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Saint Fu posted:It's just a matter of total compensation. Employees used to get a pension as part of their compensation (and received more and more pension the longer they stayed on). Now employees get a 401k which ends up being less money from the company. Sure if the company contributed to my 401k exactly what they would have to my pension, I'd take the 401k due to better flexibility. But it's not apples to apples because the pensions were (typically) more valuable than what you get with a 401k. I think my argument holds even when it's not apples to apples - a benefit that only remains a benefit if I remain at a company until a certain age or for a time is a false promise and can literally be taken away at any moment by your employer. It punishes those who wouldn't put up with being mistreated at work. I would rather have 10% of the value of a pension as I work than have nothing if I don't stay at one particular job. Sure, some people may luck into a great first job that they won't get bored of and who never mistreats them in a location they don't mind spending their whole life in - they would benefit greatly from a DB pension. I think that's a huge dice roll and most people would end up losing out, or would end up at a job they hate but are complacent in because of their pension handcuffs. e: sorry for this derail, if people want me to stop I'll stop or take it to another thread
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May 12, 2015 00:41
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Inept posted:This might be true, but there are some that argue that there was less income disparity back in the 50's partly because WWII brought everyone but the very well connected into the same shitstorm and made them relate more to one another, and less likely to gently caress an employee over. That seems much less likely than the possibility that corporate culture was still affected by New Deal economics and other legislative measures to save capitalism from itself when other alternatives still existed in relatively reasonable ways.
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May 12, 2015 00:46
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Jeffrey of YOSPOS posted:Okay just got two conflicting responses, don't know what to think - TraderStav's company sounds like what I was referring to. He describes precisely the sort of issue I'm talking about - in a society dependent on pension funds, one cannot leave a job without losing the "number of years in service" part of the pension reward, and if one company's pension is your retirement plan, you're completely dependent on working there and only there for your entire working life. I think that sounds awful and no one who is financially literate should prefer that over receiving money now. Now when you get fired at age 59, your retirement account gets instantly drained as well, lovely. Why is this a system that is looked back upon fondly? No, the pension doesn't just dissapear, but the growing multiple and growing salary make it non-linear, and so kind of worthless unless you stick it out to at least very close to retirement age. The typical formual is X% * Y years worked * average of highest Z years. So if they pay 1.5% a year and you work 20 years, and the average of your highest 3 years is $100k, you'd get $30k a year. This is great if you leave the company for retirement, but if you leave to go work for another 10 or 20 years, that $30k just gets crushed by inflation. My pension plan was recently frozen, which means that it's going to be worth very little to me, because when I collect in 2048 or whatever, the pension will be based on my 2015 salary. It's really bad if you're like 50, because you're far enough away from retirement that your pension will stagnate considerably, and you also probably don't have enough time to adjust. For me I don't give a gently caress because I always knew they'd do this, and now I'm just waiting for the sweet sweet pension buyout, which I can put into my 401k and pay no taxes on. In summary, I agree that the pension system is bad because it puts people in precarious situations where they *have* to stay with a company if they have any financial sense. If you're 10 years from retirement, that extra 15% on top of 10 years of raises is insane to walk away from. You're talking about 50% of your pension being lost, assuming a modest 3% annual raise, that's worth many hundreds of thousands of dollars, if not close to a million. With that kind of liability on the line, you can see why people are laid off close to retirement and pensions are frozen.
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May 12, 2015 02:00
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It's not difficult to set up db plans that are portable. I think people are missing the bigger picture when it comes to db versus dc which is that risk is centralized with db and decentralized to the individual with dc. It's easy to say that I'm betting on db plans, social security etc getting defunded and I'll sock away savings so I'm not reliant on them. But FI then becomes less of a movement and more a budgeting solution available to those making six figures.
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May 12, 2015 12:34
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shrike82 posted:But FI then becomes less of a movement and more a budgeting solution available to those making six figures.
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May 12, 2015 16:35
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The great thing (great may not be the best term) all the maths is percentage based so actual income is largely irrelevant to whats possible its mearly comparing how high your savings rate can comfortably be against a table for a rough year guide. If you can save 30% you need to save until that 30 can replace the 70.
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May 12, 2015 19:43
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Yes, but that 30% is much more livable at a higher income (as im sure you recognized, just saying). Not that I don't think FI is a cool way of reconceptualizing how you live slash budget.
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May 12, 2015 20:03
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You're right but at the same time lower incomes start to turn into more years not impossible. There are certainly income levels where fi is impossible. But that line is much lower than this thread seems to think. Just having a short 9 year plan or whatever becomes unbearable.
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May 12, 2015 21:20
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not sure i agree. i think if you're at median household income with kids (now or in the future) in any major metropolitan city today, fi is extremely difficult to manage.
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May 12, 2015 21:50
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shrike82 posted:not sure i agree. i think if you're at median household income with kids (now or in the future) in any major metropolitan city today, fi is extremely difficult to manage. Sure, but they don't have to live there. It's another cost to manage, and most FI people wouldn't be caught dead in a major city unless they are making the big money that you can't make elsewhere.
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May 12, 2015 22:14
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oh i include commuters in my comment. to be less combative, it'd be interesting hear any adherents with family and making median income chip in. shrike82 fucked around with this message at 22:19 on May 12, 2015 |
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May 12, 2015 22:16
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shrike82 posted:oh i include commuters in my comment. What's considered median income? I think I'm at 2-3x median in a single income three kid family and just finally have enough free cash flow to open the 401k contributions back up again. Mind you I run a strict YNAB budget to make sure all my expenses are accounted for. I don't think we live lavishly but definitely not as frugal as we could be. I could move to a cheaper area (Detroit suburbs) but really wouldn't save that much for what compromises we would have to make in safety and quality of schools. FI is HARD with kids unless you truly adopt the MMM off the normal grid philosophy. We don't keep up with the Jones's (combined car age is 20 years) and only have my student loan and mortgage for debt. Tough not to put my oldest in soccer when he is in love with playing as well as other interests that we are actively cultivating. (Biking, martial arts, etc) I can comfortably say that I don't believe my lifestyle will inflate much from this spot (except as my twin 3 year olds get hungrier and more active with sports...) so making more money will start opening these possibilities. Fortunately, a ~25% promotion is possibly in my near future so there's that.
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May 13, 2015 00:10
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TraderStav posted:What's considered median income? I think I'm at 2-3x median in a single income three kid family and just finally have enough free cash flow to open the 401k contributions back up again. Mind you I run a strict YNAB budget to make sure all my expenses are accounted for. I don't think we live lavishly but definitely not as frugal as we could be. Wait, you're making 102k-150k/year and can't save for your retirement?
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May 13, 2015 00:36
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If you're making a scant $100,000, the only way to save for retirement is to move to Detroit Suburbs. Sorry bro. It's your son's fault for liking soccer.
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May 13, 2015 00:38
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tuyop posted:Wait, you're making 102k-150k/year and can't save for your retirement? OK, so more like 2x median. I will admit that in an attempt to maximize YNAB monthly flows I pulled back on the 401k contribution but after analyzing the actual cash flows (and not just budgeted categories) and my most recent raise I felt comfortable enough to do it again. My company also gives me a good slug each year for my retirement so securing the short term was a tactical call. After its all said and done I'm hovering around a 15% savings rate. Mostly has been in cash as I'm preparing to sell my rental house and was cushioning against issues with tenants or a rough sale. Kids and a wife do complicate things though, it's extremely difficult to actually live from a spreadsheet in the moment and a lot easier to coach from the sidelines. But I do not make excuses, we have room to cut and have been reducing spend by about 10% per year over the past three. Change is slow with a wife is stressed with small children. Budgets don't get optimized in those times.
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May 13, 2015 00:53
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Yeah, it sounds like, based on MMM and my own imagination, you should hammer out a common financial front before having children so that you can fall back on mutual principles and habits when things get crazy. It really sounds like an uphill battle trying to change habits that already basically work when your life is changing so dramatically.
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May 13, 2015 01:00
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tuyop posted:Yeah, it sounds like, based on MMM and my own imagination, you should hammer out a common financial front before having children so that you can fall back on mutual principles and habits when things get crazy. It really sounds like an uphill battle trying to change habits that already basically work when your life is changing so dramatically. Absolutely, I would agree with this 100% if FI is your number one goal. Otherwise, it's a good north star to drive towards to keep your life from losing financial control.
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May 13, 2015 01:03
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shrike82 posted:oh i include commuters in my comment. Median income for a couple with kids is a lot higher than the median for the population at large.
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May 13, 2015 01:51
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ChipNDip posted:Median income for a couple with kids is a lot higher than the median for the population at large. Yes I'm aware of that. It's not difficult to pull up median household income by size of household. Like I said, it'd be interesting to hear from families making about median (for their family size if you want to be exact) and their experiences with fi.
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May 13, 2015 03:53
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Im about bang on the average spouse is average plus 30-40% and we manage it. We made a conscious choice to live somewhere cheaper. It still has jobs and is still a city with things happening. We have a teenage girl and a dog. Overall savings rate depending on how you count mortgage overpay is 40-50%. The main struggle we have is her family are nearly all awful with money and constantly pressure us to spend money. Cast_No_Shadow fucked around with this message at 07:07 on May 13, 2015 |
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May 13, 2015 07:03
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Cheers. Couple questions if you don't mind - when are you hoping to retire and how do you handle uncertainty with healthcare and your investment portfolio being impacted by downturns?
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May 13, 2015 07:33
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We are aiming for around 9-15 years. 9 is based on the markets giving us a real 6.5% return. 15 is based on them not being so kind. Im invested somewhat aggressively and take the view that this is a risk im willing to take if it falls that we have a downturn just when I want ti retire its a bummer but its ok its not like standard retirement where I wont be able to keep working and I will just keep saving and ride it out. I live in a socialist hellhole so healthcare is much less of a worry for me than in america you would have to ask those guys about that. Also my planning is split into two funds. We have nice pensions that are locked until 60-65+ so we have two funds. One to get us to pensionable age and one post real retirement. Working part time, consulting or other non full time work is very much on the table for us in our fi period. The spouse is a teacher so supply is on the tabls there.
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May 13, 2015 07:52
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shrike82 posted:Is FI primarily an American phenomenon? I'm an american by birth with Icelandic citizenship, but even with universal healthcare, extended maternity leave, and nearly free university education, my husband (an Icelandic native) and I are both extremely interested in being financially independent. Even with better social systems, working for "the man" and all the office politics, and time constraints just get tired. We have a 6 month old and should be FI before he is 7 (and possibly as early as 5). The idea of being able to volunteer for most things he wants to do at school or extracurricular events, travel for longer periods, or undertake hobbies that take more time, are all extremely attractive. LemonDrizzle posted:...yes, that's what it always has been. Living on <50% of your takehome becomes deeply uncomfortable and unpleasant unless your takehome is pretty high. What do you define as "pretty high"? Household we have just about 100k pre-tax, and live in an extremely expensive city with high taxes, and even with a dog and kid, we live off of 30% and save the other 70%. poopinmymouth fucked around with this message at 14:25 on May 14, 2015 |
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May 13, 2015 11:27
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The median household income for a family of 3 in NY (and California incidentally) is about USD$69K. So you're making close to 50% more.
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May 13, 2015 13:37
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I think $100k takehome would be considered quite high anywhere, let alone in a place with universal healthcare and cheap higher education.
Not a Children fucked around with this message at 14:02 on May 13, 2015 |
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May 13, 2015 14:00
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shrike82 posted:The median household income for a family of 3 in NY (and California incidentally) is about USD$69K. Wasn't one of your old gimicks constantly saying that even up to 250k in areas of NYC and California was middle class? poopinmymouth fucked around with this message at 14:35 on May 13, 2015 |
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May 13, 2015 14:33
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"Struggling" on 200 grand -
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May 13, 2015 14:54
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poopinmymouth posted:Wasn't one of your old gimicks constantly saying that even up to 250k in areas of NYC and California was middle class? Class is pretty much a wealth thing not an income thing - if someone makes 250k and doesn't accumulate wealth, is it really meaningful to call them upper class? Is an heir with tens of millions in wealth who makes the median income really middle class?
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May 13, 2015 15:14
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Jeffrey of YOSPOS posted:Class is pretty much a wealth thing not an income thing - if someone makes 250k and doesn't accumulate wealth, is it really meaningful to call them upper class? Is an heir with tens of millions in wealth who makes the median income really middle class? It's all of the above in my opinion. A mix of income, wealth, and lifestyle. Lower Class: Not making it, struggling and stressed Middle Class: Making it, comfortable but still balancing priorities/wants Upper Class: Made it, financial stress is basically removed, rest is self-imposed, minimal to no balancing of REASONABLE priorities/wants No dollar amount affixed to any of these. But those conditions in whatever environment you're in.
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May 13, 2015 15:31
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TraderStav posted:It's all of the above in my opinion. A mix of income, wealth, and lifestyle. But when you say that upper class is that "rest is self imposed" that is a pretty broad spectrum. Personally I feel like anyone making more than 100k household without a staggering number of children (like 8+) is in self imposed middle/lower class if they can't make it work. My initial question was because, to me, "pretty high" starts getting in the 100k per person range, which I agree would be easy to save over 50% on. I just don't personally think we are being all that frugal living on 30,000 USD a year (pre-tax) as a 3 person household. Non consumerist, yes, but hardly suffering.
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May 13, 2015 22:57
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poopinmymouth posted:But when you say that upper class is that "rest is self imposed" that is a pretty broad spectrum. Personally I feel like anyone making more than 100k household without a staggering number of children (like 8+) is in self imposed middle/lower class if they can't make it work. If a person is genuinely making 250k and spending every penny of it, and has little accumulated wealth, it's fine to call them middle class. Their income is ultimately a big, distracting, and irrelevant number if they have few assets to speak of. Trying to set a numerical threshold is missing the point - there's a cultural difference between people who live on the returns of invested wealth and those who rely on a paycheck each month and that's vastly more stratifying than whether you take home 50k or 200k each year. Jeffrey of YOSPOS fucked around with this message at 23:17 on May 13, 2015 |
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May 13, 2015 23:13
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shrike82 posted:"Struggling" on 200 grand -
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May 13, 2015 23:14
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Jeffrey of YOSPOS posted:If a person is genuinely making 250k and spending every penny of it, and has little accumulated wealth, it's fine to call them middle class. Their income is ultimately a big, distracting, and irrelevant number if they have few assets to speak of. Trying to set a numerical threshold is missing the point - there's a cultural difference between people who live on the returns of invested wealth and those who rely on a paycheck each month and that's vastly more stratifying than whether you take home 50k or 200k each year. Except it's far easier for a person making 200k a year to do a few simple adjustments and have room for massive savings, vs a person making 50k a year. If we only make upper class those people making such ludicrous amounts of money that they can buy whatever they want and still be in the clear forever, that's a pretty high bar to set. Personally I say anyone making 200k household is upper class, no matter how poorly they might spend that money on cars/houses/nannies/ski-trips.
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May 13, 2015 23:40
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poopinmymouth posted:Except it's far easier for a person making 200k a year to do a few simple adjustments and have room for massive savings, vs a person making 50k a year. I'm saying it has nothing to do with how much money they are making, it has to do with wealth and is basically independent of income. Income attenuates how easy it is to move between classes but ultimately is not a determinate of class. It's easy to compare the extremes - a heir to 30m working at mcdonalds is obviously upper class, and a guy who makes 300k and has 98% of it eaten up by taxes/debt repayment/whatever obligations such that he has to get payday loans to feed his family by the end of the month is obviously not. Looking at their incomes alone you'd think the opposite. Looking at their net worth predicts it spot on. That's my true point. Jeffrey of YOSPOS fucked around with this message at 23:54 on May 13, 2015 |
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May 13, 2015 23:50
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OldHansMoleman posted:I love the retired banking 180k where only 52k is from investments. What does that even mean? Freeloading pensioners? Drug kingpins? I was wondering about that, too. Savings? Rental income? Here in Australia I've noticed a few financial advisors have been on the radio or TV to say that a million isn't enough to retire on. I get that they're trying to drum up business for themselves, but I think throwing a number out there is counterproductive. I'm sure there's a few high-earning professionals out there who will discover the million they stowed away may not be enough to support their lifestyle, while others may find that they worked all those extras years for money they didn't really need. While the latter is probably a better problem to have, it can mean months or years of unnecessary stress.
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May 14, 2015 00:12
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poopinmymouth posted:But when you say that upper class is that "rest is self imposed" that is a pretty broad spectrum. Personally I feel like anyone making more than 100k household without a staggering number of children (like 8+) is in self imposed middle/lower class if they can't make it work. Having to work to live means you're not upper class.
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May 14, 2015 00:24
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baquerd posted:Having to work to live means you're not upper class. Yeah, I think people have a hard time admitting they're lower class, so they categorize the upper 60th percentile of middle class as upper class. It goes into the idea that people who often need social safety nets the most will also often vote against it. If you make 250k household income a year, yes you'll be comfortable, yes you can save money at a decent clip, but you are also still likely to be ruined financially by a bad medical incident. You still probably have to work to ensure get that retirement, and if you want to reach FI super early you'll have to live at spending rates that are distinctly not upper class. Rurutia fucked around with this message at 03:17 on May 14, 2015 |
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May 14, 2015 03:14
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If you have health insurance that complies with the ACA, it's pretty hard to get totally obliterated with the costs anymore, especially on a 200k a year. Also even having to fleetingly consider that is something that is so American. Number 1, woohoo!
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May 14, 2015 03:23
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Rurutia posted:Yeah, I think people have a hard time admitting they're lower class, so they categorize the upper 60th percentile of middle class as upper class. It goes into the idea that people who often need social safety nets the most will also often vote against it. This seems likely. I would also equate "upper class" with "independently wealthy" instead of some salary goalpost. The former actually has meaning and use, the latter is just a way to make professionals feel better about spending a decade in university.
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May 14, 2015 03:34
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Vahakyla posted:If you have health insurance that complies with the ACA, it's pretty hard to get totally obliterated with the costs anymore, especially on a 200k a year. That's definitely true, especially since people in that salary bracket tend to have excellent health insurance if not self-employed. For FI people, if you need to get your own insurance, you might need another $200k or so in reserves to pay for it more or less indefinitely than if you didn't have to pay the premiums.
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May 14, 2015 03:46
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