Reply to Upper and UMC Ppl: Do you Actually Know Anyone Living Beyond their Means?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous]I think it's not that people with UMC incomes can't afford their lifestyles on their current income NOW, but that many save a shockingly low proportion of their income that could secure for themselves financial security, perhaps at an earlier age, or start to generate savings that could benefit future generations (pay for schooling, etc.).  WSJ ran an article a few years back titled "Six Figure Income - and Facing Financial Ruin" - a fascinating part of this article included a study of a Typical UMC Family in Chicago making $400K+ that were clients of Northern Trust (private banking with extensive research on their clients of course) - disposable income was somewhere near $275K and they contributed about $12K to retirement - the rest going to lifestyle.

I think many people spend large amounts before their retirement is secure.  Yes, they can afford it now, but assuming the high income will always be there is risky - for most, job security is lowest when they hit their 50's.

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I agree with this.  It's not very common that people making $300k+ are going into the red every month, but it's very surprising how many people at that level are only saving 10% or less of their income.  If you make $100k, when you imagine making $300k you picture a nicer lifestyle and a very good nest egg in the bank to give you financial security and possibly enable early retirement.  Then you see people making $300k and what they actually have is a similar 401k balance to the $100k person, a nicer car and a house 2 neighborhoods over with an additional bedroom.  They're not on the verge of bankruptcy but they're also not a single step closer to financial independence or actual wealth, and that's the part that feels wasteful.[/quote]

This. Exactly. Day to day -- I think most people I know can afford their houses, fancy cars, vacations etc. And I think when others say -- oh they must in debt up to their eyeballs, they're just being petty and jealous; salaries for white collar professions have gone up a lot over the years and most people make more than you think they make.

BUT I am always surprised by how little those same folks focus on saving. It came up in biglaw ALL THE TIME esp. when an associate got the sense in his/her 6th yr that he'd be pushed out and then suddenly it was like -- wow in house and gov't jobs would pay me like 150k, I should start socking some money into my 401k in the next yr or 2 before I have to leave and take a pay cut. And invariably these were always the people who graduated with little or no debt so it's not like their first 6 yrs was spent paying $2000/month to the lender. Saw the same thing in the government too. People (lawyers -on a non GS scale) FREAK out every time there is a risk of a shutdown bc paychecks would be delayed or with this administration maybe there would be no pay for that timeframe. They start freaking out about how they'd pay 2 weeks or 1 months bills. Some of these people are single and making 150k?! They also balk re retirement contributions -- ugh contributing 8% is soooo much. Um - we match up to 8% and you're complaining about that??!

So while I don't think people are taking on massive CC debt to buy designer clothes, I do think they structure their lives such that they have the best of everything they can afford -- so much of what comes in, goes right back out. Living below your means isn't a concept for most people I know.[/quote]

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