Ask HN: Net worth of software engineer at retirement?

$1-2M is ridiculous. You can accumulate that much in 5 years without too much trouble.<p>The challenge with extrapolating this out to retirement is that tech changes very fast, and fortunes can fall just as rapidly as they rise. Particularly if they&#x27;re held in stock compensation, which Google and Facebook rely on extensively.<p>Many Sun Microsystems engineers were worth &gt; $10M at the peak of the dot-com boom. A couple years later and they were insolvent, with tax bills larger than their net worth. A decade after that and their employer didn&#x27;t exist anymore. Of course, a significant number of them quit and joined Google when their employer&#x27;s stock crashed, and those folks have net worths &gt; $100M or so.<p>If you extend out to timescales of 35 years, you not only have to worry about your employer disappearing, but you also have to worry about your industry and municipality disappearing. Right now folks who own houses in the Bay Area are sitting pretty - but what if the Bay Area goes the way of Detroit, with the tech industry obsoleted by foreign competition and houses not sellable at any price? The question isn&#x27;t quite academic: Detroit had its heyday in 1950, and 35 years later, by 1985, it had lost 40% of its population and its major companies were non-competitive.

Your tax estimate seems low. Remember that on top of federal tax, there&#x27;s California income tax, which could hit 10% if you&#x27;re single[1] (assuming most Google and Facebook employees are in California), plus real estate tax if you own a house. If you have significant income&#x2F;gains from your investments, that could push you into a higher tax bracket.<p>Also, your monthly expenses could be significantly higher if you have children (larger home, food, clothing, education, etc.), which most people probably end up having at some point.<p>Also, does your 8% growth rate on the S&amp;P 500 account for taxes and inflation? (Unless 100% of your savings are in a 401(K), you&#x27;ll be paying tax.)<p>[1] <a href="http:&#x2F;&#x2F;www.tax-rates.org&#x2F;California&#x2F;income-tax" rel="nofollow">http:&#x2F;&#x2F;www.tax-rates.org&#x2F;California&#x2F;income-tax</a>

Assume $5k in monthly expenses? The typical Google or Facebook engineer lives in the Bay area where rent goes for $5k. Tax is not 25%. California and Fed tax is more like 45%. Stop this rubbish. If you are going to answer this at least make it realistic.

As others have mentioned your tax rate is way too low. And do not forget Social Security.<p>Secondly you have to consider that most peoples spending rises to the level of their income. It takes a lot of will power to cook dinner verses ordering out ... EVERY DAY.<p>Third are you planning to get married? Have kids? They will ensure your take home pay is about 5% less than what they can spend. Relatives in need? If you got money they have needs.<p>If you are making $250K a year (20K a month) before taxes, after taxes you are probably pulling in 12K a month. Do you want health insurance? Dental insurance .... If you are pulling in that kind of cash you probably live somewhere expensive - they do not pay that much in Mississippi or Mexico. Rent &#x2F; mortgage 3K maybe even 4K.<p>So after rent &#x2F; mortgage and insurance you are down to at most 7K. Cable? Power? Water? Internet? Game subscriptions? Are you going to drive that old car? Vacation anyone? Oh right you are saving for when you are 55, so you will stay at home for vacation. Add in a gym membership. If you are going to save your money for when you are older, then you will want to keep fit.<p>So what do you think about those old clothes you wear?<p>Finally as your investment egg grows, what about the taxes? Yes they charge you income tax on a lot of it. If not now then when you pull it out.<p>All of that said, you could make a great startup, or join a great start up. Which could make you rich, but that is like the lottery. But that is hope, and hope is not a plan.<p>To keep from overspending, which would put you in the minority, try to squirel your money away in a retirement fund. You will have to wait to 59.5 to start pulling it, but it has a better chance of being available.

Your expenses seem highly optimistic.<p>As a number of other posters have mentioned, your estimate for tax liability seems pretty low.<p>You also mention that you included all of your tax mortgage payments as going toward your net worth. Your mortgage payment will include more than just the principle and would want to include that in your estimate for monthly expenses.<p>If you are not in an expensive city (i.e San Francisco, NYC, etc) 5K could be a very comfortable to live on. In a more expensive city it is still doable but likely won&#x27;t have as much room for international vacations, luxury cars, etc.<p>Also, family planning will play a big role in this. Children are expensive, you will need to factor in child care, education etc.

Your tax calculation is low I think - looks like $250k would put you in the 33% band, let alone any other regional tax calculations.<p>$60k&#x2F;year spending for the rest of your life is very ambitious for a high CoL area. I don&#x27;t think you&#x27;re accounting for medical insurance, car ownership, home ownership fees, children, a spouse that earns less than you, etc etc. Costs go up as you get older.<p>I also don&#x27;t think you&#x27;ve accounted for inflation.<p>Please also keep in mind that huge Google&#x2F;Facebook&#x2F;Bay Area salaries are a historical anomaly and will not persist throughout your entire career.

The general rule of thumb for retirement is to take your expected retirement expenses&#x2F;month time 25 and have that in your retirement portfolio (cash&#x2F;stock&#x2F;bonds&#x2F;etc). You can then pull out 4% and the money should last you at least 30 years, generally forever. You can check FIRECalc for simulations.<p>My only thoughts on your situation is you are assuming high return rates, and not a realistic retirement amount. You need to remember, you must pay out of pocket for health care, so budget 1k per person for that.

There are too many variables that will change this by as much as an order of magnitude. On the high side, say your timing was good and you made enough money to buy a house around 2012, after working for a few years. You buy a house in the peninsula. By 2018 your house value doubled. Maybe the house market doesn&#x27;t crash anymore like back in 2009; and it goes up even more in the next few years. Your house went from $1m to $5m by 2022, and your net worth just went up by that much.<p>On the low side, maybe the economy crashes like in 2000 and 2008, and that takes both your stocks and house with it. Maybe your FAANG comp has mostly been in stocks and you&#x27;ve been keeping them. If you&#x27;re not keeping everything in cash, you probably just lost 50% of your net worth.<p>Then there&#x27;s other factors. Maybe you choose to start a family and have a kid or two. You&#x27;re making $250k, would you resist the temptation to spend money to make your life easier? It&#x27;s easy to think you have the discipline to to keep your budget. When you&#x27;re getting 4 hours of sleep a day, waking up every 3 hours to feed and change diapers, you might think differently and spending $5000&#x2F;mo on baby care, home care helpers suddenly seem worth it, especially since you can afford it.<p>Lastly, how many FAANG engineers you know plan to stay in their company for 30 years -- heck, how many even stay more than 5 years? Almost every single FAANG engineer I know don&#x27;t stay that long. Most are ambitious and try to start a startup after 5-8 years. Maybe a FAANG job is just that boring and no one can take it for very long? They take a hit with low salary for a few years, and then 90% startups fail.

I noticed many people have found flaws in my assumptions and estimates, but nobody wants to post an alternative estimate?<p>Even if you increase taxes to 40% (in reality even in CA the effective tax rate as opposed to marginal is not that high) and increase expenses to $7K per month (excluding housing), the final net worth still falls in the range I estimated, i.e., north of $7 Million.<p>Any Facebook or Google engineer reading this, how much do you expect to have when you retire?

There is a lot of pessimism here, and some of your estimates (such as taxes) may (or may not!) be a little off.. but achieving something well north of $2 million by 55 is very attainable based on an income of $250k&#x2F;year. This is why early retirement blogs have grown in popularity in the last 10 years -- many of us in these kinds of situations are more interested in living frugally (I spend much less than $5k&#x2F;month), saving and investing a huge percentage of income and then retiring after perhaps 10-15 years of work.

Here&#x27;s a networth estimator spreadsheet. Plug in your own numbers to see how much you will have when you retire. (Note: use File &gt; Download as .xlsx to download the spreadsheet)<p><a href="https:&#x2F;&#x2F;docs.google.com&#x2F;spreadsheets&#x2F;d&#x2F;1Ryu_-mVYxSdJbW8lmf1z6tiOdNSYP3HaLu0YnW5-fCo&#x2F;edit#gid=0" rel="nofollow">https:&#x2F;&#x2F;docs.google.com&#x2F;spreadsheets&#x2F;d&#x2F;1Ryu_-mVYxSdJbW8lmf1z...</a>

Even if the question is legitimate, I find it a bit sad because it implies you find your current life boring and you expect to be happy with enough money at retirement.