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We all have our individual conceptions and definitions of things, and sometimes these can become pretty skewed. According to Wikipedia, themedian household income in the U.S. in 2009 was $49,777. Of course this varies considerably from state to state, as does the cost of living. But for the country as a whole, the literal middle of the middle class is (rounding off) a household income of $50,000. I agree that this would be almost a poverty income in New York City or San Francisco (and various other places), but the figure does permit us some perspective on the matter.
How is it that we have come to expect so much more? First, I would say advertising, coupled with the natural tendency to look up towards those who have more rather than down towards those who have less. Let's take the example of other peoples' cars on the freeways; we tend to notice those nicer than the one we are driving, so the beaters become sort of invisible. In addition, we cannot know, when we look at the BMW ahead of us, if that owner took on excessive debt to get that car and is one paycheck away from not being able to make his car payment.
Another reality is that the common conception of middle class has changed rapidly with time. When I entered Kindergarten in 1950, our family of four lived in a two-bedroom, one bathroom house in the suburbs. My father was a chemist who worked for the federal government and my mother was a stay-at-home mom. We were not considered lower class.
As a nation we have become very spoiled, and the current adjustments are therefore even more painful.
you should check out what the average income in NYC is if you think $50,000 income would be almost poverty. you'll be pretty shocked at the answer.
so would buying in Chicago be a huge financial mistake? You really believe that property is that overvalued, that it's worth renting in these metropolitan areas? renting in and around NYC is very expensive, as it has increased even more during the downturn as housing prices leveled off or fell, depending on which area in NYC metro area you are looking at.
The answer to those kind of questions is always going to be 'it depends'. The classic inner ring suburb (ie. easy commute to jobs centers) with good housing stock and excellent schools is almost always going to hold value better than an area that lacks the good commute, desirable homes, or school situation but saw values inflated by the bubble anyways.
NOPE... employer matching is usually vested too....... it can be a better scheduling than this but usually there is a vesting schedule.
With a graded vesting schedule, you vest in your employer’s contributions on certain anniversaries of your employment. If your employer uses a graded vesting schedule, it may be more generous than the one described below, but thanks to the Pension Protection Act of 2006, it can’t be less so:
After one year of service: 0% vested
After two years of service: 20% vested
After three years of service: 40% vested
After four years of service: 60% vested
After five years of service: 80% vested
After six or more years of service: 100% vested
soooooo back to the origonal answer. the limit on employee contributions are capped at 22k if over 55
Okay, I don't know the details around it if you work for someone else. You can easily put $49,000 in your 401k if you're self employed (assuming your copmpany has the cashflow to do so). $16,500/$22000 employee contribution and the remainder employer contribution.
Like I said, I do this every year. By choosing to work for someone else, you're likely limiting your options and have to pay significantly more taxes than if you were to choose to be self employed. Remember, that on the employer contribution, you also avoid paying SS tax.
People that spend over $100k/year are a dime a dozen here, if you don't know any wealthy people that spend more than $100k a year I'd suggest you don't know any wealthy people.
You only spend $13k/year on rent and you think you live in a high cost area? Please....
i lived in Hoboken, just out of NYC, for 5 years, and my share of rent was $1300/month. that's $15,600/yr, not horribly more than $13,000/yr, and in what is considered one of the expensive places to live.
how much would rent need to be to be considered "high cost"?
Its completely disingenuous to imply that his "father's generation" lived anything like we do today....you can easily have "his fathers generation" lifestyle on a single income today. But that isn't what you want, you're spoiled, you want what amounts to a fairly extravagant lifestyle today on a single income.
And yes, the world would be so much better if those pesky women stayed in the kitchen.....
very true! i love when people try to compare to their father's generation in these discussions on standard of living. his father's generation had a tiny refridgerator that was horribly inefficient to what we have today. they possibly had no television, and almost certainly no dishwasher, something that is standard even in most low income housing by me. no cell phone and cell phone bill. people could go to single income living and live like folks in the 50s did, no problem. but find someone that actually wants that.
Uh, that might be me. No cell phone (although spouse has one for work), lived quite happily with kids and no TV for over a decade, one car, like to cook and do dishes by hand, hang my laundry on a clothesline, maintain a vegetable garden, SAHM, prefer to BBQ with friends over a night on the town. . . .
Now, the computer . . . well, I'd like to believe we could live without one, but realistically, it's unlikely.
It's not hard to spend $100k/yr. Think about all your friends with country club memberships. That's about $20,000 a year after you add up your membership dues, fees, and expected expenses.
Add that to all the parties and benefits you throw.
Add travel.
Then add all your living expenses.
You'd be surprised how many people are spending $100k/year. I'm not saying that everyone does, but LOTs of people do.
Okay, I don't know the details around it if you work for someone else. You can easily put $49,000 in your 401k if you're self employed (assuming your copmpany has the cashflow to do so). $16,500/$22000 employee contribution and the remainder employer contribution.
Like I said, I do this every year. By choosing to work for someone else, you're likely limiting your options and have to pay significantly more taxes than if you were to choose to be self employed. Remember, that on the employer contribution, you also avoid paying SS tax.
i would imagine this would be something that may raise some red flags at the irs if your salary is reduced to low for what it is you do... its almost on par with trying to take as little salary as possible and passing it through as a dividend to avoid all the payroll taxes when your self employed.
its different when you actually get your full compensation and legitimate profit sharing on top of it.
irs basically says your drawn salary has to be what you would pay someone else if they worked for you or a competitor...
hmmmmmm so what your saying is have the employer cut your compensation on w2 and then give it back to you in profit sharing.
i cant imagine most employers would do that since it has to be for every employee who is in the plan. that profit sharing money gets divided among everyone and with it the rest of your pay. if you can find a company that works like that that would be great.
is saying, be your own employer that controls your compensation so you can get away with doing this. it works for small businesses that you run and pay yourself a salary from.
Uh, that might be me. No cell phone (although spouse has one for work), lived quite happily with kids and no TV for over a decade, one car, like to cook and do dishes by hand, maintain a vegetable garden, SAHM, prefer to BBQ with friends over a night on the town. . . .
There is nothing wrong with that. If I had no TV I would probably just be more productive with other things or read more. I have never used a dishwasher in my life. A night on the town is expensive and boring. I would be happy with a bare bones cell phone plan (plus I have no land line as a result so it evens out the cost). I would rather cook at home than eat out.
My husband however is more Americanized and has more expectations.
I don't feel like I'm missing out on anything at all. I don't understand where people feel like this generation's expectations should be higher... I am not that old, just brought up differently.
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