone as 14 minutes nominal, 17 minutes with traffic.

The "as long as I don't drive when most people want to drive" thing is nice if that works for you, but it's definitely not the common case. Most people have to commute when most people have to commute.

Oh did you mean Mission Street (as in Soma), not the mission district?

I agree driving to the Moscone sucks (driving on 3rd past Harrison is a nightmare).

Things are much better if you are talking about the Mission District: https://maps.google.com/maps?saddr=Daly+City,+CA&daddr=M...

(I mentioned "avoiding commute traffic" as I figured "place you want to be" meant for fun, not work.)

Have you ever lived in a city where you can easily walk or take public transportation?

If you're into drinking, even socially, it means no designated driver. No hunting for parking (can take > 10 mins in SF), especially in the areas where all the food and bars are.

Most neighborhoods in SF (and I'm guessing NYC) there's usually some shopping district with a street full of stores and restaurants, non-national chain, within walking distance.

Growing up in Orange County that is something I had never experienced and at least until I have a spouse and kids I don't really want to go back to.

Where I live I'm within a 3 minute walk to a Whole Foods, 15 or so restaurants. A convenience store. 3 cleaners. A twice a week farmers market. Several banks. A drug store. 6 bars. 5 coffeeshops. 2 bookstores. 2 bike stores. And I'm only a 10 minute walk from the mission or a 5 minute walk to the muni (to go downtown).

Compare to the O.C. where pretty much had to drive everywhere. Daly City is a similar place.

Just curious, in your opinion, what should be the net worth target for people making regular tech income in their 30's, 40's and 50's if they want to eek out comfortable living in retirement, inflation-adjusted?

Not my opinion, but I once read somewhere that you should aim for a savings (+investments) of 1x salary by 30, 5x by 40, 10+x by 50.

So someone with 50k/yr of expenses should be making 100k, 250k, and 500k respectively?

I think you have it backwards. If your salary is 50k, they suggest trying to save up 50k by the age of 30, 250k by the age of 40, and 500k by the age of 50.

Keep in mind this isn't direct savings. Stock and other investments count.

I believe this means you should have $50,000 in the bank or investments at 30 if you have a $50,000 salary by then, $250,000 at 40, $500,000 at 50 (if income doesn't change)

Seems to me the most difficult is saving 5x between 30-40, especially at that age when a lot of folks get married, have kids and purchase property. How do you save up to 5x - which for a household income of $100,000/yr is half a million dollar; do you really get a lot of tax breaks on mortgages, kids and filing jointly?

Also, at the current rate of US inflation; by the time I retire which is in about 40 years, $30K/year purchasing power will become $110K/year. Social security will not exist when I retire and a net worth of 1 million dollar, drawing down on principal will last me less than 10 years.

For folks in your mid to early 40's, how are you guys planning for your retirement?

All of the classic planning advice is based on about a century of economic history, most of that time period having little resemblance to today and things are only getting weirder, faster. Inflation is increasing (and increasingly under-reported), investment returns just--to put it bluntly--suck, social safety nets are falling apart, and we're expected to work for much longer in a world where age and experience don't count for much anymore.

In short I don't think retirement is something you can "plan" for if it's more than 20 years out or so. It's more like disaster preparation. Save as much as possible, live as far below your means as you can handle, keep your skills valuable. Keep your money diversified and expect your returns to just about keep up with the real and honest cost of living increases until the world economy feels like taking a dramatic shift for the better. We're still "unwinding" from all the previous crises so I don't foresee that happening anytime soon.

> Inflation is increasing (and increasingly under-reported), investment returns just--to put it bluntly--suck.

This is nearly a self contradictory statement. That is, if inflation were getting out of control, we would see high interest rates accompanying that change.

I'm not saying your advice it bad (savings are a good idea), although maybe a little extreme sounding (too much doomsday feel for my taste). I do, however, wish people would stop it with the "inflation is scary" rhetoric.

The issue is USD is losing its status as the reserve currency and declining exchange rate with BRIC countries are making consumer goods more expensive. Chinese RMB used to be 8:1 in the late 90's, now it's 6:1 and declining.

Also due to several rounds of quantitative easing, the Fed injected a lot of money into the money supply. However, banks are not lending as much money to stimulate the economy which doesn't trickle down to ordinary folks; part of the reason being big banks such as BoA and Citi needed to bolster their capital reserve against their illiquid toxic assets from the real estate speculation bubble. As a result, QE1/2/3 caused real inflation to money supply while the stock market and personal savings account returns have remained anemic.

I remember I was excited when I got a six-figure job, then I realized that 80K in 1998 amounted to 110K in 2011 and realized that inflation was real.

"real inflation to the money supply"

Inflation is what happens to prices, by definition. "Inflation to the money supply" is nonsense, like if you said int x = "foo" or talked about installing new RAM to store your photo album.

Also, the notion that banks can cause inflation by not spending reserves is baffling.

Not at all. There are several different definitions for inflation, each of which is equally valid depending on the context. Consumer price inflation is one type. Other types include producer prices or money supply (including debt marked to market).

This is wrong. CPI is not "inflation" except by common mis-usage. Inflation is defined to be an expansion in the money supply. You can have inflation and falling prices at the same time.

Do you have links to evidence that inflation is increasing, and over what time period? I thought medium term inflation estimates were still under 2%, which is historically rather low.

This statement about inflation contradicts a variety of recent economic studies suggesting that the CPI understates inflation by a percentage point or so (thus inflating the cost of inflation-linked things like Social Security). Any particular source for your sentiment that it's "increasingly under-reported"? http://goo.gl/wbnUu

Caveat: I know next to nothing about finance.

Things that come to mind that help you save more as you get older:

1. Your previous savings will be compounding.

2. If you're lucky, you'll finish paying off a house which frees up a good chunk.

3. If your career is going well, your salary will keep going up, hopefully faster than inflation.

Lesson I will take is: 1) Save like mad. 2) If buy a house, buy with 10%-20% down-payment and financed with aggressive mortgage payback timeline. 3) Climb the ladder and take the money.

It make no sense for most people to pay off their house aggressively. Refinance periodically if you want to lower your payments, but blowing a lump sum on your mortgage principal over a compressed time period is almost always more expensive in opportunity costs.

Quick question: I put $100k in your pocket right now. Would your life be more improved if your mortgage principal was reduced by $100k, or if you went and did something else with it? I think most people could find something better to do -- start a company perhaps? Invest in a rental property? Start a kids college fund?

And again, if you did want to put that into your mortgage: refi.

If you completely ignore risk then what you say is true (especially with interest rates so ridiculously low). However, if we're talking about improving lives, I personally find value in eliminating debt (including the mortgage) as quickly as possible because such obligations represent risk. I could apply all these extra mortgage payments to other things (rental property, stock market, etc.), but then I stand a varying (but non-zero) chance of losing money on those things and still being stuck with a mortgage. I'd rather wait a few years and take those risks with my own money instead of money borrowed from the bank, and I think that economic woes of late suggest we'd be better off if a few more people thought this way.

If you have a fixed-rate mortgage with a monthly payment at a comfortable level, then the mortgage should represent a very low source of risk. Having 12~18 months of payments in the bank saved up for a rainy 1.5 years is a great plan to mitigate that.

The idea of personal comfort is interesting, I think people should attempt to quantify the value of being mentally released of debt burden -- maybe for some there is very high value in it. For me personally, I have always been comfortable with the idea of strategic debt as a way to advance certain goals.

I think what your approach neglects is the fact that being conservative is risky as well. In the last five years, of course, it would be hard to make that case. But unless you die soon, there will definitely be times where you will be left behind -- relative to your economic peers -- if you don't finance your activities externally.

I actually think of it the opposite way: if you put money into paying down debt, you know exactly what the return on that capital will be. It's the interest rate on the debt (in pre-tax dollars for mortgages, after-tax for almost every other form of debt). Money is fungible; any money that's not locked up in debt-service is freed up for other purposes, like investing in other assets.

I tend to advise people I know to pay down debt first these days, because they're usually paying around 6-7% interest, and where else can you get a 6-7% risk free investment? T-bills are at about 3%, inflation-adjusted T-bills are often less, CDs are under half a percent, and savings accounts are basically nothing. You can potentially get more than that in the stock market, but that comes with additional risk, so for a lot of more conservative folks it doesn't make sense to carry a debt and simultaneously invest in the market.

6-7% would be pretty high for a mortgage these days. I was quoted a little over 3% a month ago, and my credit is not the greatest.

For student loans, I agree with you, and I'm putting all my extra money into them while saving the bare minimum for a bit of security if something bad happens.

Wow, maybe I should go buy a house. When my parents refinanced in 2004 they thought interest rates were historically low at 4.5%.

>I was quoted a little over 3% a month ago, and my credit is not the greatest.

You have to consider things like origination fees and points, though. Everybody thinks they're going to stay in their new house for decades, but the average is something like four years.

Based on the 10x at 50 multiplier, I'm guessing that's for retirement savings/investments alone, not a net worth target. (It makes a big difference if you're planning on making any other big expenditures -- down payment on a house, helping the kids with college, etc.)

in light of these new guidelines i'll be getting a job with a drastically lower salary this year. definitely don't want to be behind on savings!

The idea is that if you meet the guidelines with your existing salary, you can expect a lifestyle similar to the one you are already used to. If getting a lower-salary job lowers your lifestyle expectations, it could work. :P

That's nice, but honestly I'd be surprised if many were able to do that at all without a lot of generational wealth backing it up.

Assuming you went to college and got out in 4 years thats only 8 years to put back 1x salary. Given that a lot of those first few years is invested into "setting up shop" getting things like furniture, a reliable vehicle, maybe buying a house, getting married, sometimes having kids, I don't think thats in the cards for many people.

You can't make a savings rate of 12.5% without "a lot of generational wealth backing it up"?

You can conservatively spend 3% of a lump sum each year and the earnings will keep up with inflation. So if you had $1m in savings, you could spend $30k/year in today's dollars forever (and still have $1m at the end).

If you want to spend down the principal, the calculation becomes more complex and you need to use software rather than a rule of thumb.

I thought the typical withdraw rate is 4% to maintain a portfolio indefinitely.

That's probably pre-financial crisis portfolio returns.

I described 3% as conservative. Over most long periods 4% and even 5% would be fine, but you only have one life and you don't want to fall into an unfortunate period.

Sorry but I've become a bit of a personal finance nerd recently. :) Here is the story on withdrawal rates:

The 4% number comes from a study that discovered that a portfolio with a constant 4% rate would survive any period in US stock market history -- even the Great Depression. But past performance doesn't guarantee the future performance. Try to do this with European markets and there are periods where a nest egg won't survive a 0% withdrawal rate. But yeah 4% is the guess people use when planning retirement.

Thats fine, but in real life you have to be flexible as you approach retirement and keep an eye on the math. The first 10 years of retirement are the critical ones. After that you hopefully built up a buffer and don't have to worry due to the nature of compound interest.

More info:

    http://blog.networthify.com/withdrawal-rates/
    http://www.mrmoneymustache.com/2012/05/29/how-much-do-i-need-for-retirement/
    http://financialmentor.com/free-articles/retirement-planning/how-much-to-retire/are-safe-withdrawal-rates-really-safe
    http://firecalc.com/

Try http://networthify.com/calculator/earlyretirement for a fairly straightforward, income-independent answer to that question. Tell it your annual income and expenses, and it'll tell you when you can retire. Adjust the numbers and your retirement date changes. (The defaults for "return on investment" and "withdrawal rate" work pretty well.)

Just don't put in zero for annual savings or the savings rate, because what I'm guessing is a divide by zero somewhere can hang your browser.

Divide by zero should just cause an exception. My guess is it causes an infinite loop.

Yeah, you're right, if you put 10 dollars down as the annual savings, it just takes a very long time to finish.

Oh. Hey. This is my site. I will fix that.

Whenever I see one of these retirement calculators I don't understand how people save enough to actually retire. Are most people really socking away 25%+ of their gross income every year?? I certainly enjoy motorcycles and exotic travel far too much for that to ever become a reality (not to mention pay rent in the Bay Area and try to maintain an organic/local-sourced diet which costs about double a typical grocery store).

Now you know why everyone out here wants to do startups: it's the only way to ever retire!

You don't blow your money on expensive vacations and new cars. Don't pay retail.

My wife and I are in our mid 30's, put away about 15% of our income and have defined benefit pensions that we contribute 7% into.

It's totally doable. Last year we spent two weeks in Hilton Head and paid about $80/night, we drove from New York to save about 80% vs. flights/car rental. We live in the city we work in and I commute via bus.

It's also totally worth it. We're living we'll now, and will be able to retire in our late 50's with a paid off house. I will not be the guy in his mid 60s trying to hang on to his job.

Yes, a bunch of people are really socking away 25%+ of their gross income. I've consistently saved about 80% of my take-home pay since graduating from college. I have one friend who just paid off her $130K in law school loans, 4 years after graduation. I have another friend who managed to save $20K over 2-3 years on a grad student stipend (i.e. he was getting paid about $28K/year and saving 40% of it).

It helps if you don't enjoy motorcycles and exotic travel. I do something social about 5 days a week, but that "something social" is usually something like going over to a friend's house to play Starcraft or XBox, or hiking in a state park, or going rock climbing, or worst-case, dinner & a movie. You don't need all that much money for any of these.

Winning the startup lottery would be awesome but probably requires some amount of luck. If you save (for example) 80% of your savings you can retire after 5 years and never have to work again. Its not for everyone but you might be surprised at how little suffering is required. There is a community of "early retirement extremists". Try MrMoneyMustache or the Networthify blog if you are interested:

    http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/
    http://blog.networthify.com

Travel is cheapest when you live abroad rather than taking short trips and staying in hotels. I'm from Minnesota and I've lived and worked in Beijing, Singapore, and London.

Disclaimer: Networthify is my side project and my savings rate is not 80% but its a lot higher than 25%.

Try Oslo: http://www.numbeo.com/cost-of-living/compare_cities.jsp?coun...

mid 50s? mid 30s with kids already makes it look problematic.

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