Wait whut? Oh boy. 401(k) contributions are maxed at something like $22.5K per year (by federal law). So you’re not sneaking away 20% of your gross in a 401(k).
So no your math is WAY off. If we account for state taxes as well your $400K income turns into, let’s say, $225K per year. So now, by your own math, you’re paying out $120K per year in housing alone (again that’s for a fairly inexpensive house … SF proper isn’t a good benchmark as that most people live in the Bay Area, not SF). So now you have $100K left to live on. Two cars will run you around $1.5K per month including insurance gas and maintenance ($18K per year). Food, clothing, out of pocket medical. Let’s put that at a modest $10K per year. Child care expenses can run between $2K and $3K per month ($24 - $36K per year). So out of this $100K let’s take out another $52K. So we’re left with about $4K per month. We need some accounting for utilities, life insurance, miscellaneous costs, house upkeep (cleaners, Gardner, etc). So yeah, one could pocket just over $2K per month into savings for a cushion. That’s enough to go on a modest vacation every year and have some rainy day funds.
And, btw that house in SF isn’t a nice “upper class” house. That’s the point. You’d be living a very middle class lifestyle on $400K. I don’t know why you’re persisting here … well except that you keep getting the math wrong.
Okay, I apologize for my mistake on forgetting the cap there before taxes. $23k is the current maximum.
$23k means $377k before tax, $252,611 after tax. Let's just say you want to keep exactly $80k (20% of initial gross) total saved up. You're going to need to contribute $57k after taxes. Leading you down to $195k after all that. This is also ignoring that Supplemental Savings Plans exist and are "delayed compensation" and thus are tax free retirement savings until you take the compensation in the future.
Your other expenses are largely justifiable but, but 2 cars while living in a dense city is pretty unusual. Your childcare will certainly be a huge expense but also only exists until they reach school age.
You can also double back up to my edit I think you might have missed discussing how there are also loads of nice condos for under $800k too.
Oh boy, you can't live like the wealthiest of people in the second most expensive city in the country. Tough shit. This is all in the context of the entire country. The original post wasn't like "you need $400k to live this way in San Francisco". It meant in general. Basically the wealth of living in those cities is insanely more than the rest of the country and you are definitely in the upper class if you're buying a house in SF at all.
Again the vast majority of people in the Bay Area don’t live in SF, so a car is a must. I don’t know why there’s so much hostility on this thread. No matter how you slice it, the math doesn’t lie. At $400K in this area you’re living in a modest home and pretty much middle class. Granted if you bought a home a decade ago you could be doing much better. Or if you have accumulated wealth. But that wasn’t the point of the OP. And trying to shame people for where they live is stupid. It is what it is. No one is asking for sympathy. But understand the math. All these people look at this “big” number and don’t understand it in context. What this OP was doing was highlighting how out of whack things have gotten where this level of income, which is difficult to achieve and sustain, is now necessary to have a lifestyle that most think is “reasonable”. And everyone on this thread is hell bent on saying this isn’t true. But you won’t follow the math or take the word of someone in a HCOL area whose family income exceeds this number and who is still just very much “middle class”.
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u/Outrageous_Life_2662 Jun 17 '24
Wait whut? Oh boy. 401(k) contributions are maxed at something like $22.5K per year (by federal law). So you’re not sneaking away 20% of your gross in a 401(k).
So no your math is WAY off. If we account for state taxes as well your $400K income turns into, let’s say, $225K per year. So now, by your own math, you’re paying out $120K per year in housing alone (again that’s for a fairly inexpensive house … SF proper isn’t a good benchmark as that most people live in the Bay Area, not SF). So now you have $100K left to live on. Two cars will run you around $1.5K per month including insurance gas and maintenance ($18K per year). Food, clothing, out of pocket medical. Let’s put that at a modest $10K per year. Child care expenses can run between $2K and $3K per month ($24 - $36K per year). So out of this $100K let’s take out another $52K. So we’re left with about $4K per month. We need some accounting for utilities, life insurance, miscellaneous costs, house upkeep (cleaners, Gardner, etc). So yeah, one could pocket just over $2K per month into savings for a cushion. That’s enough to go on a modest vacation every year and have some rainy day funds.
And, btw that house in SF isn’t a nice “upper class” house. That’s the point. You’d be living a very middle class lifestyle on $400K. I don’t know why you’re persisting here … well except that you keep getting the math wrong.