Creating wealth: Career in Boston vs Charlotte (Douglas: health insurance, houses)

[booleantype]

I came across a recent post by someone implying it is possible to create wealth in Boston vs say Charlotte from a salaried career if you are in tech/bio/finance due to the large job market in those fields and have been thinking about this. There are many other reasons why one would pick Boston over other cities depending upon the individual but given that housing cost is a major factor in one's lifetime potential for savings and wealth creation, is it practically possible that a median tech/bio/finance college grad who wants to settle down, buy a house and raise a family in a top school district will come out ahead in their lifetime -solely based on their salaried income- if they settle down in Boston vs Charlotte where the COL/Housing cost still is a fraction in comparison?

[bugelrex]

An average worker? No unless they gain lots of housing appreciation by buying and assuming the home prices keep appreciating.

An above average worker? Absolutely, the opportunities are much much greater in Boston if you are ahead in your field

[CaseyB]

Charlotte is getting expensive, too but it's still less than Boston.

[bigfatdude]

$100,000/year income, $1,000,000 house vs $85,000/year income, $350,000 house - you decide...

[chicagoliz]

It depends -- there are many small and startup biotech companies here that will not pay relocation expenses for people, so you simply must be here in order to find and get the jobs. And it is possible to switch jobs, increasing in salary each time, plus the possibility that a large company could buy out your start up and if you have stock, you could see quite a bit of money from that. There is, of course, no guarantee that will happen. But it is much more likely than if you are in Charlotte.

[booleantype]

So just for fun I did a simple calculation to project the differences in assumed income and housing costs in both cities over a 35 year working career, ignoring startup/acquisition possibilities.


Starting Tech/Software Salary: $100k in Boston vs $80k in Charlotte
Retiring salary: ~3 x, achieved by 3% annual raise every year ($281k in Boston vs $225k in Charlotte)
State Income Tax: MA 8% vs NC 6.5%?
Monthly Housing + Utilities Cost (2400 sq ft house) = $3000 in Boston vs $1600 in Charlotte


Assuming one manages to put away 15% for retirement, a fixed $4k in health insurance cost, 20-30% arbitrary federal income tax rate consistently applied, 2% in after tax deductions, and after SS and medicare taxes, my calc shows that he/she would have a 35 year savings in Boston of $961.5k vs $1.233M in Charlotte (so actually about ~$271k more savings in Charlotte).


There are some assumptions here, of course. What I am interested in is whether for the “above average worker” does the salary progression based on professional advancement opportunities seem reasonable for both cities? What would be a reasonable increase % to factor in from job switches?


What other factors am I missing or underestimating?

[chicagoliz]

Originally Posted by booleantype

So just for fun I did a simple calculation to project the differences in assumed income and housing costs in both cities over a 35 year working career, ignoring startup/acquisition possibilities.


What other factors am I missing or underestimating?

One thing would be the appreciation in housing. If your house appreciates 10%, and it was a 400K house in Charlotte, you got 40K. If it's a 1.2 Million house in Boston, you see 120K.

You'd also have to factor in other taxes. MA has a higher income tax, and I don't know specifically what other taxes are in NC, but in PA, for example, there are school taxes, township taxes, city taxes -- a bunch that don't exist in MA. The states do need to get their money.

[bugelrex]

Originally Posted by booleantype

Starting Tech/Software Salary: $100k in Boston vs $80k in Charlotte
Retiring salary: ~3 x, achieved by 3% annual raise every year ($281k in Boston vs $225k in Charlotte)

What other factors am I missing or underestimating?

For tech, you are definitely over estimating the final salary. I would say it tops out at 180k in boston and 140k in charlotte. Assuming a non VP.

Also the type of tech job in Charlotte has a greater chance of being offshored due to its less advanced nature. Boston tech will likely be more on cutting edge and keeping up with new advancements.

[Sweetbottoms]

Originally Posted by CaseyB

Charlotte is getting expensive, too but it's still less than Boston.

Charlotte prices are far higher than they were years ago. Its not Boston prices by any chance but the days of getting McMansions for under $250,00 are gone... you'll find what look like nice houses online for $175,000, yes, but you won't want to live in those areas...believe me we looked... They're either right under Charlotte Douglass airport or your neighbors are trailers. Its very bizarre and decien



Another factor is what the area has to offer for families/young people. Families are usually will to pay more if the area has more to offer.. Having lived in Charlotte and NH and having my husband in finance I can say Boston area has higher pay and more to offer.. He'd easily make $40k more a year if he applied in Boston. Boston has schools car surpassing NC in ranking and quality. Weather is a downside with longer winters as well as higher income/property tax (we pay 5%). I guess in the end it really depends on the family. I mean ideally if you could get a job in NH (around Portsmouth and live outside of it) you're eliminating income tax and still within a reasonable drive to Boston so it may be a better bang for your buck

[CaseyB]

Originally Posted by booleantype

So just for fun I did a simple calculation to project the differences in assumed income and housing costs in both cities over a 35 year working career, ignoring startup/acquisition possibilities.


Starting Tech/Software Salary: $100k in Boston vs $80k in Charlotte
Retiring salary: ~3 x, achieved by 3% annual raise every year ($281k in Boston vs $225k in Charlotte)
State Income Tax: MA 8% vs NC 6.5%?
Monthly Housing + Utilities Cost (2400 sq ft house) = $3000 in Boston vs $1600 in Charlotte

The Massachusetts state income tax is not that high. It's 5.1 or so. Of course, property taxes will be much more here.