Your yearly average income while pursuing F.I.R.E?

[FlaGator]

I suspect that I got a later start than most on the forum being an immigrant. I know I was being ripped off the first few years but I was my choice to come to the USA so I just stayed quiet and worked as best I could. Looking back at my social security report, I earned between $9,900 and $287,000 for an average of $118,000 over the years I worked here. Glad I quit when I did and glad I found this forum, I have learned a lot since joining.

Congratulations!! Glad you found a good home here.

The quintessential American story!

 

[RobbieB]

Well, all that time on that boat seems like a good start!

Yeah Baby!

This is by far (3X) my most expensive boat. The first 4 I owned while I was being frugal -

 

[Puentin]

Have averaged 73K a year since I started working in 1993. Haven't made under 6 figures since 2010. Last 3 years, Foreign Earned Income Exclusion has pushed me much much higher, and making 200K annually.

 

[Franklin]

Like many here Ive found this thread interesting. What I think we are trying to observe (or answer) is whether we saved enough from our average earning. Did we squander too much of those earnings?, pay too much in taxes?, or maybe even save too much?. I looked at my on numbers (35 year average from SSA) and divided that into my NW. I feel good about my NW but must admit I didn't covert a stellar amount to NW. In my case taxes have always been the culprit as well as a spending problem.

For example: a person who averaged $100K in income might have a NW of $1.5MM. Therefore the NW was 15X their average earnings. Is that number meaningful.....I think so.

Examples:
A)Average Income $75K/ $2MM NW yields 26X
B)Average Income $125K/ $ 2MM NW yields 16X
C)Average Income $200K/ $2.2MM yields 11X

Who did the better job building a NW? My argument would be that your stash should be at least 10X your average income (otherwise you might have a hole in your bucket). Conversely, the worker who created a NW 20X their average income probably did a much better job building wealth.

What say you?

 

[aaronc879]

Like many here Ive found this thread interesting. What I think we are trying to observe (or answer) is whether we saved enough from our average earning. Did we squander too much of those earnings?, pay too much in taxes?, or maybe even save too much?. I looked at my on numbers (35 year average from SSA) and divided that into my NW. I feel good about my NW but must admit I didn't covert a stellar amount to NW. In my case taxes have always been the culprit as well as a spending problem.

For example: a person who averaged $100K in income might have a NW of $1.5MM. Therefore the NW was 15X their average earnings. Is that number meaningful.....I think so.

Examples:
A)Average Income $75K/ $2MM NW yields 26X
B)Average Income $125K/ $ 2MM NW yields 16X
C)Average Income $200K/ $2.2MM yields 11X

Who did the better job building a NW? My argument would be that your stash should be at least 10X your average income (otherwise you might have a hole in your bucket). Conversely, the worker who created a NW 20X their average income probably did a much better job building wealth.

What say you?

Doesn't work for those with a pension unless you account for the pension in some way. Pensions are worth a massive amount of money. I would say you would have to add the income from your pension onto the average income while you were working.

 

[Franklin]

good point. I'd think most folks with a pension know the current value and could add to their NW (like u can do with SS). To your point maybe add the income to the average income as well. I have no pension so it was easy to look at this. And honestly felt somewhat deflated in that Ive not plowed as much into my NW and I could have. It is impressive to see so many here build a good size NW with modest earnings.

 

[NoworLater]

Lots of ways to look at it - but I’ve been lucky and able to overcome sins of the past (youth)
- Salary now 8x of 1st year
- NW about 20x average
- Really only figured out you have to buy your retirement 15 years ago, and started in earnest
- I make more than I’m worth .. but less than some other nimwits, so whose to say

Interesting thread

 

[jimbee]

I went on the SS website for data. I used the MEDICARE earnings - because there is no cap on that.

In case anyone is using data from a while ago...

Medicare had the same earnings cap as Social Security through 1990. '91 through '93 Medicare had its own cap, and from '94 on it had no earnings cap. Reference here: https://www.ssa.gov/oact/cola/cbb.html

 

[bada bing]

I reached the magic "35 years of maximum FICA taxes" level, to get the maximum SS benefit.

My last year working, 2020, was also my 35th FICA cap year. It wasn't intentional, it just worked out that way. 42 years total paid in. I started paying into FICA at age 16, but had several no earning years while in college.

 

[brett]

Salary is only one part of it. I know of one person that had a very modest salary all of his working life. But he became a multi millionaire by investing in rental properties in a market that took off. One, then two, then....

Besides a DB pension, the last 10-14 years prior to early retirement did it for me. Significant pay for performance bonus money, exercising stock stock options at the right time, and a golden handshake made a very secure early retirement for me a reality.

 

[wmc1000]

Reading all of these posts, my $40k earned income working average while raising 3 DD's would make me feel poor, DW was less than $10K average since there were mostly $0 years after kids were born starting in 1981, yet here we are, FIRED!

Now that we are receiving SS, it pays all our bills, (with no pensions and a 0% WR!), Whoo Hoo! The old saying, there is more than 1 way to skin a cat is so true.

We may not have had all the toys or fancy vacations but we enjoyed our life's journey, and raised responsible kids. We are blessed and feel very fortunate to have avoided any major financial blunders or have had catastrophic financial situations!

 

[jollystomper]

My last year working, 2020, was also my 35th FICA cap year. It wasn't intentional, it just worked out that way. 42 years total paid in. I started paying into FICA at age 16, but had several no earning years while in college.

Congrats - amazing, that was almost exactly my pattern. I also started paying for FICA at age 16, and had one zero year during college.

I retired in 2018, not thinking about hitting the 35 year maximum. Even though I retired mid-year, my severance pay + post-retirement bonuses push me to the maximum for that year. It was not until I was playing around with modelling what would happen to SS if I did any work after retiring, and noticed my benefit not increasing, did I figure out that I hit the maximum benefit.

 

[brett]

Reading all of these posts, my $40k earned income working average while raising 3 DD's would make me feel poor, DW was less than $10K average since there were mostly $0 years after kids were born starting in 1981, yet here we are, FIRED!

Now that we are receiving SS, it pays all our bills, (with no pensions and a 0% WR!), Whoo Hoo! The old saying, there is more than 1 way to skin a cat is so true.

We may not have had all the toys or fancy vacations but we enjoyed our life's journey, and raised responsible kids. We are blessed and feel very fortunate to have avoided any major financial blunders or have had catastrophic financial situations!

I believe that it is about being happy with your life, happy living in your own skin, being satisfied and thankful for what you have.

I have relatives who will never be happy no matter what they have. They always want more. Always buy more with an eye to what people think of them or how they will impress people. Some have really been living their lives for others around them rather than themselves. As a result they end up with very little....financially or otherwise.

 

[ivinsfan]

I believe that it is about being happy with your life, happy living in your own skin, being satisfied and thankful for what you have.

I have relatives who will never be happy no matter what they have. They always want more. Always buy more with an eye to what people think of them or how they will impress people. Some have really been living their lives for others around them rather than themselves. As a result they end up with very little....financially or otherwise.

In a nutshell you just described my broke friend..in his case he was denied many many things as a child, including food. By his Mother just because she could, not as a matter of money. He's never gotten over it or come to grips with it and I don't think he ever will. If he got another million today he'd blow through that too.

 

[dixonge]

We floundered around for most of our careers. Finally, in a stroke of luck, both landed in govt. work w/ amazing pensions w/ big matching amounts. DW worked there 12 yrs, $60-85K annual. I worked 8, $35-45K annual. Mandatory 7% pension contributions. Only during the last few years did we get out of debt and save up for an ER. We quit our jobs, spent our savings (low six figures), then started drawing pensions in 2017. Now up to 2 pensions and one SS and putting about 1/3 of it back into investments. Our nest egg is back up from $10k to low six figures, targeting $500k.

That's it. That's the post.

 

[Dtail]

We floundered around for most of our careers. Finally, in a stroke of luck, both landed in govt. work w/ amazing pensions w/ big matching amounts. DW worked there 12 yrs, $60-85K annual. I worked 8, $35-45K annual. Mandatory 7% pension contributions. Only during the last few years did we get out of debt and save up for an ER. We quit our jobs, spent our savings (low six figures), then started drawing pensions in 2017. Now up to 2 pensions and one SS and putting about 1/3 of it back into investments. Our nest egg is back up from $10k to low six figures, targeting $500k.

That's it. That's the post.

Good to hear. I see you are not living in Mexico anymore.

 

[brett]

I believe that three things are important.

How much you keep, ie save.

How you make your savings/investments work for you. Your effort and diligence in making every investment dollar count.

How much you earn during your last 10-15 years of work...often the most lucrative for some, often when you have the ability to save more because mortgages are smaller or non existent. Often the most important years if you are fortunate enough to be a member of a DB plan.

 

[Timeisprecious]

We floundered around for most of our careers. Finally, in a stroke of luck, both landed in govt. work w/ amazing pensions w/ big matching amounts. DW worked there 12 yrs, $60-85K annual. I worked 8, $35-45K annual. Mandatory 7% pension contributions. Only during the last few years did we get out of debt and save up for an ER. We quit our jobs, spent our savings (low six figures), then started drawing pensions in 2017. Now up to 2 pensions and one SS and putting about 1/3 of it back into investments. Our nest egg is back up from $10k to low six figures, targeting $500k.

That's it. That's the post.

Very nice job, Dixonge! I'm really glad you're now enjoying ER. Isn't it GREAT?

 

[Timeisprecious]

Yeah Baby!

This is by far (3X) my most expensive boat. The first 4 I owned while I was being frugal -

Ahhhh - life is good!

 

[finnski1]

Reading all of these posts, my $40k earned income working average while raising 3 DD's would make me feel poor, DW was less than $10K average since there were mostly $0 years after kids were born starting in 1981, yet here we are, FIRED!

Now that we are receiving SS, it pays all our bills, (with no pensions and a 0% WR!), Whoo Hoo! The old saying, there is more than 1 way to skin a cat is so true.

We may not have had all the toys or fancy vacations but we enjoyed our life's journey, and raised responsible kids. We are blessed and feel very fortunate to have avoided any major financial blunders or have had catastrophic financial situations!

Good job!. It really is all about managing the expenses and LBYM no matter what they are. You seem to have your priorities and family relationships firmly in place. Nothing better.

 

[Firezone]

I was making 90,000 . My husband had a pension plan and was he was making 70,000 . I had 401k and we made several moves to downsize and pay off debt .

I’m scared to death , could we do this ?

But we still made the best decision in April of 2021.
We retired early and we have health care for three years . When it ends we will be 62 . We will have to pay for it . That’s factored in our plan .

Do you need a million dollars? It depends on how you want to live in retirement .

I can tell you we don’t have a million dollars .
But we have no debt . Zero . Okay ,I have a small Mtg of 78,000 . I need a write off .
But no car payments or student loans or crushing cc debt . Do I live in a big house ? No

I live in a two and one bungalow with a large yard by a bay . We get to travel a little , although covid put a wrench in some of our plans

It’s all about how you want to live out your days .
I had a health scare a year before retirement .
It made me understand that priorities in my life had to shift or I was going to die.

You either make more money or spend less
Either way you have to make the best decision for you , your family and your health .

I sat on the beach yesterday in October ,writing on the beach ,pursuing my dreams of writing .
Good luck !

 

[dixonge]

Good to hear. I see you are not living in Mexico anymore.

Not currently. Wandering around in an RV, avoiding large crowds. But as soon as things settle down we're back to Mexico, and South America, and Europe...

 

[Winemaker]

Enough to live comfortably for 35+ years, with fabulous vacations every other year, and great vacations in between. Saved over 33% of salary since megacorp hire, and 40% of DW's salary, once the kids were in school. Retired at 56, through God's good graces and probably will die before all the money is spent/given away.

 

[wmc1000]

I was making 90,000 . My husband had a pension plan and was he was making 70,000 . I had 401k and we made several moves to downsize and pay off debt .

I’m scared to death , could we do this ?

But we still made the best decision in April of 2021.
We retired early and we have health care for three years . When it ends we will be 62 . We will have to pay for it . That’s factored in our plan .

Do you need a million dollars? It depends on how you want to live in retirement .

I can tell you we don’t have a million dollars .
But we have no debt . Zero . Okay ,I have a small Mtg of 78,000 . I need a write off .
But no car payments or student loans or crushing cc debt . Do I live in a big house ? No

I live in a two and one bungalow with a large yard by a bay . We get to travel a little , although covid put a wrench in some of our plans

It’s all about how you want to live out your days .
I had a health scare a year before retirement .
It made me understand that priorities in my life had to shift or I was going to die.

You either make more money or spend less
Either way you have to make the best decision for you , your family and your health .

I sat on the beach yesterday in October ,writing on the beach ,pursuing my dreams of writing .
Good luck !

Congrats! Looks like you have your priorities straight.

 

[Deej]

The number is all relevant. My past accountant would mention how some of his very high earning clients didn't have a pot to piss in, they lived so high above their means and didn't save much. While on the other hand, some of his clients who make $60K, have great retirement savings.

As someone had posted on this site or another one, "It's not how much you make, it's how much you keep!"