Is $200k the new $100k?

[retire2020]

Yes. It's new 100K for me. I made my first 200K in 1998 and it's still 200K..so with inflation it sure feels like 100K...

 

[jkern]

I've lived in the SF bay Area all my life and generally I'd say $200k is the new $100k. While I'm not working anymore, it appears that $100k is a good income, $150K is very good and $200k is a high earner.

 

[ESRwannabe]

Eh, when my wife quit her job as a senior software engineer this year (not a project lead or really in charge of anyone), she was pulling in over $260k.

Makes me wonder if I made the right decision going with a government job in a low income region. I graduated into the dot com implosion which played a big part in my decision. Back then I couldn't tell which internet company would survive or become roadkill. A safe and secure gov job with a COLA pension looked like a good bet at the time.

Oh well, I have 15 years vested in the pension. I'm not going to leave that until I am FI (probably 3 more years).

 

[ESRwannabe]

Seems to me that take-home pay is what matters. Big taxes at the $200K - $400K level tend to shrink the thrill of it all.

Amethyst

Where I live there are no state income taxes and minuscule city taxes. It makes a big difference.

My brother makes almost $30k more than me in another state but his take home is about the same as mine after fed/state/city taxes. He lives in a big city while I essentially live in a suburb of one.

 

[RunningBum]

I disagree with these numbers. DS tells me starting salaries for software engineers with 3 years experience are 120K in start ups not including stock options. Starting salaries are higher in established companies such as Google/Apple/Facebook, etc.

Sounds too high. It's been 4 years but I was at that kind of megacorp and we were on the same scale as the Silicon Valley people and I don't think salaries have soared that much. I could be wrong.

Not sure how accurate glassdoor is, but the numbers they show seem more reasonable.

Google Salaries | Glassdoor

 

[sengsational]

I'd give Glassdoor more credence than the few "mine is bigger than yours" posts here, lol!

 

[dallas27]

I'd give Glassdoor more credence than the few "mine is bigger than yours" posts here, lol!

+1, a lot of very myopic posts here. I travel the country consulting to CIO/CTO's in medium/large business and government, helping reduce labor costs with capital spend, with full access to the corps labor costs per position, but what do I know about salaries.


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[dunkelblau]

Is $200k what it takes now to say you've made it?

I remember the old rule of thumb where "making it" takes an annual salary more than one third of the median home price in your town or city, so it's a bit higher than that where I live. Of course these days with dual incomes and low mortgage rates maybe it doesn't need to be this high?

 

[mrfeh]

IMO, $200K is a helluva salary, even in SF or NY.

 

[hnzw_rui]

I remember the old rule of thumb where "making it" takes an annual salary more than one third of the median home price in your town or city, so it's a bit higher than that where I live. Of course these days with dual incomes and low mortgage rates maybe it doesn't need to be this high?

Median home price in our zip is around $685K. I guess you don't have it made if you're only getting $200K much less $100K.

A $100K salary in high COL areas certainly doesn't feel like it's enough if you need to save for down payment, retirement and emergency funds at the same time. I make less than that so I'm prioritizing tax advantaged retirement savings. If house prices drop to reasonable levels, then I'd consider a 401K loan and raiding the Roth.

 

[HFWR]

Was approaching (slowly...) $100k until Megaconglomocorp discovered how much I made...

 

[stepford]

Makes me wonder if I made the right decision going with a government job in a low income region. I graduated into the dot com implosion which played a big part in my decision. Back then I couldn't tell which internet company would survive or become roadkill. A safe and secure gov job with a COLA pension looked like a good bet at the time.

Oh well, I have 15 years vested in the pension. I'm not going to leave that until I am FI (probably 3 more years).

Rather than gaze wistfully at the greener grass of industry salaries you can value your pension directly as part of your compensation. Friends of mine teaching college in the CA state system make about $100K/yr, and sometimes make envious comments about the somewhat higher salary I receive in industry (though my pension is much worse and will freeze after this year). The annual pension they will receive, however, increments by about $5K for each additional year they work. The value of a $5K pension as an annuity is about $70K (depending somewhat on the age of the recipient). So I believe they could think of their total compensation as comparable to that of someone making $170K with no pension - right in the range of what their industry peers make.

And suddenly the disparity between industry and government compensation levels disappears (if not reverses).

 

[MikeWillRetire]

Rather than gaze wistfully at the greener grass of industry salaries you can value your pension directly as part of your compensation. Friends of mine teaching college in the CA state system make about $100K/yr, and sometimes make envious comments about the somewhat higher salary I receive in industry (though my pension is much worse and will freeze after this year). The annual pension they will receive, however, increments by about $5K for each additional year they work. The value of a $5K pension as an annuity is about $70K (depending somewhat on the age of the recipient). So I believe they could think of their total compensation as comparable to that of someone making $170K with no pension - right in the range of what their industry peers make.

And suddenly the disparity between industry and government compensation levels disappears (if not reverses).

That's how I look at it. Industry pays better in your working years, government pays better in your retirement years.

 

[Totoro]

That's how I look at it. Industry pays better in your working years, government pays better in your retirement years.

More control in industry though over retirement savings. Some EU countries have cut pensions by 10%, sometimes even 25% past few years.

 

[hnzw_rui]

Friends of mine teaching college in the CA state system make about $100K/yr, and sometimes make envious comments about the somewhat higher salary I receive in industry (though my pension is much worse and will freeze after this year). The annual pension they will receive, however, increments by about $5K for each additional year they work. The value of a $5K pension as an annuity is about $70K (depending somewhat on the age of the recipient). So I believe they could think of their total compensation as comparable to that of someone making $170K with no pension - right in the range of what their industry peers make.

And suddenly the disparity between industry and government compensation levels disappears (if not reverses).

The $5K a year in pension at $100K annual salary seems unusually high. I think even public safety officers only get 3% per year max.

For our retirement system, we get 2% so at $100K salary, that's more like $2,000 pension per year of service. Another thing, we don't contribute to social security but have mandatory DB plan contributions. Our contribution is 10% vs 6.2% for SS. With private companies, I remember reading somewhere that DB plan benefits and 401k match is on top of the salary. The COLA on our pension is good but isn't quite as generous as SS. COLA is either CPI or 2% whichever is lower.

That said, the fringe benefits are really nice (holidays, medical, sick leave, vacation).

 

[stepford]

FWIW I'm pretty sure it was a nonlinear scale, with pensions increasing by 4-5% of salary annually once one had 25 years of service at age 55+, but growing more slowly in the early years of their career. I only know a couple of examples and then not in all details, but know one of these folks retired recently with 25 years in at about 60% salary at age 62 (which works out to 2.4%/yr overall), and several older folks got 90-100% pensions with 35 years in (but they may have been grandfathered into an earlier more generous plan).

By way of comparison, with 28 years in industry I will retire at age 56 with a non-COLA'd pension of 22% of my final salary - and that's 22% more than anybody hired after 2003 will get. I'm not complaining, but as far as I can see the grass is about equally green on both sides of the industry/government fence.

 

[nash031]

Is $200k what it takes now to say you've made it?

I'm not sure there's any salary where I'd say I've "made it". There is a net worth/invested assets, however. As long as you're making a salary, you're working for someone else, which seems to be the opposite of "made it".

As others have said, $200K for some may go as far as $75K for others...

 

[hnzw_rui]

FWIW I'm pretty sure it was a nonlinear scale, with pensions increasing by 4-5% of salary once one had 25 years in at age 55+, but growing more slowly in the early years of their career. I only know a couple of examples and then not in all details, but know one of these folks retired recently with 24 years in at 60% salary at age 62 (which works out to 2.5%/yr), and several older folks got 90-100% pensions with 35 years in (but they may have been grandfathered into an earlier more generous plan).

By way of comparison, with 28 years in industry I will retire at age 56 with a non-COLA'd pension of 22% of my final salary - and that's 22% more than anybody hired after 2003 will get.

Sounds like it could be an early retirement reduction factor then. Typically, the retirement multiplier is fixed (usually at 1.5-3% per year of service). However, if you retire earlier than normal retirement age, there's an age-based reduction factor so instead of getting 2%, you could be getting less than 1% per year of service if you retire before a certain age.

For example, in my case I get 53% of final salary if I ER at 53. However, if I wait until 55, I get 65%. That's a 22% pension increase just by waiting 2 more years to reach normal retirement age. I can also defer service retirement (quit at 53, don't collect pension until 55) which gives me 61%. Just need to bridge living expenses from 53 to 55 using other savings.

 

[Beardog]

Yes, in the same sense that $2 million in a retirement account is probably now the new $1 million.

 

[daylatedollarshort]

A python programmer here would make around $136K a year:

Python Developer Salary in San Francisco Bay Area, CA | Indeed.com

 

[hnzw_rui]

Yes, in the same sense that $2 million in a retirement account is probably now the new $1 million.

Too true. Would be quite difficult to live on just $40K a year (4% SWR) before taxes in Los Angeles unless you have a paid off house.

 

[kgtest]

I would say 100k salary won't go as far as it did in 2000.

Location makes a difference. I have a buddy earning 160k/yr working in San Jose as Sr SE. I earn 130k (34yo) living in Midwest as a Sr. Guy but they sure do make you earn it after 100k... I don't put in too many extra hrs but I am definitely on the big projects.

 

[eta2020]

100k is small money for Software Engineer in Silicon Valley or Route 128.

 

[Walt34]

As noted, where one lives in the country has a lot to do with what's considered fair salary levels. Cost of living in Silicon Valley and Manhattan is entirely different from somewhere in the Mid-West.

Exactly. Not too far from here you can buy a SF house for five figures. It'll be a starter-type home, but nice, and not in a slum or in anything near tear-down condition.

I get the sense that Silicon Valley hasn't seen five figure home prices for 20+ years.

 

[Fermion]

Exactly. Not too far from here you can buy a SF house for five figures. It'll be a starter-type home, but nice, and not in a slum or in anything near tear-down condition.

I get the sense that Silicon Valley hasn't seen five figure home prices for 20+ years.

This is true, but in 20 years the WV home will still be five figures, while the person who bought the 6 figure CA home will be selling it for well into 7 figures.