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You're missing the main debate of this thread: 250k is not wealthy in the most expensive areas in CT.
In the most expensive areas, probably not. I live in Fairfield, which is far from a cheap area but doesn't compare to Greenwich, Darien, etc. Before we moved up to CT 5 yrs we ran the numbers to see how much income we would need to cover ourselves and still have a few bucks left over. I don't have my spreadsheet with me, but here's a rough summary. With a 400k mortgage, plus taxes, insurance, etc., no car or credit card debt, plus food/utilities and whatnot, minimum 6% contribution to 401k (for employer matching), commuting costs of $400/mo (parking/train to NYC) and spending about $7k/yr for part-time preschool for 2 kids, we would need about $130k of base salary to not be strapped and panicking every month. This factored in going out for a mid-range dinner 3x/month, plus maybe 3-4 cheaper take-out dinners (like pizza or chinese, not mcdonalds). This did not include any money left for savings or emergency repairs to the house.
With $250k salary (basically double my estimate)...well, I could live a very luxurious lifestyle in comparison and still have plenty of $$ left for savings. I would not feel "wealthy", but I certainly wouldn't have any financial worries.
Well let's see...we're living on around $75k now. It's me and spouse and cat, in a 3-bedroom 1-bath house in the burbs of northern New Haven county. Both our cars are paid for, no liens. Our credit card debts are under $5000 combined between us. We reduced our electric bill by around $100/month by buying a more energy efficient TV after our home was burglarized and the burglars stole our POS energy-sucker.
Considering taxes, $250,000 gross might be only $140,000 net. So let's work with that. $140,000 is almost double what we live on now. And we live now, relatively comfortably. We struggle maybe a couple of months out of the year when the oil bill comes in and our savings is pretty pathetic...but we have savings, nonetheless.
So what will that extra 70k do for us, every year:
Sock $20k away - 5k for each of us into our IRAs, maybe put $5k into some reasonably conservative investment fund, and the remaining 5K into liquid savings fund (like a normal bank account at stupidly low interest) for emergencies.
Now we have 50k left over. Okay let's have some fun. Take $10,000 out for vacation. Just assume it's spent, we're going on a cruise and we want a nice room and a few extra-priced excursions. Now we have 40k left over. Spouse can stop doing the volunteer overtime (he'd still have to pull the mandatory but that's a rare occurrence). I can buy that Kindle Fire I've been tempted to get, spouse can get a few repairs on his pickup truck that he really needs. The first year of that extra money, we'll be able to hire someone to complete the repairs to the house that we started when our roof almost caved in during last year's storms, and finish the trim on our bathroom and finish pretty much all the improvement projects we started but were too busy to finish.
The second year of that extra $40k...we're totally getting central air conditioning installed.
The third year of that extra $40k, we'll have to spend around a thousand paying for the electricity to run that central air conditioning. So that makes it only $39k - and for an extra $39k, I'll push the spouse for a new garage. Ours is a heap of junk and needs another 2 feet on each side so maybe we can actually put a car in it. Oh and a shed. We totally need a shed.
Fourth year of that extra $40k...save it. Fifth year of that extra 40k, we now have 80k..it's time to FINALLY build out our master bedroom, which is only 11x11, add a second bathroom.
Sixth year of that extra $40k - it's time to retire, and move to Florida. We will then have plenty of extra savings, plus a fair chunk socked away into our IRA, a modest emergency fund, and our home will likely sell for at least twice what we paid for it (it's almost at that now, even with the trim unfinished and a crappy garage).
So yes, for me and my spouse, $250k is most definitely "wealthy." We'll live in relative luxury, AND be able to afford to retire in 6 years without worry.
That sounds like a great way to spend the extra cash, but how will you retire on 40K x 6 years = 240K>?
Maybe one of you could stop working but 240K won't last long if you need 75K per year.
If we agree that wealth means financial freedom, then $250k household income in most parts of the country would not be wealthy. But would certainly be an excellent income for 95% of American households, even to the point of approaching wealth after several years of making that income. In the poorest two or three states, $250k could very well be considered wealthy.
That sounds like a great way to spend the extra cash, but how will you retire on 40K x 6 years = 240K>?
Maybe one of you could stop working but 240K won't last long if you need 75K per year.
Because I'm already 50 years old and have spent the bulk of my adult life saving small amounts of money, acquiring an IRA and contributing to it, living efficiently and within my means. During that over-30-year-window, both I and my spouse have built up enough social security that it will afford us comfortable housing (and not much else), and his pension will supply most of everything else. Savings will cover whatever pension and SS doesn't cover, and the IRA will handle emergencies (our health insurance is paid for, for life).
Also as I already said, we own a house, not rent an apartment, and it is currently valued at close to twice what we paid for it. So when it's time to move, we won't owe, and we'll get something back, which will cover the majority of the cost of a retirement home in Florida.
At that salary I would pay about 12k to SS & Medicare tax, then 15k to the state and 75k in fed. I would be ok but this is not Kansas or DE it is the highest taxed state in the land. So my property tax and my car tax and all the business I deal with put that on their invoices to me and my food is up north, etc. So you figure ToTo.
I should have read all of the posts in this thread, but the first few pages and last few seemed enough. I do apologize for repeating anything already said.
$250 000 is wealthy. It seems somewhat disconnected to suggest it's not. I would assume a poll of shoppers in Dubai or on Rodeo Drive would have a separate threshold for wealth too, but you're focusing on a very elite group to begin with - those in southwest Connecticut. Everyone tends to think of themselves as middle class, but subjective feeling of one's group leads us with 315 million Americans self-labeling as the everyday middle.
So far the central argument has been that with the cost of living so high, that $250 000/year is not so extravagant. Why? You do realize there are a lot of people in Fairfield County making less than you. About 88 percent of the population in this wealthiest of places earn less, while in all of Connecticut you're near the top 5 percent. The median family income in the county is ~ $77 600, a little more than a quarter of yours.
The cost of living is not that much higher in my opinion, although you can certainly spend more than you need to in this part of the country. Your car costs the same here as in Alabama, your house could be a bit more and taxes higher, but pay usually compensates. You can get a very nice home in any number of great towns in Fairfield County and easily pay off the mortgage very early at your income. Or better yet, look in New Haven, Middlesex or Litchfield county for something cheaper and commute a bit. No need for private schools, in your price range the public schools in towns you would likely reside are already among the nation's best. Your disposable income in this bracket is more than most others' total income. If property taxes are so high, why not rent for a couple of years and invest or save? Even if you choose to buy, the amount you could still afford to invest and amass would dwarf in 10 years what most save in their lifetime.
Or better yet, look in New Haven, Middlesex or Litchfield county for something cheaper and commute a bit.
I agree with the spirit of your post, however it should be noted that commuting from these counties to NYC is way more than commuting a 'bit'.. it's several hours a day.
I should have read all of the posts in this thread, but the first few pages and last few seemed enough. I do apologize for repeating anything already said.
$250 000 is wealthy. It seems somewhat disconnected to suggest it's not. I would assume a poll of shoppers in Dubai or on Rodeo Drive would have a separate threshold for wealth too, but you're focusing on a very elite group to begin with - those in southwest Connecticut. Everyone tends to think of themselves as middle class, but subjective feeling of one's group leads us with 315 million Americans self-labeling as the everyday middle.
So far the central argument has been that with the cost of living so high, that $250 000/year is not so extravagant. Why? You do realize there are a lot of people in Fairfield County making less than you. About 88 percent of the population in this wealthiest of places earn less, while in all of Connecticut you're near the top 5 percent. The median family income in the county is ~ $77 600, a little more than a quarter of yours.
The cost of living is not that much higher in my opinion, although you can certainly spend more than you need to in this part of the country. Your car costs the same here as in Alabama, your house could be a bit more and taxes higher, but pay usually compensates. You can get a very nice home in any number of great towns in Fairfield County and easily pay off the mortgage very early at your income. Or better yet, look in New Haven, Middlesex or Litchfield county for something cheaper and commute a bit. No need for private schools, in your price range the public schools in towns you would likely reside are already among the nation's best. Your disposable income in this bracket is more than most others' total income. If property taxes are so high, why not rent for a couple of years and invest or save? Even if you choose to buy, the amount you could still afford to invest and amass would dwarf in 10 years what most save in their lifetime.
You can't look at the simple statistics (77k) and suggest plenty of people live fine on that. You're forgetting that FFC has two cities that have a large percentage of people living in poverty that drag the income down, and the county has arguably the largest gap between rich and poor in the state/country. In Bridgeport, 250k might be rich if you're spending $200k on a decent house, but in neighboring Fairfield or Westport, where housing is mutiple times what it is in Bridgeport, it's a different story. That 200k house in Bridgeport would be $500k+ in Fairfield, and higher in Westport.
You also recommend living in an adjacent county and commuting, yet fail to realize the extent of gridlock going into/coming out of/going through FFC each day. While humanly possible to commute from Goshen or Old Saybrook to Stamford everyday, your life would be hell.
Third, you mention renting. Landlords are not tenant friendly in CT, largely due to laws not being landlord friendly. We don't have many nice complexes and the ones we have are very expensive. Many of the rentals are first, second or third story homes that are not in the best of shape and don't have the greatest neighbors. Renting in Connecticut is not something I would do - I've done it to save money in the past, and each time it resulted in being a pain in the butt. And today, rentals don't necessarily save money. Rents are at an all time high. My friend who rents in Milford has a higher rent than what I pay for my mortgage.
Anyway, you make some good points, but you have to go deeper than surface statistics and obvious observations. Each point you make is unrealistic in my opinion.
I lived in Silicon Valley where $250,000 is 2 Engineers salary combined (a household), which is a very standard upper middle class family. Considering that a nice house in a good school district will cost 1 million, it is not that much.
I lived in Silicon Valley where $250,000 is 2 Engineers salary combined (a household), which is a very standard upper middle class family. Considering that a nice house in a good school district will cost 1 million, it is not that much.
Exactly. That's why in lower Fairfield County, you'd be house poor.
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