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How much is enough to FIRE in San Francisco?

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Re: How much is enough to FIRE in San Francisco?

#41

Post by y-curious »

foooorsyth wrote: post #23
the_gipsy wrote: post #5

Companies are essentially subsidizing $1M (or more now?) mortgages if you are willing to go into their SV offices. You don't have to retire there! Just sell the house and move on.

You don’t have to retire there, but it turns out that the Bay Area has one of the most pleasant climates in the entire world for humans and it is coupled with some of the most stunningly beautiful and varied terrain in the world. It’s hard to leave and call anything else retirement if you’re just considering climate, weather, and nature. My family did end up leaving the area but it was hard. I am still working. Would…

Where did you move to, if you don't mind my asking? It's hard to leave here for sure :'(

Re: How much is enough to FIRE in San Francisco?

#42

Post by whimsicalism »

diob wrote: post #11
dataflow wrote: post #4

Doesn't this depend heavily on inflation? With the ballooning US debt, how do people imagine the government will continue to pay interest without massive inflation in a few decades?

Presumably their investments would inflate as well. Unfortunately, the asset owning class is protected by inflation in that way. It's the lower / middle class who have cash savings that get wrecked by inflation.

usually inflation helps the lower class - this has been the case historically and also the case for the most recent inflation

Re: How much is enough to FIRE in San Francisco?

#43

Post by hparadiz »

dinobones wrote: post #34
photonbeam wrote: post #16

Earlier quoted context omitted.

I hadn’t heard of this, what are some example companies I can look at?

I think what he means is: Some SF companies pay very large compensation packages so that their engineers can afford to purchase homes. I don't think this is true. There are only a handful of companies that pay $500k+ TC for senior+ engineers. The vast majority of companies top out at $250k, be it F500 or startups (not including their worthless "equity"). You can't afford a home, on your own, at $250k in the Bay Area.…

250 is no where near enough to buy in SF. Maybe if you pinch pennies and save for 10 years. Or if you can put up a lot of equity up front.

Re: How much is enough to FIRE in San Francisco?

#44

Post by m3kw9 »

Using a a multiple to guess is highly inaccurate. You also cannot use stock market as a way to accurately assume it will nullify inflation. You need to use some sort of TIPS treasury as a baseline calculation, not a volitle market. If you are messing around with the stock market, you could screw it up when you feel lucky or panic.

The best way to retire is to always have some sort of backup skill income and do some side jobs on your own leisure to keep it sharp. With any number you can still go under for whatever reasons and when you do, you are really screwed

Re: How much is enough to FIRE in San Francisco?

#45

Post by I_o_IllI__o_I »

jwells89 wrote: post #35
thefaux wrote: post #2

The funny thing is that I just plucked 5MM out of a hat for my number 5 or so years ago when asked and I guess this analysis supports my intuition. The one big problem with renting is instability. If the owner decides to sell the property, it may be difficult to find something equivalent on your terms or you may be forced to hop around a few times before settling.

Stability is one of the reasons why I bought a few years ago (albeit, not in the SF Bay Area). That ever-looming possibility of needing to move again come lease renewal time, whether that be due to rent hikes or the landlord deciding to do something else with the property wore on my nerves. Of course home ownership isn’t all roses either, but I can at least rely on and plan around my mortgage payment not changing and…

>That ever-looming possibility of needing to move again come lease renewal time, whether that be due to rent hikes or the landlord deciding to do something else with the property wore on my nerves.

That sounds dreadful and that's why there should be laws against landlords kicking out long time tenants at their whim. Your home should be a safe space and having that sword of Damocles constantly looming above your head must feel awful especially in lower income households.

Re: How much is enough to FIRE in San Francisco?

#46

Post by whartung »

starttoaster wrote: post #18
coryrc wrote: post #10

Earlier quoted context omitted.

Not if you bought a couple decades ago or inherited from your parents.

Not sure how it works in every state, but my property taxes are liable to increase year to year, for a home I own. Are you saying this is not the case in California? They just true up property taxes for a property upon next sale?

Yes. Proposition 13 is famous for triggering sweeping tax changes across the country.

In CA, Prop 13 effectively caps how much the assessed value of your home can increase each year to 2%.

So over time, the tax burden of long term property is much less than the current property value.

When the house changes hands (generally) the house is reassessed to the market.

There was also new laws passed a few years ago where a family can bring their current tax basis forward to a new home.

There’s also the phenomenon of businesses buying other businesses, but leaving them formally intact so that their assets don’t “change hands” thus maintaining the inherited tax basis.

Re: How much is enough to FIRE in San Francisco?

#47

Post by slg »

adam_arthur wrote: post #27

The 4% rule as a plan is not very smart in the current environment. A few years ago it was difficult to get safe higher yielding equities/bonds, but no longer. You can build a quite safe stock/bond portfolio yielding 8% on distributions alone. Why would you aim to sell 4% of principal a year when you can avoid touching the principal at all at close to twice the yield? Large caps are also at quite high valuations hist…

The thing about retirement, especially early retirement, is it (hopefully) lasts a long time. It is foolish to assume that the trends of the last couple of years will continue on indefinitely rather than return to historic norms. Banking on a 7%-8% return on low risk assets is just asking for trouble.

Re: How much is enough to FIRE in San Francisco?

#48

Post by hparadiz »

the_real_cher wrote: post #24
gotaran wrote: post #12

Earlier quoted context omitted.

The 4% rule accounts for inflation. The stock market on an average gives you 7% a year in returns adjusted for inflation. The 4% gives you enough cushion in case of economic turmoil.

Yeah but have you seen the interest rate on the national deb and the amount the fed government is borrowing every year? The interest we pay on the debt has just passed defense spending this year as a percentage of the federal budget. I cant imagine how 4% inflation will continue to be the norm as the government has to print more and more money to pay for this stuff.

If China starts a war with Taiwan we're gonna be looking at WW2 level of taxation. Ordinance shortages are already here due to Ukraine.

Re: How much is enough to FIRE in San Francisco?

#49

Post by foooorsyth »

y-curious wrote: post #41
foooorsyth wrote: post #23

Earlier quoted context omitted.

You don’t have to retire there, but it turns out that the Bay Area has one of the most pleasant climates in the entire world for humans and it is coupled with some of the most stunningly beautiful and varied terrain in the world. It’s hard to leave and call anything else retirement if you’re just considering climate, weather, and nature. My family did end up leaving the area but it was hard. I am still working. Would…

Where did you move to, if you don't mind my asking? It's hard to leave here for sure :'(

The Carolinas, near the Blue Ridge Mountains where it is also pretty. Not quite the Sierras but it’ll do

Re: How much is enough to FIRE in San Francisco?

#50

Post by hindsightbias »

thefaux wrote: post #2

The funny thing is that I just plucked 5MM out of a hat for my number 5 or so years ago when asked and I guess this analysis supports my intuition. The one big problem with renting is instability. If the owner decides to sell the property, it may be difficult to find something equivalent on your terms or you may be forced to hop around a few times before settling.

Live in a multi-unit under rent control. New landlord has very limited options with you.
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