Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Ask HN: Net worth of software engineer at retirement?

news.ycombinator.com

Post reply on HN
Print view View original

11–20 of 24 posts

Re: Ask HN: Net worth of software engineer at retirement?

#11

Post by jklein11 »

Your expenses seem highly optimistic.

As a number of other posters have mentioned, your estimate for tax liability seems pretty low.

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.

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't have as much room for international vacations, luxury cars, etc.

Also, family planning will play a big role in this. Children are expensive, you will need to factor in child care, education etc.

Re: Ask HN: Net worth of software engineer at retirement?

#12

Post by jklein11 »

nostrademons wrote: post #10
jklein11 wrote: post #8

Earlier quoted context omitted.

How do you accumulate 2M in 5 years making 250K? If you had no expenses and somehow paid no taxes you would have 1.25M. The thought that you could make an extra 750K in 5 years in interest seems extremely optimistic. Saying that it is not a lot of trouble is a little bit misguided.

Stock price appreciation. Say that your pay is $150K base and a further $150K in RSUs, vesting over 4 years and with periodic refresh grants. Google stock has tripled over the last 5 years, so by the time 5 years has rolled around, assuming you keep your stock, your effective compensation was $600K/year ($150K/year salary and stock grants currently worth $450K/year) for that first year and slightly less for subsequen…

Yeah I totally get that.. current Google Engineers have made a killing with RSUs.

I guess my only issue with your comment is this:

>$1-2M is ridiculous. You can accumulate that much in 5 years without too much trouble.

I would say to rely on 300% growth is a moonshot, especially for a company that is almost 3% of the S&P 500

Calling out the risk of putting all of your eggs in one basket with google stock as an employee of google is an excellent point.

Re: Ask HN: Net worth of software engineer at retirement?

#14

Post by segmondy »

nostrademons wrote: post #10
jklein11 wrote: post #8

Earlier quoted context omitted.

How do you accumulate 2M in 5 years making 250K? If you had no expenses and somehow paid no taxes you would have 1.25M. The thought that you could make an extra 750K in 5 years in interest seems extremely optimistic. Saying that it is not a lot of trouble is a little bit misguided.

Stock price appreciation. Say that your pay is $150K base and a further $150K in RSUs, vesting over 4 years and with periodic refresh grants. Google stock has tripled over the last 5 years, so by the time 5 years has rolled around, assuming you keep your stock, your effective compensation was $600K/year ($150K/year salary and stock grants currently worth $450K/year) for that first year and slightly less for subsequen…

Are you speaking from experience or what you heard?

Re: Ask HN: Net worth of software engineer at retirement?

#15

Post by nostrademons »

segmondy wrote: post #14
nostrademons wrote: post #10

Earlier quoted context omitted.

Stock price appreciation. Say that your pay is $150K base and a further $150K in RSUs, vesting over 4 years and with periodic refresh grants. Google stock has tripled over the last 5 years, so by the time 5 years has rolled around, assuming you keep your stock, your effective compensation was $600K/year ($150K/year salary and stock grants currently worth $450K/year) for that first year and slightly less for subsequen…

Are you speaking from experience or what you heard?

Experience.

Re: Ask HN: Net worth of software engineer at retirement?

#16

Post by nostrademons »

segmondy wrote: post #13

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.

Rent is only $5K in the Bay Area if you want to live in one of the "luxury" complexes or a single-family home. I pay $2600/month for a 2BR townhome that's about middle-of-the-road in quality. Single engineers can do a lot better by living with roommates; if you're willing to double-up in a 2BR or triple-up in a 3BR you can do about $1200/month. (Some of the units in our complex actually have 4 young men living in a 2BR; they pay $650/month in exchange for living like they're in college again.)

The capital-gains portion of your wealth (which can be appreciable; see below) is taxed at 15% Federally and 10% CA.

Re: Ask HN: Net worth of software engineer at retirement?

#17

Post by godot »

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'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.

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've been keeping them. If you're not keeping everything in cash, you probably just lost 50% of your net worth.

Then there's other factors. Maybe you choose to start a family and have a kid or two. You're making $250k, would you resist the temptation to spend money to make your life easier? It's easy to think you have the discipline to to keep your budget. When you'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/mo on baby care, home care helpers suddenly seem worth it, especially since you can afford it.

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'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.

Re: Ask HN: Net worth of software engineer at retirement?

#20

Post by majora2007 »

The general rule of thumb for retirement is to take your expected retirement expenses/month time 25 and have that in your retirement portfolio (cash/stock/bonds/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.

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.

Post reply on HN