Reply to I Live Comfortably on Less than $70K After-Tax in DC Area

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]In your position you are absolutely not saving enough for retirement.  You may be living fine, but you are shorting your retirement.  Also, you should assume 4% for long term growth.  At your age I wouldn't include SS either.[/quote]
OP here. I am saving 18% of my income, which is more than the 15% that advisors recommend. And once I increase my contribution, I will be putting away 20%. I've been doing that since the first year after college, and I'm sure I'll be fine. The main thing is that I started early.[/quote]

Fine, but you are not maxing out.[/quote]

I'm not the poster you're responding to, but it seems the goal posts have been unfairly moved.  At first it was "you are not saving enough for retirement."  When it was pointed out that saving 18% of gross income IS enough (and it is), then the critique moved to "you are not maxing it out."  But maxing it out wasn't the point.  The poster is doing fine, and is not "shorting" his/her retirement.  Why all the hate?[/quote]
OP here, and thank you. [b]I find the criticism here from others bewildering.[/b] There is a lot of sympathy for people who, for one reason or another, must rely on government assistance programs, and lots of encouragement that they have nothing to feel bad about. [b]But when faced with a self-sufficient person (like me), who is doing everything right - saving more than the recommended percentage for retirement, giving to charity, buying and paying off my car (so no loan anymore), and just living a responsible life - I get hit with the hate. [/b]

(I am not criticizing those who need food stamps or whatever. People need help, and that's valid. I'm pointing out the difference between the emotional support of DCUMers toward a person on assistance, and criticism of a self-sufficient and financially responsible person who had the discipline to begin a retirement fund at age 22.)[/quote]

Because you and people like you refuse to believe that it's hard to raise kids in this area on $300k (two government lawyer salaries) or less. Kids - as in two or more - are HUGELY expensive. And the COL in this area is expensive if you want to be in a good school district or do private school.[/quote]

I'm not the poster you're responding to, but I definitely disagree that it's "hard to raise kids in this area on $300k."  We only have 1 kid (I recognize that you said multiple), but we also "only" make $275k gross, and we're beyond comfortable living in NWDC.  We'll add a second kid soon, and we may have to cut our annual savings down from $73k, but we'll still have more than enough money.  Here's our spending from last year:

- Taxes: $65k (includes federal, DC, and FICA) 
[b] - House: $40k (includes PITI plus HOA plus utilities) 
[/b] - Daycare: $22k 
 - Student loans + kid's 529: $16k 
 - Restaurants: $11k 
 - Travel: $9k 
 - Groceries: $8k 
 - Insurance + Medical: $8k 
 - Clothing: $6k 
 - Cable and Cell phones: $5k 
 - Discretionary/uncategorized/entertainment: $12k 
 - Savings: $73k (includes 401k, IRA, brokerage, etc.)

As I mentioned on another thread, this isn't to brag but rather aims to give a reality check to people who say $300k is "middle class" in NW DC. It isn't. It's extremely comfortable and privileged.[/quote]

Your housing budget translates to ~$500K mortgage. Since you're not talking about moving anytime even though you're adding a family member soon, it sounds like you're not living in a condo but a house.  So it further sounds like you bought a long time ago.  Yes, if your mortgage or rent is frozen at a level that is a decade or more ago, you'll be fine.

If you have to worry about present levels, you'll be screwed. Even on $300K salary.[/quote]

This trope bother me.  Yes, housing in DC area is expensive, but no you aren't "screwed" at present prices on a $300k salary.  There are plenty of homes in NW DC (even the nice areas) for $700-800k.  With a 20% downpayment you are talking $3000-3500 including taxes.  Right in line with what the budget posted above.  Here is a 3BR in Tenleytown posted today that will run you 3300/mo. for PITI.  So, the budget poster could move into this and still keep housing costs at $40k/year.

https://www.redfin.com/DC/Washington/3812-Brandywine-St-NW-20016/home/9968947?utm_source=myredfin&utm_medium=email&utm_campaign=instant_listings_update&utm_content=refresh_with_promo&riftinfo=ZXY9ZW1haWwmbD0xMjk0MjQxJnA9bGlzdGluZ191cGRhdGVzX2luc3RhbnRfMTUmdHM9MTUwMTc3OTM0NDcwNyZhPWNsaWNrJnM9c2F2ZWRfc2VhcmNoJnQ9aW1hZ2UmZW1haWxfaWQ9MTI5NDI0MV8xNTAxNzc5MzQzXzImdXBkYXRlX3R5cGU9MSZzYXZlZF9zZWFyY2hfaWQ9OTQ4NjY4NSZsaXN0aW5nX2lkPTcxNjk0MDU2JnBvc2l0aW9uX251bWJlcj0w[/quote]

Okay so maybe "screwed" is a strong word.

However, that house you pointed out is old, needs work, and likely has a lot of maintenance issues.  On top of that, it probably will sell for considerably more than $725K.

But let's say it did - 20% down on $725K mortgage is ~$4K PITI, not $3500.  The maintenance could be considerable.    [/quote]

I'm the PP who posted his budget above, who you said was "screwed" if he needed to move at present prices.  I look on redfin/Zillow and see plenty of listings for houses in NW DC for ~$750k.  But, I'll tell you what, I'll even bump that up and say that I end up buying a $900k house.  Maybe something like this (https://www.redfin.com/DC/Washington/4401-River-Rd-NW-20016/home/9949290).  That's $4k PITI after a 20% downpayment.  So, let's say my housing goes up from $40k per year up to $48k per year.  We still have plenty of room in the budget.  Maybe instead of saving $73k toward retirement, we only save $65k.  This is not a problem!  [/quote]

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