> Second, by definition median is not a competitive salary.
Yes, it is. For the field as a whole? Yes, it absolutely is. For specific segments of it? No. Some of those are higher. And others are lower.
> 20 years of savings at 30% of income will get you $2M. Which is not a fat retirement, but still doable.
Healthcare complicates early retirement badly in the US. Retire at (say) 45 with only $2m in the bank and you are... gambling. To put it mildly. Even if you live reasonably frugally.
I do not agree. If someone said "bringing regular salary in tech" I'd agree that median should be used. "Competitive" means we are talking about higher percentile within the field.
> Healthcare complicates early retirement
You don't have to stay in the US when retired. With 4% SWR one will be getting $80K/year. Which is more than median household income in the US and majority of the other countries. I am not advocating retiring at 45 with $2M, I am just saying it is not that crazy.
I've always considered "competitive" to be a signal of "as close as possible to our average competitor". It doesn't mean good or high. When a job offer says "competitive salary", it's not a good sign. I assume they mean around average, maybe a little bit below average. If the job offer was offering a significantly great salary, the company would boast about it as more than "competitive."
Yes, absolutely - though it's a difference from colloquial English, where it does normally mean "good"/"better than average". Businesses just use it as a weasel-word.
A lot of cheap countries provide good healthcare for a fraction of american costs. Also, not sure why one need a safety net when they already have a stable income which is multiple of what any such net can provide.
Very true. This is a very big reason I left the US in my 40s, while I'm still working and can acquire permanent residency and later citizenship by having a job with a local company. I didn't want to be stuck in the US when I'm at retirement age and healthcare costs are unaffordable even with a decent nest egg, where a major procedure could wipe out all my savings.
> Healthcare complicates early retirement badly in the US. Retire at (say) 45 with only $2m in the bank and you are... gambling. To put it mildly. Even if you live reasonably frugally.
100% this. I'm almost 50, and as I look towards retirement, I think I should try to find a cushy job that'll last me to 65 without causing too much stress, because until you qualify for Medicare it's really hard to afford health insurance premiums unless you're fashionably wealthy.
> Healthcare complicates early retirement badly in the US. Retire at (say) 45 with only $2m in the bank and you are... gambling.
Uhh... Why? A very good health insurance is about $10k a year (PSA: the open enrollment period for 2024 has started today).
Even if you are unlucky to get a chronic condition that needs expensive care, that's still capped at around $6k a year by the out-of-pocket maximum.
So that's $16k a year per person maximum, over 20 years (until Medicare eligibility) that's $320k. If you want to include family, that's going to be around $500k. And that's the worst case.
It's going to be a huge chunk of the expense, but not insurmountable.
As a retiree, you can probably arrange to qualify for a free silver plan under the ACA. There are no asset tests, only income. This is true for other subsidies too. If you've mostly accumulated assets in excluded locations, you can also qualify for college tuition subsidies.
Heh. I worked at a startup, and they were sponsoring a Green Card for me.
They had to raise my salary to $165k because this was the _minimal_ allowed competitive salary for my position ("Senior Software Developer"), and the USCIS doesn't take stock grants into account. This was 2 years ago.
What's the distribution of experience though? In a fast growing field, most will be early in career, which will push this metric down relative to established fields with little growth.
The question's whether 20 years of a "competitive" tech salary is enough money to retire.
I think one must have a very-skewed, bubble-bound definition of "competitive" for that to be plausibly true. Programming jobs don't pay enough to grant easy-mode early retirement for most of our field—even in the US.
Ok, sure, that's one category and some of the others do have a higher median. Some of what we think of as "programmers" or "developers" will actually land in other categories, and also some we don't, will too.
The median income is ~$30,000. That means you have ~$70,000 to invest each year. If we assume a 5% rate of return, you'll have ~$2MM after 20 years. At the same rate, that will continue to provide you $100,000 each year in retirement. Bad luck can happen, but generally speaking retirement should have been quite easy with that kind of income.
I love your optimism. Some may be able to live off software at 30k/yr making 100/yr "somewhere", but not most places. My rent started at around 40% of my take home and adding taxes alone, my pay rate was well under this 70% fantasy which doesn't even begin to address any other "incidental" living expenses like food, transport, children, elderly, school loans, etc......
You were paying ~$3,000 per month for rent 20 years ago? I remember renting a place 22 years ago for $250 per month.
Maybe you were in some super insane cost of living area, but if that's the case, why would you accept just an average developer salary? Average salaries are for average places.
You won't get much social security when you hit "retirement age" if you retire after only 20 years of working at that level of income, so you'll need more savings at that age than others do.
$100k/yr is a 5% withdrawal rate on $2 million, which might be a "safe" rate at normal retirement age (debatable) but is risky as hell if you start doing it at 45 and don't plan to die in your 60s.
If you've been saving that aggressively (as cash/investments), you won't own your own house, or at least, you definitely won't be anywhere near paying it off. That significantly raises your costs in retirement.
You have significant risk from healthcare costs until you hit medicare age (and even then...). You're probably looking at $5k-10k a year in premiums (individual) at age 45+, and still five figures of annual risk exposure despite already paying that much.
Retiring on $2m at 45 would be very likely to end in failure, even as an individual supporting only yourself.
Yes, that's what the previous comment said. Of course, you don't need anywhere close to $100k, so you would still be reinvesting the bulk of it, just as you did throughout your career. That will see your returns continue to increase as you grow older.
> you won't own your own house, or at least, you definitely won't be anywhere near paying it off.
You'd have no trouble buying a home on a $30k income 20 years ago. They could barely give houses away back then.
> You have significant risk from healthcare costs
You still have $70k to play with each year. If you have to miss a year of reinvestment it won't hamstring you that much. As before, bad luck happens. It is possible you are the unlucky one. But generally speaking the money is there.
> You'd have no trouble buying a home on a $30k income 20 years ago. They could barely give houses away back then.
I made a bit more than that 20 years ago and can guarantee you it wasn't anywhere near enough money to buy a house. Finding affordable apartments to rent on that salary was difficult enough. I lived in New Orleans, which wasn't a high cost of living city at the time. Maybe if you lived in the middle of nowhere that would be doable, but almost certainly not in a city.
> You'd have no trouble buying a home on a $30k income 20 years ago.
You're absolutely right - the banks would give you a loan you couldn't actually afford. I seem to recall this leading to some sort of financial problem in 2008, unfortunately.
Well, it'd also represent a raise for about 50% of programmers in 2022.
[EDIT] Further:
"The lowest 10 percent earned less than $54,310, and the highest 10 percent earned more than $157,690." (in 2022, still).
The ones who can retire in 20 years are making (ballpark) top-5%-of-field wages most or all of that time.
[EDIT EDIT] I didn't pick the best category for this, but the numbers only skew up 25ish % for the most-relevant one. Not a single BLS computer job category has a median particularly close to "retire in 20 years at this income" money. FAANG, finance, and a small segment of the startup market that's in that same category—yeah. Almost all the rest? No.
What is a competitive salary? Do you mean the small fraction of programmers that work for FAANG companies? Or do you mean the more normal salaries the vast majority of programmers make at non-FAANG companies?
I’ve worked for the past 20 years and am as far from not needing to work anymore as my first day. Well, that isn’t strictly true, but my 401k only has about 33-50% of what it needs for me to retire. I have no savings beyond that.
Maybe a little overly sarcastic, but there's a real point there:
Not everyone can get into med school (~5% acceptance rate?), but even more disturbingly some people get out of med school with tons of debt, and then either fail their step 2 or don't pass quickly enough to get a residency. Or fail boards after residency. Then you're in a really shitty position, with hundreds of thousands of debt but no ability to practice medicine.
